As we move into adulthood and take responsibility for ourselves, we become adept at making decisions. You may not think you’re particularly great at choosing between difficult options, but the truth is you do make many choices throughout the day. What you’re going to eat tonight, what clothes you’ll wear for the day, the hobbies and jobs you decide to partake in, and of course, the relationships you nurture are all plans you choose, even if you chose them a long time ago.
As such, it’s important to trust yourself when making a business decision. As long as you make it in good faith and with as much wisdom as you have access to, then accepting the consequences for it no matter what is how dignity and nobility are defined.
This topic begs the questions – what are the components of any wise business decision? What parameters can I use to choose a path forward, given that my choices will not only affect me but everyone who works for me? In this post, we’ll discuss that and more:
Market Research
While you will ultimately have to make your own decision, with your own risks and accepted consequences held, it’s important to note that good market research can soften the blow. Market research can help you identify many potential outcomes, such as how a target market might respond to your potential product line, or what impressions your proposed rebranding effort might yield.
Market research also encourages you to look to your competitors, identify space in the market for you to fill, and plan a more accurate, precise route forward. It can help you avoid making mistakes that other businesses may have fallen into – such as digital services failing to design an app on launch and thus losing out on a whole customer base. If making a new business decision is likened to sailing on unproven waters, market research is the map that helps you avoid your ship ploughing directly into the rocks.
Cost-Benefit Analysis
A cost-benefit analysis is a relatively smart term for simply saying “will this be worth it?” Now, that doesn’t mean you should only ever make decisions that render profits and will pay for themselves. It’s more about the value of a specific decision and if you’re happy to pay that cost, as well as what the likely returns on that will be.
So for example, you’re unlikely to gain any revenue from rebranding your company. In fact, this could lose you exposure and goodwill, and cause you to start from fresh. But perhaps that’s worth it to you in order to redefine your new company direction, to start anew, and to begin with a clean reputation. Cost-benefit analysis measures will include every possible cost, priced out forward decisions, timelines of goal-setting and execution, and measures for making that plan a reality. It will also fully measure the potential outcomes and risks of those not being met. Without a cost-benefit analysis, it’s unwise to continue as normal.
Ethical & Legal Considerations
Legal implications are always worth considering, for obvious reasons. A business rebrand, to return to an example of ours, is hardly going to be helpful if it infringes on the rights of another branded entity. Having legal consultants able to help you process the movement towards a merger and acquisitions, or developing robust new terms of service can be helpful.
Ethical concerns might seem optional, but they define how your business runs and the basic blueprint of its DNA. For this reason, really considering the social impact and responsibilities you hold can make the most difference, allowing for a better outcome for everyone involved.
Projections, Forecasts & Targets
Everything listed thus far is an effort in projection and forecasting, but the truth is you can also focus on this very specific planning effort in line with all of that. For example, using digital twin services https://mosimtec.com/digital-twin-company/, can help you determine a more robust approach towards the actual specifics of designing a manufacturing line, or structuring the utilities your business needs for success.
Then you can more easily determine which practical measures will yield the best return, and continue optimizing for that as time goes on. Plans like this may not determine the exact specifications of your final approach, but they can certainly help you get to better answers.
With this advice, we hope you can see the four components of any wise business decision. Of course, never discount instinct and accounting for luck either, as these two hidden forces really can make a difference.