Friday, May 22, 2009

4 Steps to Building and Evaluating Systems In Your Business

According to, Systems are any formulated, regular, or special methods or plans of procedure.

Whether you like it or not - you have systems in your business. But they may not be very strong systems, and they may not be very effective systems. And in the world of business, the stronger the system is, the more consistent your product is, and most importantly, the more likely your customers will come back to you, again and again.

Literally, everything you do is a system. How you make your product, answer the phone or hire new employees are all systems. Unfortunately, even though you may have systems, if you are like most small business owners, they are haphazardly used and usually require the owner's presence / knowledge to make them work correctly.

So how do you improve on this situation, if you should choose to do so? How do you take your currently haphazard, "fly by the seat of the pants" processes and turn them into consistent reliable systems that both you and your customers can't count on.

The answer is easier than you think. Below are Four Steps to Building and Evaluating Systems In Your Business:

1. Document (write it down). When creating a system for your business, the first step is documentation - get it down in writing. I don't care how you do it, or even if how you do it is how you want to do it, write it down. Write down what you do, what you say, how you do it, when you do it, and if you can, why you do it. It does haven't to be pretty and it definitely doesn't have to be perfect - it just needs to be done. Most people get hung up at this stage, simply because they let perfect get in the way of "good enough".

As you will see, the process I'm going to lead you through is all about continuous improvement - for two reasons:

a. Nothing is perfect - ever. Even as you come close to having a perfect system, the market and or the environment that the system operates in will change and you will have to keep adjusting.

b. It's too much work to try to make it perfect. They say that it requires 20% effort to get an 80% solution, and 80% more effort to get the last 20%. Well what we want to do with our systems is get the 80% solution and then improve it as necessary to keep making it better given the existing conditions.

2. Evaluate (test it and measure it). Now that you have a system or systems in place, it's time to figure out what we are going to improve first. This requires evaluating the system - measuring the efficacy of the process that is currently in place. As much as possible those measurements should be quantifiable, but there may be qualitative measurements on occasion (but consistency of evaluation is important).

Fact of the matter is that you have limited time and assets. So it's going to be important to figure out where you overall system is broken (or not working as well as you want it to), so that you can leverage your time and money to generate the largest "bang for the buck".

The key here is to evaluate (test and measure) all of your processes to see what is working and what isn't. Sometimes you will make major changes to single process and sometimes you will make make minor changes to many processes. But for each change you need to ensure that you know if what you did helped or hurt the overall all system before it becomes a permanent change in your business.

3. Innovate.
Now that you have all of your systems in place and you know which ones are working and which ones aren't, it's time to start improving them - taking them from what they have always been and start making them better.

This doesn't take rocket science - it just takes a little creativity and / or a little bit of imitation. Truly, if you want to be the best, you are going to have to be a bit creative, but if you are still far from the best in your marketplace, there is lots of room for improvement just by understanding better how you competition (or similar business in other industries) do well - and copying it.

The truth is the wheel was invented a couple thousand years ago - and I believe the patent has expired. So in most cases there is no need to re-invent it. Although the process / system involved in producing your main product may be unique, there is no reason you can't leverage other systems that other are using quite effectively.

4. Validate. And finally, now that you have improved your processes, it's time to make sure your new and improved processes are actually better than the ones you previously had. And that should be simple, since you should already have a measuring tool built into your system so that the you can see right away whether or not you improved or hurt the output of the changed system.

If you hurt the output of that process or the overall functionality of your business, then undo what you did and go back to the drawing board.

However, if you saw even the slightest bit of improvement, its time to go back the documentation step and start all over.

All too often, people make this process entirely too hard. They get caught up in fixing before they even write it down. Or they try to fix things without being able to tell if their improvements even made a difference. But if you follow these steps, you will quickly start to be able to take your business from being inconsistent in some or many aspects of operations, to soon becoming the best in your market at some or even all the processes within your business.

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