Making decisions skills are one of the most important skills you need to acquire especially as an entrepreneur. More importantly, however, you need to learn to make the Right Decisions. Look out for this points as you read on.

• 4 Types of Decisions
• 6 Tips to making Decisions with Great Results
• 5 Decisions That Could Change Your Business

The first step in good decision-making is to understand that not all decisions are created equal.

That been said, we like to differentiate decisions along two dimensions: importance and urgency. An important decision is one that has the potential to have a significant impact on your business or on a person’s life. An urgent decision is one that you must make immediately — there is no time for further consideration.

Read Also: How to Successfully Oversee Multiple Businesses at once

The two dimensions mentioned above results in the 4 types of decisions we are now going to talk about.

4 Types of Decisions

1. Neither urgent nor important

• Consider taking no action. If a decision is neither urgent nor important, you may not need to make it at all.
• Delegate to others. Such decisions provide an opportunity for a manager to coach subordinates on how to think about decision-making.
• Delay to less hectic times. Resist the temptation to focus on items that you can check off your “to-do” list quickly when there are other more important and urgent decisions that need attention.
• Beware of morphing. Don’t delay the decision until it becomes urgent.

2. Urgent, but not important

• Don’t overanalyze. Because these decisions are not important, going through a lengthy process to make the decision simply doesn’t make any sense. In some outrageous cases the cost of the time spent analyzing a decision can exceed the cost of making a wrong decision.
• Use principles. Rules of thumb, guidelines and principles can provide a great way to make decisions quickly and efficiently. This will also ensure that decisions align with the values of the organization.
• Listen to your gut. As an experienced businessperson, you have good judgment — don’t be afraid to use it.

3. Both urgent and important

• Prevent morphing. Left unaddressed, many decisions will morph into this category. Don’t let it happen.
• Beware of false urgency. Many decisions that are portrayed as urgent, aren’t. Don’t be pressed into making an important decision without careful consideration when you don’t have to.
• Reduce urgency. Consider whether you can take steps to buy yourself time to make this important decision.
• Keep options open. Consider options that will allow you the most flexibility later. If you can avoid it, don’t get locked in.
• Consult experts. These are the people that are the most likely to have immediate insight into the right direction to proceed.

4. Important but not urgent

• Identify and address the right problem. Solving complex problems requires asking a series of questions that are relatively easy to answer. The answers to these more straightforward questions then lead you to the solution of the more complicated issue.
• Have the right mindset. When you face a big decision, don’t be overcome by emotions. Ask two questions: What do I want to happen next? What do I have to do to maximize the probability that that occurs?
• Utilize appropriate analytical tools. For decisions that are important but not urgent, it is sometimes helpful to use decision-making tools. There is time to apply the tools and the cost of doing so is justified by the magnitude of the decision.
• Seek the counsel of experts. Any time you face an important decision, seeking help from experts is a good idea.
• Live with your decision before executing. Make a decision and sleep on it before implementing it.

With all the types of decisions above, you will notice that good decision-making is critical. Understanding the type of decision you are facing and responding appropriately will help you to increase your effectiveness.

Another question that will immediately come to your mind is, how are these decisions been made? This will take us to the consideration of the 6 most commonly used approach in the decision-making process.

6 Tips to making Decisions with Great Results

1. Know all the facts regarding your Business.  Gather all of the facts and necessary information that impacts your business. This is important, because you do not want to miss critical information that could make a difference in how you run your business.

Also, by being part of the information-gathering process, you can eliminate biases or opinions others may have.

For example, understanding how your competition is doing business is very important. Finding ways to improve customer satisfaction is another example of knowing the facts of your company.

A business owner can talk to their employees and customers to get the necessary information regarding certain business operations.

It is also important to read all of your important business reports and keep abreast on the media coverage of your business. These are just a few of things a business owner should know about his or her company.

2. Ask around. It is important to consider other viewpoints other than your own, so get advice from your friends and business peers.

For example, a good technique is to talk to your important business colleagues and managers to get their opinion on how to manage your business.

For instance, you have to make a decision on which client should manage your marketing campaign. Ask your business advisors and other managers on what they think who would be the best fit in managing your campaign.

In addition, a business person can join a local business support group to network with other professionals in the field. This is a great way to get valuable information regarding your industry.

3. Relax.  Do not try to do everything all at once and when things get hectic stop what you’re doing and take a 10 minute break.

Take a few deep breaths and try to do something that will make you feel more relaxed such as taking a 10-minute walk, listening to the radio or doing some stretching exercises to help de-stress.  

You will feel better and gain a fresh perspective on your current situation, whether it is dealing with your employees, giving a presentation or improving your company’s marketing plan.

4. Focus on the results. Think about what you want and consider the possible outcomes of your decision. A person needs to focus on the short-term and long-terms goals regarding every aspect of their company.

For example, keeping up to date on the company’s financial statements is very important. Keeping abreast on your employees’ morale is another example on determining the direction of your company.

