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What’s the Cost of ‘not’ Systemising Your Business?

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What’s the Cost of ‘not’ Systemising Your Business?

I shut down my first IT business when I was in my late 20’s after a good run was halted by the crash in IT investment following September 11, 2001. It was a bit of a blow.

At that time, my father’s business was a simple construction contracting business. The only systems he had in place were his paper diary and his invoice book. It was all paper based. I needed work, so I started labouring for him, working in concrete 10-12 hours a day. After nearly ten years of office work, it was a major hit for me and really kicked my ass. Within a year I had done some serious damage to my lower back, with three slipped disks. That was my wakeup call that I was doing it wrong. I figured I was not cut out for heavy labouring work.

It was also a blessing in disguise. I ended up moving into an office role, working ‘on’ his business rather than ‘in’ it. I started building the basic systems I was used to … Email lists, invoicing systems, quoting systems and so forth. Dad was sceptical.

So, what was it worth to him for me to set up the systems?

More to the point; what would have been the cost if I hadn’t done it? Most people would think that was a ‘how long is a piece of string’ question, but to be honest, you can work out some quick stats, and you can do this for your business.

In his business, I started chasing government tendering work and developed systems for doing that. Within 12 months of systemising that business, we had gone from $200K/year to $1.8M/year. Fourteen years later, that same business regularly cracks $4M or even $5M/year, with two management staff and one administration staffer. Most businesses that size employ ten office staff.

Here is the difference. Here is how you can apply systemisation to your business: it’s all in how you think about it.

If your business is dependent upon you actually being there every day, then maybe it’s time to think about systemisation? If you don’t systemise it, how will you ever sell it? After all, developing a ‘Sale and Exit’ strategy is the name of the game. If you are doing tasks that can be done by a computer, or by a staff member with a different skill set and a lower hourly rate than you, then it’s definitely time to automate.

Let’s look at the areas that are easiest to systemise:

1. Administration.

All of the things that are necessary to keep things rolling and are done by high turnover, relatively junior staff. Create systems to reduce training time and simplify handover of tasks and procedures.

(Mail / Phones / Printing / Order Processing / Shipping / Inventory)

2.  Accounting.

Systems that allow you to minimise theft and maximise productivity, done by skilled staff.

(Purchasing / Credit Management / Invoicing / Payroll / Expenses / Banking)

3.  Communications.

Printing and electronic media are key to most modern businesses, especially smaller businesses.

(Emails / Correspondence / Meetings & Team Management / Reporting)

4. Customer relations.

Phone scripts and minimum service standards can be written into procedures to standardise.

(Sales Scripts / FAQs / Newsletters / Telephone Policy / Advertising)

5.   Employees.

Create systems for hiring, training and firing staff. Clear, concise manuals are key to productive staff.

(Recruiting / Incentives / Feedback / Training / Roles & Job Descriptions)

6.   Marketing.

Customer Relationship Management (CRM) is the beating heart of any sales-oriented business. Use it to develop your business. (Referrals / Marketing / Advertising / Sales Training / Lead Management)

7.   Data management.

While the paperless office is still unachievable, your data can be safely stored and backed up to ensure you are safe.

(IT Systems / Backups / Client Files / Projects / POS / Finances)

If you were able to reduce each task by one hour per week, how much would you save? For a bigger business, how much would you save in one year if you were able to reduce your staff by one person per task area? Would another $600,000 profit make a difference?

Remember, it’s not just wages:

Wages + Leave + Entitlements = roughly 150% of wages.

What systems have you currently got in place, to allow you to do less of the grunt work? Who manages the systems and how do you know they are being managed properly? Can you do those things more efficiently by outsourcing and still manage them safely?

Can you afford ‘not’ to systemise and automate your business?

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Showing 2 comments
  • Katie
    Reply

    Wow, that’s an awesome article, thank you Paul!

  • Anna Perdriau
    Reply

    Great article and really interesting story Paul, thanks for sharing!!

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