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Every day, you wake up and make decisions on relatively trivial things like what clothes you should wear today and what to have for breakfast; they take little of your time. One of my previous colleagues who worked in the marketing department of a large Blue Chip Company followed Steve Jobs’ rule by buying identical suits and shirts for each day of the week and had a lunch pre-ordered for each day of the week. No brainpower is needed in this decision-making process; their view is to leave the brain to make crucial decisions
When you run a small business owner, you know that making decisions is a critical skill they have mastered. It can be tough to decide what the next step should be when you have so many moving parts in your business. But, making a decision is an essential part of your job. So, take a look at the following tips to help you make good decisions for your business.
Some interesting mythologies surrounding decision-making within a large organisation suggest the Chief Executive sits in their office and sends a conveyor of decisions to the business units to implement. This is not how things worked from my experience, having spent hours in meeting rooms discussing various issues on
strategic decisions such as around human resource management practices and financial decisions regarding marketing and sales budgets
associated with the business and having representatives from other teams who can give expertise to the process, the final decision is the one that has consensus within the group.
What are the types of decisions we make?
We are all making decisions every day, whether in a business or personal environment; we can consider four types of decision-making types.
Decisions that require no analysis or research
These types of decisions are such as buying groceries and deciding what to have for dinner.
Decisions based on facts only.
The best decisions are made when we base our decisions on facts only. We should never rely on emotions like fear, greed, envy, jealousy, hatred, anger, or love. These emotions are destructive and lead us to make bad decisions.
Decisions based on intuition/instincts.
Intuition is a feeling that comes from the subconscious mind. Instinct is a natural response to a situation that we have learned through experience. For example, we use our instincts when we need to react quickly to a dangerous situation. However, we also use our intuition to decide based on our feelings rather than facts.
Decisions based on experience
Experience is essential when making decisions. Learning from your mistakes is vital if you are to be successful. The best way to do this is to ask yourself questions about what happened. Was it possible to have prevented it from occurring?
If you look at the way, we can make decisions from the list above. The first three are pretty much self-explanatory – if you don’t know something about it, then you need to find out, if you’ve got some information but nothing else, then use your best judgement and finally if you’re experienced at doing this kind of thing then you’ll be able to decide quickly without having to think too hard.
Decision-Making in a Small Business Involves Using An Appropriate Decision-Making Model?
A good decision model helps you make better decisions. The best decision models are based on data and statistics, and they help you understand how different factors affect your business. In addition, decision models are used to predict future events, such as when a customer will churn or when a product will be successful.
In addition, a good decision model should include the following elements:
- Data collection methods
- Information gathering techniques
- Analysis tools
- Predictive analytics
- Interpretation of results
- Recommendations for improvement
On the other hand, poor decision-making models may lead to bad decisions being made by managers who don’t have enough information about their businesses. In this case, it’s essential to know what kind of decision model would work well for your company. For example, if you’re running an online store, you’ll need to consider conversion rates, sales volume, and average order value.
What are decision making tools and techniques?
Decision-making tools and techniques are used to help you make decisions when faced with complex situations. They include brainstorming, prioritisation, goal setting, planning, and analysis. These tools and techniques are used in business, education, and personal life.
In addition, there are many software programs available that allow you to create custom reports and dashboards. This will enable you to see trends over time and compare performance against competitors.
It is vital to have a workflow to systematically work through your business problems to improve your decision-making and hopefully make fewer mistakes. However, remember that no process will eradicate errors but reduce the numbers and the costs associated with these errors.
The decision-making process is a sequence of steps that leads to agreeing to a decision and implementing this decision to resolve the problem.
The Decision Making Process
- Before starting the decision-making process, ensure you have a clear understanding of what you want to achieve before you start.
- Don’t let emotions cloud your judgment.
- How much finance can you realistically afford to spend on resolving the issue?
- Make sure you evaluate the pros and cons of each option thoroughly.
- Calculate the costs and benefits of each option.
- Determine which one will give you the most benefit for the least cost.
- Identify any other factors that may influence your choice.
- If necessary, take another look at your list of choices.
- Pick an option and move forward.
- Communicate your decision to all the teams who will be affected by the decision.
- Evaluate your progress periodically.
- Adjust your plan accordingly.
- Repeat steps 1 through 12 until you reach your goal.
The Five-Step Decision-Making Model
Have you identified the problem?
- If you want to analyse the problem systematically, you need to ask yourself several questions. First, why does the problem arise? Second, are there any underlying problems that should be dealt with first and have they occurred before and under what circumstances?
- How has the problem occurred? Is it? Part of a network of related issues that need to be tackled together. What is further information required to clarify the issue?
Decide the preferred outcome
- Specify the. Decide outcomes as clearly as possible and identify which outcomes are essential and which are desirable.
- What conditions must be met for any solution to be acceptable
Once you have identified the problem, your decision needs to address. You should create SMART objectives to monitor your process and ensure the final decision meets the needs of the problem.
Options Appraisal and Decision Making
- Generate and evaluate as many potential options as possible. Then, identify the likely outcomes and implications of each to solving the problem.
- Use the brainstorm storming technique to generate ideas from your team, then rank the ideas as of value to your problem. Finally, you choose the top three ideas and then evaluate them.
Communication and implementation.
- Communication is the key to implementing your decisions. If you don’t communicate your decisions, then you won’t be able to implement them. The best way to share you decide to write them down. Then, when you need to implement them, you can refer back to your written notes
- Small businesses are often run by one person who must make decisions on behalf of the entire company. If this person does not communicate their decisions clearly, they may be misunderstood or even misinterpreted.
Monitoring and control.
- Monitoring data can help you identify problems with your system. It can also help you understand what works well and what doesn’t. This will give you an opportunity to make adjustments to improve your processes.
Decision Making in a Small Business means your ensure you fully understand the implication of implementing your decision in any small business. All Stakeholders should be involved in the decision-making process, both internal and external, as they can provide valuable information that could help make the right choice. Finally, if the decision is not easy to make or is not consistent with the values or goals of the company, then it should be deferred to a future date. Then, when the time is right, the decision will become much easier to make.