The past couple of years has definitely been a wild ride– especially if you own a business. But, as the saying goes, “resistance makes you stronger.” With a little focus, reflection, and determination, we have the power to turn all the disruption and uncertainty into opportunity. We can strengthen our leadership skills, become better business decision-makers, and steer our ship through the turbulence.
In order to unlock this untapped potential, however, we need to be prepared. Here are six critical factors to make effective critical business decisions in the face of disruption, uncertainty, and costly setbacks.
1. Review where you are.
Where is your business in the market, what role do you play in it, and who are your main competitors? How have you handled the pandemic and all the disruption it left in its wake? Your answers will give you valuable insight into how your business as a whole reacts to disruption, uncertainty and unpredictability.
2. Make a realistic assessment of your risk tolerance.
Before you can make any critical business decision, you need to thoroughly assess how much money and other resources you can afford to invest in a new product or opportunity. Should the initiative fail can you handle the loss?
Of course, every business decision will include a certain degree of risk. However, successful entrepreneurs don’t approach these risks blindly. They also don’t take excessive risk. In fact, the most celebrated entrepreneurs are actually risk adverse. They figure out a way to hedge their risk with every step and business decision they make.
3. Research, research, research.
The most effective and sustainable business decisions are backed by a lot of research. You need to be in touch with customer trends and preferences and the competitive landscape, all while keeping your eyes and ears open to new opportunities. Continually test the market for direct validation of your goals and endeavors. Learn from past mistakes and erroneous assumptions and put those lessons into action.
4. Determine how will you measure performance.
To see if and when goals are being met, you need to continually evaluate and measure performance. Endeavors that aren’t giving their business a sufficient ROI, can then be abandoned.
5. Work with trusted advisors.
You just can’t be an expert in everything. So, make an effect to surround yourself with a team of other professionals who can help you to broaden your perspective and give you support in times of uncertainty. This team can include lawyers, CPA’s, industry peers, professional consultants and mentors.
6. Learn how and where to hedge against risk.
In the financial world, investors routinely hedge their investment portfolio against loss. In a similar way successful entrepreneurs should seek to reduce the risk of loss as they move forward with their business. This can include strategies such as building up a financial buffer, investing in product lines less likely to suffer when disruption hits, and creating a database of alternative suppliers.
All of the above factors are designed to give you clarity and confidence in your business decision-making, so when disruption hits, you’ll know what path to take.
