Decision-making areas
When you have your own business, every decision you make can have an impact on the profitability of the business. If you were previously an employee and not involved in your employer’s decision-making processes, then all of this may be new to you.
It is important that you make the transition with a keen sense of awareness of:
· how and why you normally make decisions and have made decisions in the past;
· why making your decisions in your own business can and should be different from your decisions in your personal life;
the need to separate, in your own mind, business from personal decisions;
the benefits of sharpening business decision making; and, the dangers of allowing your business decisions to simply “go with the flow,” as they probably do in your personal life.
Often people make decisions without even being aware of it and then carry that practice over to their first business. Being more aware of the mere existence of particular decisions will set you apart from many other small business owners, and that can only be good for competitiveness and profitability. Once you are aware, then and only then can you move on to the next stages of a decision-making process:
signal the need to take a particular action;
· collect enough information to assess the options open to you whether or not to take that action;
· assess the risks and uncertainties of a decision;
review, with a clear and open mind, all the relevant information and make a conscious decision;
Establish a means and a plan to monitor the outcome of that decision.
establish a means and a plan for monitoring the success of the decision-making process itself.
The corporate world is literate with examples of large companies that have gotten into serious financial trouble due to poor decision making. This occurs particularly when there is investment in new products, markets or machinery. The fault may lie not only in the idea and the decision, but also in the decision-making process itself.
Hasty decisions, insufficient information, biased assessment, lack of full investment assessment, ignorance, and over-optimism can all play their part in bringing a company to its knees. Such failures can and do occur even with a company that has professionals in all the necessary areas of expertise.
You probably can’t hire “experts” and “professionals” to help you make a decision. However, you have other things going for you, the most obvious of which is incentive. Every decision you make affects your business and your income. As long as you are aware that a decision is needed, it is in your control to ensure that the decision you make is more likely to be a good decision.
Even before you start your business, you have to make some very important decisions, such as “should I have my own business?”, or “what kind of business should I have?” Now, having made that important decision to get started, you want to get the best out of the business, and that means making the best decisions for the prevailing circumstances.
Decisions in every part of your business are important, but the following may be among the most critical:
Investment in equipment, or other capital investment of a material nature.
Investment in software.
If and when to pack the day’s work.
· Outsourcing of part/s of your workload.
· Establishment of priorities for budgeting finances.
· Withdrawal or reinvestment of profits.
· Product lines to sell.
· Product lines to withdraw.
What types of marketing to use.
There are, of course, many more. You will learn the most important decision-making areas in your own business. So we recommend that you focus on those areas and condition yourself to think very carefully and consciously every time an important decision needs to be made.
A business decision should not be spontaneous and made in a vacuum. It must be fed by a network of information flows, and that is something that is best prepared in advance. This decision-making infrastructure will be discussed in the next issue.