Imperfect Information and Business Decision Making

How many business decisions do you make each day? Unless you’ve sat down and thought about it, probably more than you realise. Of the decisions you make, how reliable is your information?

In a perfect world, we would have perfect information for business decision making. For example, take quoting work. With perfect information, you would know exactly the number or level of inputs such as labour, materials and time that would be required and exactly how much each would cost. Furthermore, you would know the exact margin to add on to provide you with your required return on investment and profit. You would also know exactly how much your customer would be prepared to pay, and what your competitors were quoting as well.

The reality of it is however, we do not live in a perfect world. The dynamic nature of the world we live in means business decisions is never made with perfect information. The result of this can lead to cost-overruns, lost profits and failed businesses.

So how can we tip the scales of perfect information a little more in our favour? Whilst perfect information is impossible to achieve, information that is up to date, relevant and reliable goes a long way. Also, strategies such as investing time and resource into accurate costings, keeping accurate records of prior jobs and options for forwarding purchasing also help.

At Insight Accounting Limited we can develop strategies to provide you with good information so you can make better-informed business decisions.

Talk to us today and see how we can add value to your business.

  • Tax Changes in Response to the COVID-19 Pandemic

  • Mortgage Holiday – Be Careful

  • Imperfect Information and Business Decision Making