The journey towards entrepreneurship is not an easy one; it requires one to own up to frequent tough decisions. Look at some major hurdles entrepreneurs encounter while charting their path and making critical calls. Read on...
In this article “tough decision” is not in the context of starting a new venture but relates to taking the “tough decision” of discontinuing initiated ideas. Ironically, when it comes to reducing costs or discontinuing loss-making operations, many Entrepreneurs fail to make tough decisions. Fear of failure, self-ego, emotional values, overconfidence, social pressure, etc are a few reasons why these decisions are tough.
Following are 3 golden rules you must keep in mind while making such a decision for your business:
Focus on Cash Flow
When the going is good, we expand products, services and regional presence. In bad times, one has to take the tough decision of consolidating operations. One costly mistake will make you realize the value of Cash. Further, never take debt to further fuel inefficient operations. A debt trap is the worst situation to get in, especially when you are funding loss, making preposition in the hope of making profits. If you don’t focus on Cash Flow, a day will come when you will have to prioritize either interest payment over other costs (including regulatory liabilities) or even struggle with salary payments. Remember the concept of Sunk Cost and move on. Learn from your mistakes, which must be reflected in your future decisions.
Weed out inefficiency
Set a culture that promotes efficiency and also be proactive in weeding out inefficiency. Develop a strong Performance Improvement Plan and use it effectively to achieve your objective. It may not just be limited to individuals but covers business units, product lines, regional offices, etc. Strong importance needs to be given to business targets. Data-driven decision-making is necessary to utilize data analytics to identify inefficiency within your organization as such decisions can lead to targeted improvements. Adapting to Industry changes and keeping a watchful eye on industry trends can also aid in weed out inefficiency. Being on the cutting edge of your field can set you apart.
Communication
All tough decision has logic behind them. Adopt a policy of keeping your key people/ stakeholders well-informed while executing such tough decisions. This would increase clarity and commitment. Embrace technology and the latest communication tools. Being proficient in digital communication can increase your efficiency and connectivity. Ensure that all voices are heard and valued within your organization. Inclusive communication fosters a sense of belonging and commitment. Lastly, Develop a crisis communication plan to navigate challenging times effectively. Knowing how to communicate during crises can be a career-saving skill.
