Being in business is a constant process of making decisions. 

While decisions are sometimes made on instinct, taking time to thoroughly consider the decisions you face is a highly valuable (and profitable) skill to develop. 

How we make decisions

Choosing a path that provides acceptable reward for acceptable effort at an acceptable amount of risk is at the core of decision-making and sound business management.

There are many ways people define acceptable but decision-making generally comes down to three approaches (or a combination:

1. The head: the logical approach to decision-making, where information is gathered, analysed and processed rationally. 

2. The heart: the emotional aspect of decision-making. It includes a person’s beliefs, values, fears and preferences. Sometimes these feelings (like a strong connection to the family business) are deeply entrenched, making it hard to apply other approaches.

3. The gut: intuition, shaped by knowledge and prior experience. It usually bypasses rational processes by linking past experiences (good and bad) with the present. Intuitive decisions often “just feel right”.  

It’s important to note that not all decisions are created equal. Some decisions are easy, with simple information inputs and clear right or wrong answers. More complicated decisions will have an increased number of variables, and a right answer (which may not immediately apparent).

Complex decisions usually involve the interaction between a number of complicated decisions and require outcomes to be weighed against each other. Generally, we tend move out of the ‘head’ and rely increasingly on the ‘heart’ and ‘gut’ to arrive at an answer – but this is the time when a logical, analytical decision-making process is best..

How to make better decisions

There are a few things you can do to become a better decision maker in your business.

• Alleviate stress. 

Stress affects the brain. It impacts judgement, planning, behaviour, memory and your ability to regulate emotion. While some types of stress can be good because they sharpen alertness and performance, persistent stress can impair the decision-making process and potentially lead to inaction, or poor and costly decisions being made.

• Be prepared. 

Give yourself time to adequately evaluate the decision you’re facing.

• Identify the critical variables in the decision. 

Don’t be distracted by non-critical factors. 

• Use the tools you have available. Writing a pros and cons list or using a decision-making matrix can be a useful to ‘see’ the variables more clearly.

• Listen to ‘experts’ to inform your thinking (but don’t follow them blindly).

• Act quickly and decisively. It’s better to make a near-ideal decision than to analyse a situation to death.

•Remember sometimes doing nothing is the right decision.

• Have a purpose statement and clearly defined business goals and weigh every decision against them. 

Accessing help

While decision making is a constant, you don’t always have to face decisions alone. 

There are people and organisations you can turn to when facing complex decisions, including legal, financial and business advisors who can bring their technical expertise and years of industry experience to the table. 

To talk through how you can improve your decision making, contact RFCS and talk to one of our counsellors today.