Business process

Implementing standard operating procedures can help companies move from chaos to consistency especially when business is growing.  Learn how they can also help save you time, money and headaches in your own business.

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Show Notes

In this show we look at something that is often ignored by first time entrepreneurs that can help them manage their business more effectively.  Implementing standard operating procedures can help companies move from chaos to consistency especially when business is growing.  Learn how they can also help save you time, money and headaches in your own business.

Key Points

*Hear why Lisa decided that this topic deserved attention in the show and how this business tool can help growing companies.

*We share a few examples of how lack of procedures or not following them can lead to costly problems for businesses.

*There are benefits that procedures can bring to a business that help manage and monitor the operation and provide opportunities to save time and money.

*Things like government regulations can require you to have procedures and processes so that you are meeting the standards the government sets.

*Standard Operating Procedures help create consistency in your business which can help with customer satisfaction and reduce errors and defects in your business process.

*Lisa gives her top 5 benefits of implementing standard operating procedures in a business.

*She shares how to begin implementing procedures, what should be included and how to research what regulations may apply to your business.

*Lisa also shares how things like internal controls can be built into the procedures to ensure accuracy, adherence to policy and safeguarding assets.

*Standard Operating Procedures helps CEO’s to move from chaos to consistency in his or her business by streamlining and controlling the business operation.

Resources and Links

Small Business Administration (SBA) – List of regulations https://www.sba.gov/starting-business/learn-about-business-laws

You might also want to check out this recent article on building a healthier business  https://www.bizrx-advisors.com/build-better-healthier-business-new-year/

Quick Care Consultation – If you’d like to talk to Lisa about this subject or any operational issue you’re having in your business then set up a time to talk with her here.

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Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

Sales growth can end up being a trap that entrepreneurs can fall into.  High growth and large increases in sales can put a ton of stress on a company that isn’t ready for it.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

Growing sales can end up being a trap that entrepreneurs can fall into.  High growth and large increases in sales can put a ton of stress on a company that isn’t ready for it.  In this episode we cover the symptoms of the sales growth trap and what an entrepreneur can do to avoid falling into this trap.

Key Points

*If your company isn’t ready for growing sales, problems can quickly surface.

*Growing sales numbers can end up as a trap for a company that isn’t properly staffed and equipped can end up too stressed in periods of high growth.

*Readiness to handle increased sales volume is important to avoid things like product or service reworks, redo, shortages, missed deliveries, subpar quality and other errors.

*Internal problems that end up at the customer site can lead to issues that affect customer loyalty and also adversely affect your brand promise, eventually leading to problems with future sales growth.

*Increases in customer complaints, repairs as well as declines in existing customer sales are indications that something is wrong in your business.

*Employees may also show signs of stress of the sales trap when they seem overworked, sick call outs increase or overtime numbers increase and become the norm rather than the exception.

*Costs related to problems with managing sales growth can set a company back and have a negative impact with both costs increases and also the potential for future missed sales opportunities.

*Sales forecasting, attention to the back office role in the sales process as well as monitoring resource planning, quality as well as customer, production and productivity statistics all help to avoid problems that result from the sales trap.

*Sales as a business process includes not only the prospect opportunity qualification but also qualification of the sale itself which includes the ability to pay.

Resources and Links

Check out this blog post – 20 Signs Sales Growth is Overwhelming Your Business and make sure your watching for these in your business!

Note: Links in this post may be affiliate links.  Lisa Roberts is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

The phrase scaling a business is one of the latest catch phrases that describe growing a business in a profitable way. In Part 2 of this 2-part series, we cover the process and profit factors important for growing your business.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

The phrase scaling a business is one of the latest catch phrases that describe growing a business in a profitable way.  Planning and managing growth involves many important factors.  In Part 1 of a 2 part episode, Lisa talked about some of the people factors related to scaling your business successfully.   In Part 2, Lisa covers the process and profit factors that are important for scaling and growing your business.

Key Points

*When scaling your business, spending will be greater than sales as you invest in the growth of your business.

*Investments in infrastructure like information technology, accounting systems, CRM and other things will be needed to support more people and production.

