Business systems are by far the most overlooked aspect of running a successful small, medium, or large business.
We’re going to look at what they are? Why you need them? And how they can help you build massive value in your business?
Read the article or watch our live training on how to systemize your business for scale.
What are business systems?
This is often referred to as an operations manual. Its purpose is to capture the collective “know-how” of the business.
The poster child for business systems is McDonald’s. This is a complex, worldwide, multi-billion dollar business essentially run by pimply teenagers. Kids who can’t even be trusted to make their beds.
How do they do this?
They run this hugely successful and profitable business because they have amazing business systems. Their operations manual covers everything from hiring to product delivery to customer interaction.
Why business systems are often overlooked
There are various reasons why business systems are overlooked by many small business owners. And you really don’t want to make these expensive mistakes.
Reason #1 – Boring
Business systems are regarded as “back office” functions. Unlike the latest marketing strategies, sales techniques or other highly visible aspects of your business, good business systems are considered boring. While building them may indeed be boring, the incredible power they give you is anything but.
Reason #2 – Lack of time
In the startup phase, owners don’t have time to build business systems. There are seemingly more important things to do like sales, marketing, and order fulfillment.
With all of these important things vying for their attention, systems get put off. However, just like any other accumulation of neglect over time, it rarely ends well.
Reason #3 – Overwhelm
Setting up systems can be overwhelming for many business owners. They don’t know which systems to prioritize and so they land up doing nothing. But think about this. Do you really want to take someone through how to do something ten times when once would suffice?
Reason #4 – Confusion
Another reason why systems don’t happen is because people don’t know how to manage a system. They know they need it, but they have no idea how to implement it and so it doesn’t get done. That’s why I’m going to show you how to create a system.
DO YOU WANT TO GROW YOUR BUSINESS RAPIDLY?
Four reasons why you want systems and processes in your business
It’s a sad situation when a business owner goes to sell their business and finds out after putting in many years of hard work, that their business is worthless.
It’s not so much that the organization itself is worthless, it’s that they ARE the business and without them there is no real business to sell.
In cases like this, they can’t sell it for any kind of reasonable sum beyond the value of their stock and maybe a small, nominal amount for “goodwill”.
There are numerous benefits to implementing systems in your business. Here are some of the most important.
1) It builds a valuable asset.
It’s nice if your business gives you a great cash flow to fund your lifestyle. But wouldn’t it be fabulous if one day when you decided it was time, you could sell your business and have the biggest payday of your life?
You can only do this if you build the value of the business. And that can only happen if it’s a system that can continue running without you. Yes, you need marketing assets, but systems are where the money is made.
In this article I explore 10 of the best marketing assets. Check it out.
2) Leverage and scalability.
Systems give your business the ability to expand. You can replicate your business in other geographic areas. You can do this yourself or by franchising or licensing the rights to your business system. Many fortunes have been made this way.
Consistency is one of the keys to delivering an excellent customer experience. You may not like the food at McDonald’s but wherever you go they deliver a consistent experience.
4) Lower labour costs.
Systems mean you don’t have to waste time and effort re-inventing the wheel each time. This improves your efficiency and reduces your labor costs.
How to systemize your business
The reason we have systems set up is that we have a series of steps to produce a consistent outcome. It might be documented via a video, a checklist, or a step-by-step process.
When we think about business systems, you want to think of your business as one big system where the goal is to have your business as a series of systems working independently from you.
So you are outside of the business and there are different components to your business. There are sales and marketing, and maybe you’ve got HR and finance.
Just visualize your organization as one big business with all these subsystems within it.
Underneath each of these departments, the goal is to identify the 20% of the systems that deliver 80% of the result for the business.
There’s probably a handful of systems that are really driving the result. Think about how to identify them and how to create an easy way to extract and systemize what’s already happening. This allows you to remove key person dependency.
By capturing what your team does, we can make it possible for other team members to come in and take over, if need be.
Your business is dependent on your sub systems. If you have an unhealthy sales department, it’s going to drag the rest of your business down.So you really want to think about your business holistically.
Turn systemizing your business into a game
Now I want you to think about translating this into a game. On the top you’ll have your departments listed and down on the right side you will have tasks.
Trigger tasks are those where something is triggered. Maybe a client makes a purchase and that’s the trigger to fire off a series of activities. There might be other things that happen on a daily, monthly, quarterly or annual basis as well.
You can go through each department and think about the task and build a map of what systems drive your business, applying the 80/20 principle to identify the key ones.
This becomes a game and you can color code it. Once you’ve got the game in place, it makes it much easier for your team to play it with the idea that you want to turn everything into a green color.
