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Which facts matter for decision making

Every business owner is faced with countless decisions that require sound judgement as well as a clear head. While one decision might address a specific problem, each one will affect the achievement of the goal of the business. Decisions made in a vacuum are risky, and lead to many unintended side effects. These are the things I consider first. There are more, some context dependent, but these five considerations are always worth thinking about.

Reputation impact

A good reputation can increase the value of the business, it gives employees motivation and makes acquisition of new customers easier. Every decision you make will have an impact on your reputation. Your business reputation is the biggest influencer of consumer purchase decisions.

Be curious about what the actual impact of your decision will be on your reputation.

Opportunity cost

Decisions in business involve choosing from a range of different options so tradeoffs are inevitable. Most businesses do not have unlimited resources. Remember that everything you decide to do may mean you are also deciding not to do other things. If you do not know the value of what you are giving up it is impossible to make a properly informed decision.

Be curious about the other things you could do.

Return on investment

An obvious factor influencing the decisions made is the effect it has on business profitability. As the business owner, you should analyse the risks of doing what you are considering and the likely return, and then calculate your most likely return on investment

Be curious about how sensitive the outcome you seek is to change.

You

One significant factor is the impact on you, on your emotions, energy, commitment, resilience and health. It is your business so be sure that the decisions you take are going to serve you well as an individual as well as the business as a whole.

Be curious about your emotions and your energy as you consider all the alternatives.

Running a better business is all about making better decisions. Sometimes talking through the possibilities and your considerations to sense check them with an independent advisor is truly valuable. Many of our clients value this part of our working relationship.

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