A few days ago, analysing an investment with the two partners of a small business, we realised that it took much work to objectively decide between the different alternatives on the table since there were parts of these decisions that were purely subjective.

That's why following my accountant sense (similar to the arachnid sense of Spiderman), I modelled the above process visual that helped us to deal with subjectivity in a way that gave us room to find consensus among partners and make better decisions.

It works this way:

• First, I drew a horizontal line and divided it by the middle, writing the words "Investment" on the left side of the line and "Potential" on the right side.
• Second, I divided each side into five parts and defined it together with the partners. For example, on the potential side, you have situations that went from a merely appreciable improvement to a breakthrough in the business or industry. And on the investment side, you went from an "impulsive capacity" to "out-of-reach" money to put in.
• Third, we discussed every alternative in terms of the investment we should make and the potential it has to put them at the right point on each side of the line.

Finally, we took the results and decided among them which alternatives we should invest on

But that's not all, friends.

Sometimes, the decision-making process gets stuck in endless discussions about different alternatives, which can be frustrating. And then is when you follow a guideline based on these five principles:

1. There are no-brainer decisions such as low investment and high potential alternatives; or high investment and low potential options. So save time on these.
2. There are competitive alternatives and complementary ones with which you can work together. So please don't deal with them as mutually exclusive.
3. The existence of mutually exclusive alternatives is not bad news but an opportunity to get into details. Remember: the devil is in the details.
4. There are "out-of-reach" investments with high potential that you should study further to look for funds and fit them into your strategy.
5. There are moments of doubt when you have two mutually exclusive alternatives with the same results. So trust your instincts. What feels right?

The discussion with the two partners went well, and they ended up nudging two complementary actions with high potential and not too high an investment. They also dismissed three alternatives that didn't make the cut and reserved one as a change-of-paradigm alternative we should look into by the end of this year.

© Oriol López 2023

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