You'll need to make several decisions when starting your business. There will be forks in the road and those forks won't just have two paths to follow or even four like an actual dinner fork. They may have a dozen different paths to follow.
When you are staring down those numerous forks in the road, keep these three decision-making elements in mind when deciding which path to take:
You want to be ready and have a feasible path to grow your business when your business starts to grow. Choose suppliers who will allow you to increase your production quickly if necessary. If you have a physical space, know when you will need to start looking for something bigger and where you might be able to find it. The need to scale up or down often comes suddenly, but if you work scalability into your decision making process, it's much easier.
Making your business easily scalable might end up costing you more up front, but it could save you money in the long run. For example, if you are confident your business is going to grow rapidly, opting for a larger warehouse than you currently need might be a good idea so you don't end up running out of space quickly and having to move.
When I started my first business, I made a substantial investment in the enterprise resource planning software at an early stage of the company. It was an expensive system for it at the time, but the system paid off well since the company did not have to keep changing and updating it as we grew.
This is for those situations where someone approaches you with a business proposition. It could be someone who believes they have the perfect product for you or someone who has the perfect space for your business. It's best to look at these situations with a skeptical eye. That perfect product or perfect space may indeed turn out to be a good thing, but you owe it to your business to be diligent and see whether this opportunity really is in your best interest, especially if it was brought to you by someone outside your business. Remember they have their own agenda in mind.
My business sold products and we were constantly approached by unsolicited suppliers to sell their products or use their service. Whenever this happened, we approached it with an air of skepticism and put in extra effort to research whatever was being offered to us. I believed that as a company, we would make better decisions when we went sought something out rather than having something land in our laps. So, when a seemingly lucrative business proposition did come our way, we would put even more time and effort into the decision to make sure it was worth it.
3. Cash Flow
When talking about cash in relation to making business decisions, the most important thing to keep in mind is not necessarily the cost, but how it will affect your cash flow. That may or may not mean choosing the cheapest option, which in business may not be that cheap anyway.
You may have the choice between two suppliers for a product and Option A is cheaper, but only gives you a 30-day window to pay whereas Option B is more expensive, but gives you a 60-day window to pay. Is it better for your business in this case to take the cheaper option or is it better to take the more expensive one that gives you longer to pay for it? The answer is: whichever scenario is better for your cash flow.
At an early stage of my company, we had the opportunity to get our products into a major chain store, but they were only going to pay us as our products sold and that payment would be delayed by 60 days. Even though it would have increased our footprint, we knew that as a small company it was going to put too much strain on our cash flow to have thousands of products sitting on shelves and only being paid two months after they sold. Meanwhile, we would also have to spend money on marketing for those products.
We passed on that opportunity and learned a year later that another company within our industry had taken the deal and ended up going out of business because most of the products had failed to sell and were returned close to their expiration dates.
By being mindful of scalability, approaching every offer that comes your way with a bit of skepticism and always thinking about the effect on your cash flow, you can choose the right fork in the road more often than not when making business decisions.