In the corporate world, decisions are often made collectively, unless you are the CEO. And even then, CEO decisions are reviewed by the board.
Not so for the entrepreneur. In most cases, they are alone in decision-making authority and responsibility. For entrepreneurs, especially those in small businesses, it all rests on their shoulders.
With so much as stake, any entrepreneur wants to make good sound decisions. And while there is no guarantee every decision will be the right one, there is a decision-making process that can enhance the chance of success.
So, what makes up a good decision?
There are 3 crucial components for a good decision: 1) Determining why the decision is being made 2) Defining the expected results 3) and “do I have what it takes to implement this decision and make it a success?”
Let’s examine each part.
Why am I doing this?
What is my motivation for making this decision? With all that needs to be done, why will I make the sacrifice of time to implement this decision? What makes this decision important? How does this decision tie in to other things I’m trying to accomplish? Does this decision move me toward my goals?
What is my Expected Result?
What do I expect to achieve? Am I looking to increase sales 10%? Am I looking to cut costs 10%? What is the quantifiable goal I want to achieve? What metric(s) will I use to measure the outcome; to ensure the goal is met? What are my success factors?
Will I be successful at this?
Do I have the necessary skills to implement this decision? Let’s say the decision is to expand into a new area of business. Do I have the experience and expertise in the new area? Do I need upgrade my skills? Do I need to partner with someone that has that experience? Are the known obstacles in the way of expanding into this new line of business? Are there known risks? Can I migrate those risks?
Two Types of Decisions
There is an old story that applies here. Five frogs were on a log and the first one jumped off. The other 4 frogs decided to jump in the water as well. How many frogs were left on the log?
Four frogs.
Why?
Because the first frog acted by jumping in the water and the other 4 frogs decided but didn’t act on it. There was no action.
Everything we do or don’t do is a decision. Inaction is a decision also. If we decide to expand our business, but delay starting the expansion, the inaction is a decision. If we put off making a decision, it is still a decision.
“If you are a consistent moneymaker, you will be a good decision-maker. Sometimes the window of opportunity is open only briefly. Waiting isn’t a decision, although many people think it is”, T. Boone Pickens, Texas oilman and investor.
Be Action Oriented
Nothing is accomplished until action is taken. “Amateurs sit and wait for inspiration, the rest of us just get up and go to work, says Stephen King in On Writing. Stephen goes on to say, “If you want to be a writer, you must do two things above all others: read a lot and write a lot. There’s not other way around these two things that I’m aware of; no shortcut.”
It is so easy to decide, then procrastinate on taking action. We think we have decided, but through inaction we haven’t made the commitment to follow through on the decision.
Determine the most important Action for that Decision
I had decided to start my blog; obtained my web hosting service; obtained my domain names, but it was 3 months before I published a blog. Why? Fear. Yes, I took actions toward the goal, but what was the biggest, most important action I could take? To write and publish the blog.
List out the tasks to implement the decision, but it is vital to schedule the date and time when the most important action(s) will be taken.
Actions:
- For any decision and especially major ones, determine the reason for the decision; the WHY.
- Write out the expected result for the goal (e.g. increase in of 10% in sales within 3 months, or $10,000 in revenue from the new line of business in 3 months)
- Identify the metric(s) for this goal, to ensure you are on track to achieve it.
- Examine the goal and the current ability to meet that goal (i.e. gap analysis).
- If there is a gap between the goal and the ability to meet it; determine and take actions to close the gap. This must be completed first. If you lack skills to achieve that goal, it must be addressed before attempting the goal.
- Once the gap is closed, take action on the goal.
- Regularly review the metric(s) to make sure you are on track to reach the goal.
- Change tactics if the tactics are not working (e.g. sales aren’t improving).
- Celebrate the goal achievement.