When it comes to running a business, diving into daring decisions is easier said than done— and this is especially true for SMEs. If you’re a small business owner or stakeholder, you have fewer financial and human resources to fall back on should your choices prove unsuccessful. It’s often difficult to navigate a healthy balance between proceeding boldly and cautiously.
It is important to remember that stagnation is potentially just as risky for your business as an overly ambitious policy change or a premature expansion. Risk-taking is an essential—and daunting—part of running a successful business. When you are informed on how to properly weigh up the potential benefits versus the potential costs of the risk, you can make an educated decision and proceed with a flexible confidence.
Here are the seven steps you need to take to make decisions that matter:
1. Establish a Decision-Making Network
From the outset, it’s important to acknowledge that even as a small business owner, you cannot be the sole decision maker. Although the responsibility ultimately falls to you, it is highly advised that you establish a network of individuals who can function as trusted consultants in future decision-making processes. Build connections with those who have an abundance of experience in the entrepreneurial field and ask them for their input when you find yourself at a challenging juncture.
Try not to open up more conversations than is necessary to synthesize and extract some sound advice, as a multitude of conflicting opinions may only confuse you more. Furthermore, do not shy away from consulting your employees. Although they may have less experience, they understand the inner workings of your business more than any external consultant.
2. Start Small
Once you have committed to being bolder in your business endeavors, try not to rush into any major changes too soon. As you will naturally have far fewer resources than a large corporation, you don’t have quite as much room for error. Therefore, adopting a phased strategy is best.
Try taking small to moderate risks fairly consistently rather than taking one massive leap of faith. The former approach is not only more likely to succeed, but it will also ultimately produce a similar result to the latter, riskier, option. When you adopt this approach, you can expand your business to the point where you can afford to take bigger risks and make bolder decisions.
3. Practice Making Decisions
This may sound ridiculous at first, but it really does work. Like anything else in life, you have to practice making decisions to become good at it. In this way, you train your cost-benefit calculating abilities while bolstering your self-confidence.
It’s important not to become overly confident and arrogant in this training process. It is simply a practice in becoming familiar with taking charge and trusting yourself. If you can demonstrate that you have confidence in your own judgment, then others will too.
4. Remember That Flexibility is Key
The decision-making process and the outcome thereof is rarely a straightforward journey. When pondering a significant choice, you need to consider the various ways in which it could play out and plan for every possible scenario. This ties into the strategy of weighing up potential costs and benefits.
If you can view your choices and the consequences thereof as malleable, you develop a professional resilience that’s sure to set you apart from the crowd.
In adopting this flexible attitude, an applicable motto is to “expect the best and plan for the worst”. This means that you and your employees should maintain an attitude of optimism while also being pragmatic enough to prepare for a more unfortunate outcome and recover from that.
5. Monitor Your Emotions
One of the greatest mistakes made by countless small business owners is that they make impulsive, foolish decisions. These decisions are often as a result of a strong emotional reaction to a particular situation or event. If you have had a bad month or recently released a failed product, do not make any major decisions in the midst of your anger or sadness.
Your emotional response might not even be a reaction to something that has already happened, but rather a fearful anticipation of what could possibly happen. When you are nervous about taking a risk in your business endeavor, it is easy to accidentally dramatize the potential outcome.
You may come to believe that your decision will result in the inevitable overnight collapse of your business. When in reality, the worst-case scenario is wholly manageable.
6. Know When to Take Risks
As goes for any major decision, timing is key. If you find yourself confronted with the opportunity for expansion and it requires a particularly bold move, it may feel like there is never an ideal moment. This thinking can prevent you from ever taking risks. That being said, there are certain instances when the wrong move at the wrong time could be truly disastrous.
Learn to identify the times that are appropriate for planning and research, and the times that call for action. Monitor local and global market changes, patterns of consumer behaviour, and seasonal shifts while remaining aware of your personal capacity from moment to moment.
7. Accept That Failure is Part of the Learning Process
When you understand that, you’ll most likely fail at something at some point in your business’ journey, you can free yourself from the fear that’s guiding your decisions. This fear is the same one that’s holding you back from making the bold choices that will advance the success of your small business.
While it’s important to acknowledge that this fear is a natural protective mechanism, it’s potentially paralyzing and detrimental in the professional sphere.
The success of a business is rarely a linear journey. Your progress will include a combination of varying degrees of success and failure. It’s vital to remain focused on the bigger picture. As long as the net outcome is positive, then you will reap the rewards of your courageous—yet calculated—risks.
Making bold decisions isn’t easy, but in any business, it’s necessary. If you equip yourself with the right decision-making tools, you’ll benefit tremendously.
The bottom line is to be bold but to never take a risk that isn’t carefully evaluated and that you cannot recover from.