Business Systems 101: Definition, Benefits + Examples
Starting, building and growing a business is exciting. Yet so often things get out of control. Balls get dropped and what was once fun and exciting can become a dreary chore. Why? Because of a lack of business systems.
Many founders find themselves working longer hours than they ever did when they worked for someone else and the money they take home is often not much better either.
You might start wondering whatever possessed you to start a business. After all the goal was freedom, wealth and independence. But now it feels like you’re treading water and going nowhere. Sadly some owners end up throwing in the towel.
I don’t want this for you. That’s why I’m going to show you how systems can change your company for the better. If you’re falling into the trap of working non-stop, day and night, check out these top time management strategies for better productivity. It might be just what you need.
What Is A Business System?
A business system is a documented procedure that outlines exactly how to do something in your organization.
I like to think of systems as standard operating procedures—a series of checklists given to a new employee and implemented without training.
For example, it could be a step-by-step guide to reaching out to podcasts.
- Step one, research marketing podcasts.
- Step two, check listenership numbers. Visit their Facebook page, their LinkedIn account, whatever, and see how many followers they have.
- Step three, review their recent episodes. Are they a good fit?
- Step four, grab the standard introductory template and craft an email to the producer pitching yourself.
- Step five, follow up two to three days after sending the email if you’ve not heard back.
- Step six, book the podcast guest appearance in your calendar.
- Step seven, send through any relevant information, so headshots, a biography, links to your website and social media pages, suggested questions or topics, you get the idea.
Now that you understand what a business system is, let’s look at the benefits of implementing systems.
Why Are Systems Important In Business?
In my 1-Page Marketing Plan Course, I talk about the three E’s of business systems—expansion, escape, and exit. Without systems, the “know-how” of running the business is siloed between a few select individuals’ ears, and achieving the three E’s is impossible.
What happens if you get sick, or a vital team member leaves, does your company stop functioning optimally?
Systems negate this, and I’m going to show you how.
Here are five major benefits of implementing a business system.
- It builds a valuable asset. Investors can buy your business and know that they’ve got a committed customer base, a set way of doing things, a guaranteed annual income, that sort of stuff.
- You can leverage and scale your business more rapidly. Once you’ve got systems in place, you can focus your time on creating new products that cater to your different customer segments.
- Consistency. Systems allow you to deliver a consistent experience, which is super powerful. It means whenever a customer interacts with you, they’re going to get a world-class experience.
- Lower labor costs. You can reduce your staff number because technology can handle most of the more mundane and repetitive tasks.
- It can improve efficiency. Your employees are more productive because they have a set way of doing things.
To recap, systems are essential for expanding your organization, adding new people and products, growing your revenue, escaping your business and taking a well-deserved holding, and potentially exiting your business one day.
Why You Need To Systemize Your Business?
If you’re wondering why many small businesses don’t adopt systems, it’s because they’re considered back-office functions or boring.
It’s not something that requires your attention today, particularly when you’re in the startup phase. You’re so focused on building your company that there are other more pressing tasks that you need to deal with.
So there’s a perceived lack of urgency.
Thing is, without systems, you don’t own a business – you ARE the business. That means if you want to double revenue, you need to double the hours you work. Since you only have so many hours in a day, that limits how fast and how big you grow.
By automating, delegating, and systemizing, you gain leverage, which is the key to creating and scaling a high growth organization.
Even if you’re starting out, you need to get into a systems mindset long before hiring your first employee or subcontractor. It’s the critical difference between being self-employed and being an entrepreneur.
Don’t wait until your organization is in crisis mode and spinning out of control. It’s much easier to begin creating your systems from the start than retrofit your business later.
Getting Started: Transitioning From Self Employed To Entrepreneur
First we need to create a subtle but vital mindset shift. Self-employed people ARE the business, whereas entrepreneurs OWN the business.
If you’re ever going to experience financial freedom in your company, the key ingredient is leverage. If I had to pick only one thing that sets apart wealthy business owners from average ones, leverage would be it. You can find out more about The Best Kept Secret Of The Rich here.
Perhaps the only thing more important to an entrepreneur than financial success is freedom. Are you setting up your business in a way that facilitates that kind of freedom? You can read up on Why A Lack Of Systems Is Stunting Your Business Growth And Costing You A Fortune.
Building Your Systems So You Can Be Free
Now that you’ve made the mindset shift from self-employed to entrepreneur, it’s time to start actually building the systems that are going to run your organization and set you free.
If we’re going to create the kind of speed that’s necessary for a high growth business, we need to eliminate all bottlenecks – starting with you. Find out how here.
What Are Examples Of Business Systems
One of the poster children for good systems is McDonald’s.
McDonald’s is a multibillion-dollar operation run by young teenagers who can’t even be trusted to make their beds. How does that happen? It happens with business systems.
Their operation manuals cover everything from hiring to product delivery to customer interaction. What these systems do is allow McDonald’s to provide a consistent experience.
You know that when you walk into a McDonald’s, The Big Mac, the fries, the nuggets will always be the same. And it’s because they’ve got those systems in place.
Whether you like the food or you don’t, you always know that any McDonald’s you go to will deliver a consistent experience.
How Many Types Of Business Systems Are There?
While virtually anything can be systematized, there are four main types of business systems that you need to build. Getting these running is like adding rocket fuel to your startup. I’m going to touch on these below, but you can find out more in this article: Products Make You Money, Systems Make You A Fortune.
