Why have Business Systems? You just have to…
Anyone who has looked into getting contracts to supply goods or services to a resources company (or any other large organisation) knows that you will need to have your ‘Systems’ in place. They talk about Occupational Health and Safety Systems, Quality Systems, Environmental Systems …
So what are these magical ‘Systems’? And why do you need them?
Rather than looking at these as a time-consuming, money-draining, paper-wasting cost of doing business, consider what having these systems in place can add to your business.
Having good, documented systems is a ground-level requirement for dealing with all larger organisations. Without them, they simply will not give you a second look.
What is a ‘System’?
The online Business Dictionary states that a System is
“…A set of detailed methods, procedures and routines created to carry out a specific activity, perform a duty, or solve a problem.”
For our purposes, a system is a way of doing things – the system allows us to get stuff done.
Your entire business is a system – what you are getting done is supplying your product or service to solve a problem for your client, hopefully making you a profit at the same time! Your Business System is all the things you do to make that happen.
The primary system (your business) is made up of a lot of subsystems – and each of these subsystems has a purpose.
You have a Finance System – where you or your bookkeeper enters invoices, payments, receipts and payroll.
You have a Human Resources System – where you keep details about our employees and their performance.
You may even have a coffee run system – to organise who is responsible for getting the morning coffees.
And so on.
Systems, Processes, Tasks and Procedures
Each System is made up of a number of Processes. Using the Finance System as an example, there is a process to pay bills, a process to receive payments, a process to create invoices – you catch my drift.
For each Process, there will be a number of Tasks. For every one of these Tasks, there will be a Procedure that documents how that Task should be done. Have I lost you yet? Keep going!
We can illustrate this in a simple diagram, using the Finance System as an example:
‘System’ does not equal ‘Technology’
It is important to clearly differentiate the business system from the technology used. For example, you might use the software Xero or QuickBooks to make your finance system easier to use. But you could also use paper and a pencil, or a series of Excel spreadsheets.
Same system, different technology.
My colleague Laurence Stitt of Convergenius refers to the software used as an ‘enabling technology’.
Again, why have Systems?
Like I said – the first answer to this question is “Because you have to “.
Your business will not be able to take on contracts with the majority of large organisations without having certain systems implemented.
Having systems in place stops you losing jobs, but using them properly will help you to win!
Let’s look at your Finance System as an example. If you didn’t have a Finance System, it would be impossible to run your business, and the Tax Office would be less than impressed. The Finance System you have may be just the basics that you can get away with to comply with your legal obligations to pay tax, pay superannuation etc. Or, you could use the information that you legally have to keep to give you more knowledge about your business.
You can use this data to keep a close eye on your cash flow, profitability, stock levels, how long customers are taking to pay – and a whole lot more.
In short, you can use the Finance System to improve your business.
And the same applies to all the other systems you need to have.
Systems are an asset
We’ve already identified that good systems can help to improve your business.
The first step in making your systems work for you is to document them – to write down ‘how things are done around here’.
Good, documented systems are an asset to your business, just like the equipment you use and the people you employ. Like your equipment and people, systems need to be put to work – not simply created and then left on the shelf.
That would be like paying to hire a new accountant, and then putting them in the corner office with no work to do.
This is the fate of many “turnkey” systems documents that we see. A business owner buys, say, a “Workplace Health and Safety System”, loads it onto the computer or prints all the documents, ticks the “I’ve got a Safety System” compliance box, and then never touches it again.
The ‘System’ they purchased bears no relation to what people in the business actually do, or even what they should do in some cases.
What the system needs to do is to document what really happens – the procedures, methods, processes etc. that take place. Of course, you need to be sure that what they are doing is correct. And going through the process of documenting makes you think about just that.
Once the correct procedure has been documented, two more advantages of this process will become obvious…
“It’s quicker to do it myself”
If you have ever said to yourself “It’s quicker to do it myself than to explain it all the time”, consider this:
Once a correct procedure or process is documented, very little explanation should be needed. And the document is always there for anyone who needs a refresher.
Even better, if someone else starts performing that task, they will probably find a better way of doing it as well.
“It won’t be done right”
There may be some ego problems to get over here. You’re the boss, so no-one else can do things as well you can, right? Wrong.
Once a system has been documented correctly, and the right people are trained or shown ‘how it works’, there is no reason why things should be done incorrectly.
That’s right – you are not indispensable.
If you have to do everything yourself, your business will always be limited by the time that you have available.
More than that, not having to do everything yourself frees up some time for you.
Add value to your business
There are several more advantages to having, and implementing, good documented systems:
- Consistency: One of the reasons large organisations give for not using small suppliers is that they can’t supply a consistent product or service. Systems ensure that the same thing is done in the same way, every time – think McDonald’s.
- Cost: If you don’t have to re-invent the wheel or teach someone every time a job is done, your business will run so much more efficiently. Being efficient lowers your cost base, making you more competitive.
- Control: One of the mantras of large organisations as buyers is DIFOT – Delivered In Full On Time. Good systems allow you to do this. When everyone knows what should be happening, when and how, you will be more in control of your business, and your systems will be providing you with all the vital information you need to make the best possible business decisions.
- Create Value: If you ever want to sell or exit your business, having all your Intellectual Property captured will increase its value to a potential owner. If you have existing contracts, the new owner will be able to reliably continue the contract.
It’s about Profitability
Good systems that are used well will improve the profitability and the value of your company.
Getting them in place is not always easy, but the effort will be well worthwhile.
Over the next few weeks, I will be sharing some tips we have used with our clients to help them on the road to a systemised business.
By Bronwyn Reid