Systemizing Your Business, Your Strategy for Success

Once upon a time there was a company that manufactured high quality widgets. The owner, who was use to working very hard, was responsible for all the important aspects of making, selling and distributing the widgets. The business had a number of well-trained employees and had been around for years. Bill and Jill were one of the first employees to work for the company before it expanded and hired additional employees. Bill, the mail room clerk, was responsible for opening the mail and processing the incoming customer payments. Jill, the Administrator, was responsible for invoicing customers and general bookkeeping. The owner trained everyone, and they all did a great job. Bill had always liked Jill (in a romantic sort of way) and one day surprised her with a question? Jill, lets get married and run away to some tropical island? She excitedly accepted his proposal and they both quit their jobs. If this was not bad enough for the company, the owner, who was on a ladder when he heard the news that Bill and Jill had left the company without any notice fell off, landed on his head, and put him into a coma. The owner's spouse and the remanding employees had never done Bill or Jill's job before and did not have a clue what to do and without the owner around no one could be trained. No one knew how much to charge a customer or how to invoice. Since no one knew how to process a customer's payment, the cheques were piling up instead of going into the bank. Things looked very gloomy for the company if the owner did not come out of the coma soon.

Why did this happen? Each employee did their job well but was discouraged by the owner to learn the jobs of the other employees. The owner felt that the cost to cross train the employees did not make it worth while as he could train a new employee or do the work himself. The owner also felt that an operating manual with standard procedures was a waste of time as he did all the training personally with a hands on approach.

So what does this have to do with business strategy? Plenty. This hypothetical company could go out of business if the owner does not get well soon. Many business owners that I talk to complain that they cannot leave their business for even a minute without it falling apart. For the owner this means no vacation and no sick time. For the business and its customers this means that the fate of the company rests on the owner's shoulders. Let's hope that the owner will always be around to run the company. It should also be noted that even with the owner around, if they are not using a systematic approach to making the widgets, steps can still be missed, done in the wrong order or done differently each time a customer orders a widget.

Every business requires steps and procedures to get different jobs done. For this manufacturing company, the ten steps to create a widget are:

1. Take order from customer
2. Check to see if necessary supplies and materials are available
3. Schedule when to start and finish the job
4. Schedule staff
5. Set up machines
6. Manufacture the widgets
7. Ship widget to customer
8. Invoice customer for widget
9. Reorder materials and supplies used during manufacturing
10. Customer payment

Of each of these major steps, there would be sub steps. Bill, the mail clerk, thought he had the hardest job of all, processing customer payments. The very complicated sub set of procedures for customer payments (step 10) would look like this:

1. Open the mail (letter opener optional)
2. Verify that the payment is enclosed (read cheques carefully)
3. Ensure that the amount on the cheques matches the amount the remittance advice (check for same numbers)
4. Verify the negotiability of the cheques (is it signed?)
5. Restrictively endorse the cheques (Stamp For Deposit Only)
6. Record payment in the accounts receivable journal (enter number on line provided)
7. Make the daily bank deposit (Bill's favorite part)

Back to the story. While the staff try to figure out what to do while the owner is in a coma, a customer calls to complain:

Customer: The new widgets are of less quality than the ones in the past.
Employee: Well these widgets must have came from a new batch.
Customer: Don't you have a standard procedure for manufacturing widgets so that every batch of widgets has the same high level of quality?
Employee: Not that I know of, at least I have never heard of it.
Customer: Well, until you get an operating manual and standard procedures for manufacturing the widgets I am taking my business elsewhere.

What would the system look like?

Now what if the owner determines how the individual tasks are to be performed and then provides a mechanism to train employees? If the owner systemizes all the important areas of the business, employees will follow the system and the owner can actually have time off. From our widget manufacturer, not only would the owner train Bill on how to handle a customer payment but these step and procedures would be recorded in operations manual, check lists, charts on the wall, or computer programs. Bill would always know how to perform his job and other employee can do his job if Bill is away. A computerized system can also form an automated checklist for certain procedures.

What is the benefit to owner/manager?

With the defined method of doing every important aspect of a business, the owner or manager can go on vacation and know that the business is being operated the way that they would like it to be. For the customer, every time they do business with the company they know that they will get a consistent level of service and that the product will be manufactured with the same quality. Another value of systemizing procedures is that if something were not going the way you would like it to, the system can be analyzed to look for areas of improvement. New procedures can be tested against the old way of doing things to find the best way of doing the procedure.

Should you let your customers know?

Systemizing your business can also be your competitive advantage. Customers will benefit from your business running more efficiently and producing consistent high quality products or services regardless if the owner is around. Customers that shop at your competition who are tired of inconsistent and low quality products or services will soon buy from you. As part of your marketing plan you must somehow communicate to your present and potential customers of your business improvement.

Can we become more efficient?

The first step in systemizing your business is recording the steps required to accomplish all the important tasks of the business. The next step is automation. Back to the hypothetical manufacturer, when the customer calls and places an order, the owner jots down the order on a piece of paper. He then writes down what materials would be required to do the job (he may forget that he needs a certain material). He then proceeds to check the shelves to see if he needs to reorder any of the material. In contrast, with an automated system, the owner would have called up the customer's name on the computer (the computer would have all the important information on the customer such as whether they have any outstanding invoices and what they ordered last time) he would enter the order and the computer would tell him whether the materials are in stock to make the widget. The computer would print out a list of materials to order, schedule the time on the machine(s) required to make the widgets and when the widgets are ready to be shipped to the customer, produce an invoice and shipping label. All from a few keystrokes.

Now you might be thinking that automating functions of your business would be very complicated and expensive. Not true. The price of computer equipment keeps falling and is now affordable to all businesses. We have helped many businesses to organize their steps and procedures and then design custom software to automate their business functions. The customers have found the software very easy to use. The savings from increased efficiency and the increase in sales due to consistent quality of the products or service that they produce can pay for the software in a very short period of time.

Whether you are a manager of a department or the owner of a business, you can really affect the bottom line through systemizing processes. Then by automating the processes, you know that your business will be efficient in offering its' products or services. Not only will you sleep better knowing that you do not have to be there to keep the company moving smoothly, but also the company will be more profitable. You know a computer should not be used as a glorified typewriter when it can do so much more to help your business.