“You do not rise to the level of your goals. You fall to the level of your systems’’. James Clear –Atomic Habit
Ever thought of how companies become Multi-Nationals?
What do you think they got right?
Having consulted for various businesses in different industries for over a decade, I have come to understand the battle of not having a sound system and structure. I have seen businesses with huge potentials struggle because of the failure to clearly define their Structure and System.
Before we go further, let’s define some terms:
What is a Business System? A Business system is an organized way of doing things; marked by the interdependence of processes, each with a step-by-step procedure of achieving an ultimate look of success for the problem to be solved. It is important that from beginning to end you can drive predictable outcome; consistently.
Business systemization gained notoriety from the bestselling book by Michael E. Gerber,. It was published in 1986 with the name The E-Myth (Why most businesses don’t work and what to do about it).
In 2011, this groundbreaking book was named the number 1 business book of all time by The Wall Street Journal. In The E-Myth (Entrepreneurial Myth) Gerber explains how businesses are usually started by those who know the content of a business so called “Technicians”, people who know how to do the technical work involved in an enterprise rather than by those who know business itself – so-called “Entrepreneurs” and why start-ups are therefore by definition prone to failing.
Most business men start up as technicians of what they do and who they serve. Thats okay in the very early stage. But in order for a company or business to grow and thrive, it must move beyond relying on the so called “Technician” who is now also the company owner. Gerber uses the franchise model to demonstrate how a business does this: A business must see itself as preparing for franchising. Franchises are prototype businesses that are operated with a singular brand name but different owners driven by a set of ground rules and well-documented and followed upon systems, i.e., there are manuals describing in minute detail how to run that business; mainly without the present of the founding entrepreneur or team. Gerber argues that the entrepreneur should spend time creating a business that can run by itself, without the presence of the entrepreneur, and this is achieved through business systemization.
Every new business or business activity requires tremendous time, effort, expense, and even “genius” to learn and develop for the first time. But once the system has been developed for the first time, through trial and error, it can eventually be perfected and systematized to the point where the business activities can be carried out by ordinary people just by following the tried and trusted steps for a predictable outcome.
Until a business activity is systematized, it exists largely in the mind of the individual who knows how to do it. As a result, it cannot be duplicated or replicated. If the person who knows how to do the job is not there, the business or that production process can eventually grind to a halt. Many businesses falls into this trap. This can be seen as working for your business not your business working for you. As an entrepreneur you need to break this barrier. This can be done by structuring your business.
Many successful brands both Local and International brands got this two things two element right their Structure and System. This helped them to duplicate at any country and they’ll function greatly.
Systemization is all about having a strategic objective from the rush of a big gigantic vision, strategic objectives and a strong culture with values that are built to last. And then from that strategic objective, we start creating a set of well laid down structures; each with Standard Operating Procedures known as SOPs, powered by onboarding documents. To ensure this works, we must monitor it via Appraisals using benchmarking for results and a Reward and Penalty Grid for the personals. . These documents, on boarding process and continuous monitoring helps the company communicate its vision and mode of operation to even the lowest thinking human being there. Let’s dig deeper.
SYSTEMIZING AND STRUCTURING YOUR BUSINESS
“Creativity thinks up new things. Innovation does new things.” ― Michael E. Gerber, The E-Myth Revisited
Let’s take for example, creating a marketing system that works as a sales funnel. For this, let’s explore the following steps:
After you identify your actual market (by demography and psycograph) you need a proven system of promotion, marketing and advertising that can create a steady stream of qualified leads. This can be from sponsored ads to cold calling from a directory; or maybe from responding on the Internet to this who personally come into your store to just window shop. Collect their data! Without this continuous and predictable stream of leads from data collection, your sales and revenues may dry up from the little you have and your cash flow will slow to a trickle, threatening the survival of your business. Just like a burning fire, you need to keep suppling the fuel; lead generation!
After you collect leads, you need a proven sales system to convert interested prospects into buying customers. This system begins with a sales script that every customer service representative and salesperson uses from the first contact with the prospect through to the completed sale.
The use of a preplanned sales script to our leads can engage your prospect better and even triple your sales almost overnight. By using a sales script, each person who answers the phone, calls on a customer, or greets a customer walking in the door knows exactly what to say from the first greeting through to the final purchase.
