Small Business Development Blog

Systematization Process - Phase 4: Re-Write the Rules

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Design Your Future Business

Design what your business will look like when it is finished and map out a path of stepping stones along the way. 

Phase 4 of the mimosaPLANET^TMsystematization Process is; Re-Write the Rules. Who said your business has to look like it does today? Who said your business needs to conform with the industry average? Nobody! Because in business your get to write your own rules. So, what happen? Take back that feeling, that desire for control of your own destiny you had when you first started your business and design what it will look like in the future...when it is delivering on the promise of ‘freedom of choice'. Find out the areas you should be designing and re-writing the rules of your business in...

Earlier in the mimosaPLANET^TMsystematization Process, phase 2) DISCOVER & DOCUMENT, we analyzed and documented the current situation. This included; the work-flow processes, organizational chart, volume capacities, the profit model, and utilization rates. In the 4^th phase, RE-WRITE THE RULES, we focus on taking the new work-flow processes, determined from any technology advantage found in phase 3, to create a clear picture of what the business will look like when it is finished. How do we define that ‘clear picture'? By using the following strategies;

• Our New Company Structure - organization Chart Goals (Now, Qtrly, 1yr, 3yrs, 5yrs)
• Our New Company Structure - Position Descriptions (Roles, Responsibilities, Tasks)
• Our New Company Structure - Position KPIs Identification
• Our New Company Structure - Position Volume Capacities
• Our New Company Structure - Profit Model
• Our New Company Structure - Position utilization Rates
• Our New Company Structure - Position KPIs Specification Targets (Below, On, Above)

Specific outcomes of this process will differ for every business and business owner... you see, it's completely based on your outcomes from phase 1 and 3. A business owner with huge personal goals & business goals is going to need a very different business design (i.e. size, shape, profit, etc) when compared with a business owner with relatively modest goals. Whatever the specific goals of the business owner and business, no matter their size or shape, the process is the same. It becomes vital to build a clear picture of the business in a specifically defined time period.

Over time I have found people work well with a 5 year goal for when the business is to be finished (i.e. the business is delivering the owners written personal goals of money (pa income to live the lifestyle desired) and time (free time available to live the lifestyle desired)). Let's look at how 3 different people might approach phase 4 differently based on their desired outcomes....

3 Examples of Business Owners 5 year Goals

How Will This Affect Our Thinking When We Design Our Future Finished Business?

Let's look at Person A

Person A, wants to have the option of not working ever again so they are looking to sell their business and let's assume they can get 10%pa return on the invested funds from the sale of the business. They will need (assuming no other assets or investments, & that 10% is after inflation...so they are really getting 13%pa) to sell the business for $5 million. A business that has a goodwill value of $5 million is likely to be producing $1 million pa EBIT (Earnings Before Interest & Tax).

So everything that is ‘designed' in this phase (the organizational structure, all the different roles and volume capacities, etc...) needs to be from the view point of what does the business look like at $1 million pa EBIT? You see, most people work from a sales or revenue figure and then ask... ‘what profit is left?'. Challenge that way of thinking. Build the shape, size and structure of the business based on what profit you want.

Person A's current business could be something like this:

New Business Design

Let's say during phase 3 Person A found a new way of doing things and through a series of calculations based on volume capacities of each person in the team doing their job they determine the following design for the business in 5 years time so that they can sell in for $5 million....

All this can only be determined by running numbers on different structural options then reworking the numbers again and again until you find the right mix.

The tools to do this are the same as the tools highlighted in the phase 2 article Discover & Document

Simply start with the end game... 5 years from now, get a really clear picture of what your business will look like then... work backwards and set a picture for 3 yrs, then 1yr.... and I highly recommend breaking the 1yr into Qtrly goals. Now you have the setting stones... a path if you like to map out your growth.

This week's Action Points...

If you did phase 1 and set the vision of where you and your business want to be; if you've done phase 2 and you have faced the facts about your current situation and whole business model and structure and determined things have got to change; if you have looked into phase 3 and realize the opportunities you have to do things dramatically better.....if you have done all this you'd be mad not to do phase 4 because this is the point you get to see the future. Never under estimate what clarity can do for you... good luck...

Systematize Your Business (Business Processes)

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Here's How Your Business Can Do More Work...

...So You Don't Have To...

In Part 2 of 4, in Systems, we look at business process improvement.... Learn what processes you should improve, how to start the documentation and recording of your systems (business processes) and an example of what that can look like....

Nothing occurs in isolation. In fact, I'm reminded of an old principle... for every action there is an equal and opposite reaction. From the delicate eco-system of the plant and animal world (one animal dies, so another may live), to the exciting (said very loosely here) world of accounting where every transaction must balance.

