As a business owner, you make decisions constantly — both big and small. One moment you’re managing team schedules, and the next you’re consulting with IT support about a new tool or system to install. Without an effective process or decision-making framework, these choices can quickly become overwhelming.
Strong, growing businesses are usually built on solid foundations, which include tools like a business ERP system that keeps operations running smoothly and cyber essentials that protect against digital threats. But growth also depends on the quality of the decisions you make along the way. An effective decision not only addresses the problem at hand but also moves the company forward in a positive direction.
Relying on gut instinct alone may feel natural, but it isn’t always enough. The best decisions are those guided by intuition and backed by data. In this guide, we’ll walk you through practical steps to improve your decision-making process and set your business up for sustainable success.
What Counts as a Business Decision?
At its simplest, a business decision is a choice you make to move the company forward or solve a problem. The scale of business decisions can be different in magnitude, but they usually fall into three main categories:
- Strategic Decisions: These are the big ones involving your yearly plan or the 5-year plan. It could also involve deciding whether you want to start a new business vertical or acquire a different business.
- Tactical Decisions: These decisions are important to support your strategic decisions. If your yearly plan is to increase sales by a certain percentage. Your tactical decision might involve increasing marketing spend or hiring more salespeople.
- Operational Decisions: These are much smaller decisions comparatively, but they are important to make sure your day-to-day operations are working smoothly, such as scheduling shifts, managing suppliers, or chasing invoices.
Once you identify which type of decision you are trying to make, it will also help you gauge how much effort, analysis, and collaboration it needs.
Why Getting It Right Matters
It’s very important to make the right decisions because each of your decisions has consequences for your business. It might be immediate or might play out over years. Good decision-making can:
- Improve efficiency by making sure your efforts and resources are going where they need to go the most
- Strengthen your finances by helping you cut wasteful spending and improve the cash flow
- Encourage innovation by giving you the confidence to try new business ideas without worrying about the risks
One of the most successful business decision case studies is Netflix’s movement from DVDs to streaming. This decision was backed by changing consumer habits, and now they could expand it as a global business. Most business owners would be hesitant to make that call because they might not have the data to back up their decision.
Approaches to Decision Making
There are several approaches to business decision-making, and two different situations require their own unique approach. Here are a couple to consider:
- Rational: This type of decision-making follows a step-by-step approach. You start by defining the problem, gathering information, weighing pros and cons, and then deciding. This decision-making process is good for major tech investments or new partnerships.
- Intuitive: You are leaning on your experience and gut instinct when you are making these types of decisions. This approach is great if you are dealing with a recurring problem or trying to close a sale.
- Creative: When you’re brainstorming and thinking outside the box for solutions, you are using creative thinking. It’s perfect if you’re working on a new product or trying a new marketing approach.
- Collaborative: Sometimes it’s difficult for you alone to decide something, and that’s when you involve your managers to help you with it. This approach is known as collaborative decision-making.
There are some problems where you might need more than one way of thinking as well. Businesses that make consistently good decisions use different approaches together to prevent tunnel vision.
Everyday Habits That Improve Decisions
You don’t need to sit down and do a deep analysis for every situation. However, that can only happen if you keep in mind certain factors while making business decisions so that you can have sharper decision-making skills. They are:
- Set clear objectives: Always know what you’re trying to achieve when you’re choosing between options.
- Look at the numbers: Use all the financial data available to you, and also look at what your customers are saying about you when you’re trying to make a decision
- Balance risk and rewards: Always be realistic about the downsides of your decisions as well as potential wins
- Stay flexible: If you have made a decision but circumstances have changed, it’s smart to know that the decision is no longer serving you.
Summing It Up
When you’re running a business, you know you cannot escape making decisions. But you can make sure that the decisions you make will help you in the long run and make more informed business decisions.
The more you see decision-making as a skill you can learn rather than a burden, the more you feel confident and empowered. Over time, this discipline builds resilience, which is a critical advantage in today’s business landscape.
