Systems for your Small Business
There are a lot of good business ideas out there. People start new businesses every day. Why do so many fail? Why do so many just limp along? I would bet, that many fail or never truly succeed due to the lack of systems in the business. McDonalds does not make a great hamburger. They don’t make a great chocolate shake. What McDonalds has done better than anyone else, is to create systems for their franchise, that has been duplicated thousands of times, around the globe. Right now, I am flying back to Denver from a vacation in Vietnam, where McDonalds has just opened two locations within the last few months. I have eaten McDonalds in Chicago, in Washington, in Moscow, and in Frankfurt, and I can tell you that the burger and fries have been consistent every single time.
Any talk of systems, rules, or plans, usually sends budding entrepreneurs into the corner to hide, but there is so much freedom, when systems are put into place. Years ago, I started creating so many forms that I eventually created a master list of all the forms we had; a form for the forms. My office manager dubbed me the Form King and I soon learned to love the idea. The more forms I created, the more things I could track, and the more things I could track, the more I could measure. But better than tracking, the forms allowed me to do things the same way every time. Even though I created those forms, I would forget certain things every once in a while. Systems help you create order out of chaos, and bring consistency where happenstance would tend to take over.
Creating systems in your business can be a daunting task, and you may be wondering where to start, and what comes first: the chicken or the egg? I would say, start with what you know works and works every time. If you have been running your business for a while, start simple, and start recording what you do. And it does not matter if you are the only employee in the business. If you ever plan to expand, and hire someone else to do some or all of the things that you do, you need to write down and create a system for everything.
If you own a retail organization, do you have a system for opening and closing? What is it that needs to be done every day, the lights turned on, chairs brought down, displays filled and cash register turned on and unlocked? Document your procedure and create a check list so nothing is missed. Then it doesn’t matter whether you do it, your manager, or your newest employee.
If you own a contracting business, do you have a written procedure for your sales process? This one thing could help you not only raise your closing ratio, but it could enable you to command a higher price for your work. The more organized and structured you appear to your potential customer, the more value and worth you bring to the table.
When writing out a system, write it in a way that is understandable to a fifth grader. It needs to be simple and if it’s not simple, it will not be followed by you or your employees and team members.
Creating a system is truly the first step in building an organization. What is the desired outcome, and how do you make sure that it happens every time? When and who has contact with the customer and what information do you need from them. Where can problems be avoided that have occurred in the past?
To start, write out a normal process on paper and identify areas where problems have occurred, on occasion or consistently. Once you identify the items, what could you do to make sure they don’t happen again? What are things that you could automate with technology? What are things you could build into the system that would create more value for the customer? What is it about the product or service you offer that customers truly value? How can you build on this?
After owning a high-end paint contracting business, I realized there was a need for high quality painting at a more affordable price point. We had always offered our customers the moon and stars and nothing was beyond our scope. The problem with this model was that it’s hard to make a profit and leave the customers feeling like they received great value, while paying our team appropriately. I then created a limited service painting company where we automated the bidding process through an on-line paint estimating system and our customers could, price out, pay for, and schedule their projects. On top of this, we also limited the level of service we provided. Homeowners would move furniture, remove blinds and wall plates, and then our painters would show up and paint. No moving furniture, fixing of holes and no guess work. This took out most of the unknowns for us, ensuring that we could quickly and efficiently execute our process, and ensure low prices. Prices so low, that we were able to cut our pricing model almost in half compared to our full-service model.
There are books, that go into great length on building systems and if you want more details, I suggest you read E-Myth by Michael Gerber. On this topic he does the best job of any I have read. I think I have read it about 12 times between the written page and the audio version. It is one thing to think about it, and another to create the system. If you need help, there are companies out there that can help you create the systems you need. We hired Tuesday Consulting to come in and not only build the systems, but to help us implement them and train our guys to use them. This was invaluable. I think most companies want to build the systems, but either don’t know where to start, or get totally overwhelmed in the process.
Each week, Nick and Johnny talk to small business owners that have implemented systems into their business. Download or subscribe to our podcast from iTunes or Stitcher to make sure you never miss an interview.