If you run a business or you intend to start one in the future, you will find yourself in tight situations where your business acumen, objectivity and the sense of judgement will be called to work.
At those times, you will need to take tough business decisions.
Business itself is a tough war which demands tough decision-making ability.
Some of these tough decisions are briefly explained below.
1. Dilution of ownership/Forming a partnership
Assume you are a sole proprietor whose business is doing well. But at some points, you may realise the business growth is limited by the capital invested in the enterprise.
At such a point, it is obvious you need to inject more capital to bolster growth. If taking a loan is not an option you want to explore, you could think of entering a partnership.
A partner joining you will dilute your sole ownership right. This is something you have always enjoyed solely but it is about to be shared with another person or persons.
Trust me, this is a tough decision to take even though it brings more funds to inject into the business.
Besides, partnership also comes with uncertainties. Will the business witness growth really? Will the new partner(s) be as zealous as you?
It is a tough decision to make.
2. Dissolving a partnership/Fighting a partner
This is like breaking a marriage vow. It could be a tough one. Imagine being in a partnership for two decades but you now have to decide whether to part ways with the partners to save the business or to keep your business interest alive, etc.
It is also a tough call because to walk away from an alliance you have had for years could be soul-piercing.
Until you’re at this point where you have to fight a partner for a reasonable cause, you may not know it is a hard one. But believe me, it is!
3. Downsizing/Firing Trusted Hands
You may wonder why a business should fire a trusted staff member. Well, it could be a cashflow challenge.
The elasticity of your business could be stretched if there is a run of negative cashflow but you must downsize to keep the business alive due to rising cost while revenue is stagnant or even retrogressive.
Downsizing could see old, foundation and trusted hands fired because their wages bear a heavy weight on the payroll.
Do you think this is a simple decision to make? Definitely not! It is a hard one.
4. Rejecting Mouth-watering Deals to Keep Your Integrity
Sometimes, your well-kept integrity will be usually put to test at the point of signing a business deal that you consider to be a big breakthrough.
Now, the deal offeror may suggest you agree to a term among 5 others that is unlawful, unprofessional, or simply unfair to other parties such as the government.
This could be to bypass an authorising body, give a bribe, fail to pay a charges, etc.
At this point of signing a breakthrough deal, your integrity is equally put to a test.
You have to decide. And it is a tough one! Keep right if you’re not sure of where to turn to.
5. Shutting Down
Well, this could be a difficult one especially where your business is same as you.
Shutting down a business or a product line you have spent a lot to build isn’t a decision you want to take will smiling. It will be a hard one.
But halting it could be a life saver for the whole business if other units or products will continue to sell.
This could also afford you the opportunity to direct your energy and resources to functions that need them so that profitability is achieved ultimately.
So, now to you. Above are just five instances where we have to take tough business decisions.
There are many others I want you to share with us.
What tough business situation have you faced in the past and how did you come out of it?
Let’s us learn from your field experience.