I talked about the importance of business systems in the last part. In fact, I pointed out that your system IS your business. In reality, a business is nothing more than a pile of step-by-step procedures that when followed by you and your partners, employees, contractors, and vendors results in profit.
It’s really magical if you think about it. Words become money.
I also pointed out that it is nearly impossible to have a stable business that remains the same size and continues forever doing exactly the same thing resulting in exactly the same amount of profit. Businesses either grow or they shrink. A shrinking business eventually becomes unprofitable and dies. So it is extremely important that you not only create a system that is profitable, but also ensure that it produces in business growth.
To do that, it is essential that your business system includes procedures to measure every important metric in your business and that new procedures are tested to see if they improve those metrics.
For example, let’s say we have a procedure that is intended to promote a web-site by putting flyers on the windshields of cars in the parking lot of a brick-and-mortar business that has similar customers.
Maybe your web-site sells solar-powered pet collars that light up at night to increase the visibility of pets. So, your procedure includes the steps for an employee to make copies of a flyer that tells about your product and includes your web-site address. The employee then puts them under windshield wipers of cars parked at nearby pet stores and veterinarians where you can be reasonably sure that they are received by pet owners.
You might be tempted not even to have a documented procedure. It’s very simple, right? Just tell your employee to go do it.
That could work just fine for a while. Maybe you even use a tracking URL so you can monitor the profitability of this activity.
But what happens when it suddenly stops working or becomes less profitable? Why did it stop working?
It must be the employee because the activity is so simple that you don’t even need a procedure. Right? So you hire another employee and get even worse results. Is the new employee even less effective than the old employee? What do you do?
Perhaps you watch the new employee to make sure he really puts the flyers on the windshields. But, say that even when you confirm the flyers are properly placed, the metrics don’t improve.
What happened? You notice that the current flyer is on white paper, but you think you started out with canary paper. But you aren’t sure.
You also think you remember that the flyer used to be folded in half and the new employee just put it under the wiper. You once noticed that the old employee sometimes put the flyer under the wiper and sometimes tucked it into the driver’s window.
Maybe some of these things matter. Maybe they don’t. Maybe it is the time of the year. Maybe it is the time of the day that the flyers are being distributed. Maybe these businesses mostly have repeat customers so there are few new flyer recipients.
There are lots of things that could be the culprit. It could even be a combination of factors.
Now you clearly see that you did need a procedure, one that includes all the details: what time of day, what color of paper, how to fold it, and where to put it exactly on each car. When that location was impossible to access (recessed wipers for instance), it needed to give alternative locations or instructions to go to the next car. It needs to say whether permission should be requested from the business owner first, etc.
Every detail may be important and you will never know until it is too late, unless you create a detailed procedure for even the simple tasks.
Once you do that, you don’t wait for a problem. That is what shrinking businesses do. Instead, you need to have another procedure that includes making changes to every aspect of the flyer distribution procedure.
Try folding in half. Try canary, white, and blue paper. Try driver’s side windshield wiper vs. passenger side windshield wiper. Try face up vs. face down. Measure the result. Improve the procedure every time you find a variable that improves the metric.
If you do that constantly, then you will probably never see the day that the procedure seems to stop working. Instead, you will see steady improvement over time. You will learn what works and what doesn’t work.
If that day does come, you will have a very long list of things that you know from prior testing are NOT the problem. That means that the list of possibilities is much shorter.
That is what a growing business does. A growing business is never happy to have an unchanging business system, even if it is profitable today. Every business system can be improved. A growing business is a constantly improving business.