The art of making good decisions
Builders’ business coach Graeme Owen says making good decisions can be a difficult process that involves deliberation, sleep and some solid guiding principles
I recently spoke to the owner of a large building company with good buying power and supply lines. He was asked by a small builder if he would sell him materials, as he was having difficulties obtaining supplies. In the past, it would have been no problem but today he was reluctant to do so.
“If I help him out, it may affect my ability to build tomorrow,” he said.
Should the builder help his colleague, or should he take care of himself first? It’s a classic conundrum.
I talked to another builder, who had rented warehouse space to stockpile hard-to-get materials. Is this wise, or will it just compound the material shortages problem?
Again, this raises further questions. Is it selfish to stockpile when resources are scarce, or is it prudent and responsible?
Difficult problems rarely have simple answers. For example, it is never right to covertly substitute inferior materials. But when a problem is complex or personal, there are many possible answers and more thinking needs to be done. There are more issues to weigh up.
The reality is that, in business, you don’t often have the luxury of long debates and discussions. You have to make decisions in the moment and sometimes there are hard calls. Especially in difficult times.
So how do you go about making good decisions in complex times? Here are four strategies I find useful:
1. Know your numbers
Knowing where your business is at financially is crucial in tough times. You may have coped well on gut feel in the past but, in the current changing environment, you will need to read things differently. When the goalposts shift, you need to play a different game.
Knowing your numbers on a weekly or monthly basis will give you the real (actual) information about your business performance, so you can make more informed decisions. Build a simple dashboard and look for trends – small changes over several weeks/months, then tie any new decisions you make to one (or more) of your indicators and watch them carefully over the coming weeks/months. Look for small changes. If these are concerning then review your decision immediately, learn from it and make another (better) decision.
2. Revisit your values
In the case above, my business owner friends were torn between two overlapping fields of influence – self-interest and looking out for other members of the building fraternity. How do we balance these in a way that preserves both? The reality is that we live in both spheres and thrive when both our business and our community thrive. Unfortunately, there is no easy answer here and those who say there is are not sitting where you are at the moment.
I will never forget an older property investor saying he would always make sure to leave some on the table for the next person. For example, in a rising market, he would not wait until the property market had reached its absolute peak and then sell. Rather, he would sell when he had made good gains. For one thing, you can’t predict that peak anyway. Furthermore, if you are right at the top then there is no capital gain left for the next buyer and you may get a lesser price! He was guided by his deeper
value of making sure the other person does well too.
So what are the values you operate under? These will shape your motivations, and ultimately your decisions and choices. You might want to call them your business principles. Now might be a good time to remind yourself of those deeper values or principles for which you want to be known or remembered.
For example, integrity guided my builder friend to stockpile materials so that he could keep his promise to his client to complete the job. What will your values tell you?
3. Be courageous
You don’t have the benefit of experience in rapidly changing times. However, you still need to make decisions, as it’s indecision rather than wrong decisions that wipe out small businesses. But making decisions requires courage, so be courageous. Weigh up the evidence, seek the best advice you can get and make your decision. The thing is, if it turns out to be a wrong decision, then make another! But do so courageously!
Another thing – don’t be afraid to learn from mistakes. No successful business owners that I know have only made correct decisions. Every one of them has made wrong decisions. But they have not stopped at the wrong decision. Rather they have used their experience to learn how to make better decisions in the future.
4. Choose your timing
Important decisions are rarely urgent and urgent decisions are rarely important. So learn to know the difference, then protect yourself when making important decisions. Refuse to make them on the fly or with limited information.
Try to schedule your decision making time and make sure you are at your best. Most people make better decisions in the morning after a good night’s sleep – choose the best time for you. Review all the information and check your calculations several times. Then, once you have made your decision, let it sit for a few hours before acting on it.
Graeme Owen is a builders’ business coach at thesuccessfulbuilder.com. Since 2006, he has helped builders throughout New Zealand get off the tools, make decent money, and get more time in their lives. Grab a copy of his free book: The 15 Minute Sales Call Guaranteed To Increase Your Conversion Rate or join Trademates and connect with builders who are scaling too.