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Top Five Mistakes When Systematizing

2010 | Mar 31 in Business Development , Home Page News , Systems , Management , Leadership

By E-Myth Business Coach,

In order to create an E-Myth'd business, you must create a systematized business. It's absolutely critical to the future growth and success of your business.

Why? Well, systems are essential to:

  • Building the asset that will generate the greatest ROI should you choose to sell your business some day.
  • Creating the order and structure that will produce your intended product or service.
  • Producing consistent, reliable results each time, every time, exactly as promised.

Even before you intentionally set out to “systematize” your business, you'll probably find there are systems in place and functioning in your business right now. Think about it: everything that gets done in your business is done by following a system of some sort. They may not be effective systems, they may not be consistent, they may not be written down, but a good number of systems are already there. One might say that most businesses function with systems that exist by design or by default.

So let's say that you've decided that it's time to streamline and optimize your business functions and practices. You've decided to fully systematize your business. You know that customer satisfaction will improve, employee morale will rise, and the bottom line will increase.

If you're like most people who've read The E-Myth Revisited, you were inspired to begin using systems right away. Fueled by your excitement, you thought you could turn things around really quickly with a few well-placed systems. The systematization process can be approached in a number of ways, not all of them successful. The reality of creating a "turn-key" operation is harder than it seems. We know it is. And that's why we've been coaching people to do it for more than 30 years.

There are a number of common mistakes made when endeavoring to create a “turn-key” operation. Here are five of the mistakes that come up most often from our clients:

  1. Having No Strategic Plan
    You’ve got to know what you’re building, why, and where you’re going with it. This should involve writing out your vision for your business and what you want to accomplish in, say, five years from now. Having that picture and a target date will allow you to plan more effectively. This, in turn, allows you to prioritize the development, documentation and implementation of systems by the level of impact on the business and the customer experience. Without a detailed and strategic plan your systematization efforts will be sporadic, haphazard, and quite possibly incomplete.

  2. Looking for “One Size Fits All” Systems
    Everyone would like to be able to buy a set of systems that can simply be installed into their business, turned on, and make everything run! But it doesn’t work that way. You can’t take something off the shelf and make it fit your company without customizing it to your particular business, your vision, and your needs. You must make sure you’re clear about what you want your results to be and design your systems to produce those results.

  3. Not Documenting Your Systems
    I've had business owners tell me that they're business really is systematized, it's just that the systems are all in their head. That doesn't count! Unless a system is documented, it can't be repeated properly. You may have a system that has naturally developed over time, and it works pretty well because the people who do it have been doing it that way for a long time. But if that process is not written down, how can you train others to create the same results? How do you ensure that everyone does it the same way? Documenting your processes is absolutely essential. As Michael Gerber says, “If you don’t write it down, you don’t own it.”

  4. Lack of Implementation
    Peter Drucker said, “Plans are only good intentions unless they immediately deteriorate into hard work.” Implementation, or execution, of systems is absolutely essential in order to truly have a systematized business. Documentation alone is not enough. Yet it is at this point that most businesses tend to stall. And it isn’t just small business owners that struggle with this function. A recent study published in The Harvard Business Review shows that most large companies typically realize only 63% of their strategies’ potential value due to deficiencies in planning and execution.

  5. Leaving Out Quantification
    When you document your systems, you must have clearly defined and quantifiable results so that you know how to evaluate your efforts. It's the only way to truly determine if your systems are effective. Systems evaluation is an essential (but often forgotten) step in understanding your business better. By taking a good hard look at your systems and their intended results, you can determine where innovation (or possibly elimination) needs to occur. It’s been said that if you don’t measure it, you can’t manage it; if you don’t quantify it, you can’t fix it.

Make It Happen With a Team

Systematizing your business is a strategic and essential part of building your business into an asset. Building your business into one that you can sell for the greatest return on your investment isn't something you need to do alone, however. While you're ultimately in charge of the vision and direction of the business, the work of developing, documenting and implementing systems is ultimately a team effort. And effectively delegating and orchestrating the work is key to successful systematization.

Further Reading

The System Solution
Overcoming Business Frustrations with Systems
Engaging Employees in Your Strategic Objective

Comments

  1. .Barry C. says:

    Excellent points. Especially having no strategic plan and poor execution.

    Submitted Mar 31, 2010 9:46 AM

  2. .Kevin M. says:

    Great article, systems are formal or informal but we've got them everywhere in our businesses. I would add one more critical piece to have in place before systemizing: What is the Impact you want to create on your client's life and/or business? You need to have this Impact in mind to design proper systems. I talk about this in my upcoming book "Energize Your Business with the Law of Attraction" at www.earthandlight.com

    Thanks

    Kevin

    Submitted Mar 31, 2010 9:49 AM

  3. .Niall S. says:

    Absolutely right. I am setting up a new business right now (www.traffictroop.com) and i intend to apply the emyth principles to it ( having already run a business that was very poor at execution).

    Submitted Mar 31, 2010 9:55 AM

  4. .Eric E. says:

    To me implementing a system means you are making a change. My experience is that people love change so much and instantly embrace it. So you dont have worry about things like adoption. HA HA.

    All kidding aside I have found that even when new systems are more efficient and cost less its still a change and therefore a challenge to get buy in. Ah I am experience a frustration. I see I need a new system of some sort. :) Perhaps its the buy in system.

    Happy Business Building

    Eric Elwell

    Xenios, llc

    www.xeniosllc.com

    Submitted Mar 31, 2010 10:34 AM

  5. .Cassie S. says:

    After reading E-M revis, we realised the need for system. We formalised  non formal processes adn realised that building a system is the easier part. IMPLEMENTING it is difficult.

