Making difficult decisions is never easy but can be especially difficult when you’re making them for your business. That’s why using a tool such as a decision matrix can be helpful when you have a series of options and need to figure out which one makes the most sense logically.
What is a Decision Matrix?
A decision matrix is a tool that allows you to evaluate and prioritize options when making decisions. By inserting values into the rows and columns of the matrix, it systematically analyzes and identifies the rate of performance of relationships between the sets of values and information.
A decision matrix is a great tool to use to obtain an analytical view of the choices you’re selecting from. Our own biases and emotions may often cloud our judgment when making decisions, especially choices relating to our career and business goals. Ultimately, what’s important is making the choice that is most likely to put your business in the best position to succeed.
The decision matrix is also known as a trivial solution matrix, pugh matrix, or market opportunity analysis. Market opportunity analysis is a process in which you are able to assess the attractiveness of a business opportunity. There are a series of questions that you must consider when doing market opportunity analysis.
- What is the opportunity?
- How many people are already meeting this need?
- Is there another company that has already filled this need?
- Can we differentiate our company from others to have a competitive advantage?
- Is there a financial opportunity for customers and the company?
- What other factors should be considered that may impact the opportunity?
How to Use a Decision Matrix in Your Small Business
When conducting a thorough decision-making process, you can use this tool to help you assess the situation fully. Therefore, when using a decision matrix, or pugh matrix, for your business, you should think everything through carefully and follow these steps:
- Write down everything : Listing all of the options you’re considering along with each of their factors and criteria is critical when making a decision matrix as it’s what allows you to use it effectively. Without specifying the criteria of relative importance, you may miss something vital that could affect the selected best decision.
- Order the factors: Now that all of the data is collected in one place, you need to figure out what factors and criteria are good versus which ones are poor.
- Rank the factors based on importance : You know what is good or bad, but if the good doesn’t rank as important as the bad does, or vice versa, it’s impossible to make an informed decision. Create a rating scale to help you with this grid analysis.
- Calculate the overall score for each factor : The way you are able to get these weighted scores is by multiplying each score from step two by the corresponding number in step three. This will result in a weighted score for each of your choices.
- Add up all scores for each option: Now is the time to make your final decision. Whichever option has the highest score on the rating scale is the one that is best for you to choose.
Benefits of Using a Decision Matrix
Decision-making can be hard, especially when it comes to business decisions that can impact your company, brand, or value. That’s why using a decision matrix can help, as it gives you an unbiased view of what you may be considering based on quantitative criteria.
When you have quite a few good options, but they all have slightly different factors to consider, the decision matrix will help order these factors to make a more insightful decision.
Decision Matrix Template
Everyone can benefit from using a weighted decision matrix. If you’re ready to start using this resourceful tool but are unsure how to create a decision matrix yourself, consider trying out our decision matrix template to get yourself started.
Once you’re comfortable using this example of a grid analysis tool, it will become easier and easier to implement in your business. Not to mention the added benefit of having an informed decision that is based on facts and established criteria rather than clouded emotions.
Using Software to Track Decisions
Decisions often need to be made based on the amount of time projected to be spent on what you’re deciding on. A great way to have an informed decision on how much time is to be spent is by continuously tracking time. QuickBooks Time is a tracking tool that allows you to track your team’s time spent on various projects and activities while at work.
Once you’ve made your business decisions and settled on an approach, using tracking and scheduling, software is the next move. QuickBooks Time will ensure that you have the best outcome when your decisions are made and put into action.
Time management is one of the most essential skills and tools that a business owner and its employees can have, and it often gets overlooked. The reality is that time is money, so by having poor time management, not only can it let deadlines pile up and possibly get missed, but it also loses your company money in the long run.
Information, ideas and opinions expressed on this website should not be regarded as professional advice or our official opinion and you are strongly advised to consult your professional advisor before taking any course of action related to them. Each financial situation is different, the advice provided is intended to be general, and such such, you are advised to consult your financial or legal advisors for information specific to your situation. The information contained in this website is provided ‘as is’ and your use of and reliance on the information is entirely at your own risk.