How to Make Better Business Decisions

Making big decisions for your business can seem daunting, especially in times of economic uncertainty. Here's our guide to approaching decision making as a business owner

By Ben Harper

Having a solid understanding of the decision-making process is absolutely crucial for managers and business owners when they’re looking to steer their business in the right direction. Of course, this is often easier said than done, which is why it’s useful to employ a step-by-step approach which enables you to make smart, informed decisions that positively impact the overarching objectives of your organisation.

The decision-making process

1. Identify the problem

The first step on the path towards making the right decision is recognising the conundrum you’re faced with. Identify why this decision is one that you must take to make a difference to your business, customers or employees.

2. Study the information

Next, you need to gather the correct information so you can make a decision based on concrete facts and data sets. This means you must make a value judgement and decide what relevant information you’ll need in front of you to make the right call. Ask yourself and your team what you’ll need to know before you can come to the correct conclusion.

3. Pinpoint alternatives

Once you have a clear picture of the problem, it’s time to pinpoint all the different solutions that are available to you. There is rarely a single answer to most of the problems we face in life, and this is no different in business, which is why it’s so important to decide on the range of solutions you have to choose from, before jumping in.

4. Evaluate the evidence

Now, you’ll need to evaluate the evidence you have to determine:

Feasibility
Acceptability
Desirability

You must be able to weigh up the positives and negatives of your desired option to evaluate your real chances of success. At this juncture, it may be helpful to seek the opinion of a trusted ally to gain a crucial perspective on the problem you face.

5. Understand the risk

When the time comes to make your decision, it’s crucial that you genuinely understand any risk involved with the path you’ve chosen.

6. Take the decision

It's time to create a plan to implement your decision. This involves identifying what resources you’ll need behind you, as well as the support of your employees, stakeholders and customers, where appropriate.

Getting those around you onboard is absolutely key to pulling your plan off successfully, so it’s essential to be prepared for any questions or concerns that may be put to you.

7. Evaluate your decision

One of the biggest mistakes you can make after reaching an important decision is not to evaluate that course of action for effectiveness. After all, how can you hope to make essential calls in the future, if you don’t know how well the last one went?

Even veteran business pros can learn from their missteps, which means there’s no harm in having the courage to adapt your plans, or even to change your mind and run with an alternate strategy.

The common challenges of decision making

Although following the actions defined above does help you make more valuable decisions, as with anything, there are some potential drawbacks:

1. Possessing too much or too little information

Collating relevant information is certainly vital when considering the decision-making method, but it’s equally important to assess how much information is actually necessary.

An overload of information may lead to decision fatigue, which prevents you from following your instincts.

On the other hand, trusting only a sole source of information can lead to bias and blind decision making, which can be absolutely disastrous for your business.

2. Uncrossing your wires

In most cases, the problems surrounding the decision you need to make will be obvious. However, sometimes more complex issues present themselves to you and you just can’t be sure what the main issue really is.

In order to resolve this, conduct a review and speak to those in the team who highlighted the problem in the first instance and those who are experiencing it on a daily basis.

Decision-making techniques

With most of the heavy lifting in decision-making condensed into the steps above, there are a couple of techniques that you can employ to organise your thoughts during this phase, such as:

Decision Matrix – A decision matrix helps you to evaluate all the different outcomes of your decision. When using this matrix make a table with all the different options in column A, all the factors that impact that decision in column B, and then a third column which scores each of your options. Once you’ve done this, you can tally which option is best based on how important you perceive it to be.
Decision Tree – A decision tree is a graph or model that contemplates each option and the outcomes of each of them. Statistical analysis is also a crucial part of this technique.
Multivoting – This technique is ideal when there are several people involved in the decision-making process. It will help to cut down an extensive list of options to make a final decision easier.
Pareto Analysis – This technique is incredibly helpful when you need to make more than one decision. By doing this, you’ll be able to prioritise which decisions need to be tackled first based on their potential impact.
SWOT Analysis – SWOT is an acronym for strengths, weaknesses, opportunities and threats, which is exactly what you need to know before making a decision.
PEST Analysis – This acronym stands for political, economic, social and technological. PEST seeks to examine external factors which you may need to consider before making a decision.

Takeaways

Even if you follow all of the steps above when you’re trying to come to a decision, there’s still a chance that the outcome won’t be exactly what you hoped for. That’s why it’s so important to use some of the techniques to identify the option that is most reasonable and attainable.

Decision making is a critical skill in business, particularly for those in leadership positions. Following logical steps, along with being aware of what challenges you might face, is key to ensuring your decision yields positive results.

About the Author

Ben Harper is a sales specialist who is committed to helping B2B companies grow with their innovative lead generation platform.