Entrepreneur Decision Making - How to Make Decisions in eCommerce with Ken Burke of Entrepreneur NOW
Michael Veazey
00:20:13
LinkAbout this episode
How Does Entrepreneur Decision-Making Work in Real Life?
Entrepreneur decision-making works in a variety of ways. Some entrepreneurs prefer to gather as much information as possible before making a choice, while others simply follow their gut instinct.Regardless of your decision-making style, there are some principles you should always keep in mind:
Action creates momentum – If it feels like you've been stuck on the same problem for days or weeks without any progress, then it's time to take action. The more time spent thinking about how to solve a problem without actually solving it will just lead to frustration and an eventual loss of motivation.
Test, measure and adjust – When trying out new ideas or testing different solutions for problems, don't be afraid to try things out quickly and see what works best (and what doesn't). Use this process as an opportunity for learning so that you can learn from your mistakes while they're still fresh in your mind instead of later down the road when they might have cost you too much money or time already!
Tactics for Entrepreneur Decision-Making- the Decision Matrix
There are three things that you need to do in order for you to make your own decision.
List the criteria for the decision.
This is the most difficult part because it requires thinking about what matters and why it matters, but it's also very important because you cannot weight a factor if you don't know what's being weighted in the first place. Make sure that all of your criteria are relevant and appropriate for this type of decision and don't get carried away by making too many or too few; this will help keep things simple later on when calculating weights (see below).
Weight each of your criteria numerically based on their relative importance (so 1 = high priority, 5 = low priority).
To give an example: suppose I'm trying decide whether or not I want my ecommerce website design done by an agency rather than doing it myself. One of my criteria might be "time spent", since developing websites takes me a significant amount of time every month; another might be "cost", because agencies often charge more per hour than freelancers do; yet another could be "quality", since hiring someone else means outsourcing some portion of control over how well my site looks or functions.
The point here is not just listing them—you must think about these factors as having varying levels of importance depending upon which option(s) from our list above we're considering at any given moment during our evaluation process (e.g., if we had chosen Option A instead of Option B above, then cost would no longer matter as much).
Do the math
After this, it's a simple question of multiplying and comparing:
In a spreadhseet, you'd have the options or choices in rows down the left-hand column, and the criteria along column headers going left to right.
for each possible option or choice, you'll have a score for each criterion
For each of these criteria boxes, you'll need to multiple the score by the "weight" you've which of multiplying the score of each possible option by the "weight" for has the most weight
then add up the total score across all the criteria for each decision.
Finally, look at the relative scores of each decision.
Like most maths, and all spreadsheets, it's so much easier to see it on an actual spreadsheet!
Ken has created a spreadsheet that does the heavy lifting for you with a structured approach to decisions. Click here for his free entrepreneur decision matrix spreadsheet.
Have 3-Year Financial Forecast! And Measure the Decisions
A key tool for Entrepreneur Decision-Making is financial forecasting. It is imperative that you know where your business is going, so it’s important to have a financial forecast. You need a forecast for the next 3 years - and this is a shock to many entrepreneurs because they don't even have a one-year forecast.
Entrepreneur decision-making works in a variety of ways. Some entrepreneurs prefer to gather as much information as possible before making a choice, while others simply follow their gut instinct.Regardless of your decision-making style, there are some principles you should always keep in mind:
Action creates momentum – If it feels like you've been stuck on the same problem for days or weeks without any progress, then it's time to take action. The more time spent thinking about how to solve a problem without actually solving it will just lead to frustration and an eventual loss of motivation.
Test, measure and adjust – When trying out new ideas or testing different solutions for problems, don't be afraid to try things out quickly and see what works best (and what doesn't). Use this process as an opportunity for learning so that you can learn from your mistakes while they're still fresh in your mind instead of later down the road when they might have cost you too much money or time already!
Tactics for Entrepreneur Decision-Making- the Decision Matrix
There are three things that you need to do in order for you to make your own decision.
List the criteria for the decision.
This is the most difficult part because it requires thinking about what matters and why it matters, but it's also very important because you cannot weight a factor if you don't know what's being weighted in the first place. Make sure that all of your criteria are relevant and appropriate for this type of decision and don't get carried away by making too many or too few; this will help keep things simple later on when calculating weights (see below).
Weight each of your criteria numerically based on their relative importance (so 1 = high priority, 5 = low priority).
To give an example: suppose I'm trying decide whether or not I want my ecommerce website design done by an agency rather than doing it myself. One of my criteria might be "time spent", since developing websites takes me a significant amount of time every month; another might be "cost", because agencies often charge more per hour than freelancers do; yet another could be "quality", since hiring someone else means outsourcing some portion of control over how well my site looks or functions.
The point here is not just listing them—you must think about these factors as having varying levels of importance depending upon which option(s) from our list above we're considering at any given moment during our evaluation process (e.g., if we had chosen Option A instead of Option B above, then cost would no longer matter as much).
Do the math
After this, it's a simple question of multiplying and comparing:
In a spreadhseet, you'd have the options or choices in rows down the left-hand column, and the criteria along column headers going left to right.
for each possible option or choice, you'll have a score for each criterion
For each of these criteria boxes, you'll need to multiple the score by the "weight" you've which of multiplying the score of each possible option by the "weight" for has the most weight
then add up the total score across all the criteria for each decision.
Finally, look at the relative scores of each decision.
Like most maths, and all spreadsheets, it's so much easier to see it on an actual spreadsheet!
Ken has created a spreadsheet that does the heavy lifting for you with a structured approach to decisions. Click here for his free entrepreneur decision matrix spreadsheet.
Have 3-Year Financial Forecast! And Measure the Decisions
A key tool for Entrepreneur Decision-Making is financial forecasting. It is imperative that you know where your business is going, so it’s important to have a financial forecast. You need a forecast for the next 3 years - and this is a shock to many entrepreneurs because they don't even have a one-year forecast.