How fast does your business move? How many mistakes do your employees make? Armed with the right business assets, such as great products, a highly trained team, and a large customer base, achieving success should be fairly easy, unless your team moves slowly and makes mistakes.
For example, if Apple often shipped customers the wrong product, the company would falter. If it took twice as long to develop and introduce new products, sales and profits would dip considerably.
As you know, Apple doesn’t exhibit these flaws. Why? Because Apple, like most great companies, has developed multiple systems that dictate how it completes vital functions such as hiring and training employees, processing orders, and managing customer experiences. Systems are an extremely valuable business asset that allow you and your company to reach its goals.
Systems allow you to progress faster and with more consistency. Conversely, without systems things can and will go wrong. As an example, consider the ordering systems most restaurants use today. Waiters and waitresses can now take your order on a handheld device. They can also take your order on paper and easily enter it on a touch screen computer. The results? Among other things, these systems automatically calculate customer bills.
Conversely, I remember as a teenager recalculating handwritten bills in my head and finding mistakes. These systems also prevent ordering mistakes, such as cooks being unable to read the handwriting on written orders or waiters delivering meals to the wrong tables. Because the systems automatically show orders to the cooking staff, orders also get fulfilled faster. They allow owners to better manage their restaurants; the owners can quickly see what the top-selling items are, which items they need to restock, whether there are any inconsistencies that may indicate employee theft, and so on.
Clearly, the restaurant’s management systems allow it to perform faster and with more consistency. This better satisfies their customers and reduces costs, which is exactly what restaurant owners want.
The term system applies to much more than technology systems like restaurant ordering software. In fact, systems can and should apply to virtually every aspect of your business. When applied properly, your business can and will flourish.
Introduction to Systems
A system is a procedure or process for obtaining an objective or completing a task. That’s the basic definition. When you truly systematize your business, you’ll describe a system as the way you get things done.
In some cases, these processes are very sophisticated and may require an engineer or technician to develop them, such as the restaurant ordering system mentioned earlier. In most cases, however, the processes are simply documented and methodical ways of completing an objective, such as how to handle phone calls or how to make your company’s products.
When you think about it, your entire business is one big system. If so, wouldn’t it be great to fully systematize it so it runs like clockwork?
There are several reasons why you’d want to build systems and processes in your business. The main ones are:
1. Precision and consistency. By having set processes for how tasks should be completed, you will get consistent quality results.
2. Time and money savings. When employees know precisely how to do something and do it the same way each time, they eventually become much better and faster at performing the task. This saves time and money, and gives you a competitive advantage.
3. Scalability. When you have set processes for completing tasks, it’s much easier to hire and train new employees and grow your business.
4. Free your time and build business value. Developing and implementing systems allows your business to run without you. This frees up your time to focus on building your business further (and taking time off) and makes your business more attractive and valuable to potential acquirers (because it’s not dependent on you and the acquirer can see how the business could continue to scale and provide value).
A business’s ability to run without its leader deserves further clarification and is why systems are perhaps the most important business asset you must build. The single biggest problem in virtually any small business is you—the head entrepreneur, business owner, or department head. This is because you are the restraint or bottleneck.
Because there’s not enough of you to go around, things don’t get done. You’re probably the best at coming up with new product ideas, spotting new marketing opportunities, and so on. Because you can only work so many hours in a day, many of these critical tasks just don’t get done.
The beauty of developing systems is that they allow you to put structures in place to get things done using less of your time. Imagine if you had a system for new product development and all you had to do was come up with the idea and the system would create it. In this situation, you’d have time to develop many new and great product ideas.
Most entrepreneurs and business owners have a negative view on systems because they think they are difficult to establish. I’d like for you to view systems in a different way. Using systems, you become the customer.
Think about that. If your company has a system for creating new products with minimal involvement from you, who then is the customer? Who benefits the most? You do. If your company has a system for following up with customers to ensure 100 percent customer satisfaction, which results in referrals and repeat business, who benefits? Once again, you do.
Although systems do take time and energy to build, they directly benefit you. If you ever want to sell your business, they benefit the new owner, who will happily pay a handsome premium for them.
Most entrepreneurs and business owners don’t create systems. Generally they have two poorly reasoned excuses:
1. Systems take too long to build. It does take considerably longer to build a system than to simply perform once the task the system is designed to accomplish. However, if the task is often repeated or you will need the task to be completed by someone new, having a system in place will pay for itself.
2. There are too many exceptions to the rule. For example, you might think that you can’t build a system for handling inbound calls because there are too many possible things about which your customers could inquire. This is precisely why you need systems, however. As you grow your company, you will become farther removed from daily tasks such as answering phones or responding to e-mails. The process of systematizing your business forces you to address multiple scenarios, and eliminate some or all exceptions to the rule.
What Systems to Create in Your Business
So what should you systematize in your business? You should systematize any process in your business that is performed frequently, and that, if completed in a predictable, consistent manner, would increase the value and profits of your business. Likewise, any process that can free up your time should be systematized. If your systematization efforts are working, you should start seeing improved revenues and profits.
Excerpted with permission of the publisher, Wiley, from Start at the End: How Companies Can Grow Bigger and Faster by Reversing Their Business Plan by David Lavinsky. Copyright 2012 by David Lavinsky. This book is available at all bookstores and online booksellers.
Author Dave Lavinsky is the cofounder of Growthink, a consultancy that helps entrepreneurs and business owners identify and pursue new opportunities, develop new business plans, raise capital, and build growth strategies.
[Image: Flickr user tpmartins]