One of the best things about owning a business is being your own boss. Running the show means you get to make all the decisions — but what if you make the wrong move? That's why beefing up your decision-making skills is critical.
The key to strengthening those skills is using a defined process, which removes a great deal of uncertainty and wheel-spinning. But in order to improve your decision-making process, you need to qualify the opportunities that come your way. Being an entrepreneur is a creative endeavor, so offers, opinions and middle-of-the-night ideas are likely to crop up often. Here are five tips to help you confidently make important business decisions:
1. Qualify the Opportunity
Not all opportunities are worth pursuing. When evaluating a potential option, begin with your business goals and objectives, both long-term and short-term. Will this shiny new opportunity keep you on track, or could it be a distracting sidebar? When deciding, consider the impact your choice will have on the customer base you serve, as well as your profitability and resources.
Sometimes an offer is too good to refuse — or it looks that way. Growing too fast has resulted in many small businesses going under.
Large jobs mean big revenue, but they can also lead to losses. Likewise, a great new customer in a desirable location could mean opening the door to more work, or a drain on time and resources.
Once you decide an opportunity is worth pursuing, don't jump just yet. Take time to make sure it really is the right thing to do. This is where a defined decision-making process can help you.
2. State the Decision
Once you think you're ready to make a decision, accurately stating it is the first — and perhaps most obvious — step. It may be to bid on a certain job, accept work offered to you, hire another person or buy a new vehicle, but your approach should be the same. Check to make sure you aren't deciding on a temporary solution while neglecting the real issue.
For example, if you're considering hiring a new employee to solve an issue your business is facing, ask yourself, "is the issue actually getting more help?" It might be solved by partnering with another business, rather than taking on the obligations and expenses of a new employee.
3. Gather Information
The other key step is gathering information. This is where many people are tempted to take a shortcut and fly by the seat of their pants. Take out your pencil and figure out the dollars, both incoming and outgoing. Then assess how much risk there is in this decision. How much could you lose? Do you have adequate resources to take advantage of the opportunity? Or does it present another hurdle?
Your time and energy are also important areas to consider. Many business owners grab at every new opportunity, ending up scattered, exhausted and burned out. Saying "no" can be hard and feel counter-intuitive, but it may benefit you in the long run.
4. Evaluate Alternatives
During this process, several alternatives may present themselves. These too can be examined in order to find the most favorable outcome. A slightly different course of action might mitigate risk.
5. List the Pros and Cons
If you're really stuck, a simple pro-con list can help release the logjam. Without thinking too hard, list the benefits and drawbacks of a potential decision. Almost every course of action has a downside or an opportunity cost. An opportunity cost means that saying "yes" to one thing requires saying "no" to others.
What is the best move for your business at this time? Honing your decision-making skills will help you decide.