When thinking about your business do you and your team treat each task and role within the business in isolation?

Or do you and your team regularly think about the effects of each action on other members of your team and your customers?

Chances are you are in one of three camps... 1) You know your systems and processes could improve but you don't know how. Or 2) You believe you have done this already, and just can't see how they could be improved. Or 3) You're flat out doing the day to day activities of the business, and just don't have time for this.

Tell you what... it doesn't matter what camp you are in, you can't argue with this...

The Japan's principle of Kaizen, which translates to ‘constant never ending improvement', helped Japanese Manufactures improve just about everything, from about 1960-1990 they ambushed the US to climb the productivity ladder to become the  second biggest economy in the world. They improved what exactly?... The business processes (All the steps involved to; source materials, manufacture, deliver, market, etc).  Your business process, is the way in which you and your company do everything that you do... from how you market your business/products/services, how you sell, how you deliver that service or product, how you administer paperwork, how you collect your account receivable.

How you can start to improve each of your business processes...

This is actually very easy and simple. Simply start with a blank piece of paper and a pen, or use a big whiteboard then record with a photo, but ultimately do it in MS Word or PowerPoint so you can change easily later and produce a copy for all. There are two areas to dive into....

1) Flowchart everything. 

This will create your ‘initial' business process. It's as easy as asking every member of your team to flowchart step by step what it is that they do every day (Remember last week's article, we talked about involving the team. It's time to step up... Become the leader!).

This is important for a number of reasons; 1) it'll give you a fall-back position if changes you make don't work, 2) making the process tangible and visible by putting it on paper, you and your team will instantly see ways to improve... "why do we do that in four steps when if we did.... we could do it in three". 3) you can now start to really change the current process, by asking questions of your team... Now, because there are different members of your team doing different roles, (and if your team consists of just you... you still do different roles), this has got to be one of the best questions to ask.... "What do you need from each other person (role) to do your job awesomely?" 

The Marketing Process (how you find leads, get enquiries,) roles into the Sales Process (how you convert those leads or enquiries into a sale), roles into Operational Process (the doing of the work in a service business or the delivery of the product), roles into the Finance Process (invoicing the work and the collecting of accounts receivable). 

Super important point!

 All these processes are backed up by a flow of information.... and it is this flow of information, be it written or on a computer, that needs to be improved/changed/discarded or created and implemented. It is so important that at say ‘step 5' in your process the person who is about to do the task required at that point to move it to the step 6 tray, for themselves or for another person to do, that they have all the information required to do that. And this is where all of your team must be involved so they understand the importance of ensuring they complete each of the tasks at each of the steps they are responsible for. Because if they don't complete ‘step 4' completely before handing it to the next person, the next person will need to contact that person and ask them something, or it gets stalled....

How often do your team ring you asking you questions?

Or, do you have to ask questions about jobs or orders or invoices so you can complete your role? It's totally about information. Improve the process by removing the grunge and improving the flow of information... (ph & sales scripts, questionnaires, forms, quote templates, proposal templates, booking forms, order forms, job sheets, invoices, collection letters, collection scripts, trays, eMails, Diaries, whiteboards, software programmes...). 

Here's a simple flowchart example. Start simple then, get more complex...

2) Create an Organisational Chart

...with Roles, Tasks, and eventually KPIs (Key Performance Indicators - how to know if each role is performing or not). Most businesses logically start to build team members in the area of operations. The owner of a building business gets busy and employs another builder, then another, then another until they need someone to do the administration tasks of invoicing and collecting Accounts Receivable. Quite often a business will have 10 employees including the owner with 7 or 8 ‘doing the work that the business does/sells' and 1 or 2 people to answer the ph and administer.

So, when and who fills the other roles in the business... like the Marketing Manager, Sales Manager, HR Manager, Finance Manager?

Oh, it's you right? So.... do all the tasks get done in each of the 2 - 6 roles you have? Mmmm, of course not, who has the time to do that? The point is... between you and your team you need to divide the roles up, each role needs a name next to it to take ownership of it, that includes you... be accountable to your team, you want them to be accountable and responsible for their role/s in the business, so shouldn't you lead by example and be accountable for your roles?!?!

An Organisational Chart, a List of Tasks for each Role and KPIs, give everyone a clear understanding of what they and the rest of the team do and the importance of getting it done. Here's an example...

This week's action points...

It's not that hard to do but the benefits will come fast. 1) Get out ya pen and paper, start drawing! 2) Ask each member of your team to flowchart what they do, show them an example. 3) Use the computer to document and make changes as needed. The examples above are done using a the SmartArt function on MS Office Word 2007, we live in a world where it is now so easy to do this stuff, if you or nobody on your team (inhouse employees or outsourced skills) don't know how, then you are going to be left behind.