Business owners are faced with making decisions every day. And although the degree of severity differs, some decisions can make or break a business. Fine-tuning your decision-making skills will help to make more informed decisions. This week our business advisory team delves into some tips to help small business wonders asking ‘How to make better business decisions?’.
3 Tips for How to Make Better Business Decisions
Stick to facts
Weighing up the benefits/outcomes versus the risks/costs is a crucial step in making a sound decision. Relying on your own intuition or judgment alone is not enough. Stick to the facts and use logic to view the problem objectively.
Consider any past situations or similar situations other companies have dealt with and how they were handled. Use reliable data such as reports, industry trends and expert recommendations as a source of information but also be aware of their limitations.
Using multiple sources is ideal so you can get a broad picture of the problem and the different solutions available.
Eliminate bias and emotions
When you are personally invested in a decision it can skew your judgment,
you may lose sight of your goals and become attached to a particular outcome. Beware of falling into the trap of seeking information which only supports your beliefs, also known as ‘confirmation bias’. This type of bias ignores information and evidence that doesn’t support your beliefs, therefore, providing you with an inaccurate perspective of your problem.
Instead of relying on your opinion solely, it is best to ask an expert in your field for advice. Obtaining another opinion helps you to look at your problem from a different perspective, and it can also provide you with the reassurance that you are making the right decision.
Be prepared for the worst-case scenario
People tend to overestimate the upside and underestimate the downside of an outcome resulting from a decision. If you are not prepared for the worst-case scenario, you may find it difficult to handle if it does occur. Although there will always be a risk of negative results associated with a decision, turning a blind eye to the likelihood of these events occurring is ignorant. Think about the likelihood of the worst-case scenario occurring – how serious are the risks vs the risks of not acting? Come up with a plan of how you would deal with this situation and how you could mitigate the risks.
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*** This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication date April 2018
Updated 21 December 2020