Trend Data - Implement and Record Essential Business Systems

Start today and implement this important management procedure.
A business is nothing but a series of systems that produce a service or product in return for money. Are your systems defined? Are tasks performed in reasonably consistent ways so that the work and people are somewhat interchangeable?

For instance, a large contractor had a 7 person estimating department. As work was performed it was always personally reviewed by a senior staff member who carefully critiqued the format and the accuracy of the work. This way junior staff learned how to perform the work so that anyone could pick up any file and understand what needed to be done to complete the file, what assumptions were made to find a price, and in the end a summary of bids showing the lowest price.

For a small business the written record of the systems can be fairly brief and augmented by some cross training and oversight. As the business grows more comprehensive manuals are needed to ensure consistency of work product, treatment of staff, and other matters.

A related problem is when all paths lead to the owner. Many owners delegate the grunt work, such as the estimating above, but never give authority to anyone to make a decision. For instance the owner may not allow even small contracts to be awarded in his absence. Develop a quality management team that effectively implements your systems and test them by taking a long vacation. If your business cannot run without you expect to spend considerable amount of time after closing doing the training you should have done beforehand.

Improve Your Business Value – Know Your Key Numbers and Track Them

Every business can be improved. For the best results, remember the 80/20 rule. 80 percent of what you work on is not that essential. The other 20 percent is the key. We recommend you determine and work on the 20 percent that will dramatically improve your business.

Every successful business person we have ever worked with has a shorthand business management system that allows them to track the business in real time.

Small business owners often have an old green accounting ruled book where they post these critical numbers. Larger business owners have summary reports straight from the computer or compiled by trusted staff to track the most critical details.

An example of this was done by the owner of a title insurance and settlement shop we know. Weekly he would track the following items; newly opened cases, total backlog, and settled cases by unit and dollar amount. Just based on those few numbers, he knew financially where the business was at all times.

This information allows you to make adjustments as soon as market changes appear instead of months later when the checkbook is finally tied into the historical (meaning already old) accounting data.

Every industry has these critical numbers that provide an effective shorthand way for experienced operators to know what is going on. If you do not know the system used in your industry, ask a friendly competitor how they do it. If they will not tell you, go to a national convention and ask competitors across the country that are not competing head to head with you.