2017-12-05 00:00:00 Decision Making English Learn what a decision making model is and how you can use them in your small business. See some example models that top business people use... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/Man-Explaining-Use-Models-Decisions.jpg How to Make Better Business Decisions by Using Models

How to Make Better Business Decisions by Using Models

1 min read

Running and growing a small business requires you to make decisions every day. Successful companies utilize rational and analytical decision making because it helps to overcome cloudy judgement and biases that naturally occur in a person’s thinking. The best way to make rational decisions is to use one of the many decision making models available to you.

Rational decision making with models is done using data and some process of analysis to come up with a “best decision” to make out of possible choices, and it doesn’t have to be complicated or daunting at all.

For example, a popular model used in small businesses is the Eisenhower Matrix developed by Dwight D. Eisenhower, the 34th President of the United States. On a sheet of paper, draw two lines to form a two-by-two grid. The top row of this grid is labeled “Important,” and the bottom row is labeled “Not Important.” The first column of the grid is labeled “Urgent,” and the second column is labeled “Not Urgent.” Next, list all your tasks and categorize them into one of the four quadrants: “Important-Urgent,” “Important-Not Urgent,” “Not Important-Urgent,” and “Not Important-Not Urgent.” The tasks in the first category should be done as soon as possible. The “Important-Not Urgent” tasks need to be done but can wait; scheduled them on your calendar now. The tasks that aren’t so important but are urgent should be delegated, and the final category of tasks shouldn’t be done at all. Delete them.

That’s just one model, but there are dozens if not hundreds of models available to you. Famous billionaire Jeff Bezos utilizes what he calls a regret-minimization framework to make important decisions by focusing on the long-term in a unique way. Warren Buffett uses a model known as the circle of competence. Both billionaire also use the Eisenhower Matrix.

The key for your business is to start using a few different decision models and decide which ones work well for you. Find a few decision models that seem interesting to you, then test them out for a few weeks or months. Measure the progress in your business. If those models are working for you, keep them. If not, try some new ones. Rest assured though that by using decision models, you make better business decisions.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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