The effects of stress on business decision making

With the current boom I new businesses and many people looking to start up businesses of their own in the current economic climate it thought it was about time that I highlighted something that I see time and time again. We all know that the banks are not that forthcoming in terms of business lending, and that the pots of grants and interest free loans from the Government and Europe have largely dried up, so many businesses are started with little or even no working capital at all. This causes one of the most detrimental situations it is possible to find within a business, the situation of desperation, and with desperation, stress.

Without working capital it is difficult to plan ahead, it is difficult to manage income and expenditure, to balance the books and to keep control of the balance sheet. This can lead to high pressure to generate cashflow into the business, and with that pressure it is often that case that incorrect decisions are made. These can take many forms but the most common in my experience are price cutting to the extent that goods and services are sold at a loss, not a successful long term strategy, allowing customer service to slip through inefficient organization of time, which again is not ideal and failing to follow the business plan as originally set in place.

This last point is critical since a well constructed business plan is crucial to any business, particularly a start up, but it is useless if it isn’t followed. Now, this does not necessarily mean slavish adherence to something if it isn’t working, but it does mean taking time to analyse the situation with a clear head rather than acting as the proverbial bull in a china shop and that is something that is incredibly difficult to do when under stress. Stress is a real problem if for no other reason than it prevents you thinking straight leaving you with a constant feeling of having to run just to stand still. From the point of view of a new business owner this can be significantly damaging to the business.

If you feel yourself under pressure in your business my best advise is to start by returning to your business plan and assessing whether you are sticking to it or not. Chances are that you won’t be, in which case you need to get back on track, but if you look and find that you are still sticking to it, you have to consider the possibility that your plan may be flawed. The key concept is that there is nothing wrong with being wrong, so long as you find out quickly enough and are big enough to admit it and do something about it. Part of the joy of running a business for the first time is the learning process that you will inevitable go through no matter what you have done before. Take time to enjoy learning rather than assuming everything will come naturally and stressing when it doesn’t.

Above all, when you feeling yourself losing control, that is the moment when you must, must wrestle it back if you are to succeed.