Being a decider and carrying out all the responsibilities of your business in a seamless and organized way is perhaps the biggest role every entrepreneur has to play. You might have roped in a team of advisors to assist you in making all crucial decisions or you might be deciding things on your own. Irrespective of the structure of decision making, it is your business. You got to take care of it by being answerable and responsible for every loss suffered and profit gained. One bad business decision is equivalent to numerous backfires, which will be definitely followed by a downward ROI graph and customer attrition.
For example, if we are to talk about the case of the “New Coke” campaign launched back in the year 1985, the internationally acclaimed beverage brand dared to take the risk of changing the formula of one of the most popular and iconic soft drinks across the world. No wonder the company failed miserably. The officials had to revive the original taste in order to gain back the business.
Hold on! This is only one of the many infamous examples to have entered the list of the history of bad business decisions; there are multiple similar instances to learn from. And even before you learn about the history of bad business policies, here are a few foolish and inappropriate business practices for you to take note of.
- Prioritizing your gut feelings way too much
Although going by your instinct is good, it is probably not good enough when it comes to taking major business decisions. You simply cannot afford to finalize a deal or make a financial decision, solely based on assumptions and guess works. You got to rely on real-time data, logical explanations of facts and figures, market reviews, consumer behaviorism, and the likes.
There has to be a logical business strategy that will help entrepreneurs to choose and follow a particular business model as a way to compete. Moreover, having well-defined business goals and logically enriched business strategies are imperative for creating good value for the company’s stakeholders.
- Being too emotional and less competitive
Well, it’s a bad, bad world! You will probably stand no chance to enjoy progression in business by being too emotional and less competitive in your approach. From firing the least productive people at work to breaking long-term partnerships and the likes, there are certain decisions which are to be taken, without paying heed to the painful aspect of it.
As part of an example of a bad business decision, Prof. Ryan Smith, managing director of leading academic paper help firm admitted, “We retained Stacy and Vivian, two of our oldest employees, for seven long years, despite being aware of the fact that they were horrendously failing to meet the aspect of quality writing. Even though it was hard to bid them farewell, the management had to do the needful. We were losing clients miserably.”
I am sure there are similar instances scattered all over the world where emotions have overpowered logically correct strategies, leaving businesses to run at a loss. Thus, the idea is to avoid short-term pains in order to achieve something big and profitable for the trade in the long run. Any ethical decision that can guarantee an increase in ROI is a good decision, regardless of how painful or awkward it may sound.
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- Not prioritizing market research
Haste will certainly make waste, and there’s no denying the fact. At times, in order to cope with high ambitions and financial goals, entrepreneurs end up taking decisions in haste. Most of the time, they do so without evaluating the market or conducting a thorough research. Prior to making a decision, you need to delve deep into the competitive market, take a look at the competitors and be thorough with the trends that are being followed.
From the current business scenario to the potential cost associated with the decision, from evaluating all potential challenges to securing a backup strategy to combat all odds; there are so many aspects to be evaluated. Thus, overlooking the significance of a thorough market research may not go down well, as far as financial gains and an increased rate of conversion are concerned.
- Waiting too long for the right time to come
Although good business decision and the importance of time should go hand in hand, the idea of waiting to take a decision and implementing a particular strategy for too long might backfire.
For example, the worldwide popular brand Motorola decided to hold on to its old cellular phone model and failed to explore the potential of its “Razr” brand by merging it with the concept of a Smartphone. This, as a result, made the brand lose its relevance.
This is where the importance of making a wise and timely business decision comes in. If the time is right for a market penetration, go grab the opportunity. After all, waiting for too long might give your competitors an advantage over you.
- Ignoring the importance of investing in employees
You may possess a great brand and a magnanimous series of products and services to talk about. But it will not take you anywhere for too long if your employees fail to keep up with the industry trends.
Thus, being a responsible entrepreneur and decider of critical business decisions, it is important for you to train and upgrade your employees with all requisite skills, imperative for ensuring faster productions and a higher Return on Investment.
- Not paying heed to consumer feedbacks
If you decide not to consider your clients’ words, then chances are that they won’t entertain your service and products in the long run. Moreover, trashing customers’ feedback is of no good use, as you are actually missing out on accumulating valuable advice.
In addition, avoiding client feedback might not go down well with your consumers, as they might feel left out and ignored. This will not only bring down the standard of your business, but also leave no significant scope to fetch you the coveted ROI.
- Taking it all upon yourself
Being an entrepreneur, you may prefer carrying out all operations by yourself. But, you have to seek for guidance from the experienced professionals when you feel that deciding by yourself is not in the best interest of your business. After all, you cannot afford to be the Accounts Manager and the HR executive of your firm at the same time, can you?
Thus, it is always fair to consider distributing tasks among your subordinates and train them accordingly to take care of all individual departments with perfection. This will allow you to expect quality products, and facilitate client-oriented and timely services.
- Making ethically wrong decisions for short-term success
If you are clinging to unethical business decisions and considering it as a gateway to success, then get ready to bury your trade once and for all.
Factually, some of the most renowned private banks like the Citigroup, JP Morgan and the Bank of America debunked the very concept of ethics in business by making $53 billion in U.S. profits, and paying 10% or less in taxes. Consequence? They are already in news for all the wrong reasons!
If we are to look at the bigger picture, unethical practices such as tax evasion, stealing, circulating expired products in the market, and the likes will neither prove to be profitable nor safe for any business house in the long run.
- Spending carelessly and misallocating funds
You cannot afford to be frivolous when it comes to spending on resources. There has to be a budget, a plan and a fund that is created constructively. You should consider being careful with your expenses. For example, a startup CEO may choose to prioritize expenses concerning office electricity, a hygienic and well-built washroom, first-aid backup for the employees, a coffee machine, warehouse or retail space rent and the likes.
On the contrary, if a person considers overlooking these crucial aspects and spends carelessly on less important areas such ducts for central air conditioning, redesigning cabins, investing in an HR department since day one, and the likes, then chances are that the business will soon run out of the cash flow necessary for making a basic payroll.
- Confining business ideas and operations to comfort zones
There’s this age-old saying in business- “No risk, no gain.” If you restrict yourself from pushing your limits and refuse to live on the edge, then carrying out business operations like a pro is probably not your cup of tea.
Once in a while, you got to take a leap of faith and watch what unfolds. If things turn out to be good, then it’s already a jackpot for you. And in case it’s the other way round, then you can always learn from the mistake. Either way, it will always be a win-win situation for you.
Now that you are already aware of an explicit list of bad business decisions that are meant to be avoided, feel free to implement the wisest strategies to expand your business. With clever decision making, you can soon turn your company to a powerhouse of revenue generation.
Go, win over!
Author Bio – John Mark is a business consultant and tax advisor associated with a leading agency in Australia. Apart from that, he is an academic expert dedicated to help students with customized essay compositions, working on behalf of MyAssignmenthelp.