All great businesses are built around solid operating systems. Does your business have robust systems or does it rely exclusively on people and their particular competencies? Most small businesses are built around people, not systems. One of the primary reasons for considering the purchase of a franchise is that most strong franchises offer specific operating systems. A successful Weavers member who came out of a military career purchased a fast food franchise. He was instantly profitable because he followed the systems and direction of the franchise without question. His business was profitable from day one and within six years he will completely retire his acquisition debt and generating significant after-tax cash flows. He knew very little about business but he followed orders and operated with strict discipline inside their operating systems.
All great businesses systematize every function within the business. There are strong financial accounting systems which everyone is required to follow. There are exacting product ordering, handling, and delivery systems. Significant businesses driven by a sales force require a specific sales management system. Great retail businesses spend a considerable time building customer service and customer satisfaction systems. How many of us over the last 60 days have been asked to complete a customer satisfaction survey? Every business has to have systems to manage customer information. How are you managing your customer information? Do you know who they are and why they buy from you? Virtually every business today is run from a computer with an operating system. Weaver’s experience indicates that most businesses only utilize about 25% of the technology capabilities contained within their computer and the operating system that they’re using. The primary reason for this under-utilization is the lack of training provided by the owner of the company for the people who are using the technology platforms within the company.
Depending on the type of business, you may also have a physical plant, tools and equipment, vehicles or other types of specialized resources. All of these constitute systems within a business that need to be operated with maximum efficiency.
The last and most important system in any business is the human resources systems. Every business should have specific systems to recruit, hire, train, compensate and motivate their employees. Whether a business has one employee or 10,000 employees, specific systems should be in place to manage human resources functions. Most Weavers new clients lack job descriptions, hiring criteria, formal training programs and regulatory compliance systems to address the complex employer-employee relationships under federal and state guidelines. Much of our initial work for these clients involves strengthening the human resources systems within the business.