Problem-solving and decision-making skills are essential for any small business owner. Oftentimes, problem-solving and decision-making go hand-in-hand. And, utilizing the right decision-making and problem-solving strategies can make or break your business.
Read on to learn about the importance of problem-solving and decision-making and steps to take to find the best solution for your small business.
Importance of problem-solving and decision-making
You have to be able to make the right choices and use problem-solving techniques to help grow your business.
Problem-solving and decision-making in business can help you:
- Review situations carefully
- Openly discuss problems and solutions
- Organize ideas
- Predict consequences of decisions
- Weigh alternatives
- Create plans of action
5 Steps for decision-making and problem-solving
Use the five steps below to guide yourself through a problem and decide on a solution.
1. Analyze the problem
Before you can fix an issue and use decision-making skills, take a look at the problem at hand.
Identify and analyze your business’s problem. Figure out where the problem stems from and go from there. Consider seeking others’ perspectives to get a different outlook.
Learn the ins and outs of the issue and go beyond the surface. Dig deep to learn why you are experiencing a problem and what you can do to resolve it. Ask yourself questions like, When did this problem start? Did the issue create additional problems?
Determine whether or not the problem needs immediate action. How urgent is the issue? How long will it take to fix the problem? The severity of the issue determines how quickly you respond and what steps you must take.
2. Gather information
After you determine and analyze the intensity of the problem, gather supporting information.
Review documentation to support your thoughts. Some information you can gather includes financial statements, marketing metrics, and calculations, such as customer acquisition cost.
Depending on the issue, the type of information you gather may vary. Think about what reports to use to further analyze the problem and back up your claims.
3. Brainstorm solutions
You can’t expect to come up with a solution to your problem if you don’t brainstorm solutions.
Set aside time to think of solutions to your issue. Consider holding a workshop where you can discuss problems in your business with other workers. That way, you can receive feedback from multiple people. And, employees can bounce ideas off one another.
Depending on the number of problems you have in your business, you may need to consult your employees. Set aside time for regular meetings until you determine a solution.
Don’t be afraid to ask others for their input. The more ideas you have, the more likely you can find a viable solution to your problem.
Think back to previous problems you had in your business. Were they similar to the current issue? If so, how did you resolve the other problems?
When generating solutions, think outside of the box. The solutions you and your team use don’t have to be the same methods you have used in the past.
4. Weigh pros and cons
One main component of effective problem-solving and decision-making is weighing your pros and cons before making any decisions.
When problem-solving, think about different techniques you can use to review advantages and disadvantages. For example, you might create a SWOT analysis to determine your business’s strengths and weaknesses.
Jot the pros and cons of each solution down on a notepad or use a spreadsheet to organize the advantages and disadvantages. Writing pros and cons down helps you visualize which option may be most beneficial to your business.
Consider giving each solution a score based on the number of pros and cons they receive. List your solutions by point value to rank which option might be the best route. Keep in mind you don’t necessarily have to choose the option with the highest ranking.
Once you create your list of pros and cons for each solution, compare your options. Don’t rush through the process. Take time to consider all of your options to ensure you select the best one for your business’s problem.
5. Decide on a solution
After evaluating all possible solutions, it’s time to make a decision.
As a small business owner, you may feel obligated to make decisions quickly. But when it comes to the well-being of your company, don’t be rash.
When making a decision, consider a few things such as:
- Amount of risk
- Possible outcomes (short- and long-term)
- Negative side effects (e.g., other problems)
- Likeliness of success
After you complete the problem-solving and decision-making process, implement your solution. Be sure to track your solution’s results. Did the solution fix your problem? If the outcome is not what you expected, consider switching to another solution instead.