A systemised business tends to be a profitable business
Every small business owner knows that they need to have their business “systemised”. Every business book worth its salt will tell you that you should be introducing, documenting and developing systems within your business.
What exactly are “systems”? International consultancy firm McKinsey’s has what I believe is an excellent definition of business systems: All the steps involved in creating and delivering a company’s product.”
Every business has a product (or service) and every business has systems. They may be quite rudimentary and not written down anywhere, but they do exist. They must, because presumably something gets done in the business, and clients receive their products or services somehow.
So what are the benefits to documenting, following and constantly reviewing a business’s systems? These benefits are the 5 C’s.
In my work, small companies who provide products or services to large organisations must be compliant. If you want to provide goods or services to large organisations, you need to meet many pre-qualification requirements. Unless you have them all in place, you are simply not going to get any contracts.
Our customers don’t want surprises. As a business owner, your aim is to delight your customers each and every time you do business with them. One of the most-cited reasons why big companies avoid small suppliers is that they can’t supply a consistent product or service. Good systems ensure that everything is done the same way, every time.
Cost is closely related to Consistency. Systems make your business so much more efficient since they eliminate waste, rework and rejects. You also don’t have to re-invent the wheel or train someone every time a job needs to be done. Author Jay Arthur has a wonderful way of describing this:
“Every company has two factories: One that creates and delivers your product or service, and a hidden ‘fix –it’ factory that cleans up all the mistakes and delays that occur in the main factory”
Have you ever caught yourself saying “Why can’t they do this right? I might as well just do this myself because no one else can do this as well as I can.” Or “I can’t get out of the office till 10 o’clock at night – I’ve just got to do everything”.
By documenting your business systems, you’re going to get yourself back in the control seat Your team will know:
- what to do
- how to do it
- when to do it
- why it needs to be done
5. Create Value
The last “C” is perhaps the most often overlooked benefit, and it has a lot to do with exiting your business.
Not many of us think about selling our business in that first flush of excitement when we start out. Documenting your business systems creates value for when you finally choose to make an exit. Prospective buyers will be able to clearly see that the profit potential of your business doesn’t walk out the door when you do, and that future profitability can be maintained.
Good systems, documented and used well, will undoubtedly increase the profitability and value of a company. They will also help you to take back control so you won’t be working until 10pm or later every night. You will finally have a trained team, doing the right things and serving your customers correctly – every time.
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