Working with businesses to standardize and improve their processes is one of my favorite things to do. I just finished working with a medium-sized business whose owner was very engaged in every aspect of the business and every decision needed to run through him. We flow-charted and documented each substantial process by function, including sales, billing, shipping, payroll, payables, and reporting.
Now, because of these documented processes, the owner can let everyone else “run” the company while they focus on continuing to grow and scale the business. This takes a huge mindset shift for the owner – from being the main person in the business to being more of a shareholder.
I see so many business owners that are in the way of their business’s growth. They feel they need to be involved with each decision and the business cannot run without them. The team cannot make decisions without the owner’s blessing. The owner has trouble going on vacation and, if they do, they check in daily. They are involved with training new employees. They are involved in getting daily tasks done. They are involved with everything! As the business grows, the owner puts in more hours to stay ahead, but they can’t keep up. This will not work long-term and the business hits a growth wall.
The goal is to become less relevant in your company.
It’s the natural evolution. Let’s take a look at the stages:
Startup: business owner is very involved
Growth stage I: the business owner is the main person with every decision
Growth stage II: processes are in place. Everything is delegated to competent and engaged employees. The owner focuses on growth and the overall mission.
Sustainable stage: the company operates similarly to a public company where the business owners now have little to no engagement in the daily operations of the company.
Procedures follow a similar trend line:
Startup: no procedures in place
Growth stage I: the business owner starts to establish some procedures but still may be doing most of the work themselves
Growth stage II: more procedures are in place and the business owner had delegated far more
Sustainable stage: procedures become internal controls and the business owner has a systems mindset, rarely handling everyday procedures themselves
A key to moving through these stages effectively is well-documented processes. Great systems, worked by great people, lead to a great business. Great people alone won’t cut it. If any task takes more than three steps, it should be documented as an SOP (Standard Operating Procedure.)
One employee in a finance department I was working with made the following comment on a process: “It’s performed ‘as needed’ and the ‘how to do it’ is based on the person doing it.” Red flag. That’s the wrong perspective. It should be, “This is the way we do it here.” That way, the process is easily replicable by any staff person or new hires in the future.
With my current project, we took a very holistic view. For each process, whether it occurred daily, weekly, monthly, quarterly, annually, or occasionally, I asked “What is the current process and how could we definitely improve it?” We set some improvement targets, and we will revisit and tweak them again next quarter.
I also make sure to introduce Verbeck Associates’ pillars: the weekly scorecard, the rolling 13-week cash flow worksheet, accurate financial numbers, quick production of monthly financial reports, and efficient consistent business processes.
Building a great business takes a great team practicing great processes. The founder/leader is vital, but they should have a vision of becoming less relevant as time goes on.
For more on how good processes can help, take a look at Process Makes Perfect: Helping Your Small Business Avoid Failure.