How To Improve Decision-Making Skills As an Entrepreneur

Your decision-making skills impact the future of your business, from high-level marketing strategy down to the details of your customer experience.

Let’s say you’ve got a $10,000 marketing budget. Should you go all-in on paid advertising, allocate a portion to influencer marketing, or invest in search engine optimization (SEO)? Some entrepreneurs get giddy in the face of decision-making, others get the jitters, and most experience both at some point. 

But the ability to make good choices in a work setting is essential for company success. Your decision-making skills impact the future of your business, from high-level marketing strategy down to the details that form your customer experience. 

Learn about the key components that go into this valuable workplace skill and how to get better at making thoughtful business decisions with confidence. 

What are decision-making skills?

Decision-making skills are the combination of skills you use to evaluate choices. They help you remove roadblocks affecting everything from company-wide initiatives to your day-to-day business operations. Whether you need to choose a marketing slogan or build a new team workflow, the ability to make the right choice efficiently and confidently is critical for success.

Good decision-making skills demonstrate your strength as a leader, give your team confidence, and guide your company toward a collective vision. Making efficient and quick choices is the pinnacle of good decision-making and an incredibly valuable skill.

Key components of decision-making skills

1. Creative thinking
2. Organization
3. Time management
4. Leadership
5. Problem-solving
6. Emotional intelligence
7. Critical thinking

Here are the essential skills you need in your toolbox to become a better decision maker:

Creative thinking

Creative decision makers develop original ideas that are uniquely suited to their business and the challenge at hand. Ask yourself which choices will make your brand stand out from competitors. For Douglas Watters, the founder of nonalcoholic beverage brand Spirited Away, that choice was to start local and prioritize the consumers in his community.

Douglas decided to keep the shopping experience personal by launching with a brick-and-mortar store—and that decision was the right one. “About 90% of our orders come from in-store shopping because people want to shop for beverages in person,” he says on the Shopify Masters podcast.

While the brand offers online orders to handle local deliveries and in-store pickups, Douglas followed his conviction to remain local. While this choice may be surprising among ecommerce brands that prioritize online sales from day one, this creative yet logical thinking allowed Spirited Away to curate an intimate retail experience that appealed to their target market.

Organization

When you’re organized, you’re more likely to be productive, calm, and clear-headed under the pressure that comes with making critical decisions. Being organized comes in many forms, from keeping detailed notes to having dedicated time in your schedule to think through company strategy without distractions.

When it comes to effective decision-making, staying organized means you have all the necessary information readily available—from financial statements and market trends data to customer data—to help you make the best choice. Timely decisions are easier when you have all your data tracked in one place. If you run a handbag company and are wondering whether to launch a bold color or neutral, having a database of customer purchase history will help you identify the best-selling shades.

Time management

Can you make a final decision without spending too much time deliberating? There’s a time to take the decision-making process slowly and a time to make it snappy. For example, if you need to decide on a social media advertising campaign that’s dependent on a trend, you risk missing the trend’s window of virality if you take too long to deliberate. 

When you need to make a timely decision, time management techniques—like giving yourself a deadline or clearing time in your day to focus solely on the decision at hand—can make you a faster decision maker.

Leadership

When you demonstrate decision-making skills, you’re demonstrating leadership skills. Decisive business leaders can inspire confidence in those around them and set an example for others on how to approach decisions. Good leaders also encourage team members to contribute to business decisions.

Try holding an open forum involving numerous people from different teams to contribute suggestions and ideas on where to take your next marketing campaign. This gives your team insight into your decision-making process, which can encourage professional growth and ownership of positive outcomes.

Problem-solving

Problem-solving, which identifies issues and possible solutions, is often a step along the journey toward making a decision. Identifying problem patterns means you can plan in ways that avoid repeating issues.

For example, shopping cart abandonment remains a common problem for online retailers. To solve this problem, you can start tracking your website’s cart abandonment rate, then generate a list of practical solutions, such as strengthening calls to action (CTAs) on your checkout page or emailing reminders about abandoned carts.

