Leaders, Here’s How to Make Smart Business Decisions

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Decisions

As a small business owner, how do you handle difficult situations or decisions?

Whether it’s a confrontational or difficult employee, a difficult customer, peer or boss, sudden changes in plans or even a dangerous issue, maintaining your composure is key. One decision can have a ripple effect, impacting many other areas.

When my husband and I made a wrong decision in our business, we paid for it later. The cost was always much greater than if we had just taken the extra time before we made the decision.

I’m not referring to making mistakes that could not have been prevented. What I mean are those times when we fall into the pitfalls such as:

  • Decisions about whether someone you interview is the right fit
  • How to manage an employee who is not meeting their requirements and responsibilities
  • An employee who acts out of line
  • Strategies for changes within the organization
  • Compensation increases, promotions, bonuses, etc.

When making decisions, my husband and I followed our rules. We:

  • Gathered all the facts together and engaged in a thoughtful discussion.
  • Intentionally waited – and did not decide until at least the following day. Sleeping on it always allowed us to come back with a clear head to establish a sense of confidence in our decision making.

Be Vigilant for Pitfalls in Decision Making

When making decisions, we must be conscious of our thoughts. Are we:

  • Making quick decisions because we are in a hurry, overwhelmed, stressed, and/or have other more important things to do?
  • Trusting someone else’s opinions, not verifying it ourselves? What if someone else is reactive and falls into their own pitfalls? If you are the leader, it’s up to you. Delegating to someone else can turn into setting someone else up for failure if you are not providing clear direction.
  • Trusting your gut and allowing it to be emotional; “it just feels right.”
  • Procrastinating, delaying, or avoiding because you don’t want to deal with people

Two Approaches to Decision Making

There are two ways to approach making a decision:

A decisive decision:

Settles an issue and produces a definite result. There is no controversy, little hesitation and it is made with determination. In life, reactive decisions can literally save lives, such as in an emergency.

In business, a leader utilizes wisdom to make proactive decisions, forming a choice from a combination of education, experience, anticipating challenges and minimizing them before they become problems. A successful leader combines emotions with fact for decisive decisions.

A reactive decision:

Is a response to a stimulus, rather than controlling it. You’re not making a decision on your own – you are responding to a situation. If you are a reactive person, you only react – you don’t act on your own.

“When you live in reaction, you give your power away. Then you get to experience what you gave your power to.” – N. Smith

Are You A Decisive or Reactive Decision Maker?

Those who make decisive decisions are held in high esteem by others. Military commanders are often seen as decisive leaders: they are viewed as strong leaders who do not waiver and are not easily swayed.

On the other hand, reactive leaders make on-the-spot decisions that are inconsistent with their values and mission and are often viewed by their team as ineffective.

Sometimes, we may be under the false impression that it is a gut instinct or that our first reaction was the right one. With practice, it can be – but until then, it is not. Experience will bring consistently.

“We are the creative force of our life, and through our own decisions rather than our conditions, if we carefully learn to do things, we can accomplish those goals.” -Stephen Covey

The Best Approach to Decision Making

I discussed the importance of listening in a previous post and stress its usefulness for effective leadership. Why? Because most people do not listen. They simply hear what you say and interrupt with a reply.

For decisive decision making, you need to listen and:

  1. Pause. Take a moment to take a step back: Some issues require more thought than others. Some decisions require ‘sleeping on it,’ while some need more research and investigation.
  2. Bring forth your best self. Ask yourself: How am I approaching the issue and who do I want to be right now?
  3. Listen attentively. Ask questions and seek to understand.
  4. Evaluate the issue and take the time for further research.
  5. Be open minded, to truly hear others. Be willing to consider that what you first thought could change. That is the purpose of this process of breathing and pausing – instead of simply reacting.
  6. Ask yourself again: Who do I want to be? From what place do I want to make this decision? How can I approach this from a place of wisdom?
  7. Trust that your decision from this place will be the right one.
  8. Approach everything with honesty and authenticity.

Your credibility as an authentic leader, who lives your values and mission, is measured by your team with each decision you make.

So back it up.

You Will Have Full Confidence in Your Decisions When…

…they are born from a place of of well-thought out confidence and decisive wisdom verses the emotional, reactive decisions.

Once you have made your decision, be willing to allow others to think and feel what they choose. You can have genuine empathy, love and compassion for others while also being honest with them and true to your wise decisions.

The best approach to effective decision making is actually a combination of reactive and decisive. The result is a decision that is both wise and proactive.

With Experience, You Can Learn to Trust Your Gut

Over time, you will recognize better when you can truly “trust your gut.”

At that point, it will be a reflection of your knowledge and experience. You will intuitively know when you need to pause.

Ultimately, you will not only trust that your decisions will be the best it can be for that moment, but more importantly, you will decide that you are okay if you were wrong. The willingness to learn to continually shape how you address things in the future is the real goal here.

The next time you’re faced with a decision to make, remember:

Reactive + Decisive = Wise, Proactive Decisions

If you’d like to become even better at managing or dealing with difficult people or situations, please visit us at StriveCoachingStudio.com where we tackle a topic each month to add tools in your toolbox that you can implement into your workdays.

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