Why Systems are the Key to Business Growth

Written By Dave Lavinsky
Man under a big curved arrow with a set of smaller arrows showing the steps to be number one

Business systems, business systems, business systems….why is everyone always going on and on about systems in your business?

Well, it’s simple really. If you don’t have a business system, and your entire operation relies on you personally performing certain actions, then you really don’t have a business. You may be a really busy and even profitable self-employed, independent contractor, but you do not have a business.

A true business may require your leadership, strategy, vision, and even daily performance of work. But importantly, it will also continue to operate and make money even if you take a day off, go on vacation for a month, and be prepared for this, even if you die.

What is a Business System?

In its simplest form, a business system is a process or collection or processes that dictate the way your business operates.  You may have a system for client acquisition, product delivery, customer loyalty, invoicing, supply chain, etc.

The more automated and error-proof your system, the more you are able to dedicate your time and energy to growing your business rather than simply running the day-to-day operations.

If more time and greater revenue is not reason enough to have solid systems in place, let’s consider these other factors that influence why you can’t live, or die, without a business system.

Funding

Try walking into a bank or a venture capital firm and telling them what a talented widget maker you are and that they should give you money to build your company.

When they ask for your business plan (a first step in building a business system), tell them you don’t need any of that mumbo jumbo, you are Joe Blow, Great Widget Maker EVER!  What do you think is most likely?  That they will hand you a check or that they will laugh you out of the building? 99.99% will laugh hysterically (the other 0.01% are your parents and they are biased).

They will laugh because they recognize that a person is not a business.  Yes, one person can create a business, and one person can be the vision and soul behind a company, but no one person is the company.

Apple has moved on without their visionary Steve Jobs, KFC is still selling chicken just fine without the Colonel, and Microsoft is still a giant while Bill Gates focuses on philanthropy.   You may be central to your business, but to have real value, the business needs to be sustainable without you.

You Can’t Sell Yourself Into Slavery

Let’s say you have worked for your business for a few years, developed a good customer following, revenues are high, but you do everything yourself and nothing is documented.

If so, think about your exit plan.  Will you someday just close up shop and let all those clients just melt away?   Will you pass the business onto your children or chosen successor?  Will you sell the business?

If you have a thriving business, selling may be an excellent idea and may significantly contribute to the funds you have to support your twilight years.   But how will you sell a business that doesn’t have clearly defined systems?  How do you sell the business if you are the business?

Ok, so maybe the sale’s agreement stipulates you will stay on as a consultant for a few months or years to show the new owners “the ropes” and transition the client base.  Guess what you will be doing in those months? That’s right, creating systems!

The fact is that you will sell your business for a lot more money and to a wider base of potential buyers if you have clearly defined systems in place.  When you are the business, new owners have to hope they can either replicate your actions or have a plan to do it better.  When you can show them proven business systems they can easily adapt, they will clamor to buy you.

What Will You Bestow?

Perhaps your dream is not to sell your business, but instead to pass it on as a legacy to your children or a chosen successor.  There are many strong family businesses in the United States that have been passed on through generations.  Is it your goal to be one of them?

The argument here is the same as in the previous section.  How do you bestow a business if you are the business?  How will you enjoy your retirement in Tahiti if Johnny Grandson is calling every two hours because he needs to know how you did this and that?

You Can’t Die in Peace

Is the income from your business a necessary part of your household income?  If you die, and that income stops, how does your family survive?

If you need a solid reason for building business systems, perhaps this is it.  A business that can continue running without you, even if not running 100%, but can survive even without you, has value to your family.  It can be operated by relatives, it can be passed on to heirs, and it can even be sold.

But if your business evaporates into thin air then minute you stop breathing said air, you are doing your family a disservice.

A business with a solid foundation of systems will survive you.  It may even become your legacy.  Your brand, when attached to proven processes and workflows, can endure.

Feeling Squeamish?

Have you felt the tingle of cold sweat as you read this article?  Are you wondering how you will ever sell your business when it primarily exists in your head?   In many ways, a business is collection of abstract concepts.  It’s your reputation, your relationships with clients and suppliers, it’s the quality of your product and service, and it’s the word of mouth on the street.

To solidify your business, you need to give it form by building systems that can be documented, followed, and replicated by others.

Depending on the nature of your business these systems may require a strong team, wise delegation, trustworthy partners, and reliable vendors. Maybe all you need is clever automation that can be passed on to others.

If this article made you feel at risk, then take the time to carefully analyze your business. What can you automate?  What can you document? What can you delegate?  What can you reliably outsource?

Find ways to truly evolve from a self-employed worker to a smart owner of successful business systems.  Build it right and you can live (and die) in peace.

 

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Building a $10 Million Company

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On this page, I layout the precise formula for you.

As you scroll down the page, you’ll see the important schematic below:

Growthink 8 Figure Formula

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