building business systems - recommendations?

[Ska2free]

My business requires management of employees, and I will be the first to admit that this is one of the toughest parts of the business for me.

After reading TMF and Built to Sell, I want to focus on taking a hard look at our office and making sure there is an actual SYSTEM in place...meaning that instead of just evolving day to day, I want to map out on paper how projects come into an out of the office (from sales to delivery), and then consider the best way to align our workforce with this understanding.

Can anyone recommend background reading that would lend itself to this goal? I've spent some time on Amazon, and am concerned that the HR books are written for HR Managers and the Project Management books are written for PMs...I want something that can be implemented in a small entrepreneurial environment, not something for mid-level managers at some Big Pharma company.

One option is this: Business Model Generation

Anyone read that? Other recommendations?
Thanks in advance!

 

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[cashflow3000]

Without a doubt, Emyth Revisted by Michael Gerber. Good luck!

 

[Ska2free]

Thanks cashflow. I just finished e-myth...had started it when I posted, but have to admit I'd put it down. It's a bit thick on the BS in parts, but there is definitely also some good advice on how and why to set up business systems. (I don't think I would have delved back into it without your recommendation, so thanks again!)

Part of my problem may simply be a process v. event issue...it's easier to think there's a perfect book somewhere that I can read and it will solve my problem by presenting the ultimate organizational scheme, than to do the work of sitting down and mapping it myself. But obviously only the process will get me where I need to go in the long run...

 

[DeletedUser2]

My First experience with systems was from a friend of mine who bought a franchise. he let me keep all the franchise systems books, since they updated and sent new ones out.

It was very cool to look behind the curtain, see how they broke things down, how they mapped it out, including flow charts, check lists, and swim lanes for roles and responsibilities. it was years ago, and it helped me alot when it came time to build my own "book" of systems. rather than suggesting another book on people who say you need systems,

go look at some that actually exist. I have a process for creating systems, now, a taxonomy for naming, and filing systems that are in the mode of creation, and a end point when I move it from "creating" to finalizing. so i know when Im done.

one of the best tools was learning real basic flow charting. (like really basic) so i could walk through system, from various perspectives and then create an understandable work flow for the employees, and myself.

another real helpfull process come from my friend who is a "lean" consultant. (they focus more on teh improvement of processes than creation if you ask me, so you better have some systems in place they can play with first )


you may also want to check youtube for how to create a process or something like this
YouTube - ‪Flowcharting - Part 1‬‏



don't get hung up on software or things like that. most biz processes I map out on a napkin, a white board, or excel first.
simple is best

Start with the end result in mind, and work backwards.

this is a super simplified version

this is a slightly more complex version of mapping out multiple processes, prior to finalizing and handing off to employees.

when I break it down to employee level, I only hand off the process to them that they are directly responsible for. this simplifies things for them, and they know only the handoff points they have with other people.

I know this was super simple, but hope this helps,
D

 

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[Ska2free]

Wow, thank you so much zen*******. I have never played with flow chart tools, but I love a good spreadsheet...and your second screen grab is what I have in mind to present to employees eventually. I will definitely start out with paper/pencil...several different arenas to map out.

I will let you know how I progress, but a quick question about only giving employees the section they are responsible for: one of the reasons for realizing that a system is necessary in our office is that i have a problematic bottleneck at the price negotiation stage.

Basically, we do a rough design plan then develop a cost estimate based on time calculated from that design. We can't change price per unit time, bc that is negotiated in advance w the federal govt. We propose the cost to the client, they either accept or negotiate (reduce time / costs to fit their budget).

So my problem is that I have only one person aside from myself who ever deals with my cost spreadsheets, but it would be helpful to have someone else help with estimating prices. But since most of our projects are 2 to 10x an employees salary, I haven't been willing to trust that they wouldn't freak out and ask for a raise. They don't understand insurance and overhead costs built into our prices, and I don't really want them to know our profit margins either...

Hmmm.maybe I could build some locked spreadsheets and separate out the estimating time element from the applying prices element. Just asking this question is giving me a start! Any advice would be appreciated...am I just being paranoid??

 

[DeletedUser2]

if they want a raise, tell them they can foot the bill, take all the risk, spend the years, get the investors, pay the taxes, and buy what you have built up for a multiple of 5+

we had on person who was doing the negotiations, it expanded our reach, it increased our deal flow, and it made us alot of money.
he did ask for a raise, and I gave him benchmarks to reach. he reached them, i gave him a raise. but you have to remember not everyone is built to be an entrepreneur. some just want to have a job, and go play.

Another friend of mine worked at a large chip manufacture, and he saved them 230M in 1 yr on equipment costs.
his reward? a 100 dollar gift cert. that worked for him, cause he worked there for 23 yrs.

watch this vid
YouTube - ‪RSA Animate - Drive: The surprising truth about what motivates us‬‏

you will be surprised at what really motivates people.

think of it this way.
there are alot of people out there who probably already do the pricing, and they are not running around asking for parts of the company, or raises. its part of the JOB they paid to do.
and honestly most people in their hearts don't believe they are worth it. so just set the expectation up front.

If they ask for to much, replace them. if you have a system, you can train a new one

hope that helps

 

[cashflow3000]

...one of the reasons for realizing that a system is necessary in our office is that i have a problematic bottleneck at the price negotiation stage.

Basically, we do a rough design plan then develop a cost estimate based on time calculated from that design. We can't change price per unit time, bc that is negotiated in advance w the federal govt. We propose the cost to the client, they either accept or negotiate (reduce time / costs to fit their budget).

