Areas of Decision Making When you have your own business, each decision that you make may have an impact on the business's profitability. If you were previously an employee, and not involved in your employer's decision making processes, then this may all be new to you. It is important that you make the transition with an acute sense of awareness of: how and why you normally make decisions, and have made decisions in the past; why making your decisions in your own business can and should be different to your decisions in your personal life; the need to separate, in your own mind, business as opposed to personal decisions; the benefits of sharpening your business decision making; and, the dangers of allowing your business decisions to just "go with the flow"? as they probably do in your personal life. Often, people make decisions without even being aware of it, and then carry that practice into their first business. Being more aware of the mere existence of particular decisions will set you apart from many other small business owners, and that can only be good for competitiveness and profitability. Once you are aware, then and only then can you go into the next stages of a decision making process: pinpointing the need to take a particular action; gathering sufficient information to assess options open to you in taking, or not taking, that action; assessing the risks and uncertainties of a decision; reviewing, with a clear and open mind, all the relevant information, and consciously coming to a decision; setting up a means and plan to monitor the outcome of that decision. setting up a means and plan to monitor the success of the decision making process itself. The corporate world is littered with examples of large companies who have got into serious financial problems due to bad decision making. This particularly occurs where there is investment in new products, markets or machinery. The fault can lie not just with the idea and the decision, but the decision making process itself. Hurried decisions, insufficient information, biased assessment, lack of complete investment appraisal, ignorance and over optimism can all play their part in bringing a company to its knees. Such failures can and do happen even with a company staffed by professionals in all the necessary areas of expertise. You, probably, are not able to employ "experts"? and "professionals"? to assist you in your decision making. However, you have other things in your favour, the most obvious of which is incentive. Each decision you make affects your business and your income. So long as you are aware that a decision is needed, it is then within your control to ensure that the decision you make is, more likely than not, going to be a good decision. Before you even start your business, you have some very big decisions to make, such as "should I have my own business at all?"?, or "what sort of business should I have?"? Now, having taking that major decision to get started, you want to get the best out of the business, and that means making the best decisions for the circumstances that prevail. Decisions in every part of your business are important, but the following can be amongst the most critical: Investment in equipment, or other capital investment of a material nature. Investment in software. If and when to pack up the day job. Outsourcing part/s of your workload. Setting priorities for budgeting finances. Withdrawal or reinvestment of profits. Product lines to sell. Product lines to withdraw. What types of marketing to use. There are, of course, many more. You will be aware of the most important decision making areas in your own business. You would then be well advised to focus on those areas, and condition yourself to giving very careful and conscious thought whenever a significant decision is due. A business decision should not be spontaneous and made in a vacuum. It should be fed by a network of information flows, and that is something that is best prepared in advance. This decision making infrastructure will be discussed in the next issue. |
