Somewhat surprisingly, there are six key systems that are critical for businesses. Regardless of what the business does, who their customers are or what sector they work in, these six key systems are universal.
Whilst it is possible to succeed in business without one or two of these systems, most who lack systems tend to struggle, tend not to be profitable or are only operating for a short time before the owner shuts them down and goes back to being an employee.
With ninety-seven percent of all businesses in Australia being small businesses, it is scary to think that only forty percent of businesses shutdown before they reach the three year mark, and that only seven percent of businesses turn over more than two million dollars in a year.
Why are systems important in business?
Systems are critical in business. A system consists of the policies, procedures, business processes, staff training and general way of working that’s is used.
Whether a system is documented or not, there is always a system. Often this system is just invented or ‘figured out’ by those that do the work, or it may be what they were told or shown when a person first started in their job. Regardless of the role, we all figure out what works, and what doesn’t, and what the quickest way to do something is often just through trial and error, or after performing the task dozens or even hundreds of times.
As a business, McDonalds is the epitome of a systematised business. Every restaurant produces the same food, in the same way and delivers the same taste and customer experience regardless of which restaurant you go to. Whilst there is an experienced person as the manager in the store, the majority of people that work in a McDonalds store are 16 years old. When McDonalds set up their franchise system, they realised that consistency in taste, quality and experience was a critical element, so they designed everything they do to ensure this occurs, regardless of who works in the restaurant or what their job is.
Establishment of systems leads to freedom for business managers and owners, creates a repeatable and improvable approach and also helps to reduce costs, making a business more profitable.
What are the key systems for a business?
There are six critical systems that are required for a business to be sustainable and successful. We will explore each of these in turn.
System 1: Strategy
The first system is the strategy system. This system involves the establishment of the organisation’s purpose, mission and vision and establishing a set of long and medium-term goals. These goals need to be translated into key actions, activities or initiatives that need to be planned and implemented, which leads to achievement of the stated goals.
The other key element of this system is establishment of key performance indicators and a measurement and reporting system to help to measure your business progress and keep track of where you are in relation to your goals.
System 2: People
The next system is what I call the people system. Effectively this is the policies and procedures for recruiting, selecting, inducting and managing the performance of your team. Identifying and communicating your business’s values are also critical, as these set the workplace culture and shape the attitudes of staff.
System 3: Lead generation
The third system is focused on lead generation. In other words, this system is designed to make potential clients aware of who you are and what you do and also raise their awareness about what the problems are that your business is set up to solve. This system involves generating interest through blogs, podcasts, advertising, public relations or presentations and through creating compelling offers that entice your target market to make contact with you.
System 4: Lead conversion
The next system is the lead conversion, or sales system. This system is designed to convert prospects into customers then ‘on board’ them so you can deliver your product or service. Part of this approach involves establishing a Customer Relationship Management (CRM) system, to keep track of the leads and enquiries, as well as
System 5: Operational delivery
This is the system you use to deliver your product or service. Often this is the most developed and mature system, as most business operators or owners start in the delivery space doing the ‘technical’ work themselves. In addition to the actual work that is done, the operational delivery system should include any checks and quality reviews, as well as customer feedback, as it is through these methods that you can improve what you do.
System 6: Finance
The last system for business is the finance system. This involves creating a budget and cash flow forecast, as well as the method for invoicing and collecting payment. Cash flow is the lifeblood of small business, so ensuring you have sufficient cash coming in to cover the costs of the business and to pay yourself is critical.
So, where do I start?
A great place to start is in the area you are most familiar: the operational delivery system. You should map out your business process step by step, on a piece of paper. Identify each step, look at where you can find improvements and efficiencies and identify the systems, checklists and tools you may need at each step. It’s also important to identify where there is a handover between one person and another as this is often the place where things break down.
Once it has been documented, share it with others in the team, as each person probably has a different understanding of the process, or may be following a different process themselves.
You may go as far as creating a training manual, which documents the work instructions or step-by-step processes and include screenshots from systems, checklists and also identifies any tips to help someone learn the job.
Once the first is done, move onto the next and so forth until it has all been captured.
They key at this stage is to get it all down on paper (or electronically) and not to get too side-tracked trying to tweak and improve what you do. My experience has been that you will revisit each system over and over again and will continue to make small tweaks and changes each time.