A system is a set of parts which accomplish something by relating to one other. Drive a bolt through a pair of blades and the three parts form a system we call scissors. As a scissors they’re more than two blades and bolt. Systems have meaning beyond their parts.
What does a business system look like?
What if you don’t have systems?
Then you depend on really good people who “get it.” You’ve probably got a few people like that. The most frustrating thing for entrepreneurs is how hard it is to find good people who get it. It’s usually easier to systemize than to find more of them. Plus when you don’t have systems, the good people can’t move up as the company grows – so you’re kind of stuck.
Why don’t more companies systemize?
The first reason is they don’t know how. No one’s ever taught them about it. It’s not really that hard, though it does take some tedious work at the start before you see the benefits. But boy is it worth it.
The second reason is they don’t think it will work because of all the exceptions and special cases that happen in their company. I think these special cases are what makes a small company strong. I agree if you had to make everything routine, then systemizing would do more harm than good. But systemizing the right way will take those special cases into account. The result is the right people will do the right things a lot more effectively.
Examples:
I know of a small law firm with 6 attorneys who were partners. Each day they spent an hour dividing up the mail. That’s 30 hours a week, 1,500 per year that they weren’t able to bill for. Once they were able to define some rules about where the mail should go they could off-load that job to an administrative person. They key is that they defined the exceptions that in certain cases the admin couldn’t make the decision and had to show it to a partner. Also when the partners first looked at their mail, they looked for exceptions that had slipped through – if they found one they either dealt with it or dealt with in and made a change to the rules. This increased their billable hours by much more than it cost for that admin position.
I know of a publishing company that sold ad space in a directory. The two owners were the main sales people and they used to cut so many special deals that they cut all the invoices themselves. They felt no system could handle it. To systemize, they made a list called The A List. It included names of all the customers who’d gotten a special deal. It wasn’t as long as they thought. The bookkeeper was instructed to cut invoices in the normal way for everyone who wasn’t on the A list. Of course they also had to define what “the normal way” was. That helped a lot. Then the owners would spend time only on invoices for the A-list people. Only the two partners were allowed to put someone on the A list or take someone off. The result? They spent less time on invoices AND since they trusted the system more, they were able to make fewer special deals and still keep customer happy.
Some systems are more complicated than these, but a great many are not.
Takeaways:
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3 Comments
Peter Bowen
Nice article thanks John.
I specialize in helping small businesses to systemize. One of the biggest challenges we see is that the job seems so overwhelming that people don’t even want to start even though they can see the advantages like those you’ve pointed out.
Most business owners will get a fairly quick return on the investment of their time if they first tackle those areas that typically cost them the most in time and energy. These are usually marketing and debt collecting. Show me a small business owner who doesn’t want more clients and faster payment!
Pick the “low hanging fruit”
Cheers
Pete Bowen
07 Aug 2007 02:08 am
nick dougherty
I like you post. Could you reccomend any books to read on how to improve systems.
Thanks
Nick
22 Dec 2007 08:12 am
John Seiffer
Nick,
Good question. I’m not sure I have an answer. I learned about systems conceptually when I was a technical writer documenting software for a large corporation.
Computer people think systemically. What data do we have to work on? What transformations need to be made to that data to get the output we require. What resources do those transformations require?
That’s the essence of systemizing. For a very basic (I mean very) approach to using systems in a company read “The E-Myth Revisited” by Michael Gerber.
Peter Bowen, who posted above, sells an interesting tool on his web site that provides systems for very small companies in a cookie cutter fashion which can be helpful in the right situation. http://www.nomore247.com/
My grid provides a basic list of the systems required in most businesses (at a high level) Many sub-systems are usually required but at the sub-system level they are not the same for every company. The grid can be downloaded at http://thesmallbusinesscoach.com/blog/wp-content/uploads/2006/06/Grid.pdf
Hope that helps. If you find a good book on the topic, shoot me an email about it.
22 Dec 2007 09:12 am
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