Emotional intelligence

Emotional intelligence helps you make workplace decisions with care and understanding, manage your emotions in a high-stakes work environment, and respond appropriately to coworkers and customers. It’s also a key component of being a rational decision-maker who doesn’t let emotion cloud their judgment. 

Displaying emotional intelligence can also enhance your brand reputation and build consumer trust if you’re known as an authentic, transparent company. In turn, this can build customer loyalty. 

Critical thinking

Critical thinking is the ability to evaluate and synthesize information to form a judgment or solve a problem; it’s the core of all decision-making abilities. As a business owner, you’re bound to come across countless tough decisions, especially when it comes to how you allocate funds. 

In a Shopify Masters podcast interview, Shanae Jones, founder of Flyest, discussed the importance of weighing the potential outcomes of every choice. “When you are spending money on your business, you have to consider what the returns are going to be,” she says. “Are you going to be able to live with the decision?” 

For every decision you need to make, evaluate how the outcome might impact company strategy and your bottom line. Run a cost-benefit analysis that considers labor, materials, and opportunity costs. Compare those to projected benefits, such as increased revenue and boosted brand awareness.

5 tips to improve your decision-making skills

• Reflect on past decisions
• Give yourself a deadline
• Use decision-making tools
• Collaborate with your colleagues
• Stretch your creative muscles

Reflect on past decisions

Take the time to learn from past decisions by collecting feedback from one or more teammates and carving out time to reflect on your own. Assess why they were or weren’t the right move, and identify what you could have done differently. When you retrace your past actions, you can better prepare yourself for the future.

You can also evaluate the outcome of a decision using data. Look at revenue reports or conversion rate reports to determine if the latest product you added to your inventory was the right move, for example.

Give yourself a deadline

Decision paralysis is when you get stuck in the decision-making process due to fear of making the wrong choice, often in the face of an overwhelming number of ways forward. Giving yourself a strict timeline, including a deadline to make a call, can help you build the habit of making sound decisions quickly.

Use decision-making tools

Use a decision matrix to clearly evaluate your choices. This tool compares your options based on different criteria using a rating scale. Say you’re deciding between two manufacturers. To pick which one to work with, you rate each based on its cost, reliability, and location. The manufacturer with the highest total score wins.

You can also consider using the tried and tested method of a pros and cons list. This simple yet effective strategy allows you to visually compare the benefits and drawbacks of each option you’re deliberating.

Collaborate with your colleagues

Discussing a decision with others gives you access to different perspectives and all the factors at play in your decision, even those beyond your own expertise. The more you expose yourself to other problem-solving methods and points of view, the better you can assess decisions from a wider lens and consider all available options.

Try different problem-solving methods like brainstorming or team-building activities that encourage thinking outside the box. Mind mapping is a method that helps you and your team organize ideas by topics and subtopics. Write the main idea in the center of a piece of paper or a whiteboard, then add related ideas around it. As your session progresses, group related concepts together to help refine broad concepts into specific ideas.

Stretch your creative muscles

Creativity can improve how you make strategic decisions by generating multiple ideas and better alternatives, but it doesn’t come naturally to everyone. Try following the five stages of the creative process to fire up your imagination. This step-by-step approach encourages you to research, plan, and reflect to help you reach the aha moment of a fresh idea.

Once you have your new solution, put your idea into motion by soliciting feedback from colleagues and confirming that your creative decision is in line with your broader objectives.

Decision-making skills FAQ

What is a decision-making skill?

Decision-making skills are a combination of skills you use to evaluate choices. A person with outstanding decision-making skills can decide things quickly while sufficiently weighing available options and thinking critically about the potential outcomes of their choices.

What are the 5 keys to decision-making?

Knowing how to manage time, think critically, problem-solve, stay organized, and be creative are key to effective decision-making. These skills will enhance your ability to make sound decisions.

How can I improve my decision-making skills?

Improve your decision-making skills by giving yourself a time limit, creating pros and cons lists, and reflecting on past decisions. With enough practice, you’ll be more decisive.