Wednesday, February 13, 2013

Tough Decisions are Part of Entrepreneurial Landscape

Whether you are the owner of a start-up or a well established business you are going to be challenged to make tough, agonizing decisions that will have a lasting impact.

Peter Drucker said this about decision making and business, “Whenever you see a successful business, someone once made a courageous decision.”

Decision making is part of the landscape of business.  And in the true spirit of the immortal words "The buck stops here," the toughest decisions are reserved for you the owner.  So how do you make these types of decision.  First and foremost you use your strategic and tactical plan as a guide.  A well vetted, market-based long and short-range plan is a very valuable tool for making tough business decisions. "Is it consistent with the plan?" is one of my favorite questions to ask owners struggling with a tough decision.

But what if both or all the options are consistent with the plan. What then?

There is something to be said about trusting your instinct and making decisions that way.  If you have a lot of relevant experience from which these "instincts" originate then you are likely to make a pretty good decisions. But I am a data guy.  Even with my depth of experience I feel more comfortable and confident when unemotional data is added to the decision process.

Here are the steps I would take to guide me towards making a tough decision:
  • What strategic problem am I trying to solve? (Be as specific as possible.)
  • What solutions are there to solve my problem? (short-term and long-term)
  • What is the approximate cost (financial ($cash)) of each solution? Ballpark it.
  • The strategic impact (pros and cons) be of each solution over say a 2-year period? KISS principle
  • Rank the solutions by cost.
  • Rank the solution by strategic impact.
  • After compiling this data step away for a day or two.
  • Now put your CEO hat on and look at the data as if a person on your staff is presenting these options to you for the very first time. 
  • Make an executive decision.  Document your rationale (On this date, I chose this course of action because.....).
  • Proceed - and don't look back.
Getting input from an advisory board for those decisions of strategic significance may also be prudent.  But recognize, you and only you will be held accountable for the decision you ultimately make.  There is a reason for the saying, "It's lonely at the top."

Want some unbiased help exploring options and assessing impact of different strategies?  We can help. Contact us here. The first coffee is on us.

About the author. Mike Gomez is President of Allegro Consulting, a growth specialty firm helping turnaround businesses wrestling with stagnant growth. He grew his very first client’s business from $8M to $35M in just two years. Mike is also a prolific speaker, writer, three-time marathoner, a former military officer and pilot of both aircraft and helicopters.