Decision making can sometimes seem like inner civil war. Jim Rohn
How would you make the following decision?
Your business is burning through cash. Although you have a great service, you need more volume to make it profitable. You suffer from conflicting objectives you want to lower your ongoing risk and reduce your debt, but you have to increase your marketing budget to grow, and you want to start paying yourself a livable wage. Youve agonized over what to do, but now its time for a decision. Youve thought of these options:
1. Apply for credit cards and borrow against all personal assets to get the money needed for marketing.
2. Sell part of the business to a partner or investor to raise the marketing money.
3. Merge the company with a well-capitalized competitor and stay on as an employee.
4. Sell the whole business with an employment agreement.
5. Liquidate the business, pay off debts, and walk away from the opportunity.
Remember: My question to you is not about what decision you would make, but how would you make it.
Roger Dawson, in his audio program called Confident Decision Making, provides excellent methods for making many types of decisions. These decisions range from a simple decision between two choices, to very complex decisions that have many options and many variables. The following method, called Handicapping, is used for solving problems with multiple options.
I will use the above problem to illustrate the Handicapping method. For the sake of space, I will only compare the first two options, but by adding more columns, it is just as easy to compare all five. You will see my example below.
First, describe your desired outcomes in positive terms. Next, on a scale of 1-10, rate each of them according to your priority 10 being most important. Multiply the numbers in your Rate their Importance column with your Likelihood of Attaining column. Add up your Point Value columns for each option and the highest number and the option with the highest total will be your most compelling choice.
EXAMPLE: WHAT TO DO WITH YOUR BUSINESS?
Option One: Apply for credit cards and borrow against personal assets for marketing.
Option Two: Sell part of the business to raise marketing money.
Column A Column B Column C Column D Column E Column F
Desired Outcomes Rate their Importance to You (1-10 with 10 the Highest) Likelihood of Attaining This Outcome with Option One Point Value for Option One (Multiply Col. B by Col. C) Likelihood of Attaining this Outcome with Option Two Point Value for Option Two (Multiply Col. B by Col. E)
Increase Personal Income in ˜07 7 3 21 (7x3) 6 42 (7x6)
Personal Challenge 9 9 81 9 81
A Successful Business 8 5 40 7 56
Reduce Risk 7 2 14 6 42
Financial Independence 5 5 25 6 30
Debt Free 6 5 30 7 42
Total 211 293
If this was an important decision for you and you were to perform this same exercise with all five options, and if you took care in your ratings of each option, the highest score would indicate how your desired outcomes, priorities, and probabilities were most closely aligned with that winning option.
You can see how this system creates a more objective environment for making decisions. It can be performed alone or in a group. Perhaps most valuable, however, is that it creates a values-based decision making environment that restricts your emotions from taking over. When performing your ratings, record them and then reevaluate them over the time available for making the decision to allow for maximum objectivity.
Business is full of challenging decisions that can plague leaders. Poor decisions can destroy a business or cripple it for years. A system like this cuts through the emotional fog and shows your followers that your success will not be not based on chance or luck, but that you decisions will be based on your values, priorities, and their probabilities of success, making your decisions more consistent over time.
Steve Meisenheimer offers practical insights into leading and managing a growing company through his books, audios, and subscription products. Learn more at http://www.MeisenheimerInc.com, or e-mail Steve at Steve@MeisenheimerInc.com.
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