One of the most difficult things in life is making decisions. Decisions can make or unmake you and so is a business. Making decisions for a small business can feel daunting. In many large companies, teams follow well-established protocols and safeguards to optimise results and minimise risks. But the small business decision-making process often starts and ends with the business owner, and that is you.
As a small business owner, one has to appreciate the fact that success in your field doesn’t automatically translate into expertise in business management.
Small businesses invest their personal time, money and soul and may not have the safety net that is needed as an employee in a big company. These can cloud their judgment and make decision-making even harder.
Small businesses are faced with decisions such as, how much to spend on a rented shop, equipment, payroll, what to stock and how to sell and market. Also is the choice for the right partners, clientele and employees.
For every small business, one approach to problem-solving is to make business decisions as if one is running a huge company.
That means developing a clearly defined process to follow so that you’re prepared before difficult situations arise. This will help you to make decisions logically, keep your emotions in check and feel confident about the results.
Below are some basic steps to a good decision-making framework
Know the issue
At the beginning of the business decision-making process, it’s important to understand exactly what question one is asking. That means defining the overall business goals and the particular situation one is dealing with.
To a large extent, business owners have a vision and a set of goals. These goals are easy to lose sight of but could affect a decision about whether or not to expand the business.
Set some clear, measurable criteria about what it would mean to find a solution. These will help a business stay on track as one moves through subsequent stages.
Before the business starts, one needs to do some research. This may be a simple one because of cost. For instance, it could be a decision to start a new service or not. In so doing, one will have to have some information such as whether there is a market for that service or not; whether there is need for a new equipment and the cost, about competition, among many other things.
The research findings will also make one to identify the efficiencies and inefficiencies of the kind of structure needed and whether there are any bottlenecks.
Just write out all those information, whether on paper or digitally. The process of writing things down can help clarify the situation and help make new connections.
What are the options
Many ideas will come to mind but these choices need to be carefully outlined and begin to judge which is relevant based on needs and affordability. Keep in mind the issue and the criteria you identified at the beginning.
Measure all sides
With all the key information, it’s time to compare your options.
There will definitely be some very complex set of options. This requires time to prune the different paths by referring to the initial criteria. When stuck, go back and see if you need more information.
No business decision is without risks, so it helps to perform a risk assessment to determine what one can afford to lose and how much can be gained in each scenario.
Now the path is clear so a clear business plan for implementing the decision is needed at this stage. It should explain how one will solve the initial issue identified and why one made this choice over other options.
The plan must account for risks and uncertainties so one can know what to do if things don't work out as expected.
Look back and reflect on the decision afterward. Ask questions such as; did things go the way as designed? Why or why not? What has to be adjusted along the way? Were there steps in the decision-making process that could have improved?
These reflections will help improve the process the next time one goes through the basic steps for making a business decision.
Decisions are critical for the survival of a business, particularly when it is small.
In business, “we are free to choose our paths but we can't choose the consequences that come with them." — Sean Covey.
It is therefore important to know that when you choose an action you choose the consequences of that action.