How Can You Make Correct and Healthy Decisions Regarding Your Business?
One of the most challenging issues for SME-scale businesses is cash flow. As an SME owner, when your cash flow faces difficulties, it becomes inevitable to make tough decisions in order to get back on track.
What could these tough decisions be?
How can you make these tough decisions in a healthy and accurate manner?
To help you make effective decisions, we’ve listed the 7 steps you should follow:
- Define the problem that requires a decision
- Gather the root causes and all relevant information related to the problem
- Interpret and analyze the gathered information
- Based on the analysis, determine possible solution alternatives
- Compare the alternatives and choose the most suitable (optimal) one
- Determine the implementation principles for the selected alternative
- Track the implementation and evaluate the results
While following these steps for effective decision-making, as an SME owner, your focus should always be on your guiding star:
Your free cash goal that will make it easier for you to leave your business with a full pocket.
As an SME owner, you face thousands of uncertainties and conditions that arise outside your control every day. Wars, pandemics, high interest rates, falling interest rates, inflation, employee satisfaction, employee dissatisfaction, and many other issues in business life keep sticking to you daily. In this chaos and uncertainty, your guiding star—your free cash goal—must always direct the decisions you make or need to make.
Otherwise, you won’t be able to determine the right direction for your decisions, and you might end up making wrong or inefficient choices that won’t serve you, or even hinder your cash flow.
Let’s say you applied the 7 effective decision-making steps above regarding a difficult decision that’s squeezing your business, and you’re now in the decision-making process.
The second most important factor that will increase the impact and accuracy of your decision is the speed of decision-making.
As an SME owner, the most crucial thing you need to pay attention to is the strength and continuity of your cash flow. Since the revenue cycle of your SME-scale business will be quite fluctuating and irregular, you must be at least 51% certain that every expenditure or investment you make will return as profitable sales within a year. You should avoid making expenditures and investments that have a low likelihood of turning into sales. If you made them, stop these expenditures and investments quickly. The most common trap SME owners fall into is the trial-and-error trap.
Don’t make expenditures and investments based on the mentality of “Let’s try it, maybe it will work,” like Nasreddin Hodja trying to make yogurt in a lake. If you made a wrong investment due to inexperience (it can happen), once you realize that this investment will not return the cash you need or expect, you should stop it quickly to avoid further losses.
The riskiest issue your SME cannot tolerate is cash flow.
The moment you identify that external events affecting your business are damaging your cash flow, it’s time to stop the investment.
The decisions you need to make may feel overwhelming and challenging.
A decision, no matter how much you believed in it at the beginning, may not generate the expected cash flow and could even have no chance of doing so. This may shake your initial trust in the investment and leave you in a dilemma about whether to exit or not.
In such situations, the only analysis you need to do is:
Calculate the return rate and timing of the money and time you’ve invested.
If the result of your calculation is quick and positive, there’s no problem.
However, if the result is slow and negative, urgently terminate the investment.
To evaluate these and similar “tough decisions” using professional business and financial methods, and to make the best decisions for your SME, whose most valuable asset is its cash flow, contact us immediately.
The way to leave your business with a full pocket today lies in making the right and fast decisions for it.
We work for your success and prosperity in business.
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