Key Takeaways
Stress biases decision-makers toward upside outcomes, making pre-decision stress relief essential for balanced evaluation.
Considering multiple options simultaneously leads to faster, more objective decisions than binary either/or thinking.
Diverse outside perspectives—including cross-industry insights—consistently outperform insular, single-expert decision-making.
Welch's 10-10-10 rule (10 minutes/months/years) provides a structured framework for weighing short- and long-term consequences.
Every day, small business leaders are faced with decisions. Some are felt immediately, and others take longer to see results.
Regardless of their timeline, each is equally important. After all, every decision has the potential to change the direction of your business, your career, and even your life.
Decision-making is a skill. It must be learned, developed, and polished through time and experience. While there’s no perfect blueprint, putting yourself in the best position to understand the choice at hand will, ultimately, lead to more good decisions.
Here are six steps to put you on the path to making effective choices:
1. Take a breath.
The bigger the decision, the more it can weigh on you. And the more stress builds, the more it can influence your decision-making process.
According to a 2024 study, people under stress tend to pay more attention to the upside of a possible decision, even if the outcome is potentially riskier than others. This can negatively alter their perception. So before you roll up your sleeves and start drafting a decision matrix, find an activity that relieves stress, such as exercising or talking to a friend. Having a clear head to evaluate and exhaust all options, positive and negative, is invaluable.
2. Identify the decision you need to make.
This may seem obvious, but you’d be surprised how many teams forge ahead with a decision-making framework before they’ve properly defined the problem they need to solve or the decision they need to make.
At this stage, you need to get specific about what needs to be decided, why this decision is necessary (what problem is it solving?), when it needs to be decided by, and who will ultimately sign off on a solution. Not being clear on these parameters can lead to ineffective decision-making, which will only introduce more problems down the line.
Typically, business decisions fall into one of three categories:
Operational decisions are the day-to-day choices that keep a business running, such as scheduling, reordering inventory, or handling a customer complaint. These decisions are typically low-stakes and can be made quickly, without having to apply any frameworks or rational decision-making models.
Tactical decisions are medium-term choices that are usually made by middle management. These decisions cover areas like how to allocate resources, structure a project, or implement a plan.
Strategic decisions are long-term, high-stakes choices that set an overall direction for a team or company, like entering a new market, making a major investment, or pursuing a merger. These decisions are made by top leadership, hard to reverse, and are shaped by broad analysis of goals, competition, and resources.
3. Gather relevant information.
The best decisions are made by those who are well-informed. Once you’re crystal clear on the decision you need to make, evaluate what information is available, relevant, and reliable. Then ask yourself what other pertinent information you may need.
Depending on the type of decision you’re making, gathering information could look like:
Talking to stakeholders and subject matter experts
Making sure the options you’re evaluating align with your strategic and long-term objectives as a team and a company
Conducting market research, a SWOT analysis, or a focus group
Reviewing financials and considering what might happen if your company faces financial hardship after the decision is made
Whatever the decision, just be sure you’re neither underthinking nor overthinking. Gather just enough data to inform your decision, and set a deadline for when you’ll make the decision by, which can help prevent analysis paralysis.
4. Evaluate your options.
Once you have all the information you need, it’s time to identify possible solutions, which involves:
Identifying alternatives. Write out all the possible solutions you can think of—and yes, “do nothing” is a viable option! A good rule of thumb is to have three or more solid options so that you don’t feel like you’re stuck in an either-or situation.
Weighing the evidence. Evaluate your options with a pros-and-cons list, a weighted scoring system of decision criteria (also sometimes called a decision matrix), or a cost-benefit analysis for each option. You can also make a decision tree to help visualize how the consequences of each possible solution will affect your overall problem.
One exercise that can help you evaluate options is Suzy Welch’s 10-10-10 framework. During this exercise, ask yourself, “What are the consequences of my decision in 10 minutes? In 10 months? And in 10 years?” According to Welch, “The answers usually tell me what I need to know not only to make the most reasoned move but to explain my choice to the family members, friends, or coworkers who will feel its impact.”
Remember—you don’t need to do this alone. In fact, you probably shouldn’t. Considering a diversity of opinions at this stage can help you understand each potential solution more holistically, and collaborative decision-making has been shown to be more effective than deciding in a silo, particularly when the group brings genuinely different perspectives to the table. It can also help reduce the effect of cognitive biases that may be influencing the decision-making process, such as confirmation bias.
5. Make a decision—and a plan to review it.
After you’ve carefully considered each possible solution, it’s time to take action. Most of the time, this is not a set-and-forget situation. Instead, pick a date in the not-so-distant future (three to six months) to revisit your decision. Simply assuming a decision is permanent once it’s been made robs you of the opportunity to learn and do better.
6. Debrief post-decision.
The decision-making process doesn’t end once you implement the decision. Once your review date arrives, it’s time to compare what you expected to what happened. Ask questions like:
Did the solution we chose solve our original problems?
Did our decision move the needle on the necessary key performance indicators (KPIs) we were hoping it would?
Did the decision introduce any new problems we weren’t anticipating?
This is the step most small businesses skip, and it's the one that actually improves future decisions.
Ultimately, learning how to make effective decisions is a skill that can constantly be improved. By understanding the complexities of each choice, you can make the best decisions possible and set yourself up for success.
FAQs
What is the decision-making process for a business?
A structured business decision-making process typically follows six steps: manage stress first, clearly define the decision, gather relevant information, evaluate multiple options, make the decision with a set review date, then debrief afterward to compare outcomes against expectations. Following these steps consistently helps prevent rushed, reactive decisions, especially under time or financial pressure.
What are the three types of business decisions?
Business decisions generally fall into three categories: operational, tactical, and strategic. Operational decisions are routine, low-stakes daily choices like scheduling or reordering inventory; tactical decisions are medium-term calls made by middle management, such as resource allocation; and strategic decisions are long-term, high-stakes choices made by leadership, like entering a new market.
What is the 10-10-10 rule for decision-making?
The 10-10-10 rule, created by business writer Suzy Welch, is a framework for evaluating a decision by asking how you'll feel about it in 10 minutes, 10 months, and 10 years. It helps counter short-term emotional reactions by forcing you to weigh immediate discomfort against medium- and long-term consequences before committing to a choice.
Should I make important business decisions alone or with my team?
Involving others is generally better than deciding alone, but only under the right conditions. Collaborative decision-making outperforms solo decisions when the group brings genuinely diverse information and engages in real deliberation, rather than deferring to the most confident voice. Without that diversity, group input doesn't reliably beat one well-informed person's judgment.
