Starting a business is a major feat that comes with endless decisions. Many small business owners find themselves paralyzed in the decision-making phases of their businesses, so it is important to employ various strategies to help you successfully make the right choice.
Business decisions must be made starting at the ground level, like knowing if your business idea is good enough and choosing the right business name, all the way through the lifespan of your business. Having board members or a decision committee on your team can help with the process, but if you’re a solopreneur, you’ll make tough choices on your own.
“The biggest thing business owners need is a reliable sounding board, someone who they can talk through difficult decisions with that they know will listen and give them advice,” said Allec. “It is important that a business owner’s sounding board is honest because honesty will ensure that the business owners are making the right choices in difficult situations.”
In addition, Allec recommends that business owners always trust their instincts when it comes to making tough decisions. You might be wondering whether you should just make the decision and stick to it. Should you test different options? Should you use statistics to make a business decision or implement a multistep process? The answer to these questions depends on what type of decision you are making.
How do you make business decisions?
Jon M. Quigley, founder of the training and consulting agency Value Transformation LLC and author of several management books, recommends using a testing approach that allows you to figure out important parameters and evaluate them accordingly.
Quigley suggested using this multistep process for effective decision-making:
- Identify the business decision that needs to be made.
- Gather data and study what you find.
- Identify the important parameters for the decision.
- Identify alternative approaches
- Identify metrics that inform the viability and veracity of the decision made.
- Invoke the actions and make the decision.
- Monitor progress or state of the decision.
- Review the results
This is a general guideline to follow for making informed decisions; there are other strategies and variations that you can incorporate as well. For example, you can use different forms of testing. You can either repeatedly test on a small scale to see its effect before implementing on a larger scale, or you can A/B test, which consists of testing two different methods at the same time. Quigley said to explore these methods with small, inexpensive, trial-run experiments.
“Creating a small prototype run of a product that has the key features to allow the company, and perhaps key customers, to examine and use the product and give feedback on will aid in the decision-making,” said Quigley. “Low-cost exploration can help us understand the true things that matter in the decision.”
When you are in the research phase of making a business decision, learn from your past achievements and failures, see what competitors are doing and possibly even survey your consumers.
It is also a good idea to seek the advice of relevant experts, trusted colleagues and other business owners. They can help you obtain an objective opinion that is clear of your own biases and judgements, and they can play devil’s advocate to help you see the pros and cons of each scenario. If you are unsure whom to turn to, Allec suggests finding a mentor from a chamber of commerce group.
“There are many experienced and well-connected business owners who are members of their local chamber of commerce who would love to help business owners with decisions they are unsure of,” said Allec.
For certain business decisions, you might be able to play out a reverse outcome scenario. Start with your desired outcome and work backwards to see what steps need to be taken to get there. Some decisions that don’t have a monumental impact on the company can be made with the “just do it” mentality.
Regardless of what decision you make, it is important to stick with it. Feel confident in your choice, and don’t look back. If you have taken the proper steps to make the decision, don’t second-guess yourself. Give your decision time to make an impact, and then re-evaluate the results.
What are good decision-making skills?
Every entrepreneur will face a challenging decision at least one time in their career. There are several skills and traits you can develop, though, to become adept at accurately judging the situation and making wise decisions. If you already possess these decision-making skills, even better.
Quigley and Allec believe the skills and qualities below are the most beneficial for making decisions:
- Capable of making crucial decisions
- Consultative and receptive to feedback
- Critical thinker
- Mathematical (e.g., Excel modeling skills)
- Planning and time management
- Research and data collection
It is also important to know and accept that your decision might not please everyone, and that’s OK.