How to Make Better Business Decisions
by Steve Smith
The ability to have a well run, profitable business is largely dependent on being able to make better business decisions. Unfortunately, making business decisions on a timely basis can be difficult enough regardless of whether or not they are good or not. So your confidence level for staying ahead of important business matters takes a huge hit if good decision making is not one of your stronger skills.
Our lives and our businesses are driven by making decisions. We make them every day; some routine, some important, some far reaching. Our decisions usually solve some problem or provide a course of action like deciding who to call for roadside assistance when we have an accident and need the car towed to a particular service center. In business, making good decisions often impacts the results you get from various things like revenue generation or cost containment. Making better business decisions involves options The approach to making decisions is of particular interest. When faced with an important decision, most people select one of three options: address it, avoid it or pass it on. Deciding which avenue to take largely depends on the nature of the decision, the familiarity with the issue or the severity of the outcome. The best choice in many situations is to address the decision. Making better business decisions is a ‘learned’ process that takes practice. Not addressing decisions is actually a form of decision making in and of itself. People who avoid making business decisions do so primarily for two reasons. 1.) They fear an imagined outcome or 2.) They have a poor track record for making better business decisions. In either case, the thought of ending up with a bad result is enough to create avoidance to the decision making process. You could also ‘pass’ on making a decision in favor or having someone else do it for you. This usually occurs when the primary decision maker has an emotional tie to the outcome or they lack sufficient knowledge of the situation to feel comfortable making a good decision. While passing on a decision is not as bad as avoiding it altogether, care should be taken to insure the recipient is better able to make a good decision. And if they are not, the responsibility for the outcome still lies with the person who initially passed on the opportunity to make a good decision. If decision making is your responsibility, learn how to become better at it. If you own or run a business and you are tasked with deciding on any number of things, you need to develop the ability to make better business decisions. Poor decision makers can wreak havoc on an organization or the personal lives of others who are affected by their decisions. In order to boost your confidence for making good decisions, follow these steps: 1. Insure you see the problem clearly: Since many decisions involve solving problems, understanding the real nature of the problem is critical. Is it an isolated event or is there a pattern to what’s happening? Patterns can bring familiarity to problem solving but also the realization that prior decisions were not effective at stopping the reoccurrence. Don’t be swayed by mere symptoms. Look for causes that your decision must address. A good way to do this is to simply ask ‘Why’ repeatedly until you get to the root cause. 2. Way your options (pros & cons) and their implications: Every decision has options. Not realizing this or being blind to options which don’t appeal to you can have a detrimental effect on the outcome. Make sure you understand the benefits as well as the consequences and also the implications. What’s likely to happen down the road as a result of the decision I make today? Be sure to include unpopular options as well. On the surface they may seem undesirable until you compare them with other choices and the implications they’ll render. 3. Consult with people you trust: Some of the best decision makers in business today rely on input from others they trust. The secret to getting maximum value from this approach is who you pick. Your trusted contacts don’t have to know your business inside and out. They just need to be able to help you objectively sort through your options and gain clarity about your situation. The key here is to consult with no more than 2, maybe 3 people. Getting feedback from too many people will only cloud your decision making process with too many opinions. 4. Know yourself: The basis for making better business decisions starts with how well you know yourself. We all have built in perspectives, opinions and blind spots called biases. You may not be able to change them but understanding how they can skew your objectivity and ability to decide, can help tremendously when the time comes to make better business decisions. As a business coach, I find this the most difficult area for business owners to deal with. Often times, their perspectives are so ingrained that it becomes difficult to see other options as viable. If this sounds like you, be mindful of it or even asking for feedback from your trusted sources could fall on deaf ears! 5. Get a grip on your emotions: Difficult as this might seem, emotions can play havoc on you when objectivity and rational are needed to arrive at the best choice. Emotions are what causes fear, anxiety and overwhelm to cripple your ability to act. If you tend to let your emotions get the best of you during stressful or important decision moments, find a way to mitigate them. Point #3 is one of the best ways to do this as long as you are willing to heed their advice. 6. Once you decide, commit yourself to taking action: In his book, ‘Think and Grow Rich’, Napoleon Hill sited many instances where very successful business people had disciplined themselves to not change their minds after they made them up. No one is 100% right on the decisions they make but most of the time, your first choice turns out to be the correct one. Second guessing yourself only feeds the cycle of not trusting your decision making abilities. Plus, you’ll probably make more mistakes by not just going with what you decide and moving on. As mentioned earlier, making better business decisions involves practice. Learn from what you decide so you can add the outcomes to your mental library. Take note of patterns that continue to influence how you decide and what actions you take to implement your decisions. What you’ll find is your ability to instinctively know what to do will improve and your confidence for addressing areas you are unfamiliar with will get stronger. And if there’s simply too much riding on a particular decision for you to feel comfortable going it alone, reach out and get professional assistance. Ignoring it is the same as making a bad call. |
Steve offers a highly valued service called ‘Ask Steve’. It’s designed to help business professionals make better business decisions and take action with clarity and confidence. Feel free to use it as often as you need. There’s no cost to you.
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