Looking for ways on improving how your company does business will go a long way in accomplishing your business goals and mission statements.

5. Stay the course. Managing your own business involves a series of ongoing business decisions. Don’t put off important decisions, and don’t worry about your past mistakes — just keep focusing on what is best for your company.

To determine the best outcome for your business, always listen to your customer needs and have your finances and expenses organized.

Customer satisfaction and making sure your company doesn’t run out of money are some of the important priorities of any business. If your business is going in the wrong direction then you need to re-evaluate how you run your business.

6. Learn from your mistakes and re-evaluate. If you make an incorrect business then the next step is to learn from your mistakes and go from there. Learn what you did right and learn what you did wrong. 

For example, your company decides on a marketing plan for a certain product, however you don’t get the expected results in terms of sales and customer satisfaction.

When this happens, learn what went wrong and use this knowledge the next time you market your other products.

These 6 tips mentioned above will help contribute to the overall success of any decision you are about to make in your business.

As earlier mentioned, there are different decisions you will have to make at different stages of your business. Some of this decisions will be more important than others.

There are 5 decisions that are very important to your business, and at a point in time, you will have to make them. What are these decisions?

5 Decisions That Could Change Your Business

1. Product or service pricing. Determining your pricing is an enormous decision that all entrepreneurs will be faced with throughout the life of their business.

Read Also: The important reasons why Pricing is the key to Startup success

How you price your products or services will communicate the perceived value of your offering, and will position you against certain competitors in the marketplace.

Some of the factors you are likely to consider when determining the price of a product or service include:

• Having a solid understanding of what your target market is willing to pay
• Understanding what you can afford to charge, taking into consideration all of the hard and soft costs associated with producing the product
• Knowing how your product compares to other, similar products, and whether you can legitimately charge a premium for additional features, higher quality, etc.
• How you want to situation yourself in the marketplace: Do you want to be known as the company that provides the highest-quality product? The cheapest? The dependable, middle-of-the line product or service?

2. Outsourcing or hiring in-house. There will come a time for every business, almost without exception, when the need for additional personnel or an influx of new skills becomes non-negotiable.

And one of the biggest decisions a business owner must face at this juncture is whether to hire new staff or to outsource.

Unfortunately, no one can tell you what’s right for your business in this regard. Some of the factors you’ll need to consider include:

• Payroll and benefit costs versus contractor costs
• Type of job or role. For instance, functions such as online marketing, accounting and IT are often successfully outsourced, however, core areas such as PR and sales are often better kept in-house.
• Your company culture: If you have a strong culture that must be evident in all tasks and roles, in-house may be preferable.
• Your industry and the competitive environment: If you’re in a highly competitive industry, hiring in-house may reduce the risk of trade secrets being divulged.

If you need an important task completed, and could source it locally for $600,000, or outsource it overseas for $37,000, which would you choose?

An example of this is the decision faced by the owner of investment-tool company Born to Sell CEO Mike Scanlin a few years back. Any guesses what he chose?

In a CNN Money article about the decision, Scanlin reported that he opted for overseas outsourcing, and was extremely happy with his decision.

Scanlin isn’t alone: In a recent survey of US-based businesses, 36 percent of CFOs reported that their firm was currently involved in offshore outsourcing, with companies favoring India, Indonesia and China.

3. Should I give up. Starting a business is hard work, and much of the hard work you do now won’t pay off until far into the future.

It may be that financial struggles make you want to give up, or simply a lack of motivation due to disappointing business results.

Whatever the reason, thoughts of giving up cross every entrepreneur’s mind, usually more than once.

Legendary Swedish tennis player Bjorn Borg said, “My greatest point is my persistence. I never give up in a match.

However down I am, I fight until the last ball. My list of matches shows that I have turned a great many so-called irretrievable defeats into victories.” 

It’s true that there are times when giving up is the best, or only, choice to be made. But if you can summon up the gumption and courage to keep going, you may just find your big success is right around the corner.

4. Financial Decisions. Business owners constantly face decisions about business finances. For start-ups, decisions about how to fund the business and the most appropriate source of funding are important.

For businesses that are already in existence, decisions about how to manage cash flow and acquire assets are equally important.

So important are decisions on financials that many business owners rely on professionals such as accountants for expert insight.

5. How do we Operate. Business owners have to make decisions on how they will run the business. Operational decisions are not just decisions about administrative tasks.

They include choosing the right suppliers and distribution channels for products. Operational decisions also include decisions on how to market the product and to bring it closer to the target customer.

Operational decisions such as these play a significant role in determining a business’ sales revenues and also operational costs, which need to be sustainable.

Read Also: 7 things to do in Preparation for a Recession

Finally, being an entrepreneur will always mean having to make hard decisions, and these are just a handful of the ones you’ll inevitably face as your business grows.

You will notice that each of these decisions comes with a certain amount of risk, but with the information available in this article, you can make great decisions that will move your business forward.