Everyone needs to make choices in life. However, entrepreneurs and business professionals have some bigger decisions to make – ones that will affect not only their own lives but also those of other people.
When heading towards this career path, you need to know that decision-making will be a permanent part of your tasks. And while there are plenty of smaller choices you can delegate to others, you’ll have to make several important ones that could make or break your business.
To help you prepare, this article lists down the five most important business decisions entrepreneurs make and a few tips to guide you through the process.
1. Bringing a business idea to life
One decision that will affect the rest of the choices is choosing whether to bring your business idea to life.
Although this may be easy for some entrepreneurs, it could be more daunting for others as it might force them to give up a full-time job that serves as a dependable source of income. It could also mean having to scale back at work in order to pursue a dream.
In most cases, however, the challenge lies in choosing which idea to develop – something that many entrepreneurs consider the most difficult decision to make.
Once you’ve finally said “yes” to a concept, you will also need to make other crucial choices for your business, depending on your chosen location.
Besides identifying what business name to use, you also need to determine the legal entity your firm should have.
In some cases, business owners are required to narrow down the location first to determine a type of entity. For example, one of the first few steps in setting up a company in Dubai is deciding between mainland and free zone areas. If it’s the latter, business owners must also select a specific zone that suits the company’s activities.
2. Setting up and managing company finances
From setting up income sources to efficient money management, entrepreneurs also make lots of financial decisions for their business. In fact, they use their judgment on the matter all throughout the lifespan of their enterprise (sometimes, even beyond).
For many start-ups, this entails choosing the most appropriate source of funds. For already-existing firms, it revolves around managing cash flow, acquiring assets, and so on.
When you’re on square one, you might consider getting a business start-up loan. However, this won’t last long as you will have to repay it as your company starts earning profits.
To make sure you don’t fall into a debt trap, develop a detailed financial plan that details all the regular and variable cash outflow and inflow. This will give you a better view of your company’s finances and would, therefore, help you manage it better.
Don’t forget to have an emergency fund for the rainy days. This can come in the form of a credit line with your business bank or dedicated savings.
To improve your outlook, consult certified professionals, like accountants, who can provide expert insight and valuable advice on the matter.
3. Choosing and managing personnel
Human resources are one of your business’s greatest assets. Every personnel you hire could speed up or delay your success, so make sure you get involved in the hiring and selection process.
As a business owner, your role is to approve the methods and criteria for recruitment. You also need to define roles, job descriptions, and employee responsibilities to make sure HR can narrow down candidates to those who fit the parameters of the job best.
Besides recruitment, you also have the final say on compensation and benefit structures for your company personnel. This can include cash incentives, health perks, skills development and leadership development coaching to prepare those with the potential to become effective leaders within the organization.
4. Establishing your company’s core values
A company’s core values determine what the firm is all about. It defines what’s most important for the organization. Core values also build trust and affect company perception.
Although these values may change over time, their very core or foundation is bound to stay the same.
Core values provide a decision-making framework for your company. This applies to everyone in your organization, so make sure you tap on a core group from your staff and create a set that supports business scaling and objective decision-making.
5. Maintaining or expanding the business
Once your business operations have stabilized and your revenue continues to flow smoothly, you’ll need to decide whether to expand your company. Sure, keeping it small may seem more manageable and less risky, but that won’t get you any higher from where you currently are.
Plus, the temptation to expand is powerful, especially with the allure of a whole new revenue source and something fresh and exciting to be added to your usual day-to-day undertakings.
When you’re at this point of the business, the best course is to think about it thoroughly. Weigh the pros and cons of expansion and figure out the balance between the risks and potential for growth.
Bonus: Decision-Making Tips for Business Professionals
Besides the choices that need to be made, business professionals should also keep in mind a couple of recommended practices and tips in decision-making:
1. Decide based on evidence.
Adapting an evidence-based management system helps make the decision-making process more objective, so you won’t have to rely on your instincts too much.
The steps you need to take are quite simple:
- Gather performance data that support the decisions you’ll be making.
- Challenge what you feel in your gut and determine if there is any objective evidence that supports them.
- Figure out the basis of any suggested course of action and check if current and objective data support it.
- Check any commonly used strategies that worked for situations like yours and see if they apply to your specific case.
- Analyze your business data and make sure it is current and objective.
2. Seek outside perspective, but always trust yourself.
When viewing an issue that requires your decision, make sure you look at it from every angle. Seek out opinions from others – your managers, departments, peers, and partners.
Open your mind to suggestions and opinions, as this will give you a wider view of the matter.
Assess everything and look for data to support them. This will give you a good grasp of what is feasible among the recommendations you receive.
At the end of the day, you’re still the one with the final say, so don’t second-guess yourself.
3. Always consider the outcome.
Ask yourself: “How does this decision affect our bottom line?”
Never forget to consider the outcome of any decision, be it for your short- or long-term goals.
Important Decisions and Outcomes
Deciding on matters related to business affects more lives than you probably know.
So, it helps to be thorough when assessing the details you’re presented with and forecasting the possible outcomes in relation to your company and its bottom line.