*Spending, cash and financing need to be planned and managed effectively to avoid cash crunches.

*Processes that worked when you were a smaller business may not be as effective in a larger more complex business.

*Process that is not well-defined and systematized with break under the added pressure of more employees, more customers and more volume.

*Entrepreneurs need to carefully estimate the impact of increases in their business and how he affect the amount of time, equipment and people needed to support the additional business and how profits may be affected.

*Weak functions and processes will magnify problems in your growing business.

*Having a plan and budget to help manage your spending and cash during your growth will help avoid the common problems companies experience when trying to scale.

*Entrepreneurs also need to plan cash and financing so that the funds are available to finance their plan for growth.

*Be prepared to slow down or throttle your growth if things are not going according to plan.

*If outside financing is needed to support your growth, determine potential sources for that cash.

*Lisa touches on the impacts of getting financing through debt or equity types of financing.

*Identify those key processes in your business that will need to be improved to a larger scaled business.

*Businesses also need to estimate the impact on the business systems and include that in their plan to scale and grow.

Resources and Links

Questions to Answer before Scaling Your Business – Tip Sheet   Sign up to my list and get the tip sheet here

Download Link to How to Scale Your Business Part 1 of this 2-part series

Link to article and related video about the company Lisa mentioned in the episode – “Meatball Shop’s Daniel Holzman: ‘It Was Moving Faster Than We Could Keep Up With'” – check that out here

Would you like to work with Lisa to get advice about your plan to scale your business?  You can sign up for a Quick Care Session. Find out about that here

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

Get Your Business Under Control with Processes

Find out how growing companies use business process to manage work and their own growth  more effectively.

You can listen to this episode by hitting the play button.

To download this episode, right click on this link and choose Save Target As. Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes. Subscribing to the show will automatically download the episodes on your preferred device so you can listen to them where and when you want. And hey if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

Entrepreneurs in growing companies must often confront situations where it feels like they are losing control. Fast growth creates a pace where employees are hired quickly, workload increases, decisions must be made quickly and if things are left unchecked mistakes can be made. It’s a constant struggle to manage the operations effectively while maintaining profitability. In this episode, we’ll talk about how growing companies use business processes to help manage the work effectively.

Key Points

*There are many things entrepreneurs need to watch out for as they begin to feel that they are losing control of their business. Inconsistencies, errors, inefficiencies, missed deliveries and duplication of effort can all result without good business processes.

*It costs time and money to put process in place, but there are real business problems that can be avoided in business by having processes in your business operations and we explore those.

*We also look at how processes can actually save money in the long run and create value for your company with process improvement.

*We also look at instances where process may be required to comply with regulations and even where customers may require it.

*We look at where to look in your business to begin to put processes in place in your operation and what areas are ripe for needing process.

*Some of the skills needed to be able to take on a project of documenting processes are reviewed to help entrepreneurs decide who can help them either internally or externally.

*The steps to outlining and documenting your processes as well as testing the process are discussed.

Additional Reading on Process:

Policies, Process and Procedures are Not Just Big Company Stuff
People Process and Systems are Keys to Running a Healthy Business

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Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits Show!  You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry I won’t bombard you with emails.  At most you’ll get something from me every few weeks.  So sign up using this link !

So, is your customer base safe?

Lately, I haven’t been a very loyal customer. In the last few months, I’ve changed four suppliers of products and services that I’ve been using on a regular basis for years. In each case, a different trigger began my process of thinking about switching or at least shopping around.  In one case, the trigger was a big price increase. In another, a price increase combined with my feeling that the product quality had degraded. A change in a government regulation caused me to take a deeper look at another product that I had been purchasing for years.magnifying glass over word customer

In each case, the supplier handled it differently; some handled it well, others very poorly. Some worked to keep my business, but others did nothing; I just heard crickets as they say. It got me thinking about customer retention what companies can do to manage it.

One theme here at Business Rx is people, processes and systems help grow a healthy business and the same is true for customer retention.  Studies show that customer retention has a very positive effect on your bottom line.  An often-cited study by Bain and Company found that increasing customer retention rates by 5% would increase profits by 25-95%.

