Far too often, we hear stories of businesses that have failed due to bad decision-making. Decision-making is one of the most important skills a business owner should have. The problem is that good decision-making does not come naturally to everybody. Below, we will look at a few tips and tricks to making better business decisions.
Value Data Over Your Gut Feeling
Sometimes business owners need to follow their gut feeling. These include times when they are:
- making business deals
But sometimes, business owners need to make decisions based on data. The data can be collected from users or from research done by the company. The data can then be analysed using data analysis tools and the conclusions that come from that analysis used to make the right business decisions. Areas that could benefit from making decisions like this include:
- expanding or opening new branches
- increasing or decreasing manufacturing output
Recognize When Decisions Need to Be Made
Business owners sometimes leave the decision-making up to their managers or the people below them. Business owners should come in from time to time to make decisions for the company or business. When they do, it is much more likely that the right decisions will be made because the owner might know the business better than anyone else in the company.
Involve the Employees
Most business owners do not involve employees when making decisions. This can have negative effects where workers feel like they are not valued at the company and are being used for their manpower. Business owners could involve their employees when making decisions about:
- new hires
- changes in working hours
- new operating procedures
Get Higher Education
If you already have a business degree, why not go for a Masters or even a Doctorate degree? Some of the courses taught when you take these degrees are about critical thinking and better decision-making. If you would like to earn these degrees online, institutions like Aston University Online have great business programs. Click here to find out more about how DBAs are filling the global skills gap and why you should consider earning one.
Focus on the Intended Outcome
Every decision you make has to be in line with some objective. When making decisions, you have to consider the outcomes of those decisions. A business owner must focus on both the short and long-term goals of their companies and make decisions based on these goals.
Talk to Others
It is important that business owners consult others when making their decisions, especially huge ones. Some of the people they could talk to include:
- business peers
One of the most important areas where they could seek advice is on managing the business or getting financing for it. Someone else might know a way to get a good financing deal while you may not. Another good example is when choosing an advertising partner. Talk to your colleagues about this; they may have insights and give you better options than you already had.
Also, seek help when you have too much on your plate. Sometimes, business owners need to make a lot of decisions in a short time. Because of this, they can get overwhelmed and end up making the wrong decisions. To avoid this, it is always best to ask for help even if your ego is pushing against it.
Look Back and Re-evaluate
Every business person makes mistakes or even bad decisions. If you do:
- think about the circumstances surrounding those decisions
- figure out the intended outcome of those decisions
- think about why things went wrong the way they did
Once you do this, you can begin dissecting those decisions and re-evaluating them so that you never make them again in the future.
Know Everything About Your Business or Company
It is easier to make good business decisions when you have a holistic view of your company or business. Gather all the information and facts about your company and keep them in mind when making decisions. Some of the things you should always know include:
- the state of your finances
- your competition
- the state of the market
- cash flow
- inventory and more
When you have all the information and facts about your company, it becomes easier to make business decisions, as there will not be any biases during that process.
Making the wrong decisions and having it implode can be devastating. When you make such a decision, the best thing you can do is to learn from it and move on. Do not dwell on the past because when you do:
- you will not be able to make decisions in the future
- your employees might start doubting you
Limit the Amount of Data You Take In
Although it is important to know everything about your business, you should also limit this information to the most important information only. This is because too much data can lead to bad decision-making because of uncertainty.
This is a problem for big businesses that are always collecting data. Larger businesses:
- have more money to spend on collecting and analysing data
- have more checks and balances
- better access to capital
- more momentum
Because of this, their owners are much more likely to be overwhelmed by all the data they collect and make bad business decisions as a result.
Plan for the Unexpected
No one can accurately predict the future. Because of this, there will be some uncertainty in your business, which might lead you to make bad business decisions. If you do not want this to happen, you should always plan for the unexpected. When you do this, you will be able to make the best decisions regardless of what is going on in your company or business sector.
Do Not Overreact
If things are not going the right way, overreacting will only make things worse. It can:
- demotivate workers
- ruin the environment in your business
What you ought to do is relax and learn from your mistakes. You also want to be decisive so that you do not spend too much time overanalysing what has happened.
Use Tools That Help You Narrow Down Your Options
Too many options can be a problem when you need to be decisive. The best thing to do is to narrow down the list of options to a manageable number. To do this:
- list all the options you have
- arrange them from the least important to the most important
- pick the one at the top, work on it, and repeat
Do Not Take Too Much or Too Little Time
The two mistakes people make are taking either too much or too little time when making decisions.
- If you take too little time, you will be rushing and may not make the best decision. It is important that you evaluate all the information and options you have before making a decision. You could follow the steps of decision-making to guide you.
- If you take too much time, there is the chance that opportunities will pass you and you might not end up making any decision at all. To avoid this, it would be best to set a deadline by which the decisions should be made.
Eliminate Your Biases and Prejudices
Everyone has biases and prejudices. They can creep into the decision-making process and lead you astray. You should:
- do a deep self-assessment to determine if you have any biases and prejudices
- work to eliminate your biases and prejudices
Break Down Major Decisions Into Simple Steps
A huge task might overwhelm you but breaking it down into smaller chunks might make it manageable. Start by deciding what is most important and what needs to be done first. Outline the steps you will follow and keep following them until you arrive at a feasible decision.
Evaluate the Loss Versus Gain
Most business decisions either cost or make money. If you want to make better decisions for your business, you must evaluate whether your decisions are making or losing you money. If they are losing you money, you should take corrective measures. If not, you can double down.
Talk to a Business Advisor
Sometimes, one needs to talk to someone who is an expert but who is outside their usual circle. This could be a business advisor. They can advise you on every aspect of your business thereby helping you grow your business. You could make them a regular part of your team so they can be nearby to help you make decisions when you get stumped.
Understand Your Customers and the Market
Almost every decision you make will affect either your customers or the market. You should get in-depth data on the market and your customers regularly so that you know what effects your decisions have on both of them. The way the market and your customers react will tell you if you are making the right or the wrong decisions.
Making the right business decision is crucial for any business owner who wants to keep their business afloat. The problem is that making good business decisions can be hard. The best thing to do is to have as much information as possible, speak to a lot of people, and learn and re-evaluate when you make a mistake because every business owner will.