When you start your business, and as it grows, you will have a picture in your mind about where it will end up as your successful business.
The chances are that you see a business that grows and is prosperous, efficient, duplicating what it does for your clients now, but on a much larger scale, and repeating your success in bigger contexts.
This doesn’t happen by chance. You need to plan it, you need to set it up correctly so that it will scale efficiently rather than in fits and starts and discover all sorts of inefficiencies and roadblocks to growth along the way.
We will look at the steps you need to take, right now, before the growth spurts start, to set up your business to scale.
But first, if you have not been following us, this is the seventh article in our series “Growing Your Business”.
Previously we wrote seven articles in our blog on “Starting A Small Business” that made sure you understood the underlying purpose of starting your own business, what you had to do to think about before you start the business, how to start the business, checking for the business feasibility, writing your first business plan, hiring your first employees, and making daily workflows automatic.
In this series on “Growing Your Business,” we have already tackled:-
- How to grow your business by measuring key performance measures
- How to prepare a long-term strategic plan to grow your business your way
- How your strategic plan cascades into your annual business plans with defined targets for the year
- How to grow your business with a focused marketing plan
- How to grow your business by helping your employees grow
- How to grow your business by planning who you employ and what they will do
Having gone through all these steps, you should now be ready to set your business up to scale effectively.
So, what is scaling?
It’s just another word meaning expansion.
But scaling is a controlled way of expanding. It means that as you expand, you don’t bolt on new practices – scaling properly means you do what you are doing now, but you do it, twice, five times, ten times as big!
“Doing what you do now” is important, because it means that you won’t need new skills. You make your business efficient and then you take your business exactly as it is, but you just replicate it multiple times. Doing it this way saves you a lot of time and effort and stops you from reinventing, or modifying the wheel.
The ideal model of scaling is McDonald’s restaurants. Step into any restaurant anywhere in the world and it will look the same and feel the same. Apart from some local variations in the menu, it will have the same employment practices, training procedures, cooking and cleaning protocols, decor and uniforms. It will even have the same ratio of employees to floor space as any other McDonald’s restaurant anywhere in the world.
How did it start?
It started with one restaurant where they honed the best way of running a fast-food restaurant, then they wrote the “rules” on how to do it, then they opened other restaurants and implemented the same “rules” in each. It didn’t matter if they operated 5 restaurants or several thousand – they opened with the same rules and knew it would work.
These “rules” are the backbone of setting your business up to scale. They are a series of policies and procedures dealing with how things get done in your business. Policies are rules about general behaviour and values, and procedures are the step-by-step systems describing how each workflow and each responsibility is implemented or carried out.
So, how can the systems in policies and procedures help you scale?
Firstly, systems make the outputs and outcomes of your business predictable. Systems make your everyday actions predictable and repeatable.
Imagine a restaurant without a set menu, without standard recipes for basic dishes. Every night, the dishes would come out different depending on which kitchen staff prepared them. Sometimes it would take 10 minutes to prepare the dish, sometimes half an hour. Sometimes it was too spicy, sometimes not salty enough. Customers would stop trusting in the quality of food served in the restaurant; you wouldn’t know how many settings to book because you wouldn’t know how long it would take diners to get their meals.
Imagine a restaurant without a standardised way of keeping the books. Sometimes the chef would enter transactions, sometimes the Head Waiter, sometimes you. Each time the purchase of vegetables is treated differently, sometimes as the cost of goods sold, sometimes as sundry expenses. Sometimes the books are entered at the end of the night, sometimes a few days later. You would lose sight of the real financial performance of the business, you would not be able to manage the finances.
Predictable systems mean that you and your staff can do the same things, day in and day out, in the same way, so that you can manage outcomes for customers in a predictable way. This maintains a standard of quality that your customers receive – every single time. It also means you can manage time and process flows. You know exactly how long it takes to do something and what resources are consumed during the process. This makes planning and managing much more effective since it is all predictable.
Once you write down clear systems, the work becomes delegatable.
