Franchising 101: The Art of Making Tough Business Decisions During a Recession

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Tough decisions

When crisis strikes, business owners have to make considered, sensible choices, judging the situation and finding the most effective outcome. This can be difficult, but to help you take the right course of action, we’ve created a simple, step-by-step guide to making tough business decisions.

There’s lots to think about when you have to make quick decisions to boost your business’s income. If your organisation is struggling and you’re considering asking workers to take on bigger workloads, cutting salaries or even laying off employees, you need to tread carefully. You’ll have to know how to survive a recession without disrupting your business, damaging its reputation or upsetting your workforce.

Here are our 12 top tips for making tough business decisions.

How to make tough business decisions

1. Prioritise people, not profits

Always think about the effect your decision will have on your employees, as well as your operations. This may sound like a cliché, but if you remember the people at the heart of your business as you work towards a solution, you’re more likely to minimise the upset you cause your employees. Often, this will have a positive impact on your company, as high levels of morale and respect towards you will boost productivity and lower staff turnover.

2. Use your gut feeling

Sometimes, our intuition knows best. Of course, this option should also be accompanied by a significant amount of research and consideration, but if you still feel unsure at the end of the process, it might be worth ‘going with your gut’. Asking yourself which course of action feels ‘right’ will probably stop you making unethical or unfair decisions.

This is one of the most helpful things you can do when you need to make any sort of decision. Some people find it incredibly valuable to see all the potential consequences of their choices laid out in front of them. Once you’ve clearly defined the possible outcomes of each decision you could make, you’ll be able to compare them to see which causes the least disruption to your business.

4. Imagine you’re offering advice to someone else

Often, we treat ourselves very differently to the way we treat our friends and family. Take this principle and apply it to making tough business decisions. You may have come up with several possible courses of action, but what would you suggest your friend should do, if they were in the same situation? Asking yourself this can throw up fresh ideas and provide new inspiration.

5. Consider your options early on

If you can see murky waters ahead, start thinking about possible survival measures in good time. The more you postpone your brainstorming session, the more likely it is you’ll make rash choices you’ll come to regret. Be prepared and set a deadline for taking action. This way, you’ll work through the problem logically and avoid making poorly thought-through decisions.

6. Be transparent from the start

Workers respect authentic employers, so be honest with your staff members and don’t try to hide anything. Even if you have to admit you’ve recognised a potential issue but haven’t yet decided how you’ll tackle it, your employees will appreciate your honesty. If, on the other hand, you pretend to have all the answers from the outset, people may come to be suspicious of you.

7. Find a solution before speaking up if you can

If you have to give someone bad news, you can soften the blow by providing a possible solution at the same time. For example, if you have to cancel the work summer party, you could host a budget-friendly meet-up in your local park and encourage workers to bring their own drinks and snacks. If you need to let an employee go, you could offer to help them find another job using your contacts and provide fantastic references. Going out of your way just for an hour or two will have a huge impact on how people take the news.

8. Talk to family and friends

If you have a business mentor, you should, of course, talk through your problems with them. But if not, your family and friends should also be able to offer valuable advice when it comes to making tough business decisions. Gather your group and try to justify your proposed course of action to them. They’ll be able to flag any potential issues with your plan, especially if they work as employees in a business themselves.

I think with tough decisions, it’s always important to have a little breathing space. Consult who you trust and allow yourself time to reflect and ponder. – Richard Grundle, Tufferman MD

9. Give people notice

Never spring news on employees or co-workers without giving them time to take it in. Transparency is part of this process, and you should let your workforce know if there is stormy weather ahead. By keeping them in the loop, you’ll give them the chance to brace themselves for potential changes. But, once you’ve made your decision, tell the relevant person or people as early as possible. The more time you give them to absorb the news, the better they’re likely to take it.

10. Meet in person if possible

By organising face-to-face meetings with people, you’ll be able to give them the respect they deserve, as well as the chance to discuss any questions or concerns they have. Firing off an impersonal email template could come across as dismissive and rude. But taking the time to meet with someone will really show you care about them as a person. Ian Wright, Founder of British Business Energy has described ending his relationship with one of his suppliers:

“One of the toughest decisions I’ve ever had to make as a business owner was ‘firing’ one of our major suppliers because, while they were giving us their best deal, it was not competitive with what other suppliers were offering…

“Once I reached the decision, I felt it was only right to tell them face-to-face as soon as possible. So, I arranged a meeting, sat them down and went through all the numbers and why at the current time I had to go with someone else. I did say that if they could find a way to be more competitive in future that I was always willing to listen.”

11. Be clear, concise and compassionate in writing

If you must use written communication, take the time to make sure it’s the ‘three Cs’: clear, concise and compassionate. Provide enough information to explain your rationale, but don’t waffle on in exhaustive detail about your business operations. Use short, easily digestible sentences and avoid jargon whenever possible.

In almost all cases, your tone should be professional, but don’t forget to be compassionate – particularly if you’re delivering bad news to one of your employees. Think about how they’re likely to take the news and what they’d like to hear from you.

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 12. Don't make excuses

You may not feel you’re to blame for the issues you’re facing, but you run the business and are responsible for making tough business decisions to protect it. If you’ve done everything in your power to keep things running smoothly, your employees and business partners are unlikely to be angry at you.

Be open and honest with people, tell them what you’ve done to try to avoid the situation you’re now in and recognise the pain it could be causing others. As Bryan Clayton, GreenPal CEO explains:

Take ownership of the problem… Good managers should ensure employees know what is expected of them but in a gentle way. Ultimately, you are doing them a favour because you want them to be a total success.

Keep learning

To find out more about being a great business owner, take a look at our resource of informative franchise guides.

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