Your sales system will be developed as the result of trial and error. As you evaluate your sales process, you will find that there are things that you do and say that are effective and others that are not. Over time you will smooth out the rough spots in your sales process, machining and polishing the words and actions so that you turn interested prospects into buying customers over and over again.
You need a proven system, from the beginning to end, for producing the product or service that you have sold to the customer. The this proven system will ensure consistency of quality, ease of operation, efficiency of activity, and continually lower costs of production and delivery.
You need a step-by-step system to fulfill orders and deliver the product or service to the customer in a timely fashion. This system enables you to get your product or service to the customer quickly and efficiently with minimum delays and with a high level of quality
You need written policies and procedures for support and for follow-up services to each of your customers. This refers to a predefined and established way(s) to handle customer needs and complaints, to generate additional sales, to keep in regular customer contact, to elicit referrals and recommendations from satisfied customers to new customers, and to alert your customers of new products and services that they may be interested in buying.
You need smoothly functioning accounting systems that track every penny of revenue and expense coming into or moving out of business. Fortunately, there are computer programs for small and large business that you can use to keep track of all financial flows in your business so you will always know your proper financial status.
7. Hiring, Training, And Personnel Systems
Team performance is everything. You need written systems to clearly put them all in the same page culturally. After this on boarding, you need from their roles to clearly describe each job and how it is to be done. In addition, you need systems for training, development, and personnel relations. each person who works for you must know exactly what he or she is expected to do and to what standard of quality. Your employees must understand the terms and conditions of their jobs, what is deemed unsatisfactory performance, and what are grounds for termination. They must know exactly what they are entitled to in terms of medical insurance, sick pay, vacation days, and other key elements of the work experience.
IMPORTANTANCE BUSINESS SYSTEMS
“Goals are good for setting a direction, but systems are best for making progress.” James Clear- Atomic Habit
Gerber outlines the three systems that are important for businesses, by making the business processes ever more predictable and consistent: Hard systems are the physical tools that make a company more efficient; soft systems are the methods and practices employed by staff to get the job done, and information systems are those IT processes that gather data about the business and its operations in order to allow for comparison and selection of best practices.
MODELS OF BUSINESS SYSTEMIZATION
“If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic!”. Michael E. Gerber, The E-Myth Revisited
The most often quoted example of successful business systemisation is McDonalds, which has over 34 000 restaurants in 119 countries. At McDonalds, every individual franchise is able to replicate the same standards in products and service offered, regardless of where in the world it is located or who the manager might be. McDonalds and other fast-food franchises have provided a model for successful businesses run according to systems that eliminate the possibility of variance. When you buy a McDonalds franchise, you attend the company’s training program and you are taught how to run a McDonalds restaurant using an operations manual, checklist and follow through via appraisals and monitoring.
The successful entrepreneur or business owner should approach his or her business in the same way: As if it were a franchise. As demonstrated by the franchise model, systemization essentially means that you are replacing yourself with a system. While the system is running your business, you are free to expand the brand or build a second branch, in the same manner as a franchiser.
As James Clear said in atomic Habit, ‘‘The purpose of setting goals is to win the game. The purpose of building systems is to continue playing the game’’.
MODERN DAY SYSTEMIZATION
“The system isn’t something you bring to the business. It’s something you derive from the process of building the business.” ― Michael E. Gerber, The E-Myth Revisited:
In the more than 25 years since Gerber wrote The E-Myth, there have been great advances in technological development and IT software programs are today at the center of most business operations such as CRMs, digital calendars, email replacements, office productivity suites, cloud storage and performance management. This is why systemizing your business makes even more sense today than it did back in 1986. As Michael E. Gerber in The E-Myth Revisited “the Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done. The commodity isn’t what’s important—the way it’s delivered is.”
Business systematization will enable you to create repeatable systems to manage the operations of your business, to continuously streamline and improve your business processes, and ultimately to allow your business to thrive and grow.
Would you like a business that is systemised and runs without you? The first thing to do is make the commitment to build your business into something amazing. Systemising a business the right way does take time, the end results are, however, “Life changing” for you and your business.
Over the last 10 years, I have built and systemized over 128 businesses, I look forward to working with you next on creating systems.
Watch a clip of structure and systemization in business
Visit this link to watch video on structure and expansion for CEOs : 7 systems you must create.