Would have, should have, could have. All statements made by small business owners when they see they missed an important opportunity in the direction of their company. Statements that indicate that hind sight is always clearer than looking forward. Being able to identify threats and opportunities before they happen is a skill mastered by the best operators, and one you can learn to employ in your own business.
You may have heard strategy terms like goals, war gaming, decision trees, triggers, courses of action, and expected results. However, you probably thought they were only used by large corporations with strategy teams and huge budgets. They are not. All sizes of companies can identify scenarios that deviate from the plan, and take action. The problem is; once we set a path, we forget to measure our progress and take corrective action when it has gone awry.
It is as simple as choosing a fork in the road. Even easier than that because a well thought out decision tree is like a GPS system telling you which fork to take. For terminology purposes, we begin the decision tree with a stated goal of what we are trying to accomplish. Then we create several possible courses of action, or strategies, to achieve the goal. We use a war gaming process to think through everything that could happen during our execution of the course of action. During the war gaming exercise, we identify triggers, or decision points, during critical events. Lastly, we chose the path that has the best opportunity to produce the expected results. If we were trying to determine how to handle an email, it would look like this:
You probably do not need a decision tree to tell you how to handle an email. But a big decision, like what to do with your company, might need a little organization of thought. You may sketch something out that looks like this:
Now imagine you have decided to “Expand the business” by working full-time and hiring a revenue generating service employee. You can use a decision tree to trigger when the proper time would be to make that hire.
Here is the point. Setting triggers to help you indicate when to make a decision and the course of action to take, moves your business into a whole new level as an operator. Some people can make decisions based on gut instinct, but most of us would rather rely on key indicators that have the greatest likelihood of success. In the example above, we used the trigger of monitoring our direct employee’s utilization rate. We set a target of 75% of their hours should either be billable hours or generating revenue for the company. When we see the average for all employees running at 75-80%, we should hire an additional person. You have now maximized your human capital resource and have the opportunity to grow, or give you current staff some breathing room.
By having a plan in place to make these types of decisions, you are less likely to put the company in a negative flow position. You can use this type of tool to determine when you should buy or discount inventory, open a second location, and introduce a new service or product. Virtually every decision we make as business owners can be constructed within a decision tree. The successful manager who operates like this is more consistent and can anticipate the result of the decision.
If there is a critical junction in your business life right now; stop wondering what to do next. War game out the possible courses of action, set a decision target, and pull that trigger!