Importance of Decision Making in Business
Every decision a business makes will have an impact on its balance sheet. The idea of “gut-feel” and intuition is not a comfortable topic for many companies. According to former arbitrage trader Helen Lee Schifter, there’s a common misconception that the best decision is the one you can justify by numbers. However, decisions like this are rarely made on instinct alone but based on much research. Businesses want to know the “how” behind every decision and how it will affect their bottom line. Schifter says that decisions should not be viewed as a mathematical equation; it’s more about the business feeling like they were presented with all the information and made an educated decision rather than just choosing something because it “sounded good.” Here, according to Helen Lee, we have outlined the importance of decision-making in the business.
Business Decision Making is the Key to Success in a Competitive World
Schifter says that many business owners make statements such as “what’s the point of using numbers? The only way to succeed is to rely on what I feel.” How can they get away with this when consumers now have access to a wealth of information flowing through their phones, computers, and televisions? Schifter states that numbers don’t matter; it’s about taking into account some of the information gathered from surveys, statistical research, boardroom discussions, and even gut feel. According to her, you can quickly gather up to five or ten pieces of information that do not necessarily effectively support your decision. However, if entrepreneurs take time to prepare, they can see which one has consistent support.
Decisions are All About Forecasting What is Expected to Happen in the Future
Once businesses have gathered all this information, they need to run it by their team. They should be able to find out whether the number in the survey makes sense, if there are any trends or inconsistencies, and whether to be backed up in other research or not. According to Schifter, this is an excellent way to weed out wrong numbers and get down to the ones that matter. When statistics and numbers are applied correctly, they can help businesses predict what will happen with their business in three months or a year.
Be Informed About Past Decisions and How They Worked Out
The most important thing to do when making a business decision is evaluate what has worked and what hasn’t. These days one can easily access information about these things on any media, and it’s essential to do so as it will help you learn from past mistakes that might be relevant to new decisions. It is also necessary to see how something has changed over time so that you can account for these changes in the future.
Make Decisions with a Focus on the Future, Not the Past
To keep business moving forward and not get stuck in a rut, it is essential to “refresh” your marketing campaigns based on market trends. For example, if an entrepreneur plans to launch a new product, it’s important to ensure they have enough inventory for customers who will be incentivized to buy. If the customer is not incentivized to buy this particular product, their business will fail because of customer shortage. It’s important that companies keep up with societal changes and be innovative while changing with the times.
Know What Percentage of Sales Will be Under Expensive Conditions
When making decisions, it’s important to consider the worst-case scenario; you should know what percentage of sales will be affected by expensive conditions. It is important to consider this when making a business decision to ensure that the business has a backup plan or will be able to adjust according to new information.
According to Helen Lee Schifter, one of the biggest problems with decision-making is that businesses tend to be too anxious with each new decision. They could be setting themselves up for failure if they are not willing to listen to the guidance of others or gather multiple points of view before making a final decision. Businesses should remember that not every decision has to be made by instinct alone or using data; it’s really about what feels right and looking at all the available information.