Why Systems Are Critical to Your Business Success
May 23, 2011
When a company is growing, your two biggest profit killers are lack of planning and lack of infrastructure. By not having systems in place, your company loses good people, your production suffers and you must spend more money training a new employee. Systems are the only path to profitable growth.
They Keep Your Profit From Spiraling Down the DrainYou spend more on the things needed to accomplish production because there is no planning. You buy things on the fly rather than evaluating where you are, and where you are going. Buying another truck just because “we need it” happens frequently. It’s a knee-jerk reaction. Since business is a game of margins rather than volume, one must evaluate every purchase and consider how it will affect the bottom line.
You may find that adding another truck would not actually add any profit. In fact, it may cause you to lose money because you didn’t consider that your inside sales people are already maxed out, so you will have to hire another person. You also didn’t realize that two of your technicians were on their way out and, since you didn’t have an infrastructure in place, it took you three months to replace them. Meanwhile, the new truck sits idle in the driveway.
See how not planning and not having infrastructure in your business can hurt you financially? Now, take the scenario above and visualize yourself evaluating each move before you buy the truck. In your evaluation, you may discover that you will have to hire another sales person and that you are at risk with your techs. You could then begin to ensure that your helpers could step in if one of your techs was out, or that you had a fast-paced training program in place.
This is just a small example of how poor planning can eat up your profits. Growth by the seat of your pants will cost you more of your bottom line – guaranteed.
It's the Only Way to Manage EffectivelyThere comes a point in your career as a cleaning and restoration business owner that you realize you can’t do it all. So you go out and find a “crackerjack” person to be “another you.” Well, sooner or later, this person doesn’t work out. Then you are back to square one. The most important aspect of building systems into your business is to realize that you do not build a system around people, you build people around the system. Build the system, and then plug the right people into it. Put the people with the right personality and outlook into the right role in the company.
The second thing to understand about building systems is that everything in your company must be documented. If you don’t like paperwork, you will hate systems. Once you are disciplined enough to document everything, you will realize how much it helps you in management. It eliminates the negative emotions that happen with verbal communication.
It is said that up to 80% of all verbal communication is misunderstood to some extent. Surely you have seen this in your own business. You tell your technician how to do something step by step, only to find out that he did it completely different because he didn’t understand.
By having written policies and procedures, and fully training your technicians to follow written procedures, you greatly reduce the chances of miscommunication. My favorite response when there is a question about how to do something in our company is “What’s the procedure?” Usually, there is procedure, but it seems easier for an employee to use up your time rather than looking it up in the manual. Train your people to use the system! If it is a new question that hasn’t been dealt with before, or you haven’t put a procedure in place, make note of it and write it up. If you have the mindset that “I’m only going to manufacture the solution to this particular problem once!” you will build a great infrastructure. The natural destructive tendency is to solve the problem and move on without documenting it. More than likely, this situation will come up again, even if it isn’t very often.
Document it, put it in the manual. Train it. That way, when it comes up again, you ask the question, “Don’t we have a written policy on that?” and get to answer, “Oh, yes we do. Here it is!” See how that works? Maintaining good, workable systems is the key to more-effective management.
Your Employees Perform BetterIt’s a fact that if your employee has specific procedures to follow, he or she will perform better. By being thoroughly trained and having written policies and procedures, they will be less likely to miss things. They will actually get more done, because they will not have to spend much of their time getting verbal information from you or the office. Since they know what they are supposed to do, how to do it, and exactly what their boundaries are, they can keep moving ahead.
You'll Face Fewer SurprisesIt is difficult to predict what people will do, but having policies and procedures in your business will help you take the guesswork out for your employees. The reason that business owners have so many problems with employees is that they leave too many opportunities open.
Don’t get me wrong. The other side of processes is people. We must have good people – thinking, willing people. But your employee may not make the same call that you would in a certain situation.
They Keep the Owner "In Line"When you are operating your businesses on a verbal basis, you sometimes forget what you said, or decided on. By systematizing, you settle how something will be done once and for all. If it is ever changed, then it is changed in a formal way. In essence, the manual would be changed, a meeting would be held, and each employee that would potentially be affected, would be briefed and perhaps re-trained. They would get a copy of the change for their manual. There are so many policies and procedures required for a service company that it is impossible for the owner to keep up with everything verbally.
By creating written, trained systems, one can simply refer to the manual to recall what was decided on.
They Free Up More of the Owner's TimeAlthough setting up systems takes an incredible amount of time, as discussed above, once that is accomplished, you will truly be able to work less hours. Simple as that. Why?
Because once you have effectively documented how things are done, what the values and policies are, and you have put your strategies into a system where they happen day in and day out regardless of your personal presence, then it matters less whether you are there or not. In fact, some personality types get in the way, or violate the system when present, therefore infecting the employees that are accustomed to working within the system. So in some cases the business is more successful without the owner’s direct presence.