Have you systemized your business? Could it run well even if you or a key employee were gone for a few days? It’s a sad fact that because most small business owners are too busy working in their business and fending off daily emergencies, their systems go completely ignored and chaos often prevails. There is just no denying the truth that creating and maintaining formal, written systems will increase the profitability, value and ultimate salability of your business.
All businesses have systems. Systems are what make the wheels of your business machine turn. In my experience, the difference between a successful business and a not-so-successful business is that successful business owners have taken the time to create formal business systems while the unsuccessful business owners operate with an informal set of systems.
A system is nothing but a series of processes. These processes are comprised of one or more activities that will involve one or more of the following inputs:
• Labor
• Equipment/machines
• Materials (including energy)
• Facility space
• Vendors
The business that will take the lead in the race for customers is the business that has all its systems integrated and working smoothly together. Let’s face it – a business that has an infallible billing system and acceptable customer service, but has too much inventory because it has no formal inventory control system, is not going to win the race. Ultimately, your systems create an experience for the customer that makes them want to come back for more.
Imagine if you were in the market to buy a business. Would you rather buy a business that can run on its own from day one, or would you buy one that could not run smoothly without the owner? Statistics show that when a business can virtually operate on its own because its systems are so clearly documented and thought out, it is more likely to weather changes in business climate; transition to new ownership; maintain its value and sell off at a much higher price.
Here are some tips to make sure your business systems are up and running at a winning pace:
1. Make sure you have a schedule for reviewing your systems and processes. Consider reviewing them annually or monthly. Make note of any bumps in the road and identify ways to smooth them out.
2. Consider your own unique circumstances. Just because a system worked for one company does not mean it will work for yours. Always consider your business’s and your customers’ needs first when looking at other businesses for model systems.
3. Take care that your systems have a back-up and do not rely on one person to make them work. People get sick, make mistakes and have emergencies. Whether it is sending the mail, ordering inventory or packaging your products, make sure that all systems have back-up plans for day-to-day operations, technical failures and unexpected crises.
4. Think about and hear your team. Your team members may have more insight into your customers than you think. After all, they are the ones most likely working with them day in and day out. Their judgment, insight and input into system development can be an invaluable resource. And it motivates them!
5. Write all processes and systems down! This cannot be emphasized enough. Documenting how you do business safeguards your business in emergencies, alleviates confusion on the part of your team members and can ultimately protect you in potential legal matters
Imagine how much more appealing your business would be to a potential investor, lender or buyer if you were able to present a “How-We-Do-It-Here” manual. Make 2012 the year you systemize your business and increase your success.
Jan Stockton is the founder of Stockton & Associates P.C., a Certified Public Accounting firm with offices in Vancouver and Battle Ground. Jan and her team can be reached at 360.695.6511 or via email at jan@stocktonpc.com.
