The impact of decision making in your business
As a business owner you make hundreds of decisions on a daily basis… What task should you prioritise…? How should you respond to a particular email…? How can you increase your sales…? Is it wrong to take Christmas holidays in July…?
The list is endless.
Because we are frequently making these decisions, we don’t often stop to consider the importance of decision-making in our business and how these decisions can impact our business performance and even our profitability.
Heading into the new financial year, we thought we’d touch on this prudent topic and particularly understanding how this process of decision making can best serve your business and goals.
An example! Say you’ve had your planning meeting with your accountant and they’ve assessed that this financial year you need to increase your profitability by 10%. That then becomes a business goal or a key driver. With that goal, there will be 100’s of decisions around how you’re going to make it happen…
Is it investing in marketing, is it cutting costs, increasing productivity… is it a mix of everything?
If we cut corners, don’t sufficiently plan or ask the right questions, we then can’t make informed decisions that will get us to our goal in the least amount of time, using the least amount of resources.
Most business owners have experienced this at some level, perhaps investing in a marketing campaign because it worked for another business, or spending money on hiring new staff to increase productivity when it could have been solved by tightening processes.
The goal is not to waste time and resources on decisions that don’t drive your business. It’s fair to say that we won’t get it right every time, but it pays to make it a consideration!
So how can we make the right decisions?
Here are some decision-making solutions for you:
1. Understand your business drivers (aka know ya numbers!)
Of course, the accountant says know your numbers! But seriously, analysing your numbers at the end of the financial year will give you such an advantage when strategically planning your next moves. You need to know where your business is nailing it and falling down so you focus your energy in the most effective place.
2. Plan your yearly activities
Full disclosure, the biggest marketing flops our business have had is when we don’t strategically plan them out. That’s right…we have tried and tested that uninformed decisions produce less than viable outcomes. If you sit down and visit your marketing activities every quarter you can keep on top of what works, what doesn’t and most importantly how the decision ties back to your overall strategy.
3. Create a yearly budget or forecast
Just like planning your business activities, a budget will help you to predict how your business may perform if particular strategies, events or plans are carried out. It’s the perfect accompaniment to making decisions, and it will allow you to determine your course of action over the year. It also lets you know if those decisions you made gave you the outcome you wanted! Without a benchmark, how would we know if we are doing well or not?
4. Work with a trusted adviser
We love working with our small business clients to assist them in making informed decisions about what’s next in their business.