As in life, some business decisions carry very significant consequences and others don’t matter a great deal. Nobody has all the answers so it’s good to have a thought process to follow in making decisions, particularly when there is a lot on the line.
3 Common Decision Situations
Many business decisions will fall into one of these categories:
- Deciding “yes” or “no” to a proposed action, proposal or idea, or
- Modifying it so that it becomes a “yes”, or
- Choosing between more than one option
Not everything in business should be a complete surprise. If we stay informed about our markets we should be able to anticipate some of the things coming our way. Having a good Business Plan which is reviewed at least annually gives us time to focus and reflect on some of the “what if” scenarios we may encounter.
Criteria for Making Decisions
You’ll make better decisions more of the time if you develop a list of criteria that you use to guide your thinking. Here are some to consider:
- Financial Impact & Risk- what investments are required and what returns do you expect on them? What happens if things go wrong? Also, what is the cost of not doing it or choosing another option?
- Operational impact & Risk– what is the impact on how your company operates? Will productivity improve? Will people or processes need to change? What operational risks are there?
- Brand Impact & Risk – how will your brand and business reputation be enhanced or hurt by the decision?
What if You Lack Information or Expertise?
You’re willing to use the above criteria to make the decision but you don’t know how to calculate the financial impact and/or risk. Now what do you do? Well, if the decision is really important you engage outside assistance to help you. If the decision is not so important, you make an educated guess.
Two best practices to address this are (1) to get advice and counsel from your internal team as they may be able to shed light on the subject and (2) have a skilled business advisor or multiple advisors who know you and your business and can lend their assistance when you need it. You can accomplish this with a formal Board, an informal Board of Advisors or a trusted business advisor.
Schedule your Annual Planning Meeting, create your list of criteria for making decisions and line up your Advisors and you’ll be well on your way to making better decisions.
Make every day count!