You may be asking yourself, what do people, process and systems have to do with it?

Depending on the type of business you have, people can have a huge effect on satisfaction, loyalty and retention. Think about the entire experience your prospects have from the minute they contact your company to the time they use your company years from now to buy another product or renew a service.

Have you put in place a customer-focused philosophy?

  • Is your overall tone for the company one that values its customers?
  • Is the staff trained with customer satisfaction in mind, whether it’s greeting them, servicing them, resolving complaints, thanking them for their business, or even providing a little something extra for loyal customers?
  • Does the company focus efforts to see red flags when they arise like increased service calls, decreased usage or visits, or customer inquiries about price increases or service changes?
  • Does your staff engage them to get feedback and look for ways to improve your products or services with the customer in mind?

I mentioned that in each of the cases I shopped for a new supplier, there was a different triggering event. In one case, the trigger was a sharp price increase. When I called to ask the reason, it was clear that the company had no process to try to address retention because they never tried to retain my business.

What processes can you consider for customer retention in your business?

  • Are processes optimized to enhance the customers experience as they work with you?
  • Are there effective procedures to handle repairs, returns, complaints and refunds?
  • Is there a process to ensure reasonable response times for customer problems as well as processes to ensure accuracy of the response to your customers?
  • Are there procedures in place to escalate or follow-up on issues that need a higher level of attention to satisfy the customer?
  • Have you put in place internal feedback mechanisms that use recurring customer issues to make improvements to your company’s customer service processes and policies?

One of the suppliers I left did make an impression on me that would encourage me to consider them again in the future. In contrast, there was another that while they had a system to consider my concerns about leaving, they offered no real options to keep my business.

What systems can you put in place that helps your satisfaction and retention?

  • Do you have a system to identify or anticipate potential triggers that could negatively affect your customers’ feeling about your company and its offerings?
  • Are there systems in place that help customers engage in loyalty programs, encourage referrals and create further customer engagement and feedback?
  • Given the popularity with online reviews, are there systems in place to properly deal with negative reviews?
  • Is there a system to obtain feedback like satisfaction surveys, response cards or customer reviews?
  • Based on the feedback, is there a system to review, prioritize and make improvements to your products and services, processes and systems?

 

I’m sure that for some of the companies I left, they felt that I was a secure customer for them. I faithfully paid my bills for years, never complained and moved along without a problem. Then a trigger caused me to review the relationship.

All businesses, at some point, face customer retention and satisfaction issues. Make sure you have good people, processes and systems to help you manage your customer relationships and drive up your retention rates, along with your profitability.

 

 

You may have read some of my previous articles where I’ve noted that having the right people, processes and systems in place can help your business grow in a healthy way. Well, when I use the term processes, I include 3 inter-related things and they are policies, processes and procedures.  They are defined as:

Policies to create standards, rules and boundaries for how you operate.

Processes are the high level tasks for how the work gets done.

flow-chart- porcedure150x150[1]
image courtesy of Pixabay
Procedures are the detailed steps that employees take to get the work done.

A way to look at it is that policies are across the organization, processes typically involve one or more functional areas and procedures are related to one specific functional area for a set of specific duties.

Let’s take a purchasing example for a company to help explain the difference.

The Policy may be that all company purchases must be made using a purchase requisition and all purchases over $5,000 require 2 signatures. (Applies to all in the organization)

The Process might be the department requesting the purchase sends a signed requisition to purchasing clerk who obtains quotes and places the order with the selected vendor. (Applies to Department that needs the goods and the Purchasing Department)

The Procedure might be the purchasing clerk enters the requisition into the accounting system, places the order with the vendor and notifies the receiving clerk of the order placed. (Applies to Purchasing department only)

I’m sure when I mention things like the policies, processes and procedures some of you, well, you yawn, thinking I don’t need that. That’s big company stuff!   Maybe. Maybe not.

Some Real Life Examples

Check out some examples of operational problems I’ve seen in my own work with businesses that may have been avoided if one or more of the 3 P’s were in place.