- There’s your marketing system, and you use this to generate a consistent flow of leads into the business.
- Then there’s your sales system; this is what you use to nurture leads, follow up with them, and hopefully convert them into paying customers.
- The third system is your fulfillment system, and this is the actual thing you do in exchange for the customer’s money.
- Lastly, there’s your administration system, which encompasses accounts, reception, human resources, etc. It supports all the other business functions.
If you had to start with just one of these systems, the one which will give you the biggest returns on time and money invested by far would be your marketing system. Click here to learn how to build your marketing infrastructure and assets.
How To Write A Business System?
When you’re building systems there are three questions you need to think about:
- Who is going to do it?
- What are they going to do?
- When are they going to do it?
Some processes will be handled by people, for example outreach to journalists, podcasts, responding to LinkedIn connections, etc. Some will be handled by technology and automation, so a CRM will send an automated series of email, Google Analytics will track website visitors and opt-ins
Knowing this early on is important because it influences the processes you create and how you write your business systems.
But before I get into writing your standard operating procedure, I want to focus on how you can document your systems.
- You can use text and imagery. For instance, you can use a Google or Word document to list the various steps that someone needs to follow. I like to add screengrabs to illustrate my point. So if I am writing a best practice document for writing a LinkedIn post, I’ll take screengrabs of some of my top-performing posts. This graphically shows what emojis to include, how to write a question that draws attention, the position of hashtags, etc.
- You can use audio (where appropriate).
- Or you can document your system with an instructional video. I particularly like using a screen-sharing program like Loom to explain how to do something. I just hit record and can walk through the process step-by-step.
Now that you know how to document your business systems, it’s time to map out your process. And really, there are four stages to writing a standard operating procedure.
Here is what I like to do.
Step 1: Come up with a process.
My team and I will get together, and we will try to define what the best method is. So what is the gold standard? During this brainstorming session, we want to identify who does what. Who is going to compile the data? Who will design the document? Who will film an instructional video? That sort of thing.
Step 2: Document IT.
For instance, my copywriter will note down in a document exactly how to pitch media on Haro or SourceBottle. She’ll write the process, taking screen grabs of each step. Then my designer might create visuals to illustrate each step. And my marketing assistant will take all of this information and compile it into a branded SOP document.
STEP 3: Implement IT.
Let’s say my copywriter leaves, and I hire a new copywriter. They can take the media pitching business system, read it, and hit the ground running. I can also share it with my 1:1 clients, and they can implement the same process into their business, so that becomes very powerful.
Step 4: Adjust when necessary.
So sometimes we find, “Hang on, there is a better way of doing it,” and then we adjust and course correct.
For best results, show your team how to put a business system together, then let them do it. Make sure you watch them and provide guidance when needed.
Virtually everything in your business can and should be documented.
Four People Business Systems Are Valuable To
Now that you know how to put a business system together let’s look at who values your systems.
Business systems are valuable to:
- YOU, the owner because you’re not people reliant. It means you can expand and escape. You can franchise or license your business, an additional cash injection that you can look forward to.
- Incoming staff. You want to be able to pass something over to a recruit and say, “This is how we do it here, this is our checklist, this is our process, this is our procedure,” and it’s very, very important that you’re able to do that. You don’t have to train employees up. They need to follow the procedure outlined in the document. And because you’ve mapped it out, it’s easier to pick up and run with. So you’re not people reliant. Someone can decide to leave, and your business won’t stop functioning. The recruit can pick up where the last person left off, and that’s a great place to be in.
- Your customers because each process ensures you deliver consistent results with every interaction. Your customers know what to expect, and that builds loyalty. But you can also use your systems document as a byproduct which a coaching client, for example, can implement into their business. So you’re not only advising your client, but you’re saying, “look, this is how we’ve done this. It’s our gold standard. We’ve had great success using this methodology, and you can too.” So that’s a big motivator for clients to choose you over, say, a competitor.
- Potential investors. They’re not just buying the customer base, which is really a historical document, or the revenue, which again, is a historical metric. They’re buying a system that generates new leads, prospects, and customers, and a process for delivering products and services. Now that makes the business dramatically more valuable to prospective purchases.
And this is your ultimate customer. It’s the person who puts you out of business and writes you that big check that makes you leave and do something else. Some of the biggest fortunes have been created when owners have sold or licensed their companies.
But if management depends on you to be present to get things done, it’s really a self-made job and worthless to investors. So Start With The End In Mind and remember, technology has created more millionaires and billionaires than anything else. Learn How Smart Entrepreneurs Use Technology to create value in your organization.,
The startups and small businesses that win in marketing are the ones that do the simple things consistently. They get them done not because of willpower but because of a business system.
I want you to think of systems as your secret weapon—your Iron Man suit that will help you punch above your weight. Systems let you put much of the repetitive and tedious tasks on autopilot, and that’s exciting because it frees up your time to focus on coming up with a new vision, a new way of doing things, a new market to serve, whatever.
So like Jim Rohn says, “Success is nothing more than a few simple disciplines practiced every day. Failure is a few errors in judgment repeated every day.”
Don’t repeat your errors of judgment daily.
Just put in those few simple disciplines: start documenting your processes, start putting together your marketing system. Make sure you’re using technology to reduce friction, create a more consistent experience for your clients, and deliver a wow experience.
Those systems will free you. They’ll help you expand, escape, and eventually exit your SME and that, to me as an entrepreneur, is super exciting.