Step-by-Step Guide to Building a Business System
By Ted Iwere
Setting up a business system has many benefits.
One of the chief benefits is an increase in the efficiency of your business and the ability to run it without you.
This is not an easy task, especially when your business has revolved around you for a very long time.
However, it is worthwhile.
If you don’t know where to start, we’ve created a practical step-by-step guide that will provide all the information you need to make this a lot easier.
But, if you’re new to the concept of business systems, you can check this article where we discussed what business systems are. We also discussed why they’re so crucial to small business owners.
Some benefits of business systems we outlined in the article include: –
- It helps deliver consistent results.
- It helps you build a business that’s not dependent on people.
- It makes scaling the business easier.
- It creates an extra asset for your business.
- And increases your profitability and efficiency while reducing labour costs.
Different business systems and subsystems exist. Following are a few that are common across many businesses: –
a. Marketing system – The marketing system attracts leads and creates awareness for your business and products.
It is subdivided into various subsystems, such as email marketing, social media marketing, cold calling, etc.
b. Sales System – The sales system aims to convert leads to sales.
Under the sales system, various processes and requirements work together to achieve the goal.
c. Production system – Under the production system, various processes and resources work together to convert raw materials into finished products.
d. Administration system – The goal of this system is to support other systems within the business. In addition to the financial system, payroll system, order fulfilment system, etc., it comprises several subsystems.
Five (5) Steps to Create Business Systems
Step 1 – Start with a Specific Business Activity/Issue
The first step to creating your business system is to start by picking a small activity in your business, such as customer service or start with an issue you want to resolve in your business-like poor customer service, for instance.
Whatever activity or issue you choose, narrow it down to the simplest business activity or issue and define its goal.
Step 2 – Break the Activity into Components.
The next step after identifying the activity is to break it down into four components that make up the business system. These are process, people, tools and strategies.
For a system to be complete, you need to complete these components. Here is a brief definition of each of the four components of a business system.
- Process – This is an activity that you have to run to ensure that a system performs efficiently.
- People – This component answers the questions of the type of skills and people needed for the system to function.
- Tools – These are the equipment a business needs to support different parts of a system. Like checklists, documents and materials, etc.
- Strategies – Here, you define your plan of action to achieve the objectives of your system.
Here is an example, say you’ve chosen your order fulfilment system, how would you go about breaking down the activity into components?
Order Fulfilment System
Process
Receive the order. Confirm payment.
Check for availability of items ordered Package the order.
Deliver the order for shipping.
Confirm receipt by the customer.
People
Store manager – responsible for confirming the availability of items ordered and providing them
Fulfilment officer – responsible for receipt of the order, packaging and delivery
Bookkeeper – responsible for confirmation of payment
Delivery personnel – responsible for delivering the items ordered in good condition
Tools
E-commerce platform/Excel sheet/email service, etc.
Inventory app/record
Delivery van
Strategies
You can use software to make the process seamless and efficient.
Creating Business Systems – Documentation is important. Source – Nappy
Step 3 – Documentation
The next step is to document your system. After the second step, you can document your system in various formats, like video, audio or text. You can also make it visually appealing and easy to understand by representing it in a flowchart.
How you document your process and system is as important as what is documented. Be sure to document it in a format that is easily accessible by everyone involved.
Step 4 – Review and Standardize the System
The participation of all stakeholders affected by the system is important. This will unearth insights and recommendations you need to review your system in tune with reality and make your employees feel represented.
As you receive insights from employees, it also helps to compare how your business is currently carrying out these processes with how other businesses are doing theirs differently. This is important to give a sense of direction on how your system should be.
Seek opportunities for improvement, remove unnecessary activities, and automate where possible. In the end, you should have a final standardized version of how your business system should run and the goals it should achieve going forward, which you should communicate to stakeholders.
Step 5 – Measure the Performance and Optimize.
The process of business system improvement is a continuous one.
And it cannot be done without measuring the performance of the system.
So, set relevant key performance indices like cost savings, revenue or lead generation, etc. And track them over time to identify their performance and improve.
Pro Tips to Note: –
Communication is key – Always communicate with stakeholders involved this the process. It is key for feedback and employee buy-in during the implementation.
The documentation of your system must be in a format that is easy to access and review by stakeholders involved.
To enjoy the benefits of a system, the business must have an organizational discipline to follow the standardized operating procedures.
PLUS: Whenever you’re ready, here are four ways you can work with us in starting, growing or scaling your business:
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