How Business Systems Can Affect Your Personal and Financial Freedom
Successful small businesses develop systems of operation for almost every function performed. See “The E Myth” by Michael Gerber and “Stick With It” by Lee Colan. Business Systems are activities performed in a consistent manner to achieve the organization’s goals. They are performed in several steps and the successful manager documents these steps for easy replication.
To most, this will be boring and tedious but once the documents are completed, this gives you time to do what you enjoy doing and sustain and enlarge your enterprise as well. This is one of the great secrets of successful business that many small business owners avoid.
Creating systems simply starts with documenting what you do and how you do it. It could be called an operations manual or a Systems manual or some unique name that might come to you; but the object is to document the successful operations that you want to make routine.
Business Systems have been described in different ways. Michael Gerber describes Systems as Hard, Soft, and Information Systems. The Hard System refers to the placement of equipment or the vehicles used for execution such as bulletin boards for messages or the placement and care of equipment. Soft Systems are procedures used to acquire customers and product/service delivery. Information Systems are tools used to record activity in your business. Budgeting software, cloud computing, security and many other great services provided by today’s technology can help with these administrative functions.
Three other ways of System creation have also been described: the Sales System, the Delivery System and the Customer service System. The Sales System includes your marketing efforts and customer acquisition methods whereas the Delivery system involves steps for getting your product/service to the customer and Customer service System involves your contact with the customer and how you retain them. see “The Importance of Business Systems” by Ian Howard
You’ll know your Systems are working if there is very little conflict and customers are coming back for more. You will also know that the Systems are working if elements of your strategic plan are being achieved and your Mission and Vision are being realized.
You will , of course, need to use various ways of measuring the levels of achievement of critical objectives but Systems help you pinpoint areas that may or may not need adjusting.
Nick Reese, in an excellent article on the subject, provided these 7 “steps to create bulletproof business systems that boost profits while freeing up time and expenses”:
Let go of having to do absolutely everything. For most startup entrepreneurs, the business is their baby and they want to be to be hands-on every step of the way, but this is a common growth limiter. Making your business successful means letting go of control over every detail and making employees accountable for doing their jobs.
Adopt automated processes whenever possible. If you can implement simple systems for your most essential business processes (cleaning, ordering, etc), you can step away knowing that most of these systems will go according to plan. You can confidently delegate repetitive tasks to employees, freeing yourself to work on the areas of the business that generate additional cash flow. Any processes that you can’t fully automate should be batched, including email campaigns, social media campaigns, monthly ordering, and more.
Draft thorough step-by-step manuals. A good process will include training materials, which may be how-to procedures, templates, worksheets, sample orders, bills, or other documents, spreadsheets, a workflow chart or software, an FAQ page, and any other information needed to perform the task at hand. Checklists are especially handy to ensure consistency and quality. Each task can be broken into steps and checked off when complete. This may sound intimidating, but a simple shared spreadsheet online will do the job — and allow you to delegate tasks going forward.
Hire employees you can trust. For complex situations, implement an open-ended decision process that I like to call line-of-sight decision making. Line-of-sight decision making is where you, as a business owner, realize that no system will cover every possible scenario, so you trust your team to solve most problems they will encounter. If you run out of flour at the cupcake shop, let your team decide the best medium for solving the problem. In real life, most problems aren’t as simple as this example, but it illustrates why hiring and effectively managing A-list players is key — because you shouldn’t have to tell people where to get flour.
Create a two-way training process. To ensure that your employees do things your way and think the way you do, it’s important that they are well trained. Make sure they understand every aspect of their job, including why things are done. Also, empower members of the team to propose changes, reject inefficiencies, reduce redundancies, and build and refine successful processes.
Track each system’s efficiency. Most successful systems should also have a simple feedback loop built in. This feedback loop will make it easy to see when things are going as planned and when they aren’t. Reviewing feedback can be as simple as a weekly or monthly check-ins with team members or as complex as financial modeling based on performance data. As the business grows, these feedback loops will allow the system to become more and more focused.
Leave room for error, and expect it. In a business, sometimes — well, often — things don’t go according to plan, so your systems need to be flexible enough to account for that. These unexpected events are a great time for you to trust in yourself and your team to figure things out. From there, notice what went wrong and fix it in your system so you don’t make the same mistakes again. See the excellent article: “How to Build a Bulletproof System So Your Startup Runs Itself” NICK REESE
Developing Systems allow you to work on your business not in it which is required if you plan to grow. The best managers of growing enterprises are constant learners who get help and advice from professionals in the field and they read as much as they can in the field of management as well as in the particular discipline that relates to their business.
If you’re serious about your business, document Systems when you find a successful one and continue learning, your business will have a greater chance to achieve it’s Mission and Vision.
Learn more in “20 Directives for Small Business Success: Do or Die”
