Imagine lying on the beach.
You enjoy life to its fullest.
Bathing in the sun, sipping on cocktails and going from one beach resort to another.
And each time you check your bank balance, it increases.
Sounds like wishful thinking?
Too good to be true?
Well, it can be your life if you can create a systematized business.
In other words, a business that can thrive without you.
And how to do that is what you will learn in this article.
Why Systems are important for your business
Maybe you have also had the experience that you run a finely-oiled business, your employees are committed and overall things are pretty good.
But as soon as you, the boss and owner turn out the door, things suddenly begin to crumble.
Your phone starts to ring constantly, and your email inbox explodes.
Your team gets stuck in mundane tasks, productivity reaches minimal levels and the business goes completely off course without your presence..
In such a case, the business still needs your guidance.
Without your guidance and decision making, the business almost comes to a halt, and things start to go sideways or even worse.
This is a common trap many business owners and founders fall into, and it can easily be avoided.
Your staff doesn't need to have you around all day making decisions for them.
But what they need is a clear set of rules and guides that allow them to make decisions by themselves.
What helps your business to overcome this obstacle and help you to get your life back is a business with clear systems.
The more you can implement systems to help with daily activities and decision making, the smoother your overall business will run.
How come for example that many experienced business people open up a restaurant and it closes within one year already or less, while a McDonalds outlet is run by teenagers and increases profit every year?
Let’s also take into account that every average person could probably cook a burger that tastes better than the burger at McDonalds.
So how come this restaurant is one of the most successful on the planet?
It is because McDonalds has a better system built into their business.
From choosing their locations, to the marketing, to the exact seconds the patty stays on the grill, or the perfectly measured amount of sliced onion that goes into their millions of burgers every day.
In such an environment there is no owner or CEO needed for daily tasks and questions.
The system runs the business.
And therefore the burger tastes the same in New York, Madrid or Tokio and the expansion into thousands of restaurants was made possible, all operating under the same predictable outcome was made possible.
The employees are still needed to operate within the system. But it hardly allows you to make mistakes or to do it “your way” as an employee. Instead the outcome of every new McDonalds outlet is predictable, even despite different languages or cultures.
Without a system every activity requires time, effort, expenses and willingness to learn, perform and develop it.
Especially for the first few times when somebody is newly hired in your organization.
But once the procedure for daily activities is clear, tested and learned, a system can be developed and optimized to allow any ordinary person to perform the task by themselves without outside guidance.
If you design your systems right, your business will sooner or later be able to run itself.
Wherever there are small, daily decisions to be made, or the same questions come up over and over again, a system can help your team to perform better and more predictable.
Designing and implementing them is what is necessary to go from a small business to a larger organization, or help you as the owner to get your life back.
It is what Michael E. Gerber in his books called working on the business and not working in the business.
To get your business started on a similar journey of success and freedom, let's look at systems in a little more detail.
Why Systems are important for your business
Maybe you have also had the experience that you run a finely-oiled business, your employees are committed and overall things are pretty good.
But as soon as you, the boss and owner turn out the door, things suddenly begin to crumble.
Your phone starts to ring constantly, and your email inbox explodes.
Your team gets stuck in mundane tasks, productivity reaches minimal levels and the business goes completely off course without your presence..
In such a case, the business still needs your guidance.
Without your guidance and decision making, the business almost comes to a halt, and things start to go sideways or even worse.
This is a common trap many business owners and founders fall into, and it can easily be avoided.
Your staff doesn't need to have you around all day making decisions for them.
But what they need is a clear set of rules and guides that allow them to make decisions by themselves.
What helps your business to overcome this obstacle and help you to get your life back is a business with clear systems.
The more you can implement systems to help with daily activities and decision making, the smoother your overall business will run.
How come for example that many experienced business people open up a restaurant and it closes within one year already or less, while a McDonalds outlet is run by teenagers and increases profit every year?
Let’s also take into account that every average person could probably cook a burger that tastes better than the burger at McDonalds.
So how come this restaurant is one of the most successful on the planet?
It is because McDonalds has a better system built into their business.
From choosing their locations, to the marketing, to the exact seconds the patty stays on the grill, or the perfectly measured amount of sliced onion that goes into their millions of burgers every day.
In such an environment there is no owner or CEO needed for daily tasks and questions.
The system runs the business.
And therefore the burger tastes the same in New York, Madrid or Tokio and the expansion into thousands of restaurants was made possible, all operating under the same predictable outcome was made possible.
The employees are still needed to operate within the system. But it hardly allows you to make mistakes or to do it “your way” as an employee. Instead the outcome of every new McDonalds outlet is predictable, even despite different languages or cultures.
