By Sharon Cully

Have you been thinking about putting processes into your business, but haven’t quite got around to it yet? You’ve heard the success stories, but feel you’re not quite ready to take that step yet – you’re not sure your business is at a point it can be systemized yet, or you’re worried your team won’t want to do it so it’s too big of a headache to tackle, or you simply don’t have the time at the moment. You’ve got this far without many procedures in place, so surely it won’t matter that much if you don’t get around to systemising for a few more months, maybe a year…right?

But beware! There are significant hidden costs if you don’t have a decent set of business processes in place – from lost revenue to unnecessary costs, missed opportunities and outright risks to your business. Here’s the run down on what to watch out for.

Lost revenue

  • lost customers – is your customer service consistently excellent? Have you lost any customers as a result of something getting missed? Especially if you have lot of competition, customers will go elsewhere if they’re not getting the service they expect.
  • lost opportunity for upselling – if you’re delighting your customers, you’re in a position to charge a premium, or encourage customers to move to a more premium offering.
  • lost opportunity for referrals/great reviews: Delighted customers are very likely to refer you and give you great reviews/testimonials, bringing new customers and further revenue.

Unnecessary costs

  • cost of high staff turnover (rehiring + training new staff from scratch every time): How many employees are you losing due to frustration around the same problems coming up time and time again, preventing them from getting great results? The employees you want to keep are the ones that are most likely to move on if they can’t do their job well, learn and grow.
  • time wasted on staff complaints/grievances: How much time is wasted arguing over who should have done which task? This is the number one cause of frustration and friction in a team.
  • cost of fixing errors and fire-fighting: How many employees make the same mistakes over and over, which cost money, time and effort to fix? Short-notice fixes can be very expensive (e.g. shipping by courier rather than by post in order to meet a deadline)
  • wrong decisions due to incorrect data – Are you confident that the information and data you use to make decisions about your business is accurate? For example, do you know exactly how much money is owed by your customers? Or how much you owe your suppliers?
  • cost of current software that doesn’t work as it should – Have you installed software in your business that isn’t really working the way you hoped? Is it giving you the results you want?
  • time wasted on unnecessary or unclear tasks – How many tasks are your employees doing that aren’t needed, like sending out reports that no one is reading? Alternatively, are they wasting time trying to work out the best way to do a task, potentially every time they do it?

Missed opportunities

  • lost opportunity to beat the competition and attract their customers – having a business that works like a lean machine gives you a competitive advantage – the majority of your competitors won’t be putting processes in place, so you’ll be able to dominate your niche
  • lost opportunity to automate tasks/install software – there could be some automation opportunities you’re missing out on, using software systems or even something simple like Excel
  • lost opportunity to quickly react to new opportunities – if you and your team are constantly fighting fires, you won’t have much space left to react to unexpected opportunities
  • lost opportunity for owner to delegate tasks and grow the business –
    • What’s the most high-value activity that you could be doing in your business?
    • Following up on sales leads? Calling customers and confirming a job with them?
    • Let’s say that if you can do lots of sales calls, your time is worth $200 per hour
    • Does it make sense for you to be checking supplier invoices when that could be delegated to someone for $20 per hour?
    • This could save you 1 hour and $180 per week, or 50 hours and $9000 per year!

Risky business

  • a key staff member leaves taking all job knowledge – do you have an employee who keeps a critical part of the business going, but all the knowledge is in their head? What if they won the lottery tomorrow and resigned, how big an impact would that have on your business? If you’re the one with all the knowledge in your head – what happens if an emergency comes up?
  • downturn in your market – as mentioned above – do you have a plan to reduce the risk of a slow-down in demand?
  • unlikely but reputation-killing event – taking Sam Carpenter’s business as an example: if you have a business serving customers who deal with emergencies 24/7, a power failure would be catastrophic. Is there an event that could be catastrophic to your business? Do you have a solid contingency plan?
  • staying stuck and not achieving the vision you have to grow your business – or sell it – do you have a vision of doubling your business in the next 3 or 5 years? Do you know how you’re going to get there? It will take much longer without processes in place, if it happens at all – during which time, you’ll be missing out on a lot of revenue. If you want to sell your business someday, but the business can’t be run without you there, how valuable do you think it will be to someone else?

There’s one more important cost to consider: if you aren’t happy with your current lifestyle – your relationships, stress levels, income, health, and leisure time aren’t where you want them to be – the way you run your business has an impact here too. What would you like for your life? To work a normal 40-hour week while having a decent income, so you can spend more time with your family? To have less stress running your business, so you can sleep better at night? To be able to take a 2-week holiday without worrying that the business will fall over in your absence? Or would you like to build a valuable business that you can sell one day? Putting processes in place in your business will allow you to work less, make more money and give you the freedom to choose what you do with the time and income you get back.

So, the question is – given the profit you’re already missing out on, not to mention the future, do you really want to put off systemising your business any longer?


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