Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of this episode of The How of Business podcast show – dedicated to helping you start, run, grow and exit your small business.

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The following is a full transcript of this episode. This transcript was produced by an automated system and may contain some typos.

Henry Lopez (00:12):

Welcome to this special episode of the How of Business. This is a short episode on the topic of business systems developing, implementing, and executing on the systems we need to grow our small businesses. If you’re an existing small business owner, then this episode will help you assess where you are and what you need to improve. We all need to improve our business systems is what I have found. And if you’re planning to start your first business, then this episode will help you prepare for building your business the right way from the start. So let’s get into the topic of this episode. Small business systems. Developing business systems is a big topic and often it’s cited, and in my experience, it’s critical to developing a more, what we call a self-managed business, which is that that goal that we should all have, that we develop a business that doesn’t necessarily need us there on a day-to-day basis so that we can step away from the business when and where it makes sense and the business still operates effectively and efficiently.

Henry Lopez (01:10):

I know that’s a little harder for solopreneurs or professionals that need to be in the business. They deliver a particular service. I know it’s harder for that, but generally speaking, what we aspire to do when we start a business is that it gives us lots of freedoms, including the freedom of time and location. And so working towards a self-managed business is what allows us to realize that benefit and implementing business systems is the key to achieving that. I am a huge believer in the need to have systems in place to help you run and to grow your business. It’s part of what the author Michael Gerber is referring to when he talks about working on your business and not just in your business. And that’s in his classic book, which is a must read. It’s the number one most recommended book of everybody that I’ve interviewed on my show.

Henry Lopez (01:58):

And that’s the E-Myth, E-Myth by Michael Gerber. If you’ve not read that book, in my opinion, it’s a must read for either aspiring business owners or existing business owners. It’s a book that I’ve reread multiple times over the years. So one of the key takeaways, as I said in the book, is this concept of working on your business. In other words, not being the person who makes the donuts, but the person who teaches and creates the systems that others can execute on to make the donuts. So systems are what allow you to grow because it’s the only way to delegate, effectively to develop your team. And that’s a key component. People, your staff, your employees really respond to the increased responsibility that you give them, but it’s hard to do that without systems. And systems are also the way that you execute consistently on whatever it is that you do, whether it’s making something or providing a service.

Henry Lopez (02:52):

At my businesses, for example, it would be impossible to consistently deliver on our promise of remarkable service if we did not have systems in place, including our employee training and our customer service systems. One of the areas we tend to struggle with as business owners is the development of our systems. How do we create those systems? We either don’t believe we have the time or it may not be something we believe we are good at, so we continue to operate in crisis or chaos mode. And then we wonder why our quality is poor and our employees are not happy, and maybe we have turnover as a result and we have to work extremely long hours in the business long after that startup phase, so long after we should be working that many hours. Why? You can never take any time away from the business without it seemingly falling apart.

Henry Lopez (03:44):

So the lack of systems is what leads to a breakdown in our execution as a business, and it certainly constraints our ability to grow our business. Of course, it’s what also leads to burnout and a complete dissatisfaction and disappointment with our business after years and years and years of grinding away at it. That’s not the way it’s supposed to work. So let’s take a step back and define what is a system, what does it include? And of course, there’s lots of different components to it. It can include things like software, tools, like a point of sale system, a task management tool or tools, email related tools like electronic calendars. It could be Google’s tools like Google Drive and docs. It can also mean software solutions like QuickBooks or other financial accounting systems at a minimum from a software tools perspective, for most businesses, certainly if you’re in retail, you need a point of sale system.

Henry Lopez (04:38):

So that’s a software component that helps you transact and automate that part of the business. You typically also need a financial system, as I mentioned, like QuickBooks to manage your business, financial transactions, and you may also need team collaboration tools and other communication systems, but software tools are not enough, and usually they don’t live or help you just by themselves. We need procedures and policies to complete our small business systems. This includes all of the documentation of who, how, and when we do things in our business for our customers and our clients and for each other internally within the business. A system does not need to be a complex thing. I think that’s also a big misunderstanding and maybe sometimes why we put off trying to implement system and does not even need to include expensive technology. A checklist, a simple paper checklist for example, is a great example of a simple system that can allow you and your team to execute consistently on a particular procedure.

Henry Lopez (05:40):

So ask yourself, do you have checklists for your staff to follow when they perform procedures or tasks that should always or almost always be performed the same way or close to the same way. Those things that are repeatable and ideally you do execute on them the same way again, that’s a perfect example of a system that doesn’t need to be complex, is easy to develop and put in place and execute on and doesn’t require expensive technology. So how do you know if you need to improve your systems? Well, here are some questions that you can ask yourself and even ask your staff if you’re not quite sure what you may or may not have in place. And these questions will help you determine how systemized your business currently is. And this isn’t all inclusive, but it’ll start getting you to ask yourself how you answer these questions about your business today.

Henry Lopez (06:30):

So the first one is, are there repetitive tasks or procedures always completed in a slightly different way? Do you find that every time someone executes something that should be the same every time you get a slightly different result? Sometimes drastically different depending on who’s doing it. If the answer to that question is yes, then you don’t have a system in place there to govern that that particular task or procedure is executed almost or pretty darn close to the same way every time. Another question is most of the knowledge of how to do things in your head or in the heads of a few key employees if your staff or is your staff always dependent on you or a senior person on your team for directions on how to complete a task or how to perform a task. So if the answer to those questions is yes, then you probably have a big problem.

