How to Make Better Business DecisionsAvoid reactionary decision-making by learning how to properly evaluate your options and strategize the best move.
As a small business owner, you carry a lot of weight on your shoulders. The decisions you make on a daily basis don’t just determine the success of your company — they also impact the livelihoods of you and your employees.
“The right decisions don’t just mean a higher-value brand, they also mean wages and a good working environment. This can be intimidating,” said Rebecca Gebhardt Brizi, an Atlanta-based strategic development business consultant who teaches a Udemy course on effective decision-making.
A big decision — especially a strategic or tactical decision — deserves proper consideration, but for many overworked small business owners, the idea of taking time to think and strategize can seem overwhelming. Follow this advice from Brizi to learn how to accurately evaluate your situation, analyze your options and make wise decisions you can feel confident in.
Start with your strategic goals
“It is difficult to keep sight of the business as a whole when working in the day-to-day, even more so when something goes wrong and requires an immediate fix,” said Brizi. “Some proactive time spent upfront will avoid a lot more reactive time consumed later on.”
When you launched your small business, you likely put together a strategic business plan outlining what you do, who you serve, why you’re different and how you’ll succeed. As you encounter new situations in your business and are forced to make decisions, always use this strategy as your reference point.
“A strategy is what a business uses to successfully navigate a world it cannot control,” she said. “Working reactively, without a strategy for reference, is how businesses make ad-hoc decisions that help one part of their business but harm or cannibalize other areas.”
Take time to consider how every decision will impact your overall business goals to ensure any changes are contributing to the long-term success of your organization.
For example, imagine a retail boutique is considering adding a new product line. Such a big strategic decision should fall in line with your overarching business strategy, but you will also need to identify what goals you want the new initiative to achieve.
“In this case, the original strategy document will inform overall business values, principles and high-level goals,” said Brizi. “However, goals for the new product will have to be created explaining why start a new product line at all. Is it a new revenue stream, and if so, what are the revenue and profit goals? Is it to start commerce with a new audience? What is the expected buying power of that audience?”
Evaluate your gains
Brizi said the next step to making a wise decision is to consider both the short-term and long-term impact on your business.
“A review of gains will then tell a business the upside to this particular decision. What will be gained quantitatively and qualitatively for the business and its people?”
Consider the gains of expanding to a new product line in terms of revenue, growth opportunity and morale. Does the opportunity lead to increased revenue, employee happiness, client satisfaction and achievement of business goals?
“This analysis requires some guess work at first, so it is important to explain how the gain occurs and continuously question ‘how’ and ‘why’ to make an informed conclusion,” she said.
Calculate your losses
After determining what’s to be gained, also explore the possible losses that will be incurred and the consequences those losses could have on how your business functions.
“Every decision incurs a loss somewhere, and it is imperative to know what that loss is and be comfortable with it,” said Brizi. “A loss doesn’t need to be negative, but it also shouldn’t create an unpleasant surprise at a later date.”
While it’s easy to imagine gains and losses as pros and cons, this is not entirely exact, she said. Take a step back from your list and evaluate the overall impact — good or bad — of the decision.
For instance, the expenses incurred in building a new product line should be more than recouped in new profits. Similarly, a loss in time may be acceptable in one area because it is improving on another part of your business.
Get outside input
“Where possible, I also advise making this a group exercise,” said Brizi. “Brainstorming works best when done out loud.”
Whether you choose to solicit insight from multiple employees or bring in an external consultant to help you determine what’s best for your company, always try to bounce your ideas off of another person when making a major business decision. Getting an outside perspective will help challenge your assumptions, address difficult questions and uncover new possibilities.
“When closely considered, each decision has at least an option A, option B and the status quo. Once you start analyzing it, you will generally find more options than you thought you had,” she said.
You can’t control everything that happens in your business, but you can learn how to navigate these changes and make smart decisions — it just takes a little extra time and strategic thinking.