Decision Making
Challenging Decisions
As female business owners, we can make the rules and grow our business in a way that works for us and our families; but it is never going to be smooth sailing all the time, and this is when resilience comes in. Women tend to be more likely to be hard on themselves and find decision making tricky.
Yet there are many inspiring women in business as well as in sport like for example Ellen McArthur best known for her record breaking solo circumnavigation of the globe. It’s when those stormy times come along that the practice of decision making can help you navigate to smoother water and keep you on the right course.
Business decisions come all the time, from scheduling the day's work and the relatively mundane through to the strategic and long term decisions that will have a serious impact on the business. The theory is that if you don’t know why you are making the decision then it’s not going to be much more than a guess based on how you feel at the time.
Successful businesses rely on their processes to make those decisions more reliable. When I was growing my first business, I measured everything! We had an excellent CRM system which we designed ourselves so could pull out all kinds of useful information.
Understanding the Numbers
Do not rely on your accountant. They are not using numbers to make decisions in your business; they are using them to make sure you are compliant and paying all your taxes! It always surprises me when I start working with a new client how few of them are actually using their numbers to help them with planning and decision making.
Each month check these numbers:
Profit and Loss i.e. sales, cost of sales, gross profit, overheads and net profit. Compare these with previous months/years and make % comparison to help with interpretation
Sales Split - depending on your business, measure specific sales streams so you can easily see which are the best performing in both revenue and profit. WIth my travel business, I took the top destinations which were 80% of our revenue and profit. (Don’t forget that high revenue is not always equivalent to high profit)
Cash Flow - cash is the most important number you need to understand. Depending on your business model you may be paying money out to suppliers before collecting money from customers. Running out of cash means you no longer have a business.
Marketing Costs - measure the cost of acquisition,which again may need to be split. Most of the business for my travel company came from Google Pay per Click advertising which was relatively easy to track
Key Customers - make sure you know who your most important customers are. Using the 80/20 principle, you can ensure that your best customers get the best possible treatment to ensure they buy from you again.
Not only does this information aid your decision making, it helps you set relevant and achievable targets for your team. Employees who understand the business and why they do what they do are much better motivated; especially so if there is some kind of team incentive - maybe drinks or a meal out when targets have been smashed.
Critical Decision Making
So returning to the Roaring Southern Ocean, waves higher than your mast, storm force winds shrieking in your ears and a deck beneath your feet that is doing its best to throw you overboard and every part of the boat straining to stay together.
How do you make good decisions when you are wet, cold, hungry , sleep deprived and frightened to death?
Ok, business is never that bad but sometimes it can start to feel like it might be heading that way. It is at that point when you rely on your processes and your people because if you have been doing that anyway when the sun is out, the Trade winds blowing fair and the dolphins playing around your bow wave it’s something everyone, including you and the team is used to doing. The right decision gets made because people understand how to make it, what to base it on, what to check, what to measure and no one makes assumptions or lets their fears and emotions take charge of their thinking.
Listen to Your Team
It may seem counter intuitive but as the leader you ideally want to be the dumbest person in the room. It still meant the buck stopping with you but means you are practiced in consulting with your team, listening to what people are telling you and understanding why you are being told what you are. Don’t forget that the team is wider than you think, sometimes it can be stakeholders such as suppliers as well as employees. If that becomes a practice then better decisions get made.
Get into the habit of writing down why you make a decision as well as what has been decided. Memory can play tricks on us and we are never in the same moment in the future so a note, made as a reference, can be a useful insight next time. This should include all the data including how we felt at the time, wet, tired, cold,hungry or not.
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