How to Develop Business Systems: A System for Business Systems Per Se
Whilst we have identified some core benefits of developing Business Systems in the article Business Systems: 8 Core Benefits of Developing and Following Them; for businesses which have a strategic mission and vision aligning all stakeholders, put simply the beauty of developing and following business systems is the ability to withstand the test of time.
Businesses with systems are far more agile and adoptive during vulnerable and testing economic times or when encountered with the signs of trouble as discussed in the article “Is Your Business In Trouble? 10 Warning Signs and How to get Back on Track”. And are usually more receptive to resuscitative measures as outlined in the article “5 Vital Steps to Resuscitate Your Business”.
These businesses also tend to possess an inherent advantage when attracting external funding or investment for growth. Understanding the types of funding available and getting investment ready are summarised in the three articles:
Small or big, businesses in the food industry are a prime example of the need of systems. Restaurants depend on systems to produce quality and tasty dishes consistently in order to retain customer loyalty. Any changes to the recipe or tools can have repercussions.
On the other scale McDonald’s—the hundred-billion-dollar company, entirely built on systems, works in a way that anyone can go in and implement their system, and they’ll have a high chance of succeeding. They can hire almost anyone to work in any McDonald’s kitchen to follow a systematic set of procedures and produce the same food every time.
So, in a nutshell; Systems allow your business to run more independently making it more streamlined, more productive, and ultimately, more profitable.
Things get done faster, bottlenecks become visible and get eliminated quicker, onboarding becomes efficient, i.e. new hires get productive faster and clients or customers get results swiftly.
When a business is running on systems, management and stakeholders can more freely focus on high-touch and profitable activities which allows for growth and efficiency.
Ok, But, what is a system anyway?
Let’s define a system as a set of processes, tools, people, and strategies that all work together to solve a problem or achieve a goal.
Since a system can cover anything from completing simple tasks to finishing more complicated projects, you probably have your own business systems set up already.
But the same way that there are good systems and there are great systems, there are also bad systems or ones that are unnecessary, counterproductive, overly expensive, or too time-consuming.
So, anytime you have a certain way of doing things, that in itself is a system. It’s just a matter of making your system the most streamlined, efficient, and effective based on your business goals.
Here are six steps to developing business systems:
Step 1: Identify your business activities
Start by identifying activities you do regularly or a single activity that you think you’ll repeat in the future. List them in terms of their importance, who they benefit; Customers, Partners, Employees, etc. and person/s accountable to design, implement, maintain and review them on regular intervals.
Note: If you already have standard operating procedures (SOPs) or an operations manual, you can go straight to step 3.
To help you add structure to your systems, categorize your activities in terms of your business functions: Sales and Marketing, Operations and Finance.
Sales and Marketing
Sales and marketing activities are what you do to attract and convert customers.
Operational activities are what you do to produce and delivery a product or service.
Corporate and Finance
Corporate and Financial activities cover how you structure your business, what you do with your money and how you comply with regulations.
Note: These three business functions are common to all businesses, but, depending on the size of your business, industry or sector you operate in, the functions can be broken down further. The best 2 tools to use to identify and categorise the functions and activities within a business are:
1. An overall Business Workflow: If you don’t have one, prepare one as a priority. No matter how big or small your business is, besides a Strategy Plan, this is the one tool which forms the operational basis of all businesses. Chances are without a Business Workflow your business is running on a chaotic, more reactive mode.
The Business Workflow can serve as a master flow document and a singular point of reference for all systems within your business.
2. A Responsibility Matrix: graduation from an overall Business Workflow is a Responsibility Matrix. Whilst it can be useful for any business, it does become essential beyond a certain growth phase or in industries and sectors where the operational elements are more complex in nature.
Step 2. Break down each activity
Once you have a list of activities, expand each activity according to the process, time, trigger, tools, people and strategies needed to complete it from start to finish. Together, these make up your business systems.
- Process – step-by-step sequence of actions
- Time – required duration
- Trigger – when to start or finish
- Tools – required devices, apps, or software
- People – person/s in charge of each step of the process
- Strategies – tactics, tips, or techniques to use
Whilst going through this process, it is important to visualise the outcome or desired result from your customers, partners and employees perspective.
- How will they feel after interacting with the process?
- What will they have as a result of the process?
- How will the process affect their status?
- How will the process improve their day to day experience?
Note: Documenting the processes appropriately is key to an effective system. In order to be truly effective, a business process needs to be repeatable and easy to understand.
Outline the step-by-step actions and have someone on your team review it to ensure it is easy to understand, consistent and no task/s have been overlooked. You may like to record this on a video, audio as well as a document for ease of educating your team.
