How to make more effective business decisions
Effective decision-making is a good skill for any business leader to have. Yet some struggle to make even the simplest of choices.
If you find yourself deliberating for longer than necessary over decisions you’re faced with, these 10 ways to make more effective business decisions could help.
1. Train your decision-making muscles
This may sound foolish at first, but if you can find the time to improve other business skills why wouldn’t you do the same with your decision-making abilities?
By scheduling some time to focus solely on making decisions you could train your brain to think through questions more quickly and effectively.
This will help when you’re put on the spot and are forced to decide something promptly.
An effective decision-training game is to force yourself to make the small decisions quickly.
What will you have for lunch? Should you go the gym? What movie should you watch? Give yourself one minute to make these small decisions.
Once you have mastered making the small decisions quickly and effectively you can work your way up to bigger things. This will help you progress towards making all decisions more efficiently.
And, by practising on decisions with limited repercussions it won’t be such an issue if you make the wrong choice.
2. Set a deadline
It can be easy to put off making a decision when you’re not comfortable with what the outcome might be.
But the more time you dwell on things after gaining the facts and weighing up your options the harder it becomes to make that decision.
So, set a deadline for your decision and stick to it. This will help you to make your decision-making process more efficient and will eliminate time wasted going back and forth.
3. Get some perspective
Making big decisions can be overwhelming, to say the least. The key is to take a step back and gather some perspective.
Ask yourself: Why do I need to make this decision? What will happen if I don’t? Who will it impact? And what are my options? Then consider what information you will need in order to support your decision.
By keeping calm, understanding your position and clearly considering your options, you keep yourself in control and ensure you don’t make a knee-jerk decision.
4. Conduct a cost/benefit analysis
A healthy cash flow is vital for business success so it’s essential that you consider what impact your decision will have on your finances before you make it and realise it’s too late.
One of the biggest considerations is do the ends justify the means?
If the potential benefits of the decision justify the expected costs it is likely to be a good choice.
But, if the costs exceed projections and the benefits fall short of expectations will you still be happy with the decision?
5. Assess the risk vs reward
You probably do this instinctively without even noticing it but it’s vital that you consider the potential risks and the rewards.
What does your business hope to achieve from this decision, and what could you lose if it doesn’t go to plan?
Make sure you consider the end goal from all different perspectives to ensure that the best decision is made.
Whilst the safest decision isn’t always the best decision simply assessing the risks you may encounter can help you overcome hurdles once the decision has been made.
6. Discuss it
Once you have a good idea of the pros and cons it can be beneficial to discuss the decision with someone who you trust.
This will allow you to look at the situation from a different perspective and gather additional insight before making your decision.
Sometimes just the process of talking things through can be enough to give you a clearer idea of what to do.
7. Subject it to moral scrutiny
No decision is ever worth compromising your values, character, or integrity. So, always assess whether it is the right thing to do.
When faced with a moral dilemma it is worth remembering that no decision stays private forever. At some point your decision will be made public.
When this happens will you be comfortable with how your friends, family, shareholders, employees and customers feel about your decision?
If the answer is no maybe it isn’t the right decision to be made. Sometimes the saying is true: “You can’t go wrong by doing right.”
8. Learn from the past
So, you made a mistake. It happens. But it’s what you do after something doesn’t go to plan that really matters.
You can either learn from your mistakes and resolve never to trip up like that again or dwell on them and let beating yourself up about it impact other decisions too.
The most productive thing to do once you’ve made an error in judgement is to troubleshoot your process to see if you could perform better next time.
Did you pick the first option you were presented with? Did you agree with someone else simply because you weren’t sure? Or did you go with the option that you were most comfortable with?
By analysing your decision-making process you can see what your natural tendencies are and where you’re going wrong.
Using this information to adjust your habits will help you to make better decisions in the future.
9. Know when to trust your gut
Are you ruled by your heart or by your head? Both personality types make decisions differently so it’s essential that you know which one you are so that you can assess your decision making effectively.
If you’re ruled by your heart it’s likely that you make decisions impulsively and it could be wise to slow down to allow your head to have equal input.
In contrast, if you’re ruled by your head it’s likely that you over rationalise and always take the sensible option. Sometimes it may be more beneficial to trust your instincts and go with your gut.
Some decisions are OK to be based purely on your gut instincts. For example, if you get a bad feeling about a person that you’re talking to, it’s OK to trust your gut and walk away.
Whilst other choices which may have more impact, for example hiring or firing decisions, may require you to challenge your instincts and ask for a second opinion.
The trick is to learn when to solely follow your gut and when to think more rationally and this will come with practice.Always have a back-up plan
10. Always have a back-up plan
A great decision maker will ensure they have a back-up plan to save themselves if their initial choice doesn’t go as expected.
Unfortunately, sometimes things beyond your control can impact your decision.
So, it’s wise to consider what action you will take if this happens. Smart business leaders will have a Plan B and probably a Plan C, D and E to ensure that they are able to adapt to any given situation.
How do you make your big business decisions? Maybe rather than think it out you roll a dice or flip a coin. Let us know in the comments below.