Five Simple Steps for Systemizing Your Business

Businesses rarely achieve the dreams their owners had for them when they first started out. In fact, Chet Holmes writes, in his new book, The Ultimate Sales Machine, that fully 96% of businesses never make it. Much of this failure is quite simply due to a lack of documented processes – procedures, that if they were there and easily available to train and hold others accountable, the business would run smoothly, efficiently, and profitably. In our experience, there are two key reasons why most business owners never systemize their businesses:

  1. They lack a systems development plan.
  2. They lack a systems development tool.

Both issues can be easily addressed. In this article, we focus on the five simple steps you can take to build a systems development plan.

Step 1: Create a blueprint of your business in terms of systems. First, see yourself in a hot air balloon rising above your business. When you look down, you’ll see that your business – whether you’re a dentist, construction contractor, manufacturer or real estate agent – can be organized into four areas. These include:

  • Getting Business – which includes sales and marketing processes
  • Doing the Business – including client fulfillment, production and all of the processes directly related to delivering on the promises made in the sales process
  • Running the Business – these are financial and administrative systems involving recruiting, hiring, invoicing, accounts receivable and accounts payable
  • Guiding the Business – often overlooked or forgotten, this area includes leadership systems, management systems and strategic systems, in other words, all systems that guide your company from where you are now to where you want to get to.

To develop your blueprint, go through each of the four core areas in your business and identify all of the tasks in each area and then rename them as systems.

For example, in the Getting Business area, your organization may get new clients through word of mouth, direct mail, internet advertising and a newsletter.

Then when a potential client responds, you may set up an appointment, meet with them, prepare a proposal, present the proposal and close the sale or schedule to follow up if they need more time to think about it.

In terms of systems, you would have:

  • a referral system
  • a direct mail system
  • an internet advertising system
  • a newsletter system
  • an appointment scheduling system
  • a first appointment system
  • an estimate system
  • a proposal presentation system
  • a client conversion system and
  • a follow up system.

Step 2: Prioritize the systems. After you examine the four key areas of your business, you might have as few as 50 or as many as 150 systems. The next step is to look at your entire list and prioritize the development of systems.

There are many ways of doing this. You might want to create an ‘A’ list of high-priority systems to develop. For example, you may be in the position of needing to hire a new sales person and realize that you don’t have sales systems or even a job description. In this case, you would want to bring the person up to speed quickly and accelerate your return on investment. Therefore, logical ‘A’ list systems to develop would include a hiring systems as well as all the Lead Generation and Lead Conversion processes – the sales systems.

Next, create a ‘C’ list of systems, which comprises those systems that, if they were never written, would have minimal negative impact on your organization. Finally, put everything else on a ‘B’ list.

Alternately, you could start by identifying all of the functions that would make most sense to delegate. For instance, you may find yourself spending 10 to 15 hours a month on administrative functions such as invoicing, billing, QuickBooks, picking up items from a store or sorting through mail. If you had a documented process in place, you could hire someone to do this and pay them \ to \ an hour.

When I offer this suggestion to some business owners, they reply that it only takes them 10 hours a month to complete these tasks. They don’t see the value of paying someone else. Let’s take a look at this from a different perspective – the opportunity cost that is lost during those ten hours.

Ask yourself; “What is the value of the core work you I do – in sales or customer service or whatever it is you do that has made the business what it is today?”

You may figure your core work time is worth $300 an hour. If that is true and you hire someone for $20 an hour to do the simpler administrative tasks, that leaves you with a net opportunity gain of $280 an hour. In other words, if you hire someone for 10 hours a month, you’d save $2,800 each month. In a year, that’s $33,600 in lost opportunity cost.

Once you put a financial value on your time and calculate the lost opportunity cost, you may see the value of identifying tasks to delegate and developing systems for their correct execution.

Step 3: Manage the writing of the systems (the systems development process): Next, prepare a simple plan for the development of your high-priority systems. If you’re a one-person company, you might set a goal of writing one system a week. If you run a larger organization, you would want to involve your managers in systems development, showing them how to write a system, delegating the writing process and agreeing with them on a specific timeframe.

Step 4: Implement the system. Once you write the system, implement it immediately. By implementation I mean clearly training someone in the process by reviewing the written documentation step by step, making sure you’ve answered their questions and ensuring that they understand your expectations.

Step 5: Monitor and report on the execution of the system: Once you’ve implemented the system, you’re not quite done. To know whether the system is effective, you need to monitor it.

For example, if I train you in a sales system in which you need to make 20 cold calls a week to set up five appointments, I would expect you to report on the 20 calls you made each week. If you’re not setting up five new appointments each week, I would need to look at the process rather than assuming that something is wrong with you.

Usually, I would find that one of three things is the problem:

  1. You’re not following the system, in which case I would help you to understand the process and role play it
  2. You are following the system but are struggling with it, in which case I would again help you role play and memorize the system, so that it becomes more natural and integrated into your process
  3. The system doesn’t work, in which case I would re-work the process.

Using Systems to Fulfill Your Strategic Vision

One of our clients – a real estate broker with a firm of approximately 25 agents – used a systems development approach to take the blame off his employees, focus the company on building and following systems and dramatically increase the success of his organization.

A few years ago, he was troubled by the fact that only 20 percent of his agents produced 80 percent of organizational sales – the age old ’80/20 rule’. At first, he assumed he simply had lazy agents. As many business owners would do, he reacted to the frustration by firing the agents and changing the hiring process to seek out more seasoned real estate agents. However, this was a short-sighted approach that assumed the problem was the agents and focused on the frustration rather than on the strategic vision of the organization.

Quarter over quarter, he continued to see the same results: 20 percent of his agents produced 80 percent of sales despite changes in staffing.

After reviewing his strategic systems plan, he soon understood that the problem was not the agents but the absence of an effective Listing Presentation System. So, he developed a creative plan to build the best listing presentation his company could muster: he staged a competition.

For the ‘Best Listing Presentation’ competition, he set up five teams of five, with each team containing a top producer and one of the firm’s newest agents. Once he did this, he told the teams that the one rule of competition was that the rookie would have to deliver the listing presentation. He also notified the teams that the prize for the best listing presentation would be a night on the town for each agent plus one spouse, partner or friend, complete with limo transportation and fine dining.

Excited, the teams got to work and as they did, a few interesting things transpired. First, the level of camaraderie in the firm rose palpably, as team members worked together to win the prize. Second, in working closely together toward a common goal, the team members shared their best practices with each other and essentially trained each other in these practices.

When the big day came, the owner invited two other colleagues, a title company representative and a home inspector, to join him in judging the presentations. He also arranged to have each presentation videotaped.

During the presentations, everyone was exposed to other teams’ innovative ideas – they had an opportunity to see and hear the best of what the other teams had to offer. After each ‘performance’, we heard comments from the audience such as; “You say that? I had never thought of that. What a great idea.”

The business owner video taped all of the listing presentations, gathered the ‘nuggets’ from each – the best ideas from all of the performances, and created the ‘ultimate’ listing presentation system and rolled it out throughout his organization.

The result? After the competition, each of his agents – not just 20 percent of them – closed sales at a highly successful rate of 80 percent.

What systems would mean the most to your business?

As in the story above, there are systems in your business that, if effectively developed, could dramatically impact the success of your organization. By following the five simple steps outlined above, you will be able to identify, develop and implement these systems.