Recently, I visited a customer in Houston Texas who owns a chain of ten auto repair stores. By every measure, Shane has a very well-run and prosperous company. He is no longer involved in the daily routines because he has excellent and trusted managers, and first-class business operations. However, Shane wants his company to become even better; he wants to improve on his success.
After visiting some of Shane’s busy stores, I was reminded of a statement made by a marketing professional a few years ago. He said:
“One of our favorite clients is an auto repair shop that regularly puts three to four competitors out of business every year. His business operations are run so flawlessly, his marketing is so compelling, and his customer satisfaction is so high, customers are irresistibly drawn in and drawn back time after time. They are helpless. In their minds (and in reality), they would be STUPID to go anywhere else to get their cars fixed” (Rick Harshaw, Monopolize Your Marketplace).
Shane was eager to refine his company’s daily operations but new to my Box Theory™ Way. As I began to explain, he had a sudden epiphany and shouted, “YOU’RE TELLING ME THAT I CAN CREATE A SCHEMATIC OF MY BUSINESS, AND LIKE MY AUTO TECHNICIANS, I CAN VIEW THE DETAILS OF MY PROCEDURES AND PROCESSES TO PINPOINT AND SOLVE PROBLEMS.” “Uh, yes,” I responded. “I suppose you could look at it that way.” He actually had a brilliant insight that I had never thought about before.
What is a Business System?
I was inspired by Shane’s observation and now want to tell you why I am such a zealot about creating carefully designed and implemented business systems and processes. I hope you too will want to develop a business model so compelling that customers would think themselves “STUPID” to go anywhere else.
Before we start, keep in mind this helpful definition:
A business system is a procedure, process, method, or course of action designed to achieve a specific and predetermined result. Like a recipe, its component parts and interrelated steps work together for a desired outcome. Creating effective business systems is the only way to attain results that are consistent, measurable, benefit customers and workers, and yield an expected profit.
We are speaking now of people systems, not mechanical or electrical systems. For example, they might include lead generation, customer service, production, order fulfillment, purchasing, inventory management, hiring, training, and many others unique to your company. These systems are the daily hum of business activities that determine the success and profitability of your company.
10 Things to Ponder
Will you take a moment to consider ten vital principles that may help you and your staff run a more trouble-free, results-driven, and prosperous enterprise?
- Good systems are needed in EVERY ORGANIZATION, including YOURS.Effective business systems and processes are vital to product-based, service-based, and non-profit companies of every size and in every industry. They are important to the office, the workshop, the factory, or the retail store. The critical purposes of your business systems are not just to get organized or systemized, but to consistently attract and retain customers, eliminate waste and inefficiency, and set your company apart in a crowded marketplace. (The only enduring businesses are those with awesome systems and processes! How would you grade yours?)
- Business systems are the essential BUILDING BLOCKS of your company.Systems and processes are how your employees get routine work done. Unfortunately, in many small businesses, they are improvised as people come and go. Every business owner and entrepreneur can become a “business engineer,” and learn the Master Skill of developing powerful systems and processes. All business functions—marketing, finance, and operations—fall within the scope of this single skill mastery. As Michael Gerber (E-Myth) said, “the business owner must work ON the business, not just IN the business.” Whether by hands-on or overseeing others, you can work ON your business in an intelligent and systematic way by creating valuable systems that continually please customers and accomplish objectives. This is one of your key responsibilities and a best-use of your time. (Decide today to build your business on a foundation of remarkable systems and processes. There is no other way!)
- Cost-effective systems LOWER COSTS and enable you to give customers the BEST DEAL.Competition can be formidable. The customer is always looking for the “best deal,” which is sometimes the lowest price but is always includes acceptable quality, promptness, value, and a good buying experience. The quality and efficiency of your business processes will largely determine your operating costs and your ability to profitably compete. You can count on exceptional business systems to give you the marketing advantage of being better, faster, cheaper, and smarter than rival companies. (With regard to business processes, Quality + Speed = Low Cost. Do not forget that formula!)
- System building is the ART AND SCIENCE of developing “BEST PRACTICES” for your company.The art of system design comes from your unique vision, creative approach to problem-solving, and desire to differentiate yourself in the marketplace. The science comes by applying the Law of Cause and Effect and the simple but amazing improvement methods found in Six Sigma, Lean Thinking, and The Theory of Constraints. A systemized approach to running a business includes a focus on process, system components, people, quality, speed, and measurement. (Business systems are literally the “recipes” for best practices to get work done throughout your organization.)
- Quality systems and processes SOLVE PROBLEMS and foster a CULTURE OF EXCELLENCE.Systems Thinking will literally make your business transparent, allowing you to clearly see the root-cause of problems and their obvious solutions. Quickly eliminate customer complaints, operational waste, mediocre performance, worker turnover, unnecessary costs, poor cash flow, slow sales growth, small profit margins, and daily frustration. You can establish a culture of discipline and excellence with smooth-running business systems, performance feedback to workers, and the empowering motivation of accountability. (Documented business processes provide a “visual schematic” for problem-solving, innovating, and creating a result-driven culture. And, it is soooo easy to do!)
