Entrepreneurs make a lot of daily decisions to lead their business to success. Some decisions are so simple that the entrepreneurs are barely aware they are making them, while others are time-consuming, high-risk, and can leave them feeling anxious. Decisions can make or break a project or an entire business. And they often involve complex and unpredictable interpersonal issues, too.
With so many spinning plates, how can an entrepreneur make good choices? The truth is that there is no silver bullet approach to always making a good choice. It is hard to predict the future, while you can learn from the past. This knowledge is useful to plan and sharpen your problem-solving skills. This helps you bring a range of decision-making skills together in a logical and ordered process.
Many studies show that entrepreneurs do not take significant risks; they often seek a non-traditional way to find a solution to the problem. Entrepreneurs are people who take calculated risks. The following seven-step approach will help you make a good decision as an entrepreneur facing complex situations.
Step 1: Do your homework first. Decisions often fail because key factors are missed or ignored from the outset. So, before you can begin to decide, you need to fully understand your situation. Start by considering the decision in the context of the problem it is intended to address. You need to determine whether the stated problem is the real issue or just a symptom of something deeper.
Step 2: Take time to think. Can you give your decision the attention it needs? Spend some time preparing yourself before diving into the facts and figures. Remember that most decisions will affect other people, too, so it helps to think and explore the situation from every angle.
Step 3: Identify good alternatives. The wider the options you explore, the better your final decision is likely to be. Generating several different options may seem to make your decision more complicated at first, but the act of coming up with alternatives forces you to dig deeper. Try to step outside your normal patterns of thinking and come up with some truly innovative solutions.
Step 4: Explore the pros and cons. When you are satisfied that you have a good selection of realistic alternatives, it is time to evaluate the feasibility, risks and implications of each one. Almost every decision involves some degree of risk. You will also want to examine the ethical impact of each option and how that might sit with your personal and business values.
Step 5: Select the best option. Once you have evaluated the alternatives, the next step is to make your decision and come up with a plan! If you have various criteria to consider, use a Decision Matrix Analysis to compare them reliably and rigorously. Or, if you want to determine which ones should carry the most weight in your decision, conduct a Paired Comparison Analysis. If your decision is being made within a group, try techniques such as multi-voting to help your team reach an agreement and come up with a plan.
Step 6: Review your plan. Before you start to implement your decision, take a long, dispassionate look at it to be sure that you have been thorough and that common errors have not crept into the process. Your final decision is only as good as the facts and research you used to make it. Make sure that your information is trustworthy and that you have done your best to avoid confirmation bias or blind spots.
Step 7: Let others in. Once you have made your decision, you need to communicate it to everyone affected by it in an engaging, informative and inspiring way. Get them involved in implementing the solution by discussing how and why you arrived at your decision.
The more information you provide about risks and projected benefits, the more likely people will be to support it. Like many business approaches, there is no silver bullet way to do this perfectly every time. However, with thoughtful strategies, for an entrepreneur, they can go a long way.
EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor, and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.
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