Mistake 1, Part 4: Trying to do Everything Yourself (or at least too much)?

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Each business owner has their own style for implementing new initiatives, but there can be no better opportunity for a team effort than in identifying all the elements of the business. Once you have decided to go for your own systems, involve all personnel in this discussion and start with the business goals, breaking these down into a series of procedures and tasks, i.e.:

  • Set up a systems ‘office’. This can certainly be a virtual office to save costs, but there is also need for a central office or location.
  • List (or set) strategic goals.
  • Identify tasks necessary to achieve those goals.
  • Develop effective procedures for completing those tasks; that is, write the procedures manual that can be replicated from the prototype.
  • Build confidence; it’s important to get a systems design completed early to create momentum and confidence among management, staff and external stakeholders. Get some runs on the board from day one!
  • Identify transitional systems. More good luck than good management would get everything to go the systems way simultaneously across the organisation. There will usually need to be a staged transition to allow for slower segments to be implemented and for re-training to occur where necessary.
  • Create the desired turnkey environment. What worked in your pre-turnkey era may no longer work; there may be shifts, not only in job descriptions, but also for working hours, flexitime, meeting times, etc.
  • Explain this new strategy. All key employees and stakeholders need to be told what is happening and when, especially if they will be affected as above.

This process is about both simplification – finding a better way of doing things – but also creating new roles. This may require a training effort. The ultimate goal of imposing structure and instituting systems and procedures is, of course, predictability. A system is any method or procedure that simplifies or automates part of the business, making it easier for ordinary people to operate it. As one business owner said, “I’ve set systems in place – the policies and procedures – documented down to every task so that staff know exactly what they are to do and how they are to do it, and how they are accountable for doing it well.” She went one step further to ensure the business invested in training, because some tasks would be totally new tasks. “Then we train, and train them all over again.” Continued in Part 4. An extract from the book “The 7 Biggest Costly Mistakes Business Owners Make And How to Survive & Thrive” by Richard C. Cooper (c) 2011.

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Mistake 1, Part 3: Trying to do Everything Yourself (or at least too much)?

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How do you build a business that works without you?

Every business has its own unique characteristics, but there is always a flow of work that makes up the overall concept.  Your task as the owner is to identify and build your own systems, detailed in a ‘procedures/tasks manual’ (sometimes called an ‘operations manual’). Every segment of your business must have definite procedures that make up the workflow. These procedures are totally consistent with your strategic goals in the business.

Just being armed with a business plan or a set of strategic goals does not mean that running your business will be easy. Work must be done to get the systems, procedures, and organisational structure right. Ray Kroc sweated over this for a considerable time before he was confident that a franchise operator could come in, switch on the register and lights and stovetop, and deliver the same high-quality hamburger, time and time again. Every detail of the business must be handled, examined, improved and documented, and improved upon again.

Up until now, whether making a sale, negotiating with a supplier, or keeping track of expenses, it has been you, as the business operator, just getting the job done.  This is fine, if the business is just you. But if you are ready to grow into developing your ‘systems and procedures’, then a change is needed.

This exercise requires all key people to be considered. Each person in the business must ask, ‘what would best service our customers here? How could I streamline or adapt the practices, in order to give the customer what they want most easily, while at the same time maximizing profits?’

To kick off this process, ask yourself: do you have the time, the skills and the capacity to execute these activities to develop your “perfect” business model?  If not, you could plug into an existing system – which is, of course, already the domain of franchises, but also exist in many network-marketing businesses. From The 7 Biggest “Costly” Mistakes Business Owners Make (And How to Survive & Thrive) by Richard Cooper – Continued in Part 4………

Mistake 1, Part 2: Trying to do Everything Yourself (or at least too much)?

The turnkey solution

When you buy a new car, you don’t expect to have to open the bonnet and fiddle around with the bits under the hood. You should be able to just turn the key and start driving. That’s what ‘turnkey’ means. In business, it’s a system so perfectly crafted that it requires no debugging or fiddling with, or any sense that things won’t work from the outset; just turn the key, and start making money.