So my problem is that I have only one person aside from myself who ever deals with my cost spreadsheets, but it would be helpful to have someone else help with estimating prices. But since most of our projects are 2 to 10x an employees salary, I haven't been willing to trust that they wouldn't freak out and ask for a raise. They don't understand insurance and overhead costs built into our prices, and I don't really want them to know our profit margins either...

Hey Ska2free -

Im glad you found EMyth helpful. It is the best off the shelf read I have found for sifting through the tangled threads of a business and breaking it down into bite sized pieces.

For your question above: have you considered hiring an estimator specifically for that function?

Without knowing more about your business my first instinct is that might be a good place to hire a rainmaker. You could even make his pay on a commission basis or a per-jobs-accepted basis.

One of the keys to a good system is letting your people focus on what they do best.

Your other employees are there for whatever they do best, let them do that.

Create a position for a "job estimator" - hire and train them on how to bid out properly, and compensate them accordingly.

Have fun and good luck!

JW Hagarty

 

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[Ska2free]

Thanks guys...
I'm making some progress, filling pages with the different processes and breaking those down into the parts. Even after 8 years in business, I've never sat down to do this before...feeling very disappointed in myself that I never did, and that the business has grown so organically (and with no organization) in that time. So it will be a bit of a challenge to the staff to re-envision their role within a more organized structure...but I think you are right zen*******, lots of folks just really prefer employment, and they may actually appreciate the more delineated structure. The biggest thing is that we are suddenly faced with the opportunity to open a second office out of state, and so it is really important to map out our processes so that we can have quality control over that new venture.

JW-- Yes, hiring an estimator is definitely a goal in the short to mid term. I'm learning through thinking through each process that I'll need to carefully define that job...I had been thinking of a particular person who would be good for the role, but now realize it will be better to define the process/role so that I can train anyone to do it.

If only I could clone myself and get this done twice as quickly....but then, I guess this is EXACTLY why to pursue this.

 

[WestCoast]

Ska2Free - you and I are in the same boat in a similar time frame.

I've gone 6 years with the business growing 25-35% a year every year.

--
Now, I m looking at an office full of 7 employees, product everywhere, and backlogs everywhere.

The job gets done, but it is kicking and screaming and done differently everyday.
I'm kicking myself for not having slowed down and set up systems.

I'm faced with what you're dealing with -- now I have to do the dirty work... and try to sell it to employees who have been with me for years....

Read the eMyth, about to read it again.... reading all I can.
Just going to go for it.

So much to track, so much to do.... woof.

 

[Ska2free]

Thx Westcoast...glad to know someone else is in the same predicament! If I have any great epiphanies about introducing the new program to employees, I'll pass them along!


I've found some decent templates for writing an operation manual online, but the harder part for me so far is sitting down and thinking through the flow of each process like zen******* described. Seem to get hung up by the personalities of those already involved, instead of being able to conceive of the most efficient process unencumbered by current staff dynamics...if that makes sense!!

 

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[healthstatus]

Paul Lemberg has had an online course in Turnkeying Your Business, complete with templates and examples. I joined his Blueprints to Profits course and got it as part of that. I don't have a link at the moment, but you can Google him and probably track it down.

 

[saceo007]

Ska2free and WestCoast, Ditto all the positive reviews on the E-myth. The book changed my business, and subsequently, my clients' businesses...

I must assume that you are both very busy entrepreneurs, so I have a couple of suggestions:

1. Why not let your employees help! Have them jot down notes on the steps required to do their job, so that they are, in essence, writing the first draft for you. Saves you some time (so that you can spend more time transforming the systems into what you want them to be). Additionally, employees will likely have suggestions for making things better (everyone wants to be recognized), and participation in the process usually means ownership of the "product." This approach has the added benefit of freeing up some of your mental bandwith to continue to look at the big picture, rather than getting bogged down in the details.

2. This may sound self-serving (please don't think of it that way), but you might consider hiring a virtual assistant. One of the ways I offer my clients value is designing and documenting procedures for all the work we do together. This helps them build their "SOP's," and when the workload is such that they need an on-site employee to do the work that the VA is doing, they already have a job description and systems in place that make hiring and training a breeze.

Hope I haven't oversimplified - good luck with your projects!

 

[White8]

Regarding estimating, give your estimator a range of profit margin and then give him a percentage of the profit on each sale. It's amazing how people hold margin when there is a benefit to themselves. It also takes some load off of you. I have also shared my cost per hour with some trusted employees. For example my current business runs at about $200/hr so if someone shows a profit of $1000, that's only five hours of overhead.

 

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[CommonCents]

I ran into the same issue as every other entrepreneur with a fast growing business. Shooting from the hip, improvising along the way, people wearing many hats. That works in the early days when bootstrapping but as you grow you do need org charts, distinct accountability for every function, processes. This way, the business is not dependent on any one person.

A few years ago I found out my office hadn't billed in over 2 weeks worth of sales($2 freakin million dollars). You know why? They ran out of our logo triplicate invoices for an impact printer. I about hit the roof! But I realized it was ultimately my responsibility so I educated the staff on the value of $2 freakin million in cash flow, set up clear lines of responsibility, wrote up the office manager, and designed a feedback loop where it was their responsibility to notify me daily that invoicing was done, or I'd assume it wasn't. I also realized our business and outgrown several employees. Especially in today's employment market, there are tons of super well qualified experienced people who can set up systems for you that are available for hire. don't have to figure out everything for yourself, hire qualified people and your life becomes much easier! Can hire them on a project basis to see how they work out.

Just start with simple flow charts or even sketches on paper. Once you start, you can always adjust and improve. I'd also ask the employees to do their own flow charts to put processes on paper. You'll get good insight.

As far as margins, maybe you build in hidden margin to your estimator and give them bonus for getting more. This is done all the time with sales forces.