10 Tips to Help You Make Smarter Business Decisions
One of the most crucial skills an entrepreneur must have is, of course, the ability to make sound business decisions. However, when you are faced with make or break decisions, deciding whether to jump one way or the other can be stressful. But being indecisive will almost always lead to the road to ruin when you are running a business. Fortunately, though, decision-making is a skill that can be honed. Here are ten tips to help you become a better decision-maker.
- Let Logic Drive Your Decision-Making Process
Step one to making better decisions is never to let emotions be the driving force in your decision-making process. Suppose you are angry, panicked, or even overenthusiastic. In that case, that is not the best place to be when you weigh up the pros and cons of a crucial business decision. Logic should always be what drives your choices. So, if you are feeling emotional, wait until you have calmed down before you decide on a course of action.
- Gather the Facts
Try not to rush into making any decision until you have all the facts before you. Do background research on Google if you need to. Insist that employees give you all the relevant information, and always work on the basis that you can never have enough data. There may be occasions when the information you would like to have is not available, and you will need to rely on your instinct. It is always advisable to wait until you have all the facts if that is possible and time permits.
- Explore All the Options
The most obvious solution to a problem is often not the best one. If it appears that you must choose between A or B, consider if there might be a third or fourth option. When limited options restrict you, you may make a knee-jerk decision. You may decide for the sake of being decisive. However, if you take the time to explore all the options, you may find a more innovative solution to the problem.
- Allow Sufficient Time for Decision-Making
Don’t allow yourself to be forced into deciding before you are ready to do so. There are many situations when people will want an immediate answer, but even the most urgent business decisions can usually be put off for a day or two. There may also be times when you cannot see the wood for the trees, or the need for a decision is beginning to overwhelm you. If you feel that you are not in the right mental state to make a sound judgment, put off making the decision, and sleep on it. Sometimes the best solutions spring to mind when you aren’t even thinking about the problem.
- Don’t Procrastinate
Some decisions will have a predetermined deadline over which you have no control, so the timetable for coming to a decision is forced upon you. However, there will also be times when you could put off deciding indefinitely. But if you procrastinate, your business will stagnate and you will miss out on many opportunities. So, where no deadline exists, it would be best to create a timetable for making the decision and stick to it.
- Assess the Potential Outcomes
Look at the downsides of each of your options, as well as the merits. Consider what the worst case scenario possible would be for each of the choices that you could make. Then, weigh up the benefits of each option against the worst possible outcomes. Weighing up the risks against any potential rewards will help you arrive at an option that has an acceptable risk level.
- Break Decisions Down into Components
If a significant decision is overwhelming you, try breaking it down into smaller parts. For example, if you have lots of options, shortlist the possibilities first and then weigh up what are left. Or, if you are considering hiring ten new employees, you might take on only two new people as a trial to begin with. Most business decisions can be broken down into smaller elements. If you can turn a significant decision into a series of smaller ones, it will reduce risk, and breaking down a decision will make it less of a challenge to decide.
- Ask for Help
You may be the sole person who is responsible for making a decision, but that does not mean that you cannot seek input from other people. It is always best to seek professional advice when it is needed, and ask for a second opinion if you are unsure that you are making the right choice. You do not have to take the advice that you are given, but sometimes other people will take a more objective view of a situation than you, and they may see a possible solution you had missed.
- Write Down Your Options
Business decisions are often complicated, and it can be tricky weighing up the options on your head. If the answer is not immediately apparent, try writing a proposal for each of the possibilities. List the advantages and disadvantages of each option. Then, compare the proposals and make an objective decision based on the facts in front of you.
- Don’t Compromise Your Values
It is always best to let your morals and values guide you in your business decision making. If you compromise your principles in pursuit of profit, you will probably regret it later. The best decision is not always the one that will lead to the most gain. So, make decisions that are sound from a financial perspective, but let your values and beliefs guide you as well.
To sum up, the best business decisions are based on logic rather than emotion. So, look at the facts, weigh up the potential risks and rewards, and don’t be afraid to get a second opinion. Even so, there is no one-size-fits-all template for business decision-making. Sometimes decisions must be rushed and all the facts may not be available, and that’s when your entrepreneurial instincts must come into play.