If your business is starting to feel more like a rut than a business, it is time to take a turnkey approach – that is, any method or procedure that simplifies or automates part of the business, making it easier for ordinary people to operate.

This is the essence of what author Michael Gerber calls the “prototype”. Gerber is an entrepreneur guru and author of ‘The E-Myth’. He often talks about how 80% of businesses fail in the first five years.  Most people become sick of working for their idiot bosses, as they call them, so they decide to start their own business, and end up becoming the idiot boss. Instead of working five days per week for a guaranteed pay cheque; they work six to seven days per week, often for no cheque at all. You may be able to relate to these sad statistics.

In his book, Gerber walks you through the steps of a business life cycle – from entrepreneurial infancy through adolescent growing pains, to the mature entrepreneurial perspective and guiding light of all businesses that succeed –showing how to apply the lessons of franchising to any business at any level. Most importantly, Gerber draws the vital, often overlooked, distinction between working ON your business and working IN your business. This is also core to our work in this book, which is ultimately about freedom, not servitude to business!

A true business is a profitable enterprise that will work ideally without you. Most people do not really have a business; they just have another job that creates a lot more stress. The idea of a real business, as Robert Kiyosaki describes in the ‘Cash flow Quadrant’ is becoming the owner of an organisation or business that will work without you having to be there. In other words, if you wanted to go away for six months, you could; it would still bring in a passive income. Most people do not know how to set up a business like that.

Just as McDonald’s stores have been replicated tens of thousands of times all around the world, any business can be run on a turnkey basis, if it has the right systems and procedures in place.

This ‘systems’ approach allows a small business owner the means to integrate his activities via a set of systems and procedures. For a manager, this approach provides the order and predictability that is so important to the running of his or her business. For a proficient technical specialist or business owner-operator, it allows you to have the systems and procedures attended to by other people, so you can be free to do the ‘technical’ or the strategic work that you love. From The 7 Biggest “Costly” Mistakes Business Owners Make (And How to Survive & Thrive) by Richard Cooper – Continued in Part 3………

Mistake 1, Part 1: Trying to Do Everything Yourself (or at least too much) ?

Trying to do everything (or at least too much) is one of the great, potentially fatal mistakes that early stage business owners make. It’s hardly surprising because everything, and I mean EVERYTHING, does fall on the business owner’s plate. The challenge is, well, to challenge this commonality. Here we use McDonald’s to illustrate an idea accessible to all business owners, regardless of their industry or profession.

The McDonald’s Effect is a phenomenon made possible by the vision of Ray Kroc who saw that a well-oiled business, such as the one run by the McDonald brothers in San Bernardino, California, could be expanded into a viable franchise with thousands of different owners. Kroc perfected every detail of the McDonald’s procedure in a prototype store. Taken to its ultimate conclusion, a perfect system and set of procedures has the ability to replicate itself thousands of times – exemplified by tens of thousands of Mickey D’s worldwide.

For business people who are planning to grow beyond their personal management style or limitations, this concept is well worth appreciating and understanding.

Ray Kroc understood that, in order to make money out of McDonald’s, there had to be systems and procedures in place to allow replication of the proven operation. Neither Ray Kroc nor the McDonald brothers could become the key workers; there had to be a prototype, acting as a model for replication and expansion. For the business to thrive, Ray Kroc had to put in place not just systems and procedures, but employees and an organisational structure around them. Ray Kroc had to find other people to do the work, but once the prototype was effective and he had employees doing the technical work – both manual and managerial – the owners could be left to do the strategic thinking.

Of course, the Kroc approach is not restricted to a food retail store – it can be applied to virtually any business case. An effective prototype is not just a well-oiled machine; it is a business that finds and keeps customers – profitably – better than any of its competitors, and then grows within the context of a larger, expanding business. From the book The 7 Biggest “Costly” Mistakes Business Owners Make (And How to Survive & Thrive) by Richard Cooper – Continued in Part 2…….