One of the most important things for any small business owner to do is to make sound, effective decisions. This is easier said than done, of course, as there can be many outside influences that can pressure a decision-maker. Sometimes, decisions will be rushed by time, while others may be influenced by financial pressure. Sometimes a decision will have to be made while an entrepreneur is juggling many tasks at once, making it difficult to devote his or her full attention to the question at hand.
That’s why it is important to focus on some of the methods that can help you to develop strong decision-making skills. These methods will enable you to implement them when you are under pressure to make the right move quickly and confidently. Let’s examine three methods to consider.
Try to Find Flaws in Your Own Ideas
Entrepreneurs and small business owners are often free-spirited people who love living life to the fullest; taking chances and dreaming big. Those are the types of qualities that can be key when starting a company, but they can also lead to risky decisions down the line.
Obviously, everyone is partial to their own ideas, so if you are considering acting on one of your big ideas, make sure that you vet it well first. One way to do that is to spend more time trying to think of ways to disprove your theories and ideas than you do trying to prove them. Play devil’s advocate with yourself, and see if you can find flaws in your ideas. The idea isn’t to make you act fearfully, but rather to avoid taking too many big risks on unfounded ideas.
Don’t Let Emotions Cloud Your Decisions
It’s only natural to get emotionally attached to a business you started. It’s your ideas that have been buoyed by your hard work and perhaps your literal blood, sweat and tears. That breeds attachment. However, you don’t want to let that attachment cause you to make bad decisions in the future.
If your company is struggling, no amount of positive emotion is going to turn it around. You need to be able to take a cold, hard look at the viability of your business and make decisions accordingly. Leave emotion out of decisions whenever possible.
Don’t Assume Many Sure Things
In day-to-day life, people tend to assume that low probability events have no chance of occurring. Nobody wakes up and thinks about the .01 percent chance that they might have a heart attack, or looks up at blue skies and considers that there may be a five percent chance of rain.
Unfortunately, in business it is important to account for these possibilities. Very few things are 100 percent in this world, and even fewer of them are tied into business. As a result, it’s a good idea to assign a wide range of unlikely events a collective probability when making decisions. Maybe there’s virtually no chance of a major detrimental event occurring, but you don’t want to be blindsided by a long shot.
As a safe bet, perhaps you should always assign five percent as a probability of unforeseen calamity. If the decision is still profitable, then you know you’re in good shape. If that makes it a questionable decision, it may be time for additional research and estimation. Just don’t take any risks you can’t afford on nearly sure things.
Remember, running a business successfully does not need to be complicated. Keep it simple!
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Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at email@example.com.