If there’s one thing we can’t get away from as someone running a business, it’s making decisions every single day.
As the leader of your company or organization, the decisions you make every day impact both the present and future status of your company.
The inability to make better business decisions can lead to deadlock, if not failure.
While there are no hard and fast rules on how to make better business decisions, there are tested and proven ways to be able to think better and faster.
An effective leader doesn’t just make well-informed decisions, but more importantly they make hard decisions, fast.
If you feel like you’re struggling in this aspect, then you should know it is completely normal.
As every successful leader feels the same way at some point in their career.
The idea is to do things with a thorough process.
Here are three simple questions on how you can make well-informed business decisions.
How Do You Breakdown Your Decisions Into Steps?
Making a well-informed business decision means thinking things through.
This means you should be able to break your major decision into a series of steps.
Know that your decision will impact your business, thus, make sure you understand how much this decision will actually cost you, and how much you expect in return.
You can ask your business accountant for a plan, and carry out a financial modeling exercise to give you a couple of forecasts for every option you have.
Brainstorm your growth ideas and think through every opportunity there is.
Then break down your opportunities to multiple options based on their feasibility and how well they fit to your business strategy.
Again, break down the whole process to steps, and include every detail necessary on how to execute those steps efficiently.
Do You Make Detailed Financial Projections?
Running a business is a 24/7 job, and that includes doing your homework even after work hours.
You have to make a business plan for each venture that includes all the details of your financial projections.
This information should then be used for a long term financial forecasts (preferably a 2-3 year forecast).
Your financial forecast should include setting the rate of return on your invested capital (should be around 25% to 40%).
Any new venture that would follow must exceed, or at least match your target, without further stretching your finances.
Sounds like a daunting task?
Well, the key to this challenge is to do all these while minimizing external financing and NOT hurting your cash flow.
Do You Really Know Your Core Purpose?
Your brand, company, and/or organization has one thing you really want it to do.
Keep that thing in mind and commit to it.
Every business decision you make should be pointing directly towards your mission and goals.
There will be times where you will see yourself struck with tough questions and situations.
Each time this kind of situation comes up, ask yourself “does this decision support my company’s mission?’
Focus not in your opinions, but in the facts.
When you truly understand your mission, you will be more objective.
Remember to check your emotions and ego at the door.
Don’t wait too long on making decisions, but don’t make harsh decisions too.
If you think you need to spend a block of your time to think it through, then do it, but make sure you also set a deadline for yourself.
Realize that everything can be simply narrowed down into two binary decisions: Yes or No.
Indeed it can be difficult to make well-informed informed decisions sometimes, but it is far easier to complicate things.
If you reduce things into black or white, good or bad, yes or no, you can avoid analysis paralysis and make decisions fast.
Often times, indecision is what cripples the business, as it keeps everything from moving forward.
At the end of the day sometimes you need a strategic partner to help provide the answers to questions you just don’t have the answers to.
If this is the case make sure to reach out to us. We’d be happy to help provide insight into business decisions you’re unsure of making…