8 Ways to Make Smart Small Business Decisions

1. Set clear objectives

Before you make critical business decisions, you want to have clear goals. These are typically called key performance indicators (KPIs). The most common KPIs are:

• Financial metrics, such as sales, earnings, or profit margins.
• Metrics on your customers, such as retention and satisfaction rates, lifetime value and acquisition costs, and the number of returning customers versus new ones.
• Non-financial metrics, such as the employee turnover rate.  

Using metrics will allow you to create targets. Goals should be specific, realistic, and completed within a certain timeframe. Once these goals are set, you can work on achieving them.

2. Rely on data

Your primary goals will typically be to increase sales and earnings, keep your customer retention and satisfaction rates high, and reduce customer acquisition costs. To do this, you can use data to make decisions instead of relying on your gut instincts or experience.

Data will tell you what products or services are performing well when sales tend to rise and fall, which pages on your website get the most traffic, and much more. In addition, this data can be used to find trends that can inform future decisions.

Doing more of what’s worked in the past based on your collected data is a better strategy than trying something completely new and different and untested.

3. Know your customers

Your customers are the lifeblood of your business. Without them, you wouldn’t have a business. So it’s essential to learn more about your customers to serve them better. The more you know, the more successful you’ll be when selling to them.

One way to learn more is by talking to them. Find out what they’re buying and why they’re not buying other products or services from you. That can make selling to them easier because you won’t waste time trying to sell them what they don’t need or want. 

Also, learn about their challenges and goals. It can help you find the right solutions to offer to them. Monitor trends and developments in the marketplace that will affect your customers to predict what they might need.

4. Learn from past mistakes

Every business makes a mistake. Some of the largest companies in the world have made them. For example, Coca-Cola launched New Coke to replace the soft drink’s formula, Apple introduced the Newton personal digital assistant, and Colgate had a line of frozen dinners under the same brand name.

When mistakes happen, learn from them. Ask why it happened, what went wrong, what could have been done differently, and whether any outside forces played a part. 

Embracing change is often the way to learn from your past mistakes. However, it doesn’t help to focus on the error and blame yourself or others for what went wrong. You may need to start from scratch, but that’s fine. Sometimes finding a business mentor can help you when mistakes arise.  

5. Have a contingency plan

Your business will encounter many risks and challenges. For example, maybe your internet goes down for a day or two, as it did last week during the Rogers outage. In that instance, ensuring you have business interruption coverage within your commercial property insurance policy can make a significant difference if your company was one of the countless others that suffered “thousands of dollars in business losses”.

That’s where a contingency or emergency backup plan comes into place. Having one will help your business bounce back quicker, reduce losses, and provide your employees peace of mind.

A contingency plan should identify all your business risks, prioritize the risks, determine how each risk will affect the business, and the steps to follow or who to contact when something goes wrong. The plan should be shared with all employees so they know what to do.

6. Eliminate inefficient operations through technology

The pandemic has forced many companies to adopt certain types of technology faster than expected. Your competitors are becoming more efficient, which means you need to catch up.

A lot of systems and processes are inefficient and can be improved using technology, such as payroll, invoicing, marketing, contract signing, project management, and more. Look at ways to automate or speed up these processes.

Also, consider making it easier for clients to book meetings with you or your employees using free web tools. If you’re the type of business offering appointments, give customers the ability to choose and schedule (or cancel) an appointment online instead of calling someone. You can also get a chatbot for your website to answer customers’ questions after regular business hours.

7. Protect your business with insurance

Many types of business insurance can help protect your company. The insurance you need will depend on your industry, business risks, and the services or products you offer.

Your company will deal with many different risks and it’s important to know what they are because that will help determine what type of coverage is needed. There are many things you should know before buying small business insurance.

8. Trust your people

As a business owner, you’ve been making decisions from the beginning. However, you can’t make all the decisions as you grow and hire more people. You’re going to have to trust others also to make decisions.

Having trust in others is a trait that all employees crave. They don’t want to be micromanaged or have their decisions overturned by you. Allowing them to do their jobs without constantly looking over their shoulders shows them that you believe in them, and they will be more likely to stay with your company.

While there are other essential traits to be a successful entrepreneur, trust is one important trait to have when it comes to managing others.

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