Here’s How You Can Avoid Making Bad Business Decisions
The Leadership Insider network is an online community where the most thoughtful and influential people in business contribute answers to timely questions about careers and leadership. Today’s answer to the question “How do you make tough business decisions?” is written by William Craig, founder and president of WebpageFX.
There’s a great quote from Theodore Roosevelt about decision-making: “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.”
When faced with a tough decision, I think it’s helpful to remember that making a well-informed decision is more important than making the perfect decision. Of course, no one wants to make a decision that he regrets later, so here are a few ways you can make closer-to-perfect company decisions in tough situations.
Assess the financial cost
Naturally, one of the first things you should consider is how much money your decision could cost (or earn) your company. I mention this first because, even with all else equal, this will likely be the deciding factor that sways your choice in one particular direction. If the financial cost associated with your decision has the potential to ruin your entire business, don’t make that decision. If you think, ‘We might be able to do that,” without risking your company’s stability, mentally explore that route further.
When my co-owner (my wife) and I decided that we wanted to move WebpageFX from the town of Carlisle to Harrisburg, Pennsylvania, there were a number of financial costs we had to consider. The 19th century mansion we had our sights set on needed a lot of work, property on the riverfront would be more expensive than in the middle of a small town, and we knew we wanted to outfit our new office with perks that matched our culture. It wouldn’t be cheap but we thought we might be able to do it, so we explored that idea further.
Assess the culture cost
If you’re able to reconcile the financial costs of your tough decision, move on to the decision’s implications for your company’s culture. Ideally, a solution to a tough decision should have minimal impacts on your overall culture. If it does have a negative impact, you could risk losing employees or going against the very values your company was built on.
In the case of our office move, we knew putting our time and money into a place that would inspire our teams aesthetically and functionally would have a positive impact on culture. In other cases, knowing the impact on culture will likely be less clear-cut. Take the time to consider this point thoroughly before committing.
Assess the productivity cost
Lastly, a forward-thinking businessperson should consider how his or her current decision will impact future productivity within the company. Maybe the decision will cause some temporary slump but streamline productivity a year down the road. Maybe it’ll boost productivity initially but fade off over time. Both outcomes should be considered before you make the final call.
To continue with the example of changing offices, I anticipated a minor slump in productivity during the first few weeks of our move. Our teams had to get used to the new setup, we had to account for potential technical glitches,and there was the hype surrounding our new location would be a minor distraction. All in all, we experienced very little loss to our productivity and part of that is because anticipating such issues can help your teams prepare for them in advance.