Executive Theft by Power and Intimidation

A bookkeeper for a small non-profit notices her boss, the Executive Director, was submitting expense reports that look inflated and didn’t seem right. She’s convinced the expenses are fraudulent but she’s afraid; he has the power to fire her. Fearing retaliation, she reimburses him for the expenses. With no direct line to the Board and veiled threats by her boss to keep her line, it goes on for months.   Finally, with no one else to turn to, she seeks help from the outside auditors to investigate it and to catch the fraud.

Turns out, he was submitting expense reports that included personal expenses as business expenses. As a result, the non-profit developed a policy that the Board would review and approve the high level executive’s expense reports. Ultimately, the Executive Director was fired, the bookkeeper kept her job and a procedure allowing her a direct line of communication to the Board for certain transactions was also established.

Risk of Losing Their Biggest Customer

A growing company was stressed under the weight of its own growth. Sales grew quickly but operations became inconsistent, inefficient and costs were growing unchecked.  The quality of their products began to suffer in the midst of big rushes to just get product out the door.  Finally, the company’s largest customer threatened to drop them because of the quality problems. Immediately, they set out to put operational policies, processes and procedures in place to create consistency, quality and contain costs.

The company spent countless hours detailing and verifying their policies, processes and procedures which helped build in better quality in their products and also provide better customer service. Once they demonstrated that, the customer decided to keep them on and they were able to maintain a large revenue stream that they counted on for 20% of their business.  In fact, as the company continued to grow, new customers pointed to their 3 P’s as one of the deciding factors in choosing them as a new supplier.

Servicing Without Payment

A customer service department continues to service a customer even though the customer hasn’t paid for their service agreement. In this case, there was no firm operational policy or procedure in place to stop this from happening. Thousands of dollars were spent servicing the customer without the corresponding revenue to match.  Finally, after several months, the company was able to get the customer back under service agreement but gave up a few months of revenue.

To prevent this in the future, a policy was put in place that withheld services until a customer had their service agreement renewed. A process was also set up to coordinate both the finance and service department on customer warning and hold notifications.

It’s Not Just Big Company Stuff

In these examples, the first company had about 20 employees; the second about 100 and the third about 250. All companies at some point need some policies, processes and procedures in place to help them manage their operations effectively. And as you can see, it’s not just a big company problem. The policies, processes and procedures in these cases could have helped avoid employee theft, maintain and enhance revenue streams and keep costs in check.

 

Related post People, Process and Systems are Keys to Running a Healthy Business

 

Have you ever had an employee steal from you? Would you know if they were? In this post I want to share some information on ways you can control theft in your small business.

A friend of mine, who works for a small company, investigated the second incident of employee theft in less than 5 years. The last time the total was well over $100,000 and this time looks to be almost as upsetting. Last time my friend was like a bloodhound, getting to the bottom of it and uncovering the full scheme. This time around, she used a healthy dose of skepticism and uncovered the fraud herself; she went from bloodhound to watch dog.Watch Dog, control

If it’s happened to you, you know all too well how hurt, frustrated and angry it makes you feel. If you’re the owner of a small business, it may not make you feel much better but you’re not alone. In fact, a survey by the Association of Certified Fraud Examiners showed that the smallest organizations (defined as less than 100 employees) were the most victimized by fraud at a whopping 31.8% in 2012 and a median of loss of $147,000 [1]. The losses for larger companies were lower.

Larger companies are able control theft more effectively because they have more resources to protect against it. They’re able to use techniques like outside audits, internal audits, risk assessments as well as other prevention and detection activities.

However, if you’re a smaller company, you need to rely more on cost effective measures to guard against employee theft. There are some business practices you can put in place in your business to deter, and hopefully avoid, these types of incidents from happening to you.

Consider These Practices to Control Theft in Your Business

Background checks

This business practice is especially important for prospective employees that handle company funds like cash, checks, inventory and even customer accounts. You may also consider doing background checks on employees that are licensed in their profession to make sure that there are no problems from their past that could jeopardize your company. Background checks can run as low as $25 to as high as several hundred depending on how deep the check. You need to weigh the cost of a background check against the risk your business faces to determine if it is worth it for your business.

