Systemisation reduces costs and improves efficiency - SBCA Chartered Accountants

Systemisation reduces costs and improves efficiency

57 Ways to Grow Your Business

Have you ever wished you could clone yourself, so you could grow your business and still be sure everything was done consistently and in the right way?

Well, I haven’t managed to find a way for you to do that, yet, but I can tell you how you can achieve the same results: systemisation.

Think about a chain restaurant; whatever city you are in, often anywhere in the world, you can go there and know that if you order your favourite meal, it will always taste the same.

American businessmen Ray Kroc was the driving force behind the McDonald’s franchise model. The secret to the long-term success of the business might well be the uniformity of both service and quality that he insisted on, and built in from the start.

As Theodore W. Garrison noted in his article “The Magic of a Marketing System”, written in 1998:

“Have you wondered how Ray Kroc managed to get teenagers in California, Illinois, Florida, and Maine to produce the exact same fry? It is really quite simple; McDonald’s starts with the same kind of potato. Each potato is cut into fries of the same size. At all locations, the fries are cooked in the same type of oil in the same type of fryer at exactly the same temperature for exactly the same amount of time. Is there any surprise that all the fries come out the same?”

And it’s not just the way fries are cooked that is repetitive. Just about everything that happens in any business is repetitive. And the beauty of that is it means it probably doesn’t have to be done by you!

Why should I systemise my business?

Before we look at the “how”, let’s consider the “why”. What’s in it for you? Well, for a start, more money!

A firm of accountants in Sheffield carried out some research in the early 2000s. They discovered that fully systemised businesses were valued at up to 86% more than a business with no, or very few, systems in place. And there are additional benefits of systemising your business, too, including:

  • It gives you more time to do the things you want to do;
  • Systems ensure your business delivers a consistent, error-free, service;
  • Systems improve efficiency and reduce costs, because your employees don’t have to keep reinventing the wheel;
  • Systems help with staff development, allowing staff to learn new skills, quickly and easily;
  • Because systems allow for performance to be easily measured, they make staff appraisals easier; and,
  • Systems make it far easier to delegate tasks, meaning you can get on with working ON the business rather than IN it.

That last benefit is a tenet of Michael Gerber’s book, The E-Myth Revisited (1995). What it means is that if you are beavering away doing all the tasks required to keep your business running, then you are working IN the business. That’s all well and good, but it doesn’t necessarily get you very far. If, however, you free yourself up to work ON the business, then you are able to take a step back, and start planning and strategizing, and building your business to be the best it can be. How do you free yourself up? By delegating as many of those everyday tasks as possible. How do you ensure quality? Through systemisation.

The key concept of Gerber’s books – starting with the original The E-Myth Revisited, published in 1986 – is systemisation. They are a terrific learning tool for entrepreneurs.

How do I systemise my business?

In case you hadn’t already guessed, I should tell you I have a passion for systemising businesses.

Here is a three-step approach:

  1. Take a good look at what you and your colleagues do each day and make a list of separate identifiable tasks.
  2. Break each task down into steps and write down how each one is done.
  3. Start delegating tasks to other people, by having them first observe how you do it and then doing it themselves with appropriate oversight.

Step 1: What do you do?

There’ll be a host of things you do every day, that you don’t even think about – you just do them. Some of them may be specialist tasks that can only be done by qualified people. However, if they are repetitive tasks – and many will be – then they can be systemised. Anything that falls into that category should go on your list.

Step 2: How do you do it?

Think about what has to be done, and if there is a specific order. For example, if you were writing out the process steps for making a cup of coffee, you’d be sure to boil the kettle before you poured the water into the mug! This is the blueprint for each task – in theory, someone who has never before carried out the task should be able to do so by following the process step-by-step. This is the backbone of the systemisation of your business, so take time to get it right.

Step 3: Delegate

Start to hand over the tasks you have systemised. Work through the process with your trainee and let them observe, then switch roles, and you observe them. This is a great way to train and develop people, as the system takes the fear out of the process, both for them – they have the system to use as a blueprint; and for you – you can have faith that the systems work.

There’s arguably a fourth step: maintenance of the system. All that means is that you should periodically review the systems in place and make sure they’re still appropriate and reflect the reality of the job. If they don’t, then they’re worthless. Make sure you update anything that’s out-of-date. You’ll also need to add a new system if a new task is introduced.

I understand that not all businesses make “widgets”, and in a service business, for example, things happen out of the ordinary, but even for unpredictable businesses, there are numerous day-to-day tasks that can be systemised, giving you the time to concentrate on what you do best.

Need a hand getting started?

If I’ve convinced you that systemisation is the way forward but you aren’t quite sure where to start, get in touch. I’ll happily share my knowledge with you and help you get your business systemisation up and running.