Importance Of Rational Thinking In Business

It is important for the business owner to make rational decisions for the long term success of his/her organization. Business environment is constantly changing. While some changes may provide new opportunities to the company, other changes may pose threat to company’s business operations.

Business owner is required to prepare himself/herself for such opportunities and threats. Besides these external threats and opportunities, business owner is required to manage day to day operations of the business and resolve internal issues on time. Therefore, it becomes important for the business owner to think positively and rationally while handling business issues (both internal and external).

Role Of Rational Thinking In Business

Sound Business Decisions

Rational thinking on the part of business owner can help him/her in making improved business decisions. It is important to understand that all business decisions will not give fruitful results. Therefore, business owner should be ready to accept failures as well. Rational thinking can minimize the possibility of such failures.

Importance Of Rational Thinking In Business

By thinking rationally, business owner can measure the impact of any action on the business operations. For instance, business owner may decide to purchase a new machinery in order to reduce the percentage of defective products and compete effectively in the market place. However, installation of such machinery may impact day to day functioning of the business.

Another alternative may be to install machinery in phases (which may result in a minor increase in running costs). Rational thinking can help the business owner in taking right decision and reducing the impact of such business decision on the overall business objectives.

Improved Employee Satisfaction And Motivation

A business owner is required to deal with employee issues and is required to monitor employee performance on regular basis. While forming an opinion on any employee’s performance may be easy for the business owner, it is important to think rationally before taking negative action in case of nonperforming/less performing employees.

Importance Of Rational Thinking In Business

It is essential to understand the reason for non performance. Business owner should understand the impact of any adverse action on employee performance and overall working environment. Rational thinking can help the business owner in improving employee satisfaction and motivation through open and transparent communication.

Continued Success

Every business owner wants to make his/her business successful. A lot of investment is required to be made (in the business) in order to ensure customer satisfaction. However, business owner cannot continue to make investments on a continuous basis.

It is important for the business owner to recognize the fact that he/she cannot continue to run the business with the use of his/her funds. Profitability is important for any business to survive over a long period of time. Rational thinking can help the business owner in striking a balance between his/her investments in the company and use of profits to finance company’s operations.

In case, business profits are not sufficient to meet day to day operational costs and to finance long term growth plans of the company, business owner may have to consider alternative sources for raising funds or may even have to close business operations.