Step 3: Communicate the system/s and processes
Even the most cleverly designed and documented business systems and processes are of limited use if not accessible and communicated effectively.
Run workshops to ensure all stakeholders are aware and understand the business systems and processes.
Get feedback and address any concerns and queries.
Step 4: Identify ways to improve the system
Remember how we defined a system as a way to solve a problem or complete a process? Now, imagine the outcomes or results you want and answer:
What do you want your system to do for you?
Do you want your system to finish the process faster? Make it more streamlined or automated? Do you want to reduce your workload and free up your time? Do you want to eliminate bottlenecks? Do you want the process to make more money for your business or reduce costs?
Using this simple framework to improve your system; filter all your tasks to the ones that are the best use of time, energy, and other resources:
What can you eliminate from the system because the tasks, time, triggers, tools, people, or strategies are time-consuming, unnecessary, redundant, or no longer productive?
Which aspects of the system could be helpful but don’t really need to be part of the system right now?
What tasks can you automate using new tools, upgrade tools to access more features or consolidate tools?
- Delegate / Outsource
What tasks are not the best use of time, energy, skills, or expertise? What can be delegated or outsourced?
Is it possible to consolidate or batch tasks together to be more efficient or less costly?
Another way to help identify ways to improve systems is to critique each of the six components separately.
- Are all steps of the process necessary or should I delete some of them?
- Are all steps of the process being completed in the correct order?
- Are all steps of the process generating the results that I want?
- Is the time required to complete the process sufficient?
- Is the time required to complete the process efficiently utilised?
- Can the time required to complete the process be reduced?
- Are the triggers to this process necessary?
- Can this process be carried out simultaneously, in tandem or with another process?
- Are there other triggers that could help complete the job earlier, better or faster?
- Are the tools I’m using the best tools for the job based on price, performance, and maintenance?
- Are there more sophisticated tools out there that could serve my business better?
- Are there less expensive tools that could complete the job better or faster?
- Are the right people in charge of the right tasks?
- Do I need to hire more people or am I employing more than I need?
- Who are able to take on more responsibility and how?
- Are my strategies actually working?
- Which 20% of my strategies are bringing in 80% of my results?
- Are there other strategies I could implement to make the business run better and generate more profits?
Note: A word of caution here; In an attempt to improve, making too many changes at once may be counter-intuitive. Make incremental, well thought out changes and the resultant outcomes will be much robust.
Step 5: Track and Test
Ensure you track important factors relating to the before, during, and after; what you started with, what you did, and what impact it made.
This is where key performance indicators (KPIs) come in; simply identify measurable factors to determine whether your system is working well. This could include your revenue, expenses, profit margins, sales conversions, customer satisfaction, other financial ratios, etc.
Step 6: Evaluate and Improve
Evaluate the system as a whole or each of the six components (process, time, triggers, tools, people and strategies) separately, but regularly.
Did your systems actually solve a problem or reach a goal? If so, what change is responsible for the improvement? Can you replicate it easily? How much improvement did you see exactly? If it did not, what was the cause? How can you remedy the situation or go back to the way things were?
Note: Business Systems aren’t meant to be set in stone; as your business grows and the environment changes, your systems adapt and evolve along with it. Continue to tweak and refine your system.
As you go through this process of developing business systems, consider where you want to house all this valuable information.
Document your systems using organized, well-designed, and robust tools that complement each of your business systems. You do not need to have just one tool for all of your systems but it is recommended using a set of tools that work well together.
Creating business systems allows your business to run as streamlined, efficient, and effective as possible. It might take some time, trial and error to get your systems up and running, but the rewards are well worth the effort.
If you are unsure of where to start but would like to explore how to put these systems in place, seek help from experts to help put a framework together.
I am keen to understand the challenges small businesses are facing in adopting measures proven to increase value and address the “it’s easy for you to ………” comments.
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Ketan Shah is a Business Advisor, Mentor, Coach, Management Consultant and Entrepreneur with over 15 years of experience in Strategy Planning, Portfolio Management, Performance Measurement & Management, Project Management, Business Process Improvement and Private Equity.
He is especially passionate about Business Optimisation and Leadership through Strategy, Structure, Management, Operational Planning & Implementation for transformation, turn around, growth and commercialisation Initiatives.
Ketan is the creator of BOSS the Business Optimisation Strategy Structure Model® and BOSS the Business Optimisation Structures & Strategies Program® from his “in the trenches”(and sometimes “by the skin of teeth” risky) endeavors and experiences.
Moksh Pty Ltd is a Strategic Business Advisory, Management Consulting, Investment & Funding Partner Supporting Turn Around, Growth, Commercialisation Initiatives.