Here are five big decisions every entrepreneur should be prepared to face head on if they want to keep moving forward.
1. Whether to turn your idea into a reality. Of course, the decision upon which the rest of your decisions will rest is whether to start your business in the first place. This may involve sacrificing a dependable, full-time income, or it may mean scaling back at work to pursue your dream. Or, if you’re like many entrepreneurs, the toughest decision may be which idea to turn into a business.
2. Whether to expand or keep the status quo. Keeping your business small may feel more manageable and less risky, as you can personally oversee most components of the day-to-day operations. However, the temptation to expand can be strong. Sometimes it’s the allure of new revenue, or sometimes it’s simply the potential for something new and exciting.
Whatever the situation, the strategic decision to expand your operations or maintain the status quo is one of the biggest decisions most business owners will face.
It’s not a decision to be taken lightly: If you decide to expand — whether that means hiring new employees, increasing product selection or partnering with another business — making sure you grow wisely will be paramount.
Do you have the proper systems and processes in place to successfully manage the growth? Do you have strategies in place that will ensure you maintain your current quality of service? What market or economic conditions may influence the success or failure of your expansion?
3. Whether to give up. Starting a business is hard work (that’s putting it mildly), and much of the hard work you do now won’t pay off until far into the future. It may be that financial struggles make you want to give up, or simply a lack of motivation due to disappointing business results.
Whatever the reason, thoughts of giving up cross every entrepreneur’s mind, usually more than once.
Legendary Swedish tennis player Bjorn Borg said, “My greatest point is my persistence. I never give up in a match. However down I am, I fight until the last ball. My list of matches shows that I have turned a great many so-called irretrievable defeats into victories.”
It’s true that there are times when giving up is the best, or only, choice to be made. But if you can summon up the gumption and courage to keep going, you may just find your big success is right around the corner.
4. Outsourcing or hiring in-house. There will come a time for every business, almost without exception, when the need for additional personnel or an influx of new skills becomes non-negotiable. And one of the biggest decisions a business owner must face at this juncture is whether to hire new staff or to outsource.
Unfortunately, no one can tell you what’s right for your business in this regard. Some of the factors you’ll need to consider include:
- Payroll and benefit costs versus contractor costs
- Type of job or role. For instance, functions such as online marketing, accounting and IT are often successfully outsourced, however, core areas such as PR and sales are often better kept in-house.
- Your company culture: If you have a strong culture that must be evident in all tasks and roles, in-house may be preferable.
- Your industry and the competitive environment: If you’re in a highly competitive industry, hiring in-house may reduce the risk of trade secrets being divulged.
If you need an important task completed, and could source it locally for $600,000, or outsource it overseas for $37,000, which would you choose?
This was the decision faced by the owner of investment-tool company Born to Sell CEO Mike Scanlin a few years back. Any guesses what he chose? In a CNN Money article about the decision, Scanlin reported that he opted for overseas outsourcing, and was extremely happy with his decision.
Scanlin isn’t alone: In a recent survey of US-based businesses, 36 percent of CFOs reported that their firm was currently involved in offshore outsourcing, with companies favoring India, Indonesia and China.
5. Product or service pricing. Determining your “sweet spot” in terms of pricing is an enormous decision that all entrepreneurs will be faced with throughout the life of their business. How you price your products or services will communicate the perceived value of your offering, and will position you against certain competitors in the marketplace.
Some of the factors you are likely to consider when determining the price of a product or service include:
- Having a solid understanding of what your target market is willing to pay
- Understanding what you can afford to charge, taking into consideration all of the hard and soft costs associated with producing the product
- Knowing how your product compares to other, similar products, and whether you can legitimately charge a premium for additional features, higher quality, etc.
- How you want to situation yourself in the marketplace: Do you want to be known as the company that provides the highest-quality product? The cheapest? The dependable, middle-of-the line product or service?
Being an entrepreneur will always mean having to make hard decisions, and these are just a handful of the ones you’ll inevitably face as your business grows. Each of these decisions comes with a certain amount of risk, but fortunately, risk-aversion is a trait many entrepreneurs lack (or at least they don’t allow it to impede their growth).