In many franchise businesses you can see the same hamburger or service turn out the same carefully-designed way, regardless of location or the employees doing the work.
The reason why these often big businesses are able to perform an operation consistently and at a massive scale is because they use and follow systems and work processes. This means that they do the right things, in the right way.
Why Small Companies Can’t Handle Growth
Unfortunately, most small businesses and entrepreneurs do the opposite. That is, they fail to create systems and business processes that coordinate routine work in a standardized way. Their style of small business management pretty much boils down to just asking their employees to come on time, and then to watch them and hope their products and services are promoted and fulfilled correctly.
Well, what does “correctly” even mean?
This is a mistake that happens all the time; most entrepreneurs think they don’t need to set systems and work processes, or that it has to be done all at once in some monumental undertaking to make an employee handbook as thick as McDonald’s.
Because the average small business operates with less than a few dozen employees, their managers generally believe (incorrectly) that since the business only has few people, creating and applying business systems would be a waste of time and money.
It’s like saying that you don’t need a system to organize your CD collection because you only have a few CDs at present. This might work in the beginning, but the problem comes when it’s time for the business to grow. Then you may have 10 times the work going on, and things get chaotic. Quality goes down, morale goes down…it’s a confusing mess!
Same goes for when your business has to change employees (even satisfied employees change jobs, move, or otherwise stop working for you). With no systems in place, the new employee will have a tough time doing the task correctly because “correctly” has not been defined for them or demonstrated.
The Process Determines the Results
Another reason why small businesses often lack proper processes is because their management only cares about results, rather than the processes that created them. They don’t care how their employees get the job done, as long as the finished burger meets the standards.
Of course we should all be results-oriented. But sometimes having your team do something a specific way will lead to better results, higher quality, faster work, less waste, etc. In these cases, you definitely want to spell out the process for them.
When buying hamburgers from a franchise, for example, people expect it to be perfect or to at least be identical to the previous ones that the burger joint sold. If you didn’t have a system or a process for making burgers (how long to freeze, how long to cook, what the toppings are and in what order to stack them, etc.) then keeping the quality up to your standards would be tough. One employee would do it one way; another employee would do it another. You would not get consistent results.
How a Systems-Run Business Looks
We’ve covered the disadvantages of not having small business management systems and processes, but now let’s delve into what may actually happen when you do have them.
When talking about the advantages, we just have to reverse the scenarios we talked about earlier.
Imagine a business with only a handful of employees. But also imagine them following a system and doing what they were supposed to do, and doing it the right way. Costs would go down. Product and service quality would go up. Profits would soar. And your business would be simple to run. As a result, you would spend your time growing vs. simply operating your business. And tons of other businesses would want to purchase yours for a big premium.
Now imagine one employee quitting for whatever reason. The new employee wouldn’t have a problem taking the old employee’s place; because there would be a process to follow that everyone knows. It would have become the way you do it here.
Now that you know that systems and business processes are important, how do actually create them?
Make A Few Simple Systems Of Your Own
To create systems, it is best that you start looking at the business processes that take place in your business. Make a quick list of everything your business does, from accounting to sales.
Once you have a list, take one at a time (in order of impact to your business; the most potential impact first) and start writing down a simple checklist of actions that make it happen. Start with the beginning of the process (e.g., customer places order), then imagine the ideal outcome (customer receives perfect result), and then write down each step that should occur in between. Then write in who is responsible to do what, and estimate the costs of each step in hours and dollars. You should then have in one hand a brief write-up of how to perform the system and what it will take to do so.
Once you’ve designed your system, test it out once or twice before officially implementing it. Make sure your systems and processes do what they are supposed to do and nothing short of that. Perform the work yourself or watch someone closely, and pay attention to every step.
Whether it’s from not knowing about systems or not making the time for it, most small business managers do not make and improve their business processes over time. But that’s manager’s main job — to keep the right people running the right systems, so the company’s desired results can be achieved.
If the system doesn’t work…change it. If an employee will not or cannot work the system…change employees. Because once you systematize your business, it will run smoothly and it will run itself. You can then focus your efforts on growing the business, and reap the rewards of a fully systematized company.
If you want to learn more about systematizing your business, read below.
The Secret Formula to
Building a $10 Million Company
If you want to build a $10 million+ company, you must focus on building Value. And to build Value, you need to follow a specific formula.
As you scroll down the page, you’ll see the important schematic below:
Don’t be overwhelmed by its complexity, by the time you see it, it’ll make perfect sense. And you’ll be able to follow it to dramatically grow your business.