One of the major things I have always concentrated on in all my businesses is creating systems.
After first reading Michael Gerber’s book – The E-Myth, I was hooked. The penny dropped inside the business part of my brain. Good thing too because I’ve done very well out of business systems.
In fact this is one thing that took me from struggling and broke in business to doing well and able to successfully exit multiple startups.
If you’re new to business systems or could use a quick refresher, I’d encourage you to read my two previous articles introducing the topic:
In this article I want to take you on a bird’s-eye view of this vital part of your business success and the four major types of systems you’ll need to build within your business.
BUILD REPLICATABLE SYSTEMS
The most valuable business systems are those which are replicatable. If your business relies on a genius or superstar talent at the center of it, then it’s difficult or impossible to replicate.
That’s one of the reasons inventor Warren Buffet only invests in “boring businesses” – ones he can understand, that deliver a staple product, that have solid management and generate a lot of cash – how boring!
Among his portfolio you won’t see any high-risk technology startups, highly speculative biotech companies or concepts you can’t understand. These often rely on one or two superstars that would kill the company should they leave. Instead you’ll see solid businesses that have systems which deliver excellent products consistently over a long period of time.
Systems allow mere mortals to run an extraordinary business. Just look at McDonalds – a highly successful multibillion-dollar business run by pimply teenagers who can’t be trusted to make their beds. This is business systems at work.
Once you have a business system that is replicatable, people will want to pay you large sums of money for it. This will come in many forms but the most common are:
- Customers wanting to do business with you because you deliver consistent results
- Licensees wanting to license your system
- Franchisees who want to buy into your franchise system
- An investor or competitor wanting to buy out your business
THE FOUR BUSINESS SYSTEMS
The are four main types of business systems you need to create regardless of what type of business you’re in. You’re almost guaranteed to make a fortune if you can create scalable and replicatable systems in these four areas of your business:
- Marketing system – Generate a consistent flow of leads into the business.
- Sales system – Lead nuturing, follow up and conversion.
- Fulfilment system – The actual thing you do in exchange for the customer’s money.
- Administration system – Accounts, reception, human resources etc. Support of all the other business functions.
Regardless of what business you run, these four functions will be relevant to you.
Many small businesses get bogged down with fulfillment and administration while neglecting their marketing and sales systems.
After all, no one is pressuring you with deadlines to get you to do more marketing. All the seemingly urgent issues generally fall into the fulfillment and administration functions.
This causes the common situation where the business is struggling, even though they might be offering excellent products and services.
The problem is that customers don’t find out how good your products and services are until they have bought. And if your marketing and sales systems aren’t in place, they will never buy in the first place and find out how good you are. It’s a vicious cycle.
Some rely on reputation and word of mouth. While these are great, it takes a very long time to build up enough business purely on reputation.
Smart businesses, on the other hand, go to great lengths to perfect their marketing and sales systems.
Very few business problems can’t be cured with more money coming in.