Every small-business book you read, or workshop you attend, will tell you that you must have good business systems. At that point, there is usually an audible groan.
So, what are these magical ‘systems’ that seem to cause such angst? And why do you need them?
Rather than looking at these as a time-consuming, money-draining, paper-wasting cost of doing business (which many SME owners and managers do), consider what having these systems in place can add to your business.
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.
So, we all have ‘systems’, but for some of us, they are undocumented. It’s the undocumented part that brings us unstuck.
There are several advantages to having, and implementing good documented systems. I call these the four Cs:
- Consistency: One of the reasons large organisations give for not using small suppliers is that they can’t supply a consistent product or service. They use the acronym DIFOT – Delivered In Full On Time. Sometimes the quality is good, sometimes not. Sometimes the delivery is on time, sometimes not. Systems ensure that the same thing is done in the same way, every time – think McDonald’s.
- Cost: If you don’t have to reinvent the wheel or teach someone every time a job is done, your business will run so much more efficiently. Re-works, waste, and rejects are eliminated (or at least reduced). Being efficient lowers your cost base, making you more competitive.
- Control: How many times have you thought, “I just can’t go away, everything goes pear-shaped as soon as I leave, and then I have to fix it all up”. But once a system is documented correctly, and the right people are trained on “how it works”, there is no reason why things should be done incorrectly. Cemeteries are full of people who thought they were indispensable… When everyone knows what should be happening, when and how, you will be more in control of your business. Your systems will also be providing you with all the vital information you need to make the best possible business decisions.
- Create value: Most SME owners don’t think about this until the time is upon them, but good business systems will aid your eventual exit. If you ever want to sell or exit your business, having all your intellectual property captured will increase its value to a potential owner. A new owner can see that the value of your customers doesn’t walk out the door when you do. If you have existing contracts, the new owner will be able to reliably continue the contract, so everyone is happy..
It’s about profitability and value
Good systems, 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. So, it’s time to stop the audible groans and get started on creating your robust, documented business systems.
This post first appeared on https://insidesmallbusiness.com.au on September 27, 2022.