    So part of each system is a set of documents which include the implementation plan. Without it, it doesn't work. You have to sell it, enforce it, train it, and work better because of it. Well, my thinking anyway.

    Submitted Mar 31, 2010 12:22 PM

  6. .Lyle P. says:

    The longer I'm in business the more these 5 mistakes ring true. There's probably 10 more but these are a good start.

    Submitted Mar 31, 2010 12:24 PM

  7. .Jay B. says:

    Yes, I agree with these points put forward here. The strategic plan is absolutely critical to provide direction and meaning to the systems. Then lack of documentation and implementation basically negates the entire purpose of the system in the first place.

    Quantification would have to be one of the more difficult aspects to developing systems, for me personally. With practice though, it is becoming easier to implement this step too. I concede that this is a very important point here, else you have no performance indicator of this aspect to your business.

    Jay

    Amino Z

    www.aminoz.com.au

    Submitted Mar 31, 2010 1:02 PM

  8. .Jay B. says:

    Oh and one more note - the one size fits all strategy, while it seems good initially to save time, will cost you a lot of profits in the long run. I am finding that putting in the hard work developing these systems is paying big dividends!

    Jay

    Amino Z

    <a href="http://www.aminoz.com.au">Personal Training</a>

    Submitted Mar 31, 2010 1:03 PM

  9. .Gabi P. says:

    As one just starting a new branch to my business, the E-Myth Revisited has given me heaps of things to work on, and the enthusiasm and excitement to do it. I struggle a little as I am a sole trader, a one woman band,  so setting up the systems tend to fall prey to my inner voices that insist that it is all too hard.

    However, given my extreme willingness, faith in my service and intense enjoyment of what I do, I am taking the systemization step by step without rushing or assuming it will all work and being willing to change it on a dime if it doesn't.

    I thank you all for your contribution.... each persons' comments help me enormously.

    Gabi P from Cairns, Queensland, Australia. www.gabiplumm.com

    Submitted Mar 31, 2010 4:10 PM

  10. .Eduardo A. says:

    I have a 25 people company. I have finished the Mastery Impact two weeks ago. And the hardest part of systematizing is: people. You have to keep them pointing in the right direction and keep their motivation high.

    That's why I really enjoy the "Company's Culture" process. There you can find out how you can get them in the right direction and happy doing their activities.

    Thank you,

    Eduardo Avalos.

    Monterrey, NL, MEXICO

    Submitted Mar 31, 2010 4:16 PM

  11. .Eric E. says:

    On the topic of implementation. check your will power for saying NO when someone trys to buck your new system. You will have to say no over and over in order to get it to stick. In my humble opinion

    Submitted Mar 31, 2010 4:56 PM

  12. .Brian P. says:

    I have sent this article to my friend Patrick Gavaghan in Bolivia who has 350 dairy cows and runs his farm with his son and daughter and 43 workers. The Gavaghans have each read E-Myth Revisited. I'll report back on what they tell me

    Brian Passman

    Submitted Apr 1, 2010 12:42 AM

  13. .Howard I. says:

    Another mistake commonly made is establishing too rigid a systemization without allowing the flexibility to evaluate, measure and redirect where error occures or opportunity and growth dictate.

    The E-Myth books are of great value and direction but if one proceeds to systemize a erronious or archaic method damage can be done. There need be room left for reasoned, knowledge gained adjustment. One's business need interact and respond to the external economy and requirements of a changing industry.

    Submitted Apr 1, 2010 6:23 AM

  14. .Keith L. says:

    Our company is in the business of designing custom software systems for systematizing companies yet many of our own internal systems were not documented or quantified.

    We were so inspired by the E-Myth Revisited we actually created a simple software tool that allows users to create standard operating procedures that can be assigned to company positions, assigned to employees as a “position contract” and then displayed on a simple company Org Chart.

    We love it and refer to it every day to get our jobs done!  Take a look and let us know what you think.

    http://www.orgplannersoftware.com

    Submitted Apr 1, 2010 11:02 AM

  15. .Todd C. says:

    On the last mistake people make in business. "quantification" 

    I think the way we do business today are ever changing. I'm finding more and more businesses are turning to social media. So my frustration with this is how do I quantify the money and the time I spend each day on these types of social media marketing tools. to what my ROI is?

    Submitted Apr 1, 2010 2:19 PM

  16. .Vida E. says:

    Keith,

    I took a look at your OrgPlanner demo. Good job! I was impressed with some of your other software solutions as well.

    Thanks for posting.

    Submitted Apr 1, 2010 3:26 PM

  17. .Demarcus T. says:

    It is impossible to build a true franchise prototype without properly systematizing your business.

    Demarcus Thornton

    CEO

    Lighitnin Lube

    www.lightninlube.com

    Submitted Apr 2, 2010 6:32 AM

  18. .John F. says:

    I think two additional points to me made are:

    1. You've got to see it through long enough to make a difference.   So many people and organizations execute changes and systemizations and then don't have the stomach to see it through.   They work it for a couple of months and then say, Ha!  It isn't working, let's go back to the old way or they give up.

    2. Flexibility not just in the actual system development, but in adaptation.   If you aren't willing to adapt and constantly improve, you will go no where!

    Submitted Apr 5, 2010 11:07 AM

  19. .Donna J. says:

    I am "just" a mommy blogger, but I am also a business consultant and strive to keep learning and growing so that once I am able to be more active in business again, I'll have a much firmer foundation.

    It seems as if the e-myth org and community is just what I need to help me achieve this goal.

    Thanks for sharing such vitally important and excellent business wisdom.

    Submitted Apr 8, 2010 11:19 AM


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