Economic downturns can stop great customers from continuing to pay their bills. New regulations can suddenly prevent you from conducting business exactly as you have before. Some key employees may retire. These are just a few examples of the types of uncertainty that can affect your decision-making process.
Entrepreneurs are typically risk-takers by nature, but uncertainty can make or break many companies. Here are 5 ways to handle uncertainty when making business decisions.
1. Don’t let uncertainty stop you from moving forward
First and foremost, uncertainty should not put your goals on hold. If you fail to move forward with plans, your business cannot achieve success. A positive attitude helps you break through a stagnating thought process, so you can think clearly and make plans flexible enough to transcend the unknown.
When uncertainty looms, recognizing silver linings can help. If your go-to supplier shows early signs of unreliability, for example, don’t view the situation as upcoming doom for your company. With the right attitude, shopping for new vendors can be as exciting as a trip to your favorite retailer. You might find a vendor that’s better than the original one — and you’ll sleep better knowing that you have a backup plan in place.
2. Pre-plan for all imagined possible outcomes
Even when you can’t precisely predict unknown situations that can throw a wrench into your plans, you probably know what circumstances might pop up in the future.
For example, are you a carpenter who wants to add high-end furniture making to your business? News reports pointing to a possible upcoming cherry wood shortage won’t affect your plans if you know that customers would be just as happy with furniture made from beautiful red cedar, instead.
This is known as potential problem analysis, a system developed by Kepner Trego about six decades ago. By using this systematic approach to predict what can go wrong, you essentially reduce uncertainty by developing a roadmap for handling anything that might arise.
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Do you belong to one or more organizations that focus on issues that are important to your business? If not, then you should consider some memberships.
Don’t be surprised if meeting topics sometimes specifically address matters that create uncertainty in your industry. And, attending meetings puts you in touch with like-minded individuals who are more than willing to help you work through some of your concerns, just as you are willing to do for them.
Of course, you don’t necessarily have to turn to people in your industry for solid suggestions. Trusted relatives and friends in your personal network can be surprisingly on-point when providing business advice — even if your industry happens to be rocket science.
4. Learn current trends by monitoring the news
Don’t let your overcrowded schedule serve as an excuse to avoid regularly keeping up with the news. Current events can have a major impact on your business and the more you know, the more you can reduce uncertainty.
General or industry news identifies trends and how other companies are handling them. For example, if businesses are resuming spending after an economic downturn, it may be a sign for you to analyze if it’s time to reconsider a stalled buying decision.
Keep in mind that this type of news is hardly an edict. Consider whether those companies are similar, versus large enough to handle more risk. And, countless other details specific to your business must drive your decisions. But, at least you will gain some new thoughts.
5. Monitor closely
Particularly if you pre-planned as suggested in No. 2 above, you need to keep current on an issue, so that you can identify when to put an alternate plan into action.
Uncertainty is not stagnant; it can change over time or disappear altogether. A client that stopped paying its bills might resolve its financial issues, while another might go out of business. In either case, monitoring their circumstances will tell you if you can resolve their bill-pay issues and add them back to your current customer list — or end the relationship and take a tax write-off.
If anything’s certain in business, it’s uncertainty.
They say that nothing other than death and taxes are certain in life, with change being a possible third certainty. Still, uncertainty does not mean pandemonium. When you learn how to keep control, you can reduce the effects of uncertainty and make the decisions needed to keep your business healthy.
About Carol Roth
Carol Roth is the creator of the Future File™ legacy planning system, “recovering” investment banker, billion-dollar dealmaker, investor, entrepreneur, national media personality and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett-produced technology competition show, America’s Greatest Makers and TV host and contributor, including host of Microsoft’s Office Small Business Academy. She is also an advisor to companies ranging from startups to major multi-national corporations and has an action figure made in her own likeness.
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