Without a system every activity requires time, effort, expenses and willingness to learn, perform and develop it.
Especially for the first few times when somebody is newly hired in your organization.
But once the procedure for daily activities is clear, tested and learned, a system can be developed and optimized to allow any ordinary person to perform the task by themselves without outside guidance.
If you design your systems right, your business will sooner or later be able to run itself.
Wherever there are small, daily decisions to be made, or the same questions come up over and over again, a system can help your team to perform better and more predictable.
Designing and implementing them is what is necessary to go from a small business to a larger organization, or help you as the owner to get your life back.
It is what Michael E. Gerber in his books called working on the business and not working in the business.
To get your business started on a similar journey of success and freedom, let's look at systems in a little more detail.
What is a System in business?
A system can be anything that helps your company to achieve excellent results on a repeatable, permanent basis without outside guidance.
Usually systems consist of documented best practices in some form.
Which format you chose is less important than the effectiveness of the outlined process itself.
A system can be in the format of a video that shows new employees how to work with the internal software, for example.
Or it could be a written step-by-step instruction on how to handle service issues.
It could also be a script that your sales people use when they are calling their leads.
And there are even systems in the form of guidelines for decision making for your key employees, so they can run the business without you.
Mcdonalds in our previous example even has custom-built dispensers for the people in their kitchen to put the exact same amount of ketchup and mustard into a burger every time.
In all cases, the system itself will help your business to produce predictable results on an ongoing basis and deliver services and goods repeatedly with high quality to a large number of people.
Systems make your life as an entrepreneur much easier, take a lot of the daily discussions and risks of failure out of the equation, and will make your business much more successful in the long run.
Every business that wants or needs to grow beyond the small-business stage will have to introduce systems at one point or the other to achieve growth. Scaling an organization without proper systems in place might be possible, but will result in chaos, turmoil and failure in most of the cases.
Without any system, major decisions in the business will always be depending on the founder or CEO.
This dependendence will sooner or later always result in a bottleneck however, as the CEO only has 24 hours a day and only 7 days a week.
Once the business has a certain size, time will be too little to handle all the decisions by yourself and delegating becomes a must.
To grow your business you need to create a platform that allows other people to make decisions and do the work on their own without your interference.
This is the essence of entrepreneurship.
To achieve this milestone, let’s take a closer look at what ways exist to systematize your business.
What does a system for business look like?
The exact format of how you build your system matters less than its ability to create excellent results over and over again.
The process has to be clear and optimized at first.
If you have a problematic process to start with and try to systematize it, you will get a problematic system out of it.
Therefore make sure you only put the best processes and action steps into your business that will lead to the desired outcomes. The better the outcomes with your system, the easier it will be to replicate certain tasks and scale the company.
The next critical decision to make will be to choose a format that your team will actually use in real life situations.
Different formats work better or worse in different work cultures, industries and roles the system is used in. So there is never a right or wrong answer in what the perfect format for a system could be.
What will suit your business best is therefore dependent on your individual tasks and company that you run.
As a rule of thumb: anything that will make an excellent outcome as predictable as possible will do the job.
The most important aspect in a system is that it is working and bringing you the desired results. How the results are being achieved is secondary as long as it works.
You can select from many formats which one is best suited for the job at hand or which fit best into the culture of your organization.
Here are a few examples what a system could look like:
Clear descriptions of a job role, combined with clear instructions on the job
Instructional videos demonstrating how to do certain tasks
Templates for budgeting, accounting, sales reports, etc.
Software with reusable pathways
Pre-approved contracts for vendors, partners, etc.
Checklists for finishing a task
Scripts for conversations on the phone with customers
Step-by-step guidelines
Daily routine checklists
Databases with the most important information
Written policies or instructions
Explanatory videos of experienced colleagues, demonstrating how to achieve a certain outcome at work
Written guides on how to deal with predictable problems
Spreadsheets with built-in formulas to achieve a certain outcome, e.g. calculation
Standardized parts and equipment
Project management software or templates
Decision making criteria for key employees on how to make decisions themselves
Timelines for tasks
Schedules for projects in different departments aligning with each other
Templates for daily / weekly / monthly reporting
…and many more!
All these and more are viable formats to use for systematizing your business.
How do you know if you have chosen the right format for your system?
The simplest answer is to observe if your team is actually using the system.
This goes also to measure the system's effectiveness and how easy it is to use.
Any system should be simple to use and intuitive to understand. Even new hires in your business should be able to quickly achieve great outcomes when they are using your system.
The real test if you have developed an effective system will be to observe if your team embraces it or ignores it.
People generally want to do a good job, and if your system helps them to make their work better they will make use of it.
