As a business mentor I often get asked my opinion on the validity of a particular decision. Should I open a new regional office? Should I hire a sales person? Should I bring on more partners into the business? Should I invest $50,000 in a new brand? Should we launch a new product? Should we open an new shop?
The answer is always the same: “I don’t know.” Followed quickly by a question: “What’s the business case for it?”
Because rarely, if ever, is the question supported by a rationale containing enough information for me to assist with the decision.
In many cases, after I’ve said “I don’t know” the business owner goes and does whatever it is anyway. And in equally as many cases, after a lot of time, money and emotional energy invested, it turns out the decision to proceed wasn’t the best decision. A fair amount of time is wasted and focus away from the big picture costs the business in growth opportunity.
I’m allowed to comment on this because I’ve been guilty of chasing my own ideas down rabbit holes far too many times in business. I’ve wasted as much time, energy and money as the next person. I’ve learned the hard way the value of time spent upfront assessing the value of the idea. When I hired my first General Manager, Angela Meads, she forced me to run all my ideas through her business case health check. The following steps have helped me to make better decisions, maybe next time you have a great idea, they could help you.
7 steps to making a good decision – the business case for the business case
- Articulate the why. Write the best rationale you can for why you want to do this. What problem does this solve? What are the expected benefits? How will the business be better off? Make sure this includes tangible and measurable benefits, not just emotional ones.
- What are the alternatives? List all the other options the business could consider, including doing nothing. What are the pros and cons of all options considered? Then re-consider the ‘why’. Why is this idea better than the others?
- What resources are required to implement the idea? This includes financial investment (what is the real cost – to implement and maintain) and people investment (who’s going to do it and what will they have to drop in order to do it?). This is the bit I see skipped most often when business owners rush into new ideas… it has a high cost of time and money they were not prepared for.
- Return on investment – what do you expect to see in terms of financial return, over what time period?
- Risks associated – what could go wrong? And how will you handle it? What buffers do you need in place should the worst happen?
- Share your business case. NEVER launch off on a new idea without running your business case past someone wise, ideally someone external to the business. You can be a legend in your own mind sometimes, you are the batman of your own dreams… don’t let your ego drive your decisions. Be willing to listen to the voice of reason. But equally don’t let them talk you out of it if it really is a good idea… just make sure your hear their questions and have confident answers.
- Make the right decision based on all above. Be bold if its the right thing to do. But be smart if it isn’t.
Good luck with it! And if you ever want to run your business case past me… feel free to send it to me at email@example.com … just makes sure it has all the elements above