Bold decision-making is vital for businesses looking to capitalise on opportunities and manage risk. However, for the best chance of success, decisions need to be justified and supported by data, says Scott Wiltshire, general manager, Oracle NetSuite ANZ.

Leaders who make bold decisions stay ahead of their peers as this approach can improve the ability to respond to market conditions quickly. By being proactive, it is possible to set your business apart from competitors, which boosts brand awareness, market share and loyalty.

Try these strategies if you want to make bold decisions yet still minimise your business risk.

4 strategies to minimise risks and incorporate data in your decision-making

1. Understanding market trends and dynamics

Business owners should be relying on market insights to inform their decisions. Such insights are formed through an analysis of economic conditions, trends and competitor behaviour. Businesses also need internal data, collected from existing customers, to develop a market analysis.

Conducting a market analysis can help identify broad patterns and trends and can be useful to understand customer preferences. However, gathering and consolidating data can be a time-consuming challenge for many teams. Having one source of truth for customer data can help combat this. With all data under one roof, hours spent on manual collection can be eliminated. This, in turn, can boost productivity and efficiency.

To be most effective, internal data should be coupled with external economic insights. This can determine the impact that market factors, such as inflation and supply and demand, will have on a business.

2. Assessing the risk-to-reward ratio

Understanding the risk-to-reward ratio of a course of action is crucial when making decisions. Businesses must assess the likelihood of success against potential risks and determine how any decision will impact operations.

This approach requires access to real-time financial data to analyse costs, while accurately predicting potential returns. It is important that internal business data is always considered alongside external market conditions. This information can determine whether it is the right time to make risky or speculative decisions.

The right business management software can produce data that can determine the ratio of cost to the business versus performance, displaying it in an easy-to-read format that helps decision-makers uncover the most important insights.

3. Testing the waters with small scale experiments

Businesses should test the waters before diving headfirst into high-stake risks. Start with small scale experiments to gather real-time feedback which determine whether significant resources should be allocated.

A good starting point may be developing an early, simplified version of a product or service. This is also known as a minimum viable product (MVP), which prototypes the core functions, features and interface of a product or service. The aim of developing an MVP is to launch a lightweight and low-risk product that helps you gain real customer feedback before large scale development.

Understanding customer demands, both pre- and post-MVP stage, requires a real-time view into the business. Businesses will need access to customer, supply chain and financial data to help build an MVP. Having an ERP (enterprise resource planning) system in place can help consolidate this data, while easy access to consolidated data helps speed up and streamline development.

4. Maximising efficient business performance with effective KPI monitoring

Business leaders need to have their KPIs (key performance indicators) top of mind when making decisions. Doing so allows businesses to track the impact of their decisions. Frequently monitoring progress can determine if the decisions made have been of benefit to the business.

Regularly reviewing KPIs enables leaders to make timely adjustments. Most importantly, KPIs provide useful learnings for future decisions. Having consolidated information across the business is the best way to keep on top of these metrics. This makes tracking of various departmental metrics and KPIs a simple process.

Bolder ways to inform business decision-making

Making bold decisions doesn’t equate to being reckless. Business leaders should conduct a thorough analysis to determine if a particular decision will pay off.

When looking to minimise risk, it is important to start off with small bets, monitoring business performance as you go. With this in mind, businesses should be able to make better decisions, regardless of how market conditions evolve.

Right now, business leaders should be refining processes to seize opportunities as soon as they appear. Now is the time to significantly refine risk management, while also making bolder decisions.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.