This is a simple setup to create on a spreadsheet. Figure out which are the triggered tasks and which are done daily, monthly, quarterly and annual.
Getting started with business systems
The next thing to think about is where to start. People can get overwhelmed as there are many different options. There’s a start point and end point for each different task.
Some tasks have different decision points and different ways to get to that outcome. When you first create a system, think of the most probable outcome for that type of system and just document that. That helps to simplify what you are documenting and you’ll find that anytime there is an exception, that’s usually when it goes to a senior team member.
When new team members are on board, they will follow these simple systems. You are getting the team involved and understand that the systems will evolve over time.
A lot of people have a picture in their head that a system will create a lot of work for them. But if we simplify it and say it will evolve over time, it will be much easier.
Creating your system
Think about who on your team enjoys systems and processes.
Systemization is a two person job. There’s the person who knows how to do the task, and the person who helps to extract, document and make sure it’s in the right place.
The business owner, typically speaking, is the worst person to create the systems and processes. As a business owner you don’t have to love creating it, but you have to love what it will do for your business.
Create a section in your productivity tool for systems, policies and training creation. You might be doing training, and oftentimes the knowledge that’s uncovered in that meeting is forgotten. The key is to figure out a way to go from idea/video to creating the documentation.
Create a job request. You’ll want to identify:
- Who has the knowledge
- Who will document it
- What type of system it is
- What is it about
- Link to the recording of the task getting done
- Link to any additional documentation
- Determine where it will get saved
- What sort of task is it
- Whether there an associated Asana task
Review your initial spreadsheet. Assign each task to the correct team member. Add a specific due date with very clear documentation on how it’s done. Then set the process in motion.
Download our FREE SYSTEMS TEMPLATE here.
Develop a culture that loves systems
It’s crucial that you get buy in from you team when it comes to systems.
While a business system can help set the tone of the company culture just having the system documented won’t miraculously make everything work.
You need to encourage your team to review the system before going to their supervisor. Only if they can’t resolve an issue should they then come to you.
This starts at the recruitment level. You want to implant these ideas from day one, that will let them know that’s how you do things at your company.
How detailed should a process be?
It really depends on what the task is and who’s executing it.
Some tasks, such as issuing an invoice or setting up a one-click automation in your CRM would need to be very detailed.
Tasks that give an overview of a system can be more high level. Systems that lend themselves to the high level approach would be something like the delivery of your product or service.
When it comes to the delivery, maybe it’s very complex. If you get that feeling that you have to go granular and you don’t know where to start, that’s the trigger for you to keep it at a high level.
Do you need a business system's champion?
It is easier to build a business system when you have a team, but if it’s just you, it can be done.
- Start by identifying what systems you need to create.
- Then record videos whenever you perform task.
- Organized them in a systems folder.
- Once you can hire a VA, gave them a copy of Systemology and access to your systems folder.
- Get the VA to watch all of your videos and document them.
Here’s what will happen. Your VA will realize they can take over certain tasks, as they learn how it’s done. When you are small, that’s a great stepping stone.
Then you can copy business systems and repeat the process. That’s how you build an effective business system, increase your capacity, client retention, and revenue.
Ask yourself, "Why does your business exist?"
Let me ask you a question. If you went overseas for six months leaving your business behind, would it be in better or worse shape when you come back?
Would you even have a business left?
If you answered negatively to either of these questions, then it’s likely you don’t have a business. Rather, you ARE the business.
Many small businesses, especially sole operators, make the mistake of not thinking about systems. After all, the business is small and the founder or founders perform all roles.
Unfortunately, this thought processes dooms them to staying small and remaining a prisoner in their business.
They often find themselves in a catch 22 situation. They have no time to work on the business because they’re too busy working in the business.
They can’t get away from the business because they haven’t developed documented systems and processes.
So they’re stuck in a business that’s become a self-made prison.
Don’t get me wrong, they may be financially successful. Their business may be thriving with a loyal base of customers. But the problem is they are stuck – shackled to their business.
If they were to leave or get sick for an extended period of time, their business would cease to exist.
Effective business systems provide freedom. So ask yourself, why does your business exist?
Level up your business
Remember, the problem about not having systems is that all the “know how” of the business is stuck in a silo between their entrepreneurs’ ears.
The only way out is to make time to create and document these business systems.
Thankfully this daunting process is not that difficult when we break it into chunks. Start with building your marketing plan. Get your messaging right. Then review which systems you need to level up your business.
In our next article we’ll start this process and go through some of the practical first steps of creating documented business systems.