If your system is confusing or complicated to use, people will stick with their usual way of handling things. The worst situation that could come up is that your team will look for “shortcuts” in the process on their own instead of working with what you provided for them. In such a case gather feedback, and look for ways to make it better and easier for people to use.
Analyze why exactly your system was abandoned. In many cases force of habit and the “usual way” of doing things can be the biggest obstacle on this way - especially when you have employees that were used to “their way” of doing things for many years.
Gathering the necessary knowledge
To create your first system, you first of all will have to know how to do the required task in the best possible way.
As you already run your business, you are already handling everyday tasks.
Sometimes you will handle them better and on other days you will not handle them that good.
To find the basis for systematizing you should closely observe the days when everything is running just fine and the outcomes have been remarkable.
The best sign is when you have a happy customer in the end, and you even handled it faster or better than usual.
Such moments are the starting point of your common best practices.
Forget those days when things didn't go as expected, and focus solely on those when everything was a smooth process.
If you encounter such moments or know the best way for a task straight away, write the necessary steps down and try to fit them into your chosen format for the business.
In a larger organization however, you may notice that certain knowledge is not in your direct area of expertise, but within the expertise of a few key employees.
This makes it a little more difficult to gather their knowledge as not everyone will willingly share their secrets, especially if they were acquired through years of hard work and make the individual thus far more valuable to the company.
In such a case the best way to extract the knowledge of key employees is through running a workshop together.
The goal of this workshop is that all participants have to define the best practices for the given task, e.g. servicing a customer, handling shipping procedures, calculating quotes, etc.
All you have to do is ask specific questions and let all participants explain their way of handling things.
Those ideas are then written down, and the best ones will be selected as state-of-the-art solutions to the problem.
This is an easy way to get knowledge out of people's heads and onto paper and thereby accessible to others within your organization.
From the gathered knowledge you again have the basis for creating systems in the designated areas as we will now do in the next step.
Creating your own systems
To start with building your own systems, you first have to look at your business in detail.
And I don't mean an overall bird's eye view, I mean really looking into the daily business and the daily tasks and decisions that have to be made.
Pay special attention to problems that can already be anticipated and processes that require the same set of decisions to be made over and over again.
You want to find out the best practices and optimal solutions to every small detail that gets handled in your company.
All these best practices should be gathered in an internal database or intranet where they can be accessed by your team if needed.
Next you analyze the necessary steps that have to be taken in order to achieve that outcome and work to get the optimal result.
Take your products for example.
How many of them do you have?
What is necessary to have those products ready to sell?
What steps do your employees have to take?
How are the products sold?
How are you dealing with customer requests?
What specifically should be said during conversations?
Do goods have to be moved?
Who handles the shipment and in what way?
How can you make the daily operations more efficient?
Are there tools you could use, or software that would make things faster and more efficient?
Do a careful analysis of every step that is crucial and gather the best practices on how to successfully take this step and move further along in the chain of processes.
Then move on to the next part of your business, let's say your salesforce, and repeat the same procedure.
How do customers find your business in the first place?
How does your sales process work?
What is absolutely necessary for your business to keep making sales or even to increase them?
Why do people buy from you at all?
How can you improve your position in the market?
What do your competitors say?
What should your salespeople emphasize in the presentation?
What sentences will they use during the presentation?
Especially for sales there is much you can systematize in your business.
You can learn more about it from our post on How To Improve Sales Performance.
Next you do the same with the operations of your business and so forth until you have really carefully scanned and analyzed every single moving part of your business.
It is kind of creating an X-ray insight into what really is going on within your business, and to document and analyze every single step that is made.
And sure all this will take on a lot of time and careful commitment to details.
However, don't rush this process and don't try to do it half-heartedly.
It is absolutely essential to really look at the present situations and carefully observe what happens in these processes.
Then start questioning the status quo in the current system:
What words are used in conversations and why?
Who is communicating with whom?
What materials are necessary, where are they located?
Are all resources being used in the best possible way?
Does all of this make sense?
Is it the best way possible?
Can we improve this process and our outcome?
Chances are very high that you would find already during this analysis a lot of things that can be improved right away.
In the daily stress, hardly any business owner really takes the time to carefully do such an analysis and step back for a moment.
But exactly this helps you to get a more distanced view of things and really question what goes on every day and if this is truly what should be going on.
If you have done your observations correctly, you should now know every single sentence that gets spoken and every movement your employees should make in the selected process.
If you have not reached this level of detail yet, go back and really take your time to fully commit to this step and understand the process thoroughly.
The details are really necessary to systematize your business in a way that will really work as intended.
If this is your first time ever to introduce such a system into your business, it is often a good idea to start small. Select the most mundane, recurring tasks and begin to develop a system in this area.
