Starting a new business is both exhilarating and downright scary. Every new business owner has a story to tell about the early days.
When I was a young man, my father sadly passed away from cancer at age forty-one. He had a life-insurance policy of $30,000. My mother felt he would want my brother and me to have this money for a new business venture we were considering. Craig and I were pretty naïve back then and did not realize how likely it was we would lose it all. Fortunately, our startup manufacturing business landed a big customer and could leverage that income to get the ball rolling.
However, Craig and I were not only youthful and naive about the perils of starting a new business, but we were clueless about how to create a fully-functioning and profitable business operation. We jumped in, started making and shipping products, and enjoyed a short honeymoon. Then the harsh day-to-day business realities began to settle in.
The Game of Business
We discovered it was not so easy to keep customers, employees, vendors, bankers, and landlords happy all the time. We realized that the more we sold, the more our accounts receivable and inventory grew, keeping us cash-poor. We learned that we needed to make a high-quality product every time and all the time, and that we had to watch every penny in the process. Given the many variables, unexpected costs, and things that went wrong, making a profit turned out to be a tricky proposition. At the end of the month, we took home a meager paycheck and wondered, “Where has all the profit gone?”
Craig and I didn’t understand the importance of creating business systems, or the underlying principles for making them efficient and effective (8 Characteristics of Good Business Systems). We spent our day putting out fires and stumbling around to improve the operation. Eventually, some rudimentary systems emerged, and we began to learn how to play the “game of business” (see Grade Your Business Systems).
As a new enterprise—one that expects to have people, products, and processes—you must give attention to creating fundamental business systems and processes such as those described below. Some should be developed before the business roll-out, while others can be created and refined during the first year.
- Systems to Acquire New Customers: marketing, lead generation/advertising, sales, website/SEO/social media
- Systems to Get Good Workers and Teams: hiring, training, compensation/incentives, safety, employee policies, performance evaluations/recognition
- Systems to Make and Deliver Products and Services: production, order fulfillment, shipping and receiving, customer service, inventory management
- Systems to Manage Money: accounting, payroll, purchasing, credit/collections, tax/compliance, cash management
- Systems to Support the Above Systems: facility management, computers (IT), housekeeping, security, maintenance, office management
- Systems to Improve the Business: product/service development, business systems development, business improvement workshops.
Good Business Systems Make All the Difference
Getting off to a good start with effective business systems and processes will produce consistency, confidence, and accelerated sales growth; it will put you on the fast-track to earning your first profit.
New customers will love you because good systems:
- Help you meet and exceed their expectations
- Provide a great buying experience
- Give customers the “best deal”
- Increase consistency, quality, speed, and reliability
- Help you become a standout in your target market
(Customers will see you as organized, credible, and professional.)
Employees will thank you because good systems:
- Make job expectations clear
- Reduce training and supervision
- Improve productivity, quality, safety, and cleanliness
- Elevate job satisfaction
- Reduce employee turnover
(Employees will see you as a great company to work for.)
Your business will reward you because good systems:
- Maximize your income and ROI to make a profit sooner
- Eliminate chronic frustration and excessive costs
- Reduce dependency on people who come and go
- Build long-term value into your business
- Enable you to eventually sell, replicate, or have others run it for you
(Stakeholders will have confidence in your Leadership.)
Don’t Do What I Did
Starting and running a new business is high-risk. You have to work on the business as much as you work in the business (Michel Gerber, “E-Myth Revisited”). That means creating effective, efficient, and even exceptional business systems and processes.
Don’t do it like I did. Do it right, and right from the beginning.
Quite frankly, the Box Theory™ Way—the methodology and software—is the best tool available for business startups. It will get you organized, develop your Systems Thinking skills, and help you learn the Master Skill for creating growth-producing, customer-pleasing, waste-removing, profit-boosting business systems and processes. And, it will pay for itself almost immediately!
Please take a minute and check out the Box Theory™ Products. It may be the most important thing you do today.
And One More Thing: Don’t become one of the dismal statistics that describe the failure of most business startups. Even good business systems and processes won’t save a company with low market demand, insufficient working capital or profit margins, superior competition, an undifferentiated strategy or value proposition, difficulty reaching the target market, or ineffective management. These conditions—if not remedied—can kill a new business, so proceed with caution!
