I had no idea how much of a positive influence business systems could have on my business until I read The E-myth by Michael E. Gerber. It opened my eyes to just how powerful developing systems for your business can be.
What is more, business systems and “systems thinking” allow you to work on your business instead of working in it. They increase the efficiency of your business processes and give you options when it comes time to consider your exit from your business.
Table of Contents
- So, what are business systems?
- What is the difference between a system and a process?
- Why should you use systems?
- How to go about creating systems
- Step 1: Identify your business functions
- Step 2: Break down each process
- Step 3: Compile your system document
- Step 4: Refine and review
- Using system thinking
So, what are business systems?
I have found several definitions of business systems, each of which is slightly different but offers a slightly different perspective to this topic. Let’s go through some of them.
According to the SYSTEMology website, business systems are
This definition is succinct and gets to the core of what systems are. It’s a series of steps that lead to an outcome.
Let’s now take a look at what the successwise.com website defines a business system to be to see if it can help us add anything;
“A business system is a group of interdependent elements or tasks that meet a business objective. You should document every step for each business process or activity.”
I like this definition’s focus on documenting the steps taken to reach and objective in a system.
And according to the productiveandfree.com website, a business system is
“… a set of processes, tools, people, and strategies that all work together to solve a problem or achieve a goal.”
From this definition, we can see that a process is not just the actions you take (the processes) but the people and resources that must be included in your system.
To my mind, a system is a set of (documented) instructions on how to get the same reliable and repeatable result from a sequence of steps (a process) using specific processes and resources.
What is the difference between a system and a process?
At its core, and whether you realize it or not, your business is in fact a conglomeration of systems, while processes are components of those systems.
In short, processes are components of systems.
According to this article by Kate Erickson, the difference between a system and process is as follow;
“A system is the overall “thing”, or a core element, you’re looking to have and/or implement in your business. It’s something that helps your business run.
The processes are all the things you do in order to make any given system work most efficiently.”
Why should you use systems?
So, what are the advantages of using systems.
There are several advantages to using systems, most important of which are;
- Systems take the guesswork out of outcomes. By following a system, the results of any process are predictable. That said, It does usually take some trial and error to fine-tune systems to be reliably predictable.
- Systems facilitate effective delegation as the person delegated to is able to follow an established set of steps that have been proven to work, thereby reducing the chance of error, even where they lack experience. Delegation not only cuts down on wasted time and resources by reducing failure and mistakes but it is a key to business owners being able to withdraw from the day-to-day running of their business with a view to selling or retiring.
- Relating to the previous point, systems make your business easily scalable.
- Systems allow you to reduce overheads by automating processes using technology and remote workers.
- Most importantly, systems increase the value of your business as an asset. Effective systems can be transferred along with the business to a new owner, who will be safe in the knowledge that they will be able to maintain the value of their investment.
As you can see, developing systems for your business offers many advantages.
Now that we have established that business systems are valuable, how do you go about setting them up.
How to go about creating systems
Before we get to the nitty-gritty of setting systems up, it’s important to realize two things;
- Firstly, systems require effort to set up properly. Many (particularly small) business owners intend to set business systems up but fail to see the task through when they get bogged down in the day-to-day slog of keeping their business’ head above water.
- Secondly, systems need to be refined. They need to evolve as the business environment changes. This adds to the time required to develop effective systems in your business.
If you appreciate these two caveats, we can move on to how to go about setting your business’ systems up.
Step 1: Identify your business functions
Start by determining which are your core business functions. This will most probably include sales, marketing, bookkeeping, admin/operations, and compliance as well as other industry-specific functions.
Now it’s time to identify the processes that must be undertaken in each of these functions. This will include repetitive as well as once-off or irregular processes.
Repetitive processes are those that are repeated regularly, either daily, weekly, monthly, or at some other fixed interval. Perhaps you update your company blog every Friday or do the banking first thing on Monday mornings. These would be regular processes.
Sporadic processes are those that are not regularly undertaken. This might be something like hosting an event or running a competition.
Most business functions will require one or more processes be undertaken.
Once we have a list of processes, we can move on to breaking down each process into steps.
Step 2: Break down each process
Now that we have our list of processes, we need to break each one into a series of steps.
This sounds like a lot of work, and to be honest, it can be. However, you don’t have to do it all at once. You can simply record each step on a notepad or on your phone the next time you go through and complete that process.
The first draft of your process can be quite rough with just the major steps being noted. Then, when you go through the process again, try to add smaller details as well as options where more than one action can be taken to your process description.
Do this a few times until you are quite sure that you have included most of the details about each process.
It will take a few months to do this properly, but take your time to get it right. Be sure to file your notes carefully so that you keep all the relevant information together in an easy-to-follow order.
Step 3: Compile your system document
Now that you have your processes mapped out in rough, it’s time to create your system documentation.
Start by creating a system template. I have used the structure proposed by Tet on the productiveandfree.com website, as it is logical, comprehensive, and effective.
Your template should include the following sections;
- Process – This will be a step-by-step description of how to complete the process using the notes you made in step two of this process.
- Tools – Here you can list the tools required if any.
- People – If you need any specific skills or expertise for the completion of this process, they can be listed here. You can also list the person who will be responsible for the completion of each step in the process.
- Strategies – This might include tips, tricks, tactics, resources, and ideas for helping complete the process.
Step 4: Refine and review
Once your system document has been completed for each process, it is important to review it once every year or so and to refine it so that changes in your business, in technology, in your industry, and in the environment in which your business operates can be taken into account.
Using system thinking
Once you have created your systems for the major functions in your business, you should continue to use systems thinking to try to reduce as many of the smaller functions to processes and ultimately systems as possible.
This will only add to the efficiency and value of your business.
What is more, you can extend system thinking to areas like time management and even networking, developing processes to enhance these performance and relationship enhancement skill sets.
Using business systems to reduce your key business functions to easy to understand and follow step-by-step instructions can have a marked positive influence on the efficiency and salability of your business.
If you haven’t thought about developing systems for your business, perhaps you should. It can only benefit you.
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