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Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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4 Reasons Businesses Should Never Rush Financial Decisions

 

Business owners, just like consumers, often fall victim to the shiny new toy syndrome. They are easily swayed by new products and crafty sales pitches and consider each and every one of them as a potential purchase. Others will quickly switch service providers or suppliers the minute someone makes them what they see as a sweet deal.

But, even small business decisions can become major ones. Small choices can add up to major mistakes while failing to take all factors into account can result in one serious mistake taking down your business. Here are four reasons businesses should never rush financial decisions.

It Isn’t Just That Decision

Whether someone is buying a new piece of equipment or changes an existing process, the reality is that they aren’t just making a decision about that particular process. Instead, what they’re doing has an impact on the rest of the business. When you alter a business process or implement a new one, everyone needs to be trained on it. This could impact quality, productivity, or both. When someone buys new equipment, it may be necessary to train people in how to use it, and it affects everything else on that assembly line or the flow of the department.

Short-Term Decisions May Hurt Your Long-Term Prospects

Fast decisions, especially when made on the basis of one’s emotions, means you may make a decision that is merely OK now but hurts the business for the long-term. When you make a fast decision, you are by definition failing to consider all of the information involved.

Before you make a business decision, consider the whole picture. What exactly is the purpose of the new tool or process? Are you replacing something or adding to the existing process? How are you going to train everyone, or is it truly intuitive to use? How will you measure success, and when do you expect it to be demonstrated? If you just buy things hoping that it will improve matters, potentially wasting money while creating chaos on the shop floor, you’ll end up hurting your business despite the good intentions behind every purchase.

Then there are times where a business makes financial decisions, and because they rush the making of a key decision, they ignore the potential steps they could take to mitigate the risk. Consult with the financial risk management experts from JCRA whether you are financing major projects, buying property, or raising capital for your business.

Don’t Skip the Analysis

If you let yourself make fast decisions, you risk getting into the habit of succumbing to pressure to decide the way the person making the offer wants you to go. When someone is pressuring you to buy a drink, the cost of a mistake is the cost of a drink. When you’re making a Human Resources decision or another costly business decision, you’re skipping the detailed analysis of risks and benefits.

You’ll Be More Sure of Your Decisions

Suppose the fast decision was the right decision. Because you didn’t take the time to do the analysis, you may feel like it was the wrong choice because you didn’t take everything into account. Now you’re burdened with regret because you didn’t do the detailed analysis to be certain that it was the right choice. You won’t worry if the snap decision undermines your overall business strategy.

Conclusion

While fast decisions in business are not always wrong, you’ll never be certain it was the right decision. So, take your time to run the numbers, compare the pros and cons, and project how each decision impacts the entire operation.

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