Wouldn’t it be great if your small business…
- Worked without you. Only if your business can work without you will it have any great capital or sale value.
- Delivered its product or service consistently time and time again to the customer.
- The employees did it the same way every time, the best way.
If we’re going to learn from the small businesses that successfully do this, let’s take a look at the most successful small business in the world, McDonalds. Even if you don’t like what McDonald’s sell, there is no denying it is a hugely successful business.
- The owners don’t work in the business flipping burgers.
- You know when you go you’re going to get the same consistent burger every time, with the same customer experience every single time, which is why people go there. They give the customer exactly what they are expecting every single time, there is no disappointment and so the customers return.
Similarly, if you went to a printer and got a great print job done the first time but the next time there were a few mistakes, you’d be far less inclined to return again. How comes it was perfect one time and not another? That doesn’t happen at McDonalds. What’s more, they manage to do it at thousands of their restaurants all over the planet.
- The burgers are the best tasting burgers made the same way every single time. They’ve found their best formula and they use it consistently, only changing it when they find an even better formula. And that is true for every part of the McDonalds experience from the food, to the greeting, to the cleanliness, to the kids packs, etc. Everything works and is done the same way until they find a better way to do it.
It doesn’t matter who does a task, they always follow a system, so that it’s then done the same way every single time and the customer gets the same experience every time they go back.
When one-person leaves and another joins, how comes it still gets done exactly the same way.
Although McDonald’s is a seemingly low quality product, it is an extremely high quality business which customers value and have great loyalty to.
McDonald’s has the entrepreneurs with the vision to move the business forward, the managers who manage the units and the technicians who work in the units and they all work together in harmony.
Of course, it’s because they have an organisational strategy, a management strategy and a system for everything they do. It is the ultimate systematized business that runs just like clockwork.
Just because your business isn’t McDonalds doesn’t mean you can’t learn from them. It is what is known as a Business Format Franchise. This is the type of franchise operated throughout the world by many other businesses and it’s no surprise that franchises are far more likely to succeed than any other start up business.
When a McDonalds franchise is taken, the franchisee gets far more than a brand name. They get a whole way of doing things that work and not until they have learnt the way things are done, do they get the keys to the door.
Just because you are not going to franchise your business doesn’t mean you can’t learn from how they make everything inside the business consistently happen. If that happened just inside your one business unit, without you working in it, wouldn’t your business be a great place to go to work, or not work if you so chose.
When Ray Croc took the McDonald brothers burger business in 1954 and set about figuring out how he could make it work, he set about working on the business and not in the business. The business became the product to him, not the burgers and it was the business he worked on.
The key is to work ON, not IN the business. If you are a one-man business, not wanting to grow, this perhaps isn’t true to the same extent, although certain things can still be learnt from it about ensuring you deliver consistency to your customers. A one-man operation may not really have a business; they have a job, possibly a well paid one, with customers as their boss. This doesn’t mean there is anything wrong with the one-man operation. The world is reliant on many one-man operations, it’s just that some of these principles apply less to them.
For every other small business that wants to develop, you’ll only do so if you get to work on your business and stop working in it. As an extreme, you can imagine that you are going to make another 1000 just like it. What would you have to do to achieve this? You would have to completely systematize your business.
An analogy that can help with the understanding of working on, rather than in your business, is a game of monopoly. If you are the hat in the game, you are simply a piece in the game and you don’t make the decisions, you can’t influence the game at all. However, by being a player in the game and being able to see the whole board, you can start to put strategies into place that will have far more of an influence. You are now working on the game rather than being in it. It’s exactly the same for your business, you can have far more effect by working on it.
Before we get carried away, a word of warning. Some small businesses have tried to systematize their business and got so carried away with it that they spent all their time doing just that and failed almost before they got going. Some people believe the E-Myth book sets a standard that most people cannot hope to meet. Common sense is the operative word and the E-Myth is a must read book for every entrepreneur.
You have to operate and generate enough income to put food on the table, pay the mortgage, etc. This has to be the first priority. After that, look to work on the systems for your business that will …
- Give consistency to everyone – your customers, suppliers, and employees.
- Be operated by people with the lowest possible skill level. This enables you to find staff when you need them at the lowest possible price. You don’t want systems that can be operated by only high quality people, because when that person leaves, you will have trouble getting a replacement.
Sure, you say McDonalds is not like your business. So let’s take a far more complicated business such as a firm of solicitors. If a firm of solicitors was to employ only the brightest legal brains it would be extremely difficult to consistently offer their level of legal knowledge, as it becomes very difficult to find a replacement should they leave, be ill, etc. However, if they were to develop services that could be provided by anyone with an average legal brain, they would be able to grow and leverage the business far more.
- Enable you to eventually not work in the business at all.
Even if you just focus on the most critical things you do in your business and systematize these, your business will be far better for it.
So what you need is a systems dependant rather than a people dependant business. The systems run the business and the people run the systems. You can’t do without people, but the more you systematize, the less dependant you become on people.
If you are going to develop a business that is not people dependant, you need to have an organisational chart that starts not with peoples names on it but with the positions that need filling.
It helps to draw an organisation chart based on what you want your business to look like rather than how it is at present.
The positions on the chart should relate to employee functions (managing director, sales director, accounts, etc) rather than named people. This ensures it’s the system that you’re concentrating on.
Once you’ve decided the functions you need in each box, then you can allocate people to fit those functions.
Let’s say there are three owners of the business but there is only one position for managing director. Instead of having 3 people all trying to be the managing director that creates conflict, duplication of resources and nobody knowing what their responsibilities are, you agree who is likely to be best suited to that position and put them into it. The other two, take other positions. They still all own the business equally but now they are starting to organise the business far more effectively.
To start with, you may be the only one in the business. That doesn’t matter – just put your name in each box. As the business grows you move out of some boxes and get other people to move into the box. However, in the box will be a system for them to follow so that they do it the same as you. Now you’re starting to build a business that works.
Look at each position in the chart and outline what is expected of each position. In the most profitable businesses, people know what is expected of them.
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