Whatever problems you think your business has — whether it be marketing, sales, or cash flow — the decisions you make will ultimately help solve or exacerbate those obstacles. But how are you supposed to know at the moment whether you’re making a smart choice for the long term?
There’s no way to predict the future. But things like data analysis, peer feedback, opinions, and financial forecasting come close. Consulting them before making a big decision will reduce the number that you later regret.
Whatever choice you’re faced with, here’s how to make it well:
1. Dissect your customer data.
Every sale you make and service call you take generates data. But staring at a database isn’t going to suddenly result in groundbreaking insights.
The work of turning raw data into insight-ready is known as ETL, short for “extract, transform, load.” Tools like ETLrobot hook up with platforms ranging from HubSpot to Five9 to Salesforce. They ensure the data you input is readable by the program and ready to be analyzed.
Be sure, too, to choose an appropriate visualization. A pie chart is a great way to review revenue sources, but it’s not a smart way to look at revenue changes over time.
2. Get a second (or third) opinion.
Most business owners become so absorbed in their company’s day-to-day needs that they struggle to step back and look at the bigger picture.
Especially if you’re a first-time entrepreneur, the right decision may not be apparent. By all means, do your own research, but don’t underestimate the value of a mentor’s advice.
Think of it like getting a doctor’s take on your diet. Sure, you can find guidelines online about how much protein you should consume in a given day. But that’s far different than getting an expert opinion on your specific dietary needs.
3. Invest in forecasting.
Your business needs capital to operate and grow, but even the most lucrative companies don’t have an endless supply of cash. Don’t risk running out because you failed to plan ahead.
Research published in Harvard Business Review suggests strong forecasts have five attributes:
- Projections for the next 3-5 years
At many companies, financial projections look only a single year ahead. Many initiatives take multiple years to come to fruition.
- Industry context
Due to their industry, some companies simply have more growth potential than others. Forecasts should compare the company’s own projections to industry averages.
- Accurate assumptions
Are you hoping to double the size of your account team next year? Be sure to factor that increase into labor costs in your profit projections.
- Market-driven explanations
Projecting high growth rates is a temptation every company faces. If your forecast includes them, you need to explain why. What leads you to believe your competitive advantage will hold for the coming years? If you need help with market research, you can look into support from companies like Qualtrics.
- Non-financial action items
Forecasting shouldn’t be an exercise in financial navel-gazing. Be sure to end every forecast with takeaways for marketing, sales, HR, engineering, and any other departments you have.
4. Break big decisions into smaller ones.
Especially if your options seem limitless or you’re struggling to see their potential consequences, break down the decision into smaller, more manageable pieces.
Say you’re trying to decide whether to purchase company cars or reimburse employees for mileage they put on their own vehicles. Before making that choice, you might ask whether you can simply drive less. Perhaps you can find a cheap videoconferencing service that meets your needs, reducing mileage expenses to a degree that you couldn’t possibly buy and upkeep a fleet of cars for less.
5. Get some space.
Harvard research suggests 95% of purchasing decisions are subconscious. If you suspect something other than your rational mind is pushing you toward a certain option, take a step back. Nobody makes her best decisions in the heat of the moment.
Give sales or marketing some attention. If you’re seriously stressed out, take a walk or meditate. When you come back, you’ll be in a better position to make a calculated business decision.
Most importantly, remember that decisions must be made in order to move your business forward. Choices can be scary, but analysis paralysis often leads to worse outcomes than making any decision at all.
The good news? Making decisions only gets easier as you go, so you might as well get started.