Making smart business decisions requires diligence and shrewdness. Whether you’re acting on behalf of a small company or a large corporation, decision-making skills are imperative for success. They can help you to implement new strategies, streamline your processes, grow your profits and ultimately achieve your business goals.
In the current economy, it’s never been more important to be business-savvy as a small company. Want to know how you can make smart, practical business decisions? Here are four steps to follow for better decision-making as a small business owner.
Why is smart decision-making important?
Savvy decision-making is crucial in business. For small startups in particular, it can mean the difference between hitting roadblocks or successfully progressing as a company. In fact, effective decision-making can lead to increased profits, decreased risk, and more effective processes. It can also help to foster a culture of accountability and transparency and promote learning and improvement.
If your business goals align and your business funding options allow it, consider upskilling in decision-making. It will both benefit you as a leader and help to empower your wider team to make more perceptive choices. Ultimately, great decision-making benefits everyone, from employers to employees and their customers and clients. Dedicate your time to working on this skill to experience a more streamlined, effective and profitable small business.
Related: 9 powerful time-saving tips for small business owners
4 steps to effective small business decision-making
1. Identify your business needs and goals
It’s easy to make rash decisions in business, particularly if they’re driven by a desire to get ahead. However, understanding your end goal is key to advancing productively. Take time to identify your business needs to make informed decisions that will lead you closer to your desired results.
For example, does your goal require objective decision-making? Who will the decision affect, and will the results be long-lasting? Are you making your decision based on personal career goals, or for the greater good of the company? Consider your motive for making the decision and any potential consequences to discern the most helpful course of action. Reflecting on your business strategies in this way may even highlight areas of improvement that you hadn’t considered prior.
2. Conduct research
The vast majority of smart decisions you make in business will be objective ones. To ensure you’re making business decisions based on facts, you’ll need quality research and data-backed information to refer to.
You may need to conduct market research or assess relevant industry case studies. Ensure that the data you use is aligned with the issue you’re trying to solve and can be trusted. It should adhere to the six pillars of data quality: accuracy, completeness, uniqueness, consistency, timeliness, and validity. Use your data to predict upcoming trends, evaluate the current market, or discover new decision-making strategies.
3. Create a strategy
Just as with any entrepreneurial endeavour, an effective business strategy is crucial for making key business decisions. This will help you stay on track, and allow you to follow your progress as you move towards your goal.
There are different frameworks you can follow to make strategic business decisions. Some of the most popular include SWOT analysis (standing for Strengths, Weaknesses, Opportunities and Threats), cost-benefit analysis, and decision trees. The right decision-making business strategy will depend on your end goal as well as the findings of your research.
4. Analyse performance
Once a strategy has been developed and deemed appropriate for your goal, you’re ready to put your plan into action. You’ll need to reassess your business strategy throughout each implementation stage to identify gaps and fix any issues.
Similarly, you’ll want to continue to analyse the decision-making process once your end goal has been achieved. It’s easy to skip this process, particularly if you’ve been successful. But, it’s important to reflect in order to continue to make smart business decisions moving forward.
For example, consider what went well, and what could be improved next time. Did your research and data prove useful and reliable? Could your strategy have been streamlined? Conducting a stringent performance analysis will extract plenty more accurate data to work with in the future.