Henry Lopez (07:22):

You’re now exposed of course to those people being available and everybody else is now feeling like they’re not entrusted on how to perform their job. They’re always having to wait for somebody else for direction. And it also sometimes for us as small business owners is a great indication of us micromanaging and not being willing to let go of things and we have to let go. We have to delegate on these particular tasks, especially the ones that are repetitive because otherwise we can’t grow the business. We only have so many hours in a day. And furthermore, what you’re going to find as you do it more and more is that those people that you’ve hired, you hired them for a reason, or you brought ’em on, or you partnered with them for a reason, they’re probably going to do it better than you have and they’re going to bring different and fresh ideas and approaches to these tasks and procedures.

Henry Lopez (08:13):

So ask yourself those questions. Here’s another question. When a new employee is hired, when you bring somebody on, whether it’s an employee or a contractor for that matter, and they have, do they have, the question is, do they have a formal training process or a checklist or some kind of procedure that they follow, or is it entirely that they have to shadow somebody else? So watch so and so learn from them. That doesn’t mean, I’m not saying that shadowing isn’t a key part of most training procedures, but if you have nothing in place, not even a checklist or an outline of what a new employee should be learning, then you don’t have systems. And that’s probably one area you might want to start with again and again, as I’ve read about and been told by other experts in the topic of HR and what motivates employees and how they feel about where they work beyond pay, very often will people will tell you is that they value whether they felt they were invested in, was there a plan for them to succeed?

Henry Lopez (09:16):

And very often because we’ll hire someone and throw them into the current or existing chaos of our business, then they feed off of that. And most people don’t like that. They don’t feel like there’s an opportunity for them to succeed. It’s a moving target. How about this question? When you’re not in the office, are people waiting for you so that they can do whatever it is that they need to do? Especially those routine or repetitive things. Does it always depend on you for them to make decisions or on a senior person on your team? If one of your senior employees left tomorrow, what would happen to your business? Would they walk out with all of the operational knowledge in their heads? If the answer to those questions is yes, or kind of then you obviously, in case you didn’t already know you’ve got a problem.

Henry Lopez (10:03):

And the way you begin to address that problem is you need to document those things that, especially those things that are repetitive, that are the procedures, the systems of how you do things within your business. So where do you start? That’s always the big one. And I think it’s often what paralyzes you as a small business owner is it’s so monumental. It can seem so overwhelming as it is with a lot of things. It’s similar to getting started with your first business. There’s so much to do that it paralyzes us. So don’t try to do it all at once. There’s a couple of different approaches that I recommend. One is identify where is the most pain or what are the repeatable tasks? What are those things that get done the same way again and again and again. So those two questions, where’s the most pain?

Henry Lopez (10:53):

What’s most broken in my process today and related to it? What are those things that are repeatable? So if we go back to the example of hiring a new employee, which you do that on a regular basis probably, or for a lot of us, depending on your type of business and how many employees, if that’s a big area of pain, then that certainly would be a place where I would start. So if it’s also, it’s something that’s repeatable, what are the tasks that I’m doing right now, for example, which add little value to growing the business, but which have to get done. And then can I document and delegate those to someone else? So start with the things that are the most pain or also, and or also start with the things that are repeatable, like opening your business for the day, for example. Or how to process and pay an invoice.

Henry Lopez (11:42):

So start with simple checklists or outlines of the process, the procedure or the policy. You’re not writing a novel here, just keep it simple. But it’ll nonetheless serve to at least begin documenting the major steps of a procedure or a process. And then another great technique is to delegate the drafting, at least the first drafts of these procedures and policies. Delegate that to the people who are currently performing those duties and document as you go. So for example, when I record one of these episodes, I have an assistant who helps me. Aubrey helps with editing, actually, she does most of the hard work with editing the show. And there’s a series of steps that she performs that go into creating an episode. And that might seem simple, but it’s not. There’s a lot of steps to it. Well, what I had her do early on, and then she updates it every once in a while, is she has created a step-by-step document that details how to produce a show.

Henry Lopez (12:42):

Now, if I were to lose Aubrey because she moved on to another position, or she moved into a different area of responsibility in the company, it’s not that I could replace her automatically. There are things that Aubrey does that are her talents, but I would be a heck of a lot better off in ramping up a new person because at least there’s this starting point, this procedure for the new person on how to get started. We would not be reinventing the wheel and have to waste all of that time and effort to start over. If I can be of service to you and either in making your transition to your first business or in helping you with your small business, getting organized and implementing systems like we’ve just talked about, so that you have the time to go and enjoy your life, I invite you to schedule a free business coaching consultation with me.

Henry Lopez (13:31):

There’s no obligation beyond the first call. And during that call, I’ll make sure that we address and answer some of your key questions and concerns. So what’s the one thing I want you to take away from this episode? It is that a business needs systems to execute consistently and to grow. It’s also what of course is going to allow you the freedom of time that you’ve earned and that you should be realizing with your small business. My takeaway for you is that you start with the areas of most pain and or those things that are repeatable and that can be delegated. That’s where I would start. Don’t try to do it all at once. The goal is to begin working on your business and not just in your small business so that you can realize all of the benefits of being your own boss. This is Henry Lopez and thanks for listening to this episode of The How of Business podcast.