How to Make Business Decisions
5 min read

How to Make Business Decisions

A framework to help you stay tethered to your business model even as it’s changing.
How to Make Business Decisions

Even when the world isn’t in crisis, it’s a challenge to operate a business from a calm, thoughtful place. You can often spend all your time ruminating, second guessing and wondering what you’re actually supposed to be doing at any given moment.

In the movie Gravity (stay with me here) Sandra Bullock is an astronaut who gets lost alone in space. For most of the movie she gets bounced around all over because there’s no… gravity. But when she anchors herself to a space station or another astronaut, then she’s able to begin solving her problems and trying to get back to earth. She doesn’t know if an old space station is the right solution, but at least if she assumes it is, she can start trying to solve her problem within those constraints.

Building a business is kinda like floating in space without a space shuttle. It can feel disorienting, but when you anchor your thinking to certain variables temporarily, you’re able to more creatively explore the variables you’ve chosen to test.

Limiting choices, even artificially is the key to decision-making.

It takes the weight off any one decision and speeds up the process resulting in meaningful learning and progress. Learning how to make decisions is a skill that will not only advance your business, but help you stay confident and grounded during chaotic times.

Why is it hard to make decisions?

It’s hard to make decisions because we have too many viable choices. Professor Barry Schwartz’ work in The Paradox of Choice concluded that the more options you have, the harder it is to make a decision. And the more choices you have, the less happy you’ll be with what you ultimately choose. This explains why people love Trader Joe’s even though they carry a fraction of the variety you’d find in supermarkets where an entire aisle is dedicated to marinara sauce.

This may sound obvious, but it’s counterintuitive when it comes to entrepreneurship. People start businesses because they want more choice. They want to decide for themselves how they spend their time, who they work with, when they work and what they work on. The assumption is that more options equals happiness and satisfaction. So when it’s time to choose a customer segment to focus on, a first employee to hire or even the colors on your website, having more choices can seem like freedom. But it’s not.

Too many options makes you feel unfocused and unbalanced. When you’re in this mode, you start operating from a place of fear and become less able to think creatively and see new opportunities.

Limiting your options to create momentum.

Barry Schwartz’ recommendation to combat an abundance of choice is to just lower your standards. Make choices that are not perfect, but good enough. Because the abundance of choice makes us feel worse no matter what we choose, it’s better to just pick something. You’re better able to do this by limiting your options, artificially if need be.

This thinking is key to getting a business off the ground in the early stages when there’s no such thing as the perfect choice. It works because so many of the choices being made at that stage are arbitrary anyway. We don’t know enough. And there are so many ways to make a thing work, there’s no need to worry about finding the one perfect way.

This concept admittedly is hard to put into practice. Day-to-day, every choice feels heavy and consequential. It feels like any wrong move can sink everything you’ve already built.

The truth is, moving forward in the wrong direction will get you closer to a successful business than spending weeks agonizing about a decision.

So we need a plan. A process to limit options and speed up decision-making when starting a business. That’s what the validation process is for.

The validation process is about finding a business model that works.

A business model can have many components but at its simplest, you should be able to explain it in 2 sentences:

We help [customer] do [problem you solve] by [your solution]. We’ll find most of our customers [your main channel] and will make money by [your revenue].

Customer Who will pay for your offer?
Problem What pain is your customer feeling that you want to address?
Solution Describe your proposed community in a few words.
Channels How will your members find you?
Revenue How will you make money?

This is inspired by questions asked in the Business Model Canvas originally created by Alex Osterwalder.

Before you’ve landed on the business model that works, validation is about moving these pieces around until you find a combination that works. Working means that people are consistently paying you for what you’re offering.

You have to keep most factors constant in order to test the variable that’s most important to get right at the time. This works because it makes you more present to the problem you’re testing.

Every time you come up with something to validate, you determine what parts are not on the table for validation for that period of time. You keep those variables constant. If you’re at the very beginning, those variables will be a guess but that’s okay! It’s better for you to be wrong and learning. That’s making progress. Choosing to not change most of your options, gives you a solid foundation from which to experiment with the variable you are testing.

You can use this framework to build any kind of business or clarify decisions at any stage. I’ve talked about it within the context of building a Community Business here.

Keep all but one variable constant.

In your business, if you’re testing your marketing channels for 2 weeks, you would keep constant everything else about your business model. What you’re selling and who you’re selling to stays the same and you only change how you reach those people with your offer.. maybe you’d try Instagram, LinkedIn and content marketing to see which works best. This approach helps you learn and make decisions quickly about your channels because there are no distractions.

This doesn’t mean other aspects of your business model will never change, but for that period you’re choosing to assume that they are correct. Isolating one or two variables makes it so that you’re not distracted by other decisions and can concentrate on learning about and validating the variable being tested.

After the early stages.

Here I’ve introduced decision-making mostly within the context of starting a business and testing a business model. But internalizing this way of thinking is crucial regardless of business stage.

Making confident decisions and staying grounded early in your business will always serve you as you learn and grow through your business. Choosing to limit your choices will not only help you learn faster, but it’ll also make you a calmer, more confident decision maker at any stage.

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