With Murray Patt of Hale-based accountants Alexander Knight & Co.
Being a risk taker is something that comes naturally to most business owners. You probably took the biggest risk of all by launching your very own venture in the first place in a world where most people are happy to continue working for someone else. It’s important to remember, however, that most successful entrepreneurs take calculated risks. Kneejerk decisions rarely, in my experience, result in the best outcome, so here are my five key tips to de-risking decisions.
Get external advice
It doesn’t matter how successful your business is, you don’t know everything and you can’t do it all yourself. Receiving professional advice on key matters such as capital expenditure, tax strategy or employment law matters makes a huge difference to outcomes. Using your own hunch or informal advice from pals can all too often result in expensive mistakes being made. Wise entrepreneurs select their professional advisers – lawyers, accountants and any other external consultants – carefully to avoid mishaps.
Weigh up the pros and cons
As entrepreneurs, we tend to see the glass half full. Having a positive outlook is an essential characteristic for leaders, especially in tough times. A positive persona motivates colleagues, customers and clients. Key business decisions, however, should be taken logically and not emotionally. There are always upsides to doing a deal – but it is essential to also weigh up the potential downsides. Having a fully rounded viewpoint enables you to make more informed decisions than those based on sheer gut instinct.
Measure the impact
Knowing your facts and figures is often what separates the best business owners from the rest. You can only accurately measure the impact of your business decisions if you know what you’re measuring in the first place. Put simply, commercial decisions should be measured commercially. Having a good handle on daily sales figures, revenue and profit margins is essential.
Seek input from your own team
Very often, your own staff can give you the best insights about your business. Considering the viewpoints of your colleagues from within the wider business (not just those colleagues in the boardroom) will give you a holistic view of the impact of potential business decisions.
Don’t be stubborn
Sometimes, we make the wrong decision as business owners. It’s important that you can acknowledge this and that you’re not afraid to shift your position – otherwise known as a U-turn! Sticking to a business strategy out of sheer stubbornness can not only be painful financially but can negatively impact the people around you. The best entrepreneurs have the agility and humility to change their tactics swiftly, and always have a plan B (and even a plan C) if things don’t work out.
Remember, if running a business was easy everyone would do it!