Establish code of conduct

A code of conduct establishes the company’s position on the conduct of its employees. It communicates to employees standards like honesty, integrity, professional conduct, fairness etc. Owners and managers of small businesses should also take steps to not only effectively communicate the code of conduct but also practice what you preach by following those standards in order to set the tone from the top.

Keen Monitoring and Observation

Keep a watchful eye of signs that may lend themselves to a risky situation developing. A common example is an employee involved in a theft scheme never takes vacation to ensure the scheme is not uncovered. Also, changes in behavior or actions by an offending employee can be a red flag. In my friend’s company, hindsight analysis revealed that the offending employee’s financial problems seemed to evaporate and even improve over time and yet there was no significant change in the employee’s pay.

Establishing Internal Controls

An internal control is a process or procedure designed to minimize risk. They can take on various forms depending upon the nature of your business. There are too many internal control procedures to lay out in detail here, but you should think about where the risk lies in your own business. For example, cash intensive businesses should look at the business processes for collecting and safeguarding cash as well as check and balances for detecting problems. If you have inventory that can be easily used, sold or concealed, you should review inventory control procedures to ensure that inventory is monitored and safeguarded to prevent theft. According to an often-cited statistic from the National Restaurant Association, they estimate that 75% of inventory loss in restaurants is due to employee theft.

Regularly Reviewing Internal Controls

It’s also important to review internal controls periodically. In cases where there’s a change in business process or even the business environment, controls that were in place may no longer be effective. Also, make sure controls continue to be followed over time. In the case of my friend’s company, an internal control in place stopped being followed by the person who took over the head accounting position. That failure to follow the control procedure allowed the 1st theft to go undiscovered for years.

Establishing anti-theft policies and practices

According to the survey, besides management review, the other top ways smaller companies detected theft was “by accident” and “by a tip” [1]. Sadly, we can’t always rely on chance or accident. However, setting the tone through your code of conduct and good communications allows tips will come more freely in an open and honest work environment. A few examples of other policies and practices that help are required vacations, regular reconciliations of bank accounts, supervisory sign-offs and regular inventory counts.

Now, you’re aware of some of the ways smaller companies can try to control theft or at least deter theft in their business. Take a hard look at your own business. There may be some small changes you can make that in the long run can save you a lot of money and a lot of heartache. For more about Controlling Theft of Cash Receipts check out my earlier post here.

[1] Report to the Nations on Occupational Fraud and Abuse, 2012 Global Fraud Study. © 2012 Association of Certified Fraud Examiners. pp. 26-27 and p.18.

I was in a meeting years ago with the “higher ups” of a company who were making big decisions about changing how the company sold its products.  Problem was, no one consulted anyone on the front lines.   Group think took over and everyone in the meeting thought great, we’ll move forward and do this.  There was one problem. They wouldn’t be able to execute because the company’s infrastructure, procedures and business practices that existed couldn’t support it effectivelyBusiness meeting
Decisions are sometimes made in a vacuum at companies and some of the simplest ways to avoid problems are often overlooked.  It’s great to have big ideas but it’s even better to execute on those big ideas.

Get the information you need to make good decisions in your business.

Talk to Your Staff

It’s easy for business owners or heads of companies to think they need to be the smartest people in the room.  But sometimes you need to get the right people in the room who are close to the problem and get their advice and ideas.  Your staff knows the process, the priorities and the pitfalls.  They can add insight you may not be aware of and help guide your problem solving to help make the best decision.

Consult Experts Inside Your Business

If your business has inside experts that can help with the problem, use them.  Business owners and leaders need to get the right people on the problem. Subject matter experts bring their own specialty and viewpoint to the problem.  If you have a personnel problem, make sure the human resource expert is involved. If its an operations problem, make sure you have your operations expert involved. People with different experiences and expertise can look at a problem and bring diversity and unique points of view you may not have considered. Sometimes ideas and insights can come from the least likely sources because of the perspective they bring.

