Seven tips for better business decisions

Looking to grow your business but don’t know where to start? Learning how to make better business decisions is one of the best ways to improve your business’ performance

There isn’t a concrete model for how to make better business decisions (as much as we wish there was) but as a rule of thumb you should always be guided by a rock-solid understanding of where your business is right now, and where you want to take it next.
It’s easy to let emotions influence how you review business performance or drive your business strategy, but successful business owners know that great financial decisions are always impartial. Our tips on how to make better business decisions will show you how to evaluate business performance in ways that remove personal bias, while still leveraging the data and know-how you’re gathering as you grow your business.

How to make better business decisions

These seven tips are designed to equip you with tangible ways to improve business performance by outlining how to evaluate financial health and distil your observations into an effective business strategy. They are:

1. Review your previous financial year
2. Look at your business from a stranger’s perspective
3. Examine your existing customer base
4. Create a financial forecast
5. Develop an ambitious but achievable business strategy
6. Communicate with your team
7. Provide opportunities for feedback

1. Review your previous financial year

You can’t know where you’re going if you don’t know where you’ve been. Learning how to make better business decisions starts with reviewing the effect of past business decisions. Although looking for ways to improve business performance should be done all year round, end of financial year is a particularly good time to review your business strategy and think about how you’ll make the start of financial year count.
When you’re reviewing your business’ strategic plan, think about what's working and (arguably more importantly) where you’re getting stuck. Consider which tasks are the most time-consuming or stressful, then do some research into solutions that can alleviate or outsource these pain points.

For example, if you’re constantly bogged down by payroll, consider whether you need to outsource finances so you can spend more time on the projects directly related to growing your business.

By using the start of financial year to launch a new business strategy you’ll be in a good position to evaluate its effectiveness after a whole financial cycle has passed (aka the next end of financial year).

2. Look at your business from a stranger’s perspective

An important part of learning how to make better business decisions is being able to step back and evaluate your business from an outsider's point of view. Take the time to slow down and reflect on your past financial decisions, accomplishments and weaknesses.
If you weren’t involved, how would you view the financial health of your business? How would you judge the financial decisions that have been made? If you’re finding it difficult to answer impartially, consider asking someone in your network for their thoughts and feedback.

3. Examine your existing customer base

Another way to improve business performance is to evaluate your existing customer base. Are you relying too heavily on a small number of customers? Should you look at diversifying your customer base? How could you upsell to existing customers? Ultimately, these questions are what will help guide you on how to make better business decisions moving forward by giving you actionable insights.

4. Create a financial forecast

While ambitious goals and a clearly defined business strategy are important, you also need to have a framework for measuring and achieving these goals. Having a clear path towards your ambitions will empower your team with actionable next steps to keep them on track.

To do this, work with your accountant to prepare a business strategy that includes a financial forecast for the next 12 months.

Basically, you want to get this down to a key metric or two. For example, you might focus on the number of customers you expect each month and their individual average value to ascertain what you need to do to reach your goals.

Knowing what money you’ll have available (and when) is an important component of knowing how to make better business decisions. By building a financial forecast, you can draw up more realistic budgets and be prepared to meet financial commitments year-round, even when business is slow.

5. Develop an ambitious but achievable business strategy

To grow your business, you need to build on solid foundations in the form of a plan or financial strategy. Effective business strategies are driven by specific and realistic goals, which you’ll already have if you’ve followed our first four tips.

A robust business strategy is your roadmap to success by guiding how to make better business decisions in line with your business’ goals.

Staying true to your strategy means making sure that your day-to-day actions align with these goals. For example, if your goal is to retain as many clients as possible, your strategy could be to focus on developing existing relationships, which might translate day-to-day into prioritising client emails before you get back to any new business enquiries.

6. Communicate with your team

When it comes to learning how to make better business decisions, communication is key. Successful businesses are built on teamwork, and people need to feel like they’re a part of something if they’re going to help grow your business.

Involve your team in the process by learning which tasks and projects they’ve enjoyed working on the most, and then match those preferences with the business’ needs.

People love to feel involved, so be transparent with your team about your business goals. For small businesses, building a team that’s passionate about their work is an invaluable way to improve business performance.

Not only can it help to strengthen your brand (how your staff interact with stakeholders is a huge part of your business’ personality), but it can also help alleviate some pressure, so you can focus on growing your business.

7. Provide opportunities for feedback

Although feedback is a part of healthy communication, it’s an important enough pillar that it warrants its own tip.

Listen to your team – they’re living and breathing your business strategy and are an important resource when it comes to understanding how to make better business decisions.

Make yourself available to speak to them in a range of formats (think meetings, ad-hoc discussions, brainstorms, reviews, feedback sessions etc) to cater to individual communication preferences.

This also holds true for clients, who are another great source of feedback you can draw from. Try asking them their favourite and least favourite things about your business – you’ll likely find out things you otherwise would’ve missed without this open dialogue.

Don’t take on feedback and you risk losing valuable team members and clients, or overlooking various issues in the business. Being open to fresh perspectives is an important part of knowing how to make better business decisions and puts people at the heart of your business strategy. After all, it’s people who power businesses, not just money.

It’s easy to make confident financial decisions when you have the right partner by your side. Get in touch with us to find out how we could help achieve your goals and learn how to make better business decisions.