One of the most common pieces of advice you hear as an entrepreneur is to work on your business and not in it. Essentially, this advice means that you create a working system for your business. With a working or functional system in place, it becomes very easy for your business to run without your active participation. Also, your business becomes less dependent on people. This is because as long as the system works, anybody with the right skill can fit in, and the business continues to operate seamlessly.
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Having realized the benefits of the functional system for a business, you need to build one. This article will discuss the process of building a functional system for your business in five simple steps.
Step 1: Understand your Business
The first step is to have a complete and resounding understanding of your business. This sounds like redundant advice. Why would you need to understand your business when it is already yours? But, it is very valid advice. While you may understand how your business works, you need to see the activities in your business under three major business functions: Operations, Finance, and Sales.
Operations are the business activities that don’t look like business activities. In other words, they are activities done in the backend, the one that most people do not see, but without which the business itself cannot run.
Examples of activities that fall into the Operations category include:
- Making plans for the business.
- Sending and receiving emails regarding the business.
- Setting goals and measuring their accomplishments.
- Conducting meetings.
- Things like that.
Activities that fall under the finance category are quite simple. Anything that has to do with money management falls under the finance category. They include filing taxes, paying salaries or wages, as the case may be, and bookkeeping.
The last categorization is sales or marketing, which involves all activities that help you attract people and convert them to customers. These activities include email marketing, content marketing, conventional advertisement, and the like.
In almost all cases, the operational activities of any business will fall into any of these categories. Now, the activities in your business may not be the same as those cited as examples here, but as long as they fulfill the same function, they fit the categorization.
Step 2: Declutter Each of the Activities
After identifying the activities that help your business operate seamlessly, it is time to break them down under the process, tools, people, and strategies needed to carry out each activity from start to finish. The process refers to the chronological actions needed to carry out the task, while the tools refer to the equipment, software, or any device you use. The people refer to the person that carries out the activities, and the strategies refer to the techniques used to carry out the task.
For example, let us assume that one of your business activities is writing a business blog post. The process involved would be researching, creating a befitting title, creating an outline for the blog post, writing, proofreading/editing, and publishing. For the same activity, the tools involved would be your researching tool, writing tool, proofreading /editing tool, and website platform where you publish the blog post.
The people involved with the activity would be you, and the strategies involved would be copywriting, search engine optimization, and editing.
By breaking down each activity upon which your system runs, you start to have a clear view of what the system for your business would look like. At this point, you understand that the four components that define a working business system are process, tool, people, and strategies.
Step 3: Build your System
Now that we have understood the components of a functional system, it is time to build the system for your business around these components. To do this, you must determine what you need in the system. Is it to make your business operate more smoothly? Or to free up your time?
If you are like most people and need a functional system for your business to free up your time and allow you to work on it and not necessarily in it, you need to take the following steps;
You need to look through the four components of your system and identify the redundant process, tools, people, or strategies. With each of these components, you find things that are redundant, unnecessary, irrelevant, and unproductive and remove them. Your business will run perfectly fine without these things, so why keep them around?
Next, you need to find the processes, tools, people, and strategies that are helpful to the system but do not need to be a part of the system. These are not redundant because they are useful. However, they need not be a part of the system at the moment.
Which of the processes in your business activities can be automated? This is the question that you need to answer at this stage. Almost everything in the world is automated right now. All you have to do is find the right tool, app, or software for it.
After automation, the next stage is delegation. You need to push tasks that frustrate, bore, and delay you to another person within the business. The aim is to ensure that all activities you handle are a productive use of your time.
Now, there will be some activities left. The next step is to find a way to batch them or consolidate them so that you can complete these tasks or activities faster than you used to.
With these five actions, you may end up with a better and well-improved system where you need to put fewer hours into your business. As this progresses, you start to see how the system can work without your active participation.
Step 4: Test
Now that you have made improvements and changes in your system, it is time to test it and see how well it works. You need to start monitoring how your business operates under the new system. This is also where you will need Key Performance Indicators (KPIs). Large businesses and corporations use these indicators as a standard for measuring the performance of their businesses.
However, if yours is a small or medium-sized business, you need to use the measurable factors you have been using all this while. For instance, your sales conversion rate, revenues, profit margin, expenses, and other financial indicators you are familiar with.
In simpler terms, you want to know if you are selling more products, earning more profits, or you are selling more products and making fewer profits with the system. Are there any glitches or hiccups with the system? Did any of the processes take longer than normal with the new system?
You may also want to gauge the reaction of your employees and customers concerning the new system. How do they feel about it, and are they in support?
Step 5: Evaluate
You have built the system and have tested it. What are the results? Did you achieve your aim? Can your business run smoothly without you? Have you increased production or profit-making? If yes, can you identify the specific things responsible for this, and is it possible to replicate it for other businesses? If the system did not solve your problem or achieve its purpose, can you identify the cause? Can you fix the problem and retry again, or do you need to go back to build the system again? These are all the questions you need to answer during your evaluation.
To evaluate the system, you can go through every component or evaluate the system as a whole. The end game is to identify why the system worked and replicate it as often as possible. Or identify why the system did not work and fix the problem.
It is important to mention that the system does not have to work perfectly the first time. It will take time to make it work. Therefore, if the system does not work in your first trial, you are only a few tweaks away from building a business system that works without your active participation.
As a bonus, it is important to document all of these processes, your trial and error, and the attempts at reorganizing your system. You need to document the components of the system and how they work together to help you achieve your goal. You should also document the “before” and “after” effects of the reorganization of your system.
If you are serious about building a business that operates successfully without direct dependence on you, you should take systems seriously. With a good system, neither you nor a particular person needs to be around before your business operates. As long as the needed parameters are met, you are good to go.
And contrary to what many people think, building a system for a business is not a very complex process. While it might be time-consuming, especially with the testing and evaluating part, it is all worth it in the end.