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...