How to make business decisions
Making business decision simply means making the right choice from many alternative options.
Making appropriate decisions is very key to the success of your business.
In some cases, decision making can be quite difficult while in others it can be made seamlessly.
Consequently, below are the most important tips on how to make decisions in your business.
How To Make Decisions: Identify the problem
In decision making, the first stage is to identity a problem that needs to be fixed.
The problem you want to solve can be caused by internal or external factors.
Moving forward, the problem you want to solve must have alternatives or options from which you can make a choice.
We are told in elementary economics that without alternatives there will be no choice to make.
For example, if you have only one item of clothing you will have no choice to make.
In other words, you will be restricted to using the only one clothing you have.
Therefore, in trying to make a decision, you will need to identify the problem.
How To Make Decisions: analyze the problem
Having identified a situation that requires decision making, the next step is to analyze the problem with a view to making an appropriate decision.
Additionally, you will need to identify:
- The actual cause of the problem.
- The type of decision that will be best for your business.
- When and how the decision will be made
- Who will make the decision.
In all cases, your overall priority should be to make a decision that can move your business to the next level.
Decision making: Gather info about the problem.
The next process is to gather as much information as possible about the problem.
This stage of the process is very important because you are going to make a decision that can make or break your business.
Consequently, you will need to gather relevant, reliable and accurate information about the problem.
You will need to spend quality time assembling all the data you need to make the decision.
This is important because decision made on the basis of incorrect data may not produce the desired result.
Sources of information
For you to make informed decision, you need credible information.
You can find credible information from the following sources:
- The internet
- Oral interviews
- Industry publications
- Or even personal observations.
Finally, you will need to ask questions and get answers as to how that or similar problem was resolved in the past by those who have experienced it before you.
How To Make Decisions: Analyze the information
The next process in decision making is to analyze the information.
This time you will need to break down the whole problem into many separate parts and find out how they can impact the decision.
In particular, you will need to:
- Analyze every single bit of info that you have gathered
- Evaluate the importance or otherwise of every info you have received
- Take only the useful parts
- and discard the useless parts.
Most importantly, you should remember that if you do not know the root cause of the problem, you cannot make a valid and workable decision.
How To Make Decisions: Figure out alternative choices
You can work out all the alternative ways you can take to solve the problem.
At this stage of the decision making process, you will need to consider many factors, including the following:
- How many alternatives or options are available to you
- The pros and cons of each alternative or option
- The costs and benefits of each alternative or option
- The short-term and long-term benefits of each alternative or option.
At this stage of the decision making process, all options will be on the table.
Therefore, the rule of the thumb, as always, is that you must make a decision that will be in the best interest of your business.
Evaluate each alternative choice
You will need to evaluate the costs and benefits of each option.
In decision making, you will need to evaluate each alternative that the problem will throw at you.
Somehow, some of the alternatives may have the same or very close values.
Consequently, decision making becomes even really difficult.
Moreover, you should not go for an option just because it will cost little money.
On the other hand, you should not just discard an option because the costs are high.
Therefore, you need to use wisdom, not sentiment, to make a decision that will be in the best interest of your business.
However, if you find it difficult to arrive at a workable decision, you should feel free to seek advice from your mentor or those who have been there before you.
After all, only the best is good for you.
How To Make Decisions: Make a choice
Making a choice is the most critical aspect of decision making process.
The ultimate goal of the processes is to make a valid and optimal decision that will take your business to where you want it to be.
In other words, your decision should be based on facts and figures; not sentiment.
To help you at this critical time, there are two well known strategies you can use in decision making. They are called Rule 24 and Rule 72.
Rule 24 simply means that you can use 24 hours to think and find a workable solution to the problem.
Rule 72 means that you can spend 72 hours to arrive at a decision.
However, should the problem become overwhelming, you can seek help from outside.
Remember that decisions made on the basis of trial and error can have positive or negative impacts on your business.
How To Make Decisions: Implement your choice
Now that you have made a choice from the various options generated by your analysis, it is time for you to implement your choice.
Remember that you still need to keep all the working papers you used during your analysis.
This is because you might have need to refer to them again in the future.
Looking back on those papers, once a while, will help you to ensure that you are not abandoning your earlier findings.
Monitor the performance of your choice
In business, it is one thing to make a decision but it is quite another to implement and see the decision through.
Therefore, you must monitor the performance of your decision to make sure that the decision is on the right track.
Most importantly, you will need to make changes here and there to ensure that your business succeeds.
How To Make Decisions: ask for feedback
In decision making process in business, you need to ask customers for their feedback from time to time.
This will enable you to know whether or not your decision is effective.
If you get positive feedback from your customers, you can improve on the positive feedback you get.
In other words, you should embrace the concept of continuous improvements.
Even the big companies practice continuous improvements to enable them remain competitive in the marketplace.
How To Make Decisions: Negative feedback
Decision making in business require that you know how to deal with negative from customers.
This is because feedback will normally point out to you any observed weaknesses in your business processes.
Moreover, if you receive negative feedback, you should accept it good faith.
Bill Gates was quoted as saying “your most complaining customers are your greatest source of learning”.
When you do receive negative feedback concerning your products or services you should:
- go back to the drawing board,
- work it out
- find out what went wrong.
Most importantly, you should make sure that you evaluate all feedback you get from the field.
How To Make Decisions: Address issues raised
After receiving criticisms, suggestions and complaints, you should revisit the decision to address all issues raised in the feedback.
You can also reach out to all your working papers to see if there was an important point you missed out when you were analyzing the information you gathered.
Relaunch your revised decision
After you have considered and made all the necessary fixes based on the feedback you got from your customers, you can then implement the decision again.
In conclusion, note that even the most successful companies are still looking for better and cheaper ways of improving the fortunes of their businesses.
Therefore, you will need to continually monitor and update your decisions.
This will enable you to solve current and future problems.
By Samuel Ijenhi,
Founder: Ijenhi Business Solutions