You can stop being frustrated that the task is not done correctly, you don’t have to do it yourself, you don’t have to keep retraining new people personally, you don’t even have to be a hostage to an experienced employee you can never let go.
If you have clear, written systems, you can train new staff, not on the task, but on the implementation of the system by following the system’s procedures. They will know exactly what is expected of them, what the end-result should look like, and how long it will take.
The workflows in the business will happen on time and be done exactly the way you want, with exactly the same results you want. If a team member leaves, all you have to do is replace them with someone with the right attitude, train them in the system by taking them through the written documents, and they can follow them from there. You no longer have to show them, you just point to the part of the system they need to follow.
This makes all your processes controllable because you can easily spot when something is being done wrong, and instead of taking over, or showing them how to do it again, you refer them to the steps in the system they are not following and get them to follow the steps correctly.
Having standard systems also means that you can automate your processes.
Not every system can be automated, but because the steps in the system are always the same, you can find software to automate some processes. For example, instead of preparing and manually sending out marketing pamphlets, you can write one out, and then add it to mailing software and have it sent out at set times, with automated responses to queries and replies.
One of the biggest advantages of having systems in the growth of your business is that systems are measurable.
Because systems make sure that every task is done in exactly the same way, that task becomes measurable. How long should something take? How many resources should it consume? By measuring these factors, you can jump on cost over-runs and inefficiency immediately.
Measurement also helps you see what works and what doesn’t. If you had no systems for your chefs to prepare dishes in exactly the same way, how do you know which dish from any night is a favourite and why? On the other hand, if your chefs prepared the same dishes in exactly the same way, you can analyse orders and tweak the menu to sell better.
Since systems make your work measurable, this also means that systems can be improved. When you know the result, you can make improvements on a regular basis, the philosophy of continuous improvement.
Through continuous improvement, you can try making changes to the system, perhaps armed with feedback from your team. If the waiters in your restaurant feel that they can improve the booking system, you can try it out to see if it speeds things up, and if it does, change the system. Or, you can test each step of a procedure by just changing one step and see how that affects the result.
The presence of systems improves the value of your business for any future sale.
Potential buyers will want to know that they can reproduce the success you show. The fact that you can show them written, step-by-step systems means that they can have much more confidence that the goodwill they are valuing can be maintained.
Finally, because they are written down and predictable, you can scale your business because the systems themselves are scalable.
All you have to do to scale is to add resources because you know that those resources used in the system already work to get you the result you want. You just need to do more of it. If the restaurant wanted to open a second location, you just hire more cooks and waiters and they follow the system from location 1 to location 2.
And you don’t have to be in both places at once doing everything yourself!
Many small business owners build these systems out of habit. When they start their business, they have to figure out how to do things and these how-to steps evolve into something they do for themselves regularly. They habitually remember how it’s done and as new people join the team they show them how it’s done.
But they don’t step it out in detail, and they don’t write it down, so that in time, it’s not so standard anymore, and the owner never gets to let go.
Detailing step-by-step systems and writing them down creates all the benefits that will change your life in the way you can let go in your business and let other people do what you do.
As a small business owner, you will not attain your vision of a successful business that brings financial freedom and time with family unless you invest in and design systems in your business. You cannot achieve your dream just by answering more phone calls or working more hours. You have to work on the way your business does things and focus on building value through systems.
How do you build up your policies and procedures into a scalable, repeatable, reliable, automatic system?
I have a free download you can get, which gives you a template for writing the policies and procedures that make up your systems. Click here to download now.
In return, I’d like to ask if you can help me with some advice.
I’m thinking of creating an online workshop and training to help small businesses create systems in their business. I’d like to know if you would be interested in this online product. Please comment in the blog to let me know, or tweet me @OhTeik or put a comment on the Teik Oh Dot Com Facebook page.
Thank you for your help, and I’ll see you for the next article which will be the start of a new series on Managing Your Mature Business.
If you don’t want to miss it, put your details at this link here and I’ll send it directly to your inbox!
See you then!