Most Small Business Owners Struggle To Make Decisions
I usually see small business owners, including medium entrepreneurs, delay making decisions.
Many business owners and leaders have an underlying fear of making decisions. At times one may think that it’s because they are at the centre of the business and feel the brunt of every decision, good or bad.
However, over the years, I have realised that the underlying problem is not necessarily fear and doubt but the failure to understand the main goals and objectives of the business.
They need to understand whether they want to make money and significant profit or be happy with the social aspect of the business without making any significant profit.
I have met happy owners with a product or service that solves people’s problems without looking at what they’re charging their customers and whether it brings in a profit. They are simply happy that they are running a business, and every morning, they wake up, go open shop, and carry on until they begin to fail to cover their costs. At this point
most owners use debt to keep the business afloat.
The challenge with this method is that it puts the business at risk of over-borrowing and failure to pay its debt. At this point, it is Sink or Swim.
The real question that needs to be analysed and answered is, Does the company want to make money, and that is the underlying goal? The company management should consider its pricing, cost and sales strategies to ensure profitability.
The mission and vision of the company should be looked at and translated into the organisational structure and broken down into day-to-day tasks and activities. The owner should also consider restructuring the company into a more efficient unit.
The bottom line is, does everyone else in the business, including the owner understand what mission and vision mean and imply? Does everyone in the company have the same overall desired goal- to make money? Do the other people in the business understand it, and can they translate the vision and mission into other business areas? The answer to the above questions lies in how well the owner strategies, guides the company through its overall strategic plan, business plans, intermediate goals and objectives, and links them together. If you own a small business, there are many key considerations to ensure a successful and profitable venture.
They say in business, only the smart ones survive.
In other words, failure to have a clear understanding of the motive of the business creates situations where it is very difficult for business owners to make decisions. That is because a lack of clarity creates doubt. Also, being unsure of what they are doing and what their long-term goals imply creates an overwhelmed feeling.
Therefore it is essential that small business owners have a clear understanding of both the purpose and the vision of the business. They also need to have a network of people, including business managers, to offer advice. (That’s a topic for another day).
In the final analysis, business is easier than you think it is if you understand the goal and motive. If the main goal is to main a profit, every decision made should reflect the goals and have a structure and framework supporting the goal.
Take the time to formulate a plan that clearly outlines what you want to achieve, why you want to achieve that, and how you plan to achieve it.
What you do see in practice are business owners who need to figure out the purpose of the business. Is it profit-driven or nonprofit-driven?
There are no standard answers to these questions. Each business is unique and requires different approaches.
As an SME consultant, my job is to help you understand why you do what you do as a business and assist you in developing a strategic plan. The strategic plan provides a road map for the company. It also encompasses strategies you can pursue to ensure the business is healthy and profitable.
First, we understand the organisation's purpose, mission and values.
Knowing these helps identify the goals and objectives you want to achieve. The goals and objectives are the framework we build our plan around.
Returning to decision-making, there are decisions making tools that can assist you in arriving at the best possible outcome given the environment.
These tools can be mathematical, such as scenario planning or simulations.
The usage of decision-making tools assists the business in becoming decision efficient and avoids unnecessary delay.
A decision matrix is a decision-making tool consisting of a criteria grid against which options can be judged.
The decision matrix assists people when making a complex decision by putting forward the pros and cons of the different choices. It also gives the company a framework to use and collect data and information for analysis and decision-making.
The decision tree is another tool for assisting in decision-making for complex scenarios. It is a graphic flowchart of the steps used to reach a decision.
Finally, as much as making business decisions is scary and comes at a cost, it does not have to be scary.
A comprehensive and well-thought-out planning process is key to successful business decisions. Taking time to define these areas clearly can help you ensure the best outcomes for your business.
If you need help to understand your business goals and develop a strategic plan and business strategy.
Contact me by email at ckatotobwe@yahoo.co.uk
and Twitter at @charityk_k to discuss further.
The author is a Chartered Accountant, MBA candidate with over 25 years of Financial management experience working with SMEs, Nonprofits, and Quasi Government institutions.
Disclaimer: The views in the article are views of the author and not attributable to any institution
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