- Good business systems turn ORDINARY PEOPLE into EXTRAORDINARY PERFORMERS.Established systems and processes are your most valuable business asset when they can continually produce the results you seek. People are the most important components within those working processes. As people come and go, the systems remain constant. Ordinary people can produce results far above their pay grade if they operate in well-designed and effective systems. Good business systems reduce mistakes, waste, and rework, and allow workers to capably perform higher-level tasks. (When problems do happen, blame the system before blaming people, and perhaps blame yourself for the faulty system.)
- Achieve CONTINUOUS IMPROVEMENT with a PROCESS IMPROVEMENT MANAGER.Whether it is you, a manager, or employee (full or part-time, and not necessarily a new hire), someone needs to wear the hat of a “Process Improvement Manager.” This person’s role within the company is to maintain efficiency and quality in the work setting. They evaluate current business practices, looking for ways to improve customer service and productivity, reduce costs, and make the best use of the business’s resources. Specifically, the process improvement person will develop, refine, and monitor the performance of the company’s vital systems and processes. Ongoing system development promotes continuous learning, growth, and improvement of individuals and organizations. (Innovation at the system level drives all business progress. The primary vehicle for innovation and improvement is the weekly Business Improvement Workshop.)
- SYSTEMS THINKING and BUSINESS IMPROVEMENT WORKSHOPS elevate people, products, and processes.The Business Improvement Workshop is a one-hour-per-week meeting focused on solving identified problems, refining business practices, and advancing the organization. This brief council meeting improves people, products, and processes by encouraging critical thinking, problem-solving, innovation, engagement, buy-in, and team spirit. For busy owners, the weekly workshop is an important crossroad for relationship building and steady business improvement; there is no better use of time for managers or staff. (Small weekly improvements throughout the year add up to happier customers and employees, and incrementally larger profit.)
- Exceptional business systems and processes are necessary to START, GROW, FIX, REPLICATE, or RETIRE.Start – Effective business systems are the only way to plan, organize, and structure a new business that runs smoothly and impresses customers right from the start. Grow – Well-executed systems and processes provide a methodical and consistent way—the best way—to dramatically grow your business and to skillfully manage the special challenges of growth and expansion. Fix – Improved business systems cut the waste, inefficiencies, and fat out of your organization (e.g., mistakes, lost time, and rework). Your well-oiled and cost-efficient business operation will delight customers and employees, and put more money into the pockets of stakeholders, including YOU! Replicate – once you create your moneymaking “system”—and document the successful way you do things—it is easy to franchise or replicate your business model in other market locations (especially with Box Theory™ Software). Retire – Become free of the daily grind. Turn your entire business into a self-running system that provides consistent results day after day, even when you’re not around. Let someone manage the business for you or sell it for top dollar. The true value and selling potential of your company is found in the maturity of its systems and processes—their ability to consistently produce desired results. (No matter what stage of business you are at, or what you want to do to get better, creating quality systems and processes is the only solution. There is no other way!)
- Effective business systems PAY FOR THEMSELVES over and over again.“If you need a new process and don’t install it, you pay for it without getting it.” (Ken Stork, former president Association of Manufacturing Excellence). Please believe me when I say, “Good Systems are worth it!” And the larger your company, the greater the potential benefit. The question is not whether you should create business systems, but what new system or process improvements will have the most immediate financial impact. YOU have your hand on the lever of cash flow and profit, so go ahead and turn it up! A small investment to upgrade your operational processes is “the gift to customers, employees, and owners that keeps on giving.” (The financial benefit of high-performance business systems far exceeds their cost of development, and the payoff is often immediate and dramatic.)
- BONUS TIP: BOX THEORY™ Software will BENEFIT YOU in FOUR WAYS.Look, I’m not big on sales hype, but I’ve spent a lot of time and money to create a powerful software program for building remarkable business systems and processes. (It is like the QuickBooks of business systems.) This low-cost product will 1) turn you into an effective Systems Thinker and developer, 2) provide all the tools you need to accomplish this mission-critical task, 3) cut your system development time and cost in half, and 4) trust me, it will raise your business IQ by 80 points—OVERNIGHT! (Learning the Box Theory™ Way could be one of the most important decisions of your business career!)
“Systems are the Solution” (AT&T)
Shortly after returning home from my trip to Texas, I needed to get new tires on my Toyota Highlander. While waiting for the installation, I learned that Discount Tires has opened over nine-hundred stores in the United States since 1960. Now that’s a pretty impressive example of a business operation “run so flawlessly, with marketing systems so compelling, and customer satisfaction so high,” that it could be replicated—and profits multiplied—without end.
I think I would be STUPID to build a business any other way! How about you?
Business systems are the most misunderstood and undervalued tools of entrepreneurs, small-business owners, and managers. If you are not giving up close and personal attention to the processes that drive the day-in and day-out results of your company, I invite you to take the next step to learn more about this most fundamental and indispensable business activity.