Inexperienced business owners often get stuck in pre-decision making loops and find it difficult to get out of them. The reason for this can often be that they are over analysing and attempting to remove all elements of risk. Some call this ‘analysis paralysis’. Many new or inexperienced business owners may not have the knowledge or experience required to effectively bring a particular issue to its conclusion. It is important to give every decision its due attention however it is also vital to make the necessary decisions and move forward with building your business.
In order to give your full commitment to achieving a desired outcome you must bring all of the experience and knowledge you have available to you at the time, work out your worst case scenario and be willing to accept that outcome.
You can never make the right decisions all the time and often business owners are so terrified of making the wrong decision they make none instead. Yet no decision is still a decision and can be just as debilitating.
In planning anything for your business whether investing your own money, increasing prices, employing staff or taking on partners, you need to assess the absolute worst case scenario of that decision and be able to live with it before you commit yourself to going ahead. With any decision there is always unpredictable factors yet surprisingly the worst possible result is often relatively predictable. Looking at decision making in this way will allow you to decide if there is an acceptable risk or not and move on quickly.
Imagine the following scenario:
The owner of a business is debating whether or not to take a loan against her home to provide $50,000 in capital for business expansion. This is a difficult decision, as it will increase her mortgage repayments. Results will need to be achieved quickly otherwise the increased mortgage repayments will put a strain on her income.
She decides to investigate the worst possible outcome should she go ahead with the decision. That would include considering what would happen if the new product range does not sell as well as expected. She would then need to turn her attention back to her core business and sell off the new stock at a heavily discounted rate.
The resulting worst-case scenario therefore is that she stands to lose $15,000 on the stock she has purchased and the cost of alterations made to her premises to store this new stock. She believes that a further $5,000 in sales may be lost due to a lack of concentration on the core business over that period. She decides that while repaying the $20,000 lost plus interest will cause a strain in the short term, it is an acceptable risk for her to take and the decision is made to go ahead.