Most people in the business industry are not blindsided by their mistakes, they are well aware of what is going wrong and how it can be improved if they are to be put in such a situation. When the frustration increases, the level-headedness of a person decreases and that’s when wrong decisions are made.
While following different approaches, one can make smart short-term business decisions while doing the same old tasks. With several tips focusing on making better use of data and creating insights, rather than simply ignoring it, is a way to revolutionary business strategy.
In this blog, you will read about tips on how you should make short-term business decisions and much more!
What is Short-Term Decision Making?
Short-Term Decisions usually focus on making the best use of the resources available in the short run. The relevant costing approach and several other factors, therefore, play an important role in decision making in order to maximize the profits of the business.
Short-Term Business Decision Making Process
In order to make a wise business decision, it is important to go through the following steps and process. Here are a few important points on what you should do while making a short-term business decision.
Defining the Goal
Before taking any decisions, it is important to set a goal, which could be as simple as “I need to drink 3 bottles of water today”. Whenever you take the simplest of decisions, there is always a goal behind it.
The proper you identify the goal, the more information you can gather and in order to achieve the goal, make your goal measurable and timely so that I can be achieved at the end of the process.
Identification of Problem
Before making a decision, it is important to identify the problems you need to solve or the questions to be answered. The identification part is essential because if one misidentifies the problem, it will knock the decision process off the track.
Gathering & Analyzing Relevant Information
Once you have identified your problem and defined the goal, it is easier to gather relevant information. Doing an internal assessment of the good areas and the loopholes of your business is an important factor.
Apart from internal assessment, seeking information from external sources such as researches, studies and also, paid consultants is a part of the process.
With gathering so much information from several sources, it becomes a little problematic because you are bogged down with the number of facts and statistics you have collected, which in turn might complicate the decision-making process.
Identifying Alternative Courses of Action
Now that you have all the relevant information you need, you need to identify all possible solutions to the problem and answers to the questions. There is usually more than one way to meet a specific goal.
For example, if your business is trying to improve the social media engagement, the alternatives for them is to either include paid advertisements, or changing their social media strategy, or might be a combination of both.
Evaluation of Options
After identifying the alternatives, it is now time to weigh down the evidence for or against the chosen options. You need to evaluate the decision-making process of other successful companies in order to understand the process better, then list down failures of your business. Once you’ve the identified pit-holes, you can identify different options and alternatives for each failure and weigh those against the potential rewards.
Selecting Among Alternatives
This step in the decision-making process is where you take the actual decision. Now that your business has identified the problems, and chosen the suitable alternatives for the various loopholes and gathered and evaluated the relevant information, you can now develop and consider the potential paths to follow by selecting among the alternatives.
At this point, you are perfectly capable to take a decision.
Taking Proper Action
Once you have taken the decision, now it is time to implement the decision. In order to implement the choice, the business needs to develop a plan to make the decisions tangible and achievable.
After you develop a detailed project plan, it is time to assign the team and distribute tasks to each one of them in order to fulfill the goal.
Reviewing the Decision
After a predetermined period of time defined in the decision-making process, it is now time to step back and review the decision.
It is time to ask yourselves certain questions such as- Did you solve your problem? Did you meet your goals? Do you see any potential problems?
Once you have a satisfactory answer to all the above questions, is when you have successfully completed the short-term decision-making process.
Tools & Techniques to Evaluate the Decision
Here are several tools you require during the decision-making process and after you have taken the decision in order to evaluate the short-term business decision.
- Decision Matrix
It helps in evaluating the several alternatives in decision-making. Using this tool, you can create a table dividing the columns into factors affecting the decision and then scoring each option, in order to weigh down the factors of more importance. The final score is tallied to reveal the best option.
It helps in noting down all the positives and negatives and the plus and minuses of the options available. It can also be classified as making a pros and cons list to compare the options.
With this graph or model, the business can contemplate each alternative and the outcomes of each. This technique helps in conducting a statistical analysis.
When multiple people are involved in the decision-making process, a large list of options are given to a smaller group to eventually take the final decision.
- SWOT & PEST Analysis
It is essential to conduct a SWOT (strengths, weakness, opportunities & threats) and PEST (political, economic, social & technological) analysis in order to improve the short-term business decision-making and timing. This process helps in considering present trends to help predict future ideas.
Congratulations on taking your decision. All you have to do now is control the managerial accounting once you plan is implemented. You can only be a successful manager and business owner, if you follow-up in order to determine if the choice you made was a right one.