Decision-making is a cognitive process which results in the selection of a course of action, among other similar alternatives. For you to reach your full potential as an entrepreneur, you need to make good decisions quickly and consistently. You also need to learn how to implement them effectively and as fast as you have made them.
Running a business is not for the fainthearted. The entrepreneur is required to have particular skills for them to be able to run their business properly. Being an entrepreneur means that, in as much as you have staff working for you in various departments, at the end of the day you assume all their roles. This means you will not only be the manager, but also the administrator, accountant and staff motivator.
Therefore, you will be required to make better business decisions, be more rational and determined, so that you drive your company in the right direction. It is undoubtedly true that making better business decisions for your business is one of the most difficult things that every entrepreneur has to contend with. These decisions determine your enterprise’s productivity as well as the profits that it will make.
These same decisions will also keep the operations of your business up and running. That is why it is imperative that you nurture your ability to make better business decisions from the onset of your business.
Good decision-making skills are acquired from reading, mentorship, research and enrolling in as many business courses as possible, so as to expand your scope of knowledge. One thing that also needs to be understood is the fact that in business, failure is bound to happen. In the event this happens, the way you handle things will determine whether your business will thrive or not.
Below are ways that will help you make better business decisions.
Take a look:
Split decisions into stages
In his system for making better business decisions, my mental models, Charlie Munger recommends splitting decisions into a series of stages. This helps in determining the feasibility of a decision, how much it will cost and how much return you can expect from it.
Come up with comprehensive financial targets
Once you have a working business plan, coming up with thorough financial projections will help you implement your plan on improving productivity and maximising profits. Your business decisions should always match your targets and not stretch them.
Focus on the decisions that are most crucial
You may be wondering which decision is most important and which is less important.
Decisions lead to furtherance of the business’s goals. Most businesses have two categories of decisions: strategic decisions and operating decisions.
- Both of the above play a significant role in the achievement of the business’s objectives. However, for you to be able to focus on the decisions that are most crucial in the two categories, a formula called decision architecture will come in handy.
- You are expected to list decisions that you have made for every business process, and then narrow everything down. The narrowing down should be based on the value on the line and the level of management attention needed.
- Once you have done this, what remains on your list is what you should focus on the most for optimum growth and performance of your business.
Learn from models, not from requirements listed on paper
Most entrepreneurs with thriving businesses will tell you for free that learning from a model is the best way to build your business. A model gives room for mistakes and learning, which comes with a lot of experience. At the end of the day, you get to know what works best for your business and what doesn’t.
Engage in the services of trusted individuals
Being a business owner does not mean that you are the only one capable of making good decisions. You should be able to trust that your employees too have the interests of the business at heart. Such that whenever you have a big decision to make, they too should have a say.
This enables you to view things from different perspectives, hence better decision-making.
Score your organisation
Scoring your organisation is an ideal way to survey the kind of employees you have in your enterprise. It also helps measure performance based on the quality of decisions made, speed and effort.
It also helps you answer questions such as: How often does the organisation make the right decisions? What amount of effort is involved? The inferences you get reveal to you where your decision-making ability is faltering and why, so that you are able to come up with an effective way of dealing with the situation.
Shorten decision-making time
Before implementing a project, there ought to be upfront decision-making. However, this need not drag on for ages so you can get to know what works and what doesn’t in a timely manner. This way, you will be able to improve on every aspect of the project, hence better performance in the end.
Making sound business decisions is what drives a business into success. That is why every entrepreneur should strive to hone the skill of good decision-making. Not only will it bring about excellent performance, but also a smooth running of the enterprise. Nothing brings an entrepreneur such joy as their business reaching its full potential.
That is why a culture of making good decisions quickly and consistently, and putting them into practice should be embraced by business owners. When this is done, productivity will be increased, the business’s targets will be met and profits maximised.
Learning how to make better business decisions is not rocket science. You do not need to go to school for a second or third degree for this either. All you need to do is be open-minded, be willing to learn and be mentored by those who have ventured in and succeeded in the business world. Another thing you ought to do is read and research as much material as you can on entrepreneurship and attend as many business trainings as you can. There is always something new to learn.
