7 Critical Decisions Every Entrepreneur Has to Take
Being an entrepreneur is a tough job. An entrepreneur is a person who plans and starts a business assuming all the risks associated, to make a profit.
14:10 29 October 2019
These days everyone wants to become an entrepreneur since the rewards associated with this phenomenon are many. However, most aspiring entrepreneurs fail to understand that being one does not merely mean having no boss to answer to, but being an entrepreneur also means being responsible for the business and its profitability. It also means having to make some tough decisions within a short period.
We must also understand that taking the right decision at the right moment can mean the difference between success and failure. Opportunities often come in disguise, and decision making is a must for any aspiring entrepreneur.
Once you start your own business, you will find yourself – more than once – in situations where your decision-making skills will matter the most. Throughout your entrepreneurial venture, you will have to make several decisions – some of them will be trivial, but some of them will hold immense importance.
The article below will discuss seven such decisions that every entrepreneur needs to make.
The very first decision that an aspiring entrepreneur needs to make is whether to start the business or not.
All the rest of the decisions come after this one. Taking this leap of faith requires a lot of courage, determination, and sacrifice. At times, you may be required to let go of your job as well as your fixed monthly income. You never know whether your business will be a success or a failure, and you won't even know the odds you're up against, yet, once you decide to go for it, you are committed.
2.Choosing the Niche
Choosing the right market for your products/services is a decision that will mean all the difference between success and failure. One of the most common problems with new startups is that they are carried away by their enthusiasm.
When a few people let them know that their business idea is fantastic, they generalize it and start thinking that everyone will like the idea as much. It is not the case. No matter how great your product, it will cater to the needs of only a select group of people.
The decision lies with the entrepreneur whether he/she would concentrate on a niche carved out from the general public, and consisting of a segment that will need your product more than anyone else. From the perspective of the business owner, carving out a niche is much better. It is always easy to concentrate on a small group of people rather than a broad segment.
It is also feasible for a business owner to limit its production, at least in the beginning. However, again, the decision lies with the entrepreneur, for gauging the pros and cons of each choice.
- To grow or to remain static
A small and profitable business is a lot more manageable and a lot less headache. A business owner can oversee the entire operation of his / her business, and remain involved in its day-to-day activities. Yet, when a business unit starts working correctly and begins to make consistent profits, the entrepreneur is tempted to expand it.
This temptation arises partly for two reasons: the lure of more profits and more money and the excitement of doing something new.
However, there are risks involved in the expansion. The owner may lose his / her grip on daily operations. The need could arise for taking in new partners. Plus, there are no guarantees that new services will become profitable. Repayment of cash flow loans may be eating up your equity. When faced with this decision, the entrepreneur should act prudently, weigh the risks and rewards associated with expansion, and invest wisely in the new venture.
- Pricing and profitability.
It is one of the most important decisions to be made by any entrepreneur. In fact, throughout a business, the need to take this decision will arise again and again. The pricing of your product conveys its value to the customer. It also provides you an edge over your competitors. But, the essential thing about pricing is that it affects your profitability.
Pricing involves an understanding of your market, the purchasing power of your niche, and what they will be willing to pay for your product. Sometimes, to retain your customer base, you will be required to lower the price and decrease your profitability. But, being an entrepreneur means having the ability to take these harsh decisions in the short run so that the business can have solid foundations for the future.
- Hiring, Retention, and Outsourcing of workers.
No matter how good you are at your work, you will always need a helping hand. An entrepreneur is mostly between the decision regarding the hiring of new personnel. He/she also has the option to outsource; however, a full-time employee is a better resource than an out-sourced one.
Moreover, a hired employee will come with a clearly defined skill set. You can invest in this resource through training and development and ready him/her for business expansion.
Such long term planning with an outsourced employee may not be possible. The above decision hinges on several factors that may vary from company to company. There are payroll costs, fringe benefits, and insurances involved in hiring permanent full-time employees. Then, there are tax returns and other regulatory issues. Outsourcing, on its part, also has its drawbacks.
The best option for an entrepreneur faced with such a decision is to assess costs and benefits involved with each of the above choices, and then make a wise decision that will benefit his / her business in the long run.
- Developing Business Strategy
Initially, there is no need for a concise business strategy; however, with time, as the business grows, the need for a clear road map becomes apparent.
The decision to develop a clear and concise business strategy lies with the entrepreneur. If he/she thinks that the business has growth potential, a clear plan is required so that in the future, there is no room for confusion.
A business strategy involves listing down your resources, their allocation, projected sales, and revenues. It also involves setting down precise instructions for carrying out the business.
- Stick or Quit
An entrepreneur is a dreamer. He/she starts the business from scratch, in the hope of achieving his / her dreams. Sometimes it works, sometimes it doesn’t. There may come a time in every entrepreneur’s life when he/she is faced with the decision whether they should carry on with their business, or quit it, cut their losses, and find something else. It mostly happens when the company is not making profits, and its equity is washing away slowly.
Faced with this decision, an entrepreneur has to take all the facts and figures into account and make the arrangement according to his / her gut feeling.
The Final Word
Being an entrepreneur is not easy. It involves decision making at every step, and then living the consequences of those decisions. An entrepreneur has to be prudent, pragmatic, and hopeful while taking every decision. The rest depends on lady luck.