There are 28 million small businesses in the US. The sad reality is that most of them fail in the first years of operation. The small percentage that survives remains small forever. Only a few manage to grow into large companies. But why them and not the others? What are the factors that make it possible for unknowns to become house brands? One thing is certain: it takes much more than hard work, luck and timing. Read on to see if your small business has what it takes to make the leap into the big leagues?
The lives of many small businesses are chaotic because they lack systems. Systems are hard, but they enable small businesses to scale. Systems are not as glorious as sales, marketing or research and development. Some say that systems are boring, after all it is a back office function. Systems separate sick small businesses from those that grow by leaps and bounds.
Creating systems can be a daunting task, and for many, the prospect of taking on another project is out of the question. For some, it’s a catch-22 situation. You can say, “How can I get additional time out of my already hectic schedule?” The right way to think about systems is that creating systems is an investment in your business.
One of the biggest challenges faced by small entrepreneurs is that they are eternal decision makers. The owner is involved in everything, from sales, customer service, research and development, accounting, etc.. The creation of systems is the first step towards a business where not every decision depends on the entrepreneur. Systems enable people to join and leave. The systems include operating instructions and manuals that a new team member can update in a jiffy. It’s what gets small businesses out of small businesses.
Franchise companies are often more successful than independently operating ones simply because they rely on systems. The franchisee may pay a premium for the upstart costs compared to an independent company, but it makes sense for many because they don’t have to worry about developing systems.
Someone has already created the necessary systems for success. When you buy a franchise, you take a system that is proven to work. Does that mean you have to buy a franchise to be successful? Absolutely not, but you need to consider your own independent business as a franchise. Create procedures for everything. Don’t leave anything to guesswork.
Most small businesses do without systems, but that doesn’t mean it’s a good idea. While you may get away with it at first, the lack of systems will lead to huge bottlenecks on the road. The lack of systems will reduce your profits. Why? Because you and your employees have to reinvent the wheel day after day. Systems minimize the element of surprise. With the systems installed, your team is able to provide consistent service. Companies with consistently good service will outperform those with fluctuating service quality.
Systems not only make life easier, they also increase the value of your business. Buyers want to buy companies that build on systems. The existence of systems shows the buyers that the company does not completely rely on you. Creating systems helps you create a turnkey operation that is attractive to buyers. Business systems are assets that enable your business to work without you.