Systemize Your Business

A system is a set of parts which accomplish something by relating to one other. Drive a bolt through a pair of blades and the three parts form a system we call scissors. As a scissors they’re more than two blades and bolt. Systems have meaning beyond their parts.

What does a business system look like?

• It’s designed to produce a result – so it includes a description of the result.
• It has some instructions or rules about what steps to perform in what order to produce the result.
• It is repeatable and scalable and you can teach it to others.
• There are about 50 systems each company needs to some degree. The good news is you’re probably doing most of them already.

What if you don’t have systems?
Then you depend on really good people who “get it.” You’ve probably got a few people like that. The most frustrating thing for entrepreneurs is how hard it is to find good people who get it. It’s usually easier to systemize than to find more of them. Plus when you don’t have systems, the good people can’t move up as the company grows – so you’re kind of stuck.

Why don’t more companies systemize?
The first reason is they don’t know how. No one’s ever taught them about it. It’s not really that hard, though it does take some tedious work at the start before you see the benefits. But boy is it worth it.

The second reason is they don’t think it will work because of all the exceptions and special cases that happen in their company. I think these special cases are what makes a small company strong. I agree if you had to make everything routine, then systemizing would do more harm than good. But systemizing the right way will take those special cases into account. The result is the right people will do the right things a lot more effectively.

Examples:
I know of a small law firm with 6 attorneys who were partners. Each day they spent an hour dividing up the mail. That’s 30 hours a week, 1,500 per year that they weren’t able to bill for. Once they were able to define some rules about where the mail should go they could off-load that job to an administrative person. They key is that they defined the exceptions that in certain cases the admin couldn’t make the decision and had to show it to a partner. Also when the partners first looked at their mail, they looked for exceptions that had slipped through – if they found one they either dealt with it or dealt with in and made a change to the rules. This increased their billable hours by much more than it cost for that admin position.

I know of a publishing company that sold ad space in a directory. The two owners were the main sales people and they used to cut so many special deals that they cut all the invoices themselves. They felt no system could handle it. To systemize, they made a list called The A List. It included names of all the customers who’d gotten a special deal. It wasn’t as long as they thought. The bookkeeper was instructed to cut invoices in the normal way for everyone who wasn’t on the A list. Of course they also had to define what “the normal way” was. That helped a lot. Then the owners would spend time only on invoices for the A-list people. Only the two partners were allowed to put someone on the A list or take someone off. The result? They spent less time on invoices AND since they trusted the system more, they were able to make fewer special deals and still keep customer happy.

Some systems are more complicated than these, but a great many are not.

Takeaways:

• Systems allow your company to grow.
• They make it easier to hire, train and cross-train people.
• The 50 systems I mentioned? The fall into 4 result areas: Owners, Customers, The Company and the Future. Start with the area that’s giving you the most frustration. Get your best people together and design a system.
• It won’t work right the first time. Keep making changes. When it clicks, you’ll never go back.
• Management’s primary job is to design systems