Tap into Experts Outside the Company

Don’t have expert help inside, then go outside to your team of expert advisors.  You most likely have professionals that help you with your business like accountants, lawyers, insurance and other consultants.  Depending on the problem you’re trying to solve or decision you need to make, they can provide expert advice and insight. They also provide a fresh objective opinion that can help you make better decisions.

Ask Other Stakeholders

Besides your staff and other experts, customers and suppliers may be able to help guide you in the decision process.   Recently, I spoke with someone who thought of a way to change how they ordered to save money with bulk purchases.  They spoke to their supplier and got an added bonus as a result.  The supplier offered to make deliveries for them, saving them even more money.  Your customers could also be a source for information and advice especially about decisions that affect them. Talk with your customers to find out what is working well, what could be improved and what else they may need.  Customers and suppliers can be a good source of information, advice and ideas.

Making a Big Decision? It’s Ok Not to Have All the Answers

Running a business is demanding.  We struggle to do make decisions about the right course of action. It isn’t always easy since we can’t know everything. If you’re running a business, it’s ok not to be the smartest person in the room.

Really, it is ok!  

What’s not ok is to ignore valuable advice and input that others can bring to the table.

Seeking information, expertise and input….that will make you the smartest person in the room.

 

 

It’s common for a business to periodically hit a wall, have to regroup and figure ways to climb over or go around the wall.   As companies grow they are continually faced with new problems and challenges that they must face.  Growing a business can become a continuous process of remaking and redefining it to fit the ever-evolving circumstances.  Usually, you will have to look at your people, processes and systems to match your ever changing company.

 

With Growth Comes Challenges and Problems

Even though a business may have started with just a few employees, modest sales and expenses and a local concentrated customer base, it will become very different as it grows.  A company with 5 employees becomes very different when it later has 25 employees and still different as it becomes a 150 person company.  In the same way, a company with 20 customers has different challenges from a company that has 300. While the company grows, the owner must manage through the problems and challenges that go along with it to make sure he is running the business and the business is not running him.

 

Sometimes it’s a good idea to step back from the day to day and review your business to see if you are on track and your business is healthy.  By reviewing different areas of your business, you can determine where you are versus where you want to be.  For example, if your company values customer service as an important area that differentiates you from the competition, but you do don’t have to right policies and processes to support that goal, or you are getting bad feedback from customers then,  you may not be where you want to be.

 

One way to look at your business is to look at the functional areas that work together and are made up of people, processes and systems.  This combination of  elements will ensure that the business operates for its intended purpose and does so in a way that serves its customers, provides a good living for its employees and creates a profitable result for its owners. While there have been variations of the following concept, it is important that a business owner understands he needs the right people, doing the right things with the right tools in order to be successful.

 

People

The people that make up the business, the owners and employees, are key components for the organization’s success.  The owner and management provide the leadership and strategy to drive the company’s purpose and set goals for the business.  The employees and the team work that they use provide the effort toward the common goals that were set by the leadership of the company.  The people part of the equation answers the questions do you have the right people and are they in right positions.

 

Process

The process part of the equation answers whether your people are doing the right things.  In describing process, we are considering process in the traditional sense – the interconnected activities that transform inputs to outputs.  More specifically it is the procedures a company uses to develop, market, sell, produce and ship to and service its customers.  In addition, the policies that the company follows to support that are also part of the process equation.  Whether its policies on how the company deals with customers, employees and vendors or how the company conducts and records its business transactions, the policies support the process and procedures to ensure that employees are doing the right things.

 

Systems

Finally, systems are the last part of the equation.  The systems that support the business can be viewed in two parts: (1) the high level organizational levels such as sales, marketing, operations, and finance and (2) the actual tools that these organizations use such as sales management and compensation methods, marketing and promotional techniques, operational plans and budgets and accounting and reporting systems. All of the systems used to support the business answer the third part having the right tools.

 

Many problems that a business faces can be tracked back asking this question. Do we the right people, doing the right things with the right tools.  Stepping back, looking at the bigger picture and analyzing the people, processes and systems in your business can help you target the problems, analyze the challenges and make the necessary improvements to grow a healthy business.