The easier the first system will be to use, the sooner your team will have a positive first impression for future systems. The first system should therefore really be made for an easy task that can almost be automated with the system you design.
This helps to raise acceptance among your team and proves that a system will lead to better results and help your team to make their job easier. If you have never developed a system before, this first task you will systematize is also a test for your own skills in creating and implementing them.
For example:
Start by putting together a manual for your employees on how to speak to a customer on the phone.
Or how to handle certain machinery in the production process.
It could even be just a small step-by-step description on how to use the copier effectively.
Every small manual or clear, written instruction can already help to make the daily operations more efficient and systematized.
Just do anything that will allow the daily processes to run easier, smoother and without any room for discussion - even for the most inexperienced and thoughtless employee.
Similar to writing a computer program where programmers always have to assume the users won't understand the big picture of it and adapt to the dumbest possible user, your systems have to be designed in a way that even very simple minded people can follow them and fulfill the task effectively.
Imagine creating systems for dog puppies.
If even the puppies could follow them, then you can be totally sure that your employees will do so too. The simpler, the better.
This is the reason why at McDonalds or other fast food outlets the employees often don't even speak your language, but still they can give you a burger as you expect it.
Everything is so standardized, pre-planned and inherent that it is just impossible to do it “your way” or to improvise.
From then you can work at one task at a time and implement more and more systems over time. Here is exactly how you do that:
1. Define your objective
To develop any system you have to set a clear goal for what the outcome has to look like. Be specific in terms of how people should talk in a situation or how to behave if this is necessary for achieving the outcome, e.g. in customer related situations.
2. Break down the task into steps
After you know what you want to achieve, you can start defining the individual steps that have to be taken to get to that desired result.
Record the process you will use, pay attention to any tools or conversations that will be necessary and give the instructions for each step as clearly as possible. Don’t expect people to “get it” right away, make it so simple a schoolchild could follow the instructions and still achieve excellent results.
3. Test, measure, improve
In most cases, the system will not be perfect right away. Especially if this is the first system you ever introduced in your business.
Some instructions may not be as clear as you thought they were, or in other areas the outcome is not as great as expected.
Test the system therefore in practice and see it as a chance to learn to make it better over time.
Can it be done better, faster, more conveniently?
Would additional resources, new software or new tools help the situation?
The biggest trap when building business systems
There is a common trap especially small business owners now fall into when building the first system in their business.
It is to stop your daily activities and for the next months to go only working on gathering knowledge, laying out every step of the process in detail and planning how to implement your first systems.
If your business does not yet have any systems in place and you take too much time away from uncovering these important details, you might set the entire operation up for failure.
Small businesses in particular are often very dependent on the owner in daily decision making.
In such a case when the owner is too busy with analyzing the processes instead of taking care of daily issues, the business might soon be in jeopardy.
If everything is threatening to fall apart without your daily input, then better to start small in one area.
One hour of the day could be enough to really just uncover the processes that are going on.
The rest of the day then can be used for the important daily operations to keep the business running as usual. Thereby you make sure that even if the business is still depending on your direct involvement, it will not be in danger during the time of your research.
Where to start with your first system?
As soon as you have the necessary information and implemented a small system for a mundane task to test your skills, you are now ready to take on the bigger tasks and systematize them one by one.
If you are unsure where to go next, try to focus on the “biggest domino” in the business.
The one thing, that would make everything else easier once you get this running on autopilot.
In many companies this will be one of the core processes that keeps the daily operations running.
If the research of the entire business and its processes and tasks would take up too much time for you, you can also observe only one area such as finances or operation and systematize this one first, and then move on to the next.
Think about one thing or one area that if you could automate and improve it, would have the biggest possible impact on improving your business.
For example: if the sales process is the heart of your business, then start to systematize there.
Or if the preparation of your products is the core process such as in a restaurant, then start with this area.
By tackling the most important part first, you allow your first system to have the biggest impact and ideally reduce the biggest amount of effort you will further have to put into the daily grind.
Ideally, the systems you introduce are also interconnected with each other, and one system is supporting the others.
By building on each other, the systems can even have a multiplying effect on the efficiency and overall strength of your business.
This could mean that the production already prepares the products according to what salespeople promise customers in their sales scripts, and at the same time making both parts of the business work more effectively.
Thus the effect of your systems will not only add up, but will multiply in effectiveness.
Done right, multiple systems working together could make your business run like clockwork.
The interesting effect that will come to life right now should be that you as the CEO or business owner will be demanded less and less in the business, as more systems become operational.
As you begin to implement the first systems, it should give you a noticeable change in the form of less people coming into your office, less people calling you and less people needing your help.
The systems now take care of all these questions. And the magic starts to work.