10 Steps to Systematizing Your Business for Success

10 Steps to Systematizing
Your Business for Success

by Troy HillardDirector Wash Rite Limited

Most errors made within any business large or small are not caused by staff not taking there job seriously or intentionally damaging product it’s cause by those staff not having a clear and defined policy and procedure on how to carry out that task there required to do.. Here are 10 steps i believe will help you to create policy’s, procedures and systems that will ensure your business more successful in the future.

 

Clarity is one of the key point’s in effective business structure design, along with people and industry specific technology. Yet with the haphazard process management common in many businesses, it is little wonder that employees struggle to do a good job. So, although mapping your business processes is relatively simple to do and involves no financial outlay, it pays huge dividends in business efficiency and employee commitment. If you are thinking about systematizing your business, here are ten key pointers to keep in mind.

I see many businesses, both large and small, continue to communicate sections of important policies and processes to employees through one-time emails and the like. This could include a new purchase authorization policy or a new data entry procedure. Expecting employees to forage through past emails and other transitory type documents only leads to wasted time and exasperation.

 

1. Involve employees who actually do the work in the mapping

Employees who do the actual work are in the best position to know the detailed steps in each process. They are also most familiar with the common roadblocks and bottlenecks and the key contacts in the organization to get things done. Involve your employees up front by inviting them to join process-mapping teams. Keep managers and supervisors out of the process-mapping sessions, as they have a tendency to dominate the sessions with their own “expertise.”

 

2. Identify process start and end activities

For each process, clearly identify the start and end. If the team neglects this important step at the start of each mapping session, in the team’s enthusiasm, extra activities will quickly creep into the picture until the process becomes unmanageable. Think of one activity that triggers the process, such as an invoice appearing in an in tray. This is the start. Then think of the last activity performed. It may be, for example, posting an item to the General Ledger.

 

3. Identify process objective and inputs and outputs

This is where work starts to take on new meaning for employees. The team leader should ask employees why each process is performed and what are the expected results of each process. Not only does this help to focus attention on removing non-value add activities, but it also gives employees a sense of purpose in their working life.

Asking the teams to identify the inputs to the process and the expected outputs will serve to clarify what the process needs before it can begin and what customers of the next process will get before they can begin. For example, agreeing that widget assembly cannot begin until the joining screws are supplied will eliminate a lot of idle work in progress.

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4. Identify Customer and Supplier requirements

Next, each team needs to work out who the suppliers and customers of the process are. This step is critical as it identifies who the team needs to work with collaboratively to maximize business results. If a process does not have a customer, then eliminate it as it has no useful purpose. Every employee working in a process should serve either an internal customer or an external customer or both. Each team should then ask of their customers what it is they want from the process, in terms of quality, turn around time, and so on. For example, the internal customers of the purchasing team may require orders to be fulfilled within two days unless placed on back order.

Conversely, the team needs to clarify what it is they need of their suppliers, both internal and external, to perform their process effectively and efficiently. A purchasing team may require other departments, for example, to fill in all fields of the Purchase Order prior to submission.

 

5. Identify a Process Owner for each process

For each process, specify one Process Owner. Identifying one person who is responsible for the process end to end is critical to ensuring process efficiency. Where processes flow through departments, as all major processes do, the Process Owner will need to have sufficient authority and credibility to make decisions spanning these departments. There is no more effective way that I know to dismantle quickly and effectively the silo walls that get built separating departments.

 

6. Manage the level of detail

The magic of process maps lay in their seemingly simple visual presentation of complex ideas. One picture can tell a thousand words. Each process map should take up no more than one page, with its definition taking up just one other. If a map takes up more than one page, identify sub-processes within each process and show each sub-process on a separate page. Use clear referencing to link each sub-process with its associated macro process. I have seen process maps that flow on page after page after page. These do little more than confuse employees.

Do not try to document everything that goes on in your organization. Decide on the priority processes and concentrate on these. Processes from which you can gain quick wins are those that interface with external customers and suppliers and those that are currently providing you with your biggest headaches.

 

7. Use standardized mapping conventions

What you want is for anyone in the organization to be able to pick up a process map and understand instantly what it is they are seeing.

Standardize on mapping conventions and formatting of the maps. Mapping symbols, flow direction, page layout, fonts, titling and so on, should be the same from one map to another. Keep the number of flow chart symbols to a minimum. You should need no more than six to keep the maps easy to read.

 

8. Get agreement on the process

The most beautifully documented process will mean naught if there is little commitment from the major actors to follow them. Crunch time will come in those tough times of impending deadlines and snappy stakeholders.

I find what works well is getting formal sign-off from the process-mapping team leader, the Process Owner and the managers of the interfacing processes (both supplier and customer). This may seem overkill and you may get some resistance, however, getting formal agreement now will save you much heartache later when people start to come up with excuses as to why the seemingly agreed process does not apply in this or that case.

 

9. Document the process

The most important thing that team leaders can do after the team agrees on the process definition and steps is to write it down. What works well is brainstorming all the process activities first, writing each process step on a Post-it note and then having a team member place the Post-it notes in order on flip chart paper. The next hour or so is then devoted to arguing about the activities and order of steps. Post-it notes can easily be moved around during this debating process. Only when there is full agreement are the lines and arrows drawn in to signify the process flows. Get the process formally drawn up and make sure that they are made easily accessible to all who need them. Fix them to operator machines, post them on the corporate intranet or place them in a loose-leaf binder on each officer’s desk. Put them where people do their work and make sure that they are accurate, concise and easily understandable.

 

10. Convey management commitment and train your teams

Although mapping business processes will not cost you much in capital expenditure, it does require concerted effort. Get the management team to show visible support and commitment to the project. Activities here include holding regular project progress meetings and rewarding the most productive teams. Teams will loose faith and energy quickly if management support is seen as piecemeal or being given grudgingly. Team leaders will need to be able to organize effectively and manage their time, along with possessing the necessary interpersonal and analytical thinking skills.

Each team will also need a mix of abilities; people who can think creatively, bond the team and follow through on tasks, to name just a few.

Where these skills are lacking, they will need to be learned. Do not skimp on training the teams and their team leaders. This is a very wise commitment, as such teams have proved to be a fertile ground for developing the next line of leaders.

 

Use as a basis for further improvement

The primary objective of mapping business processes is to form a common understanding from which process improvements can be achieved. If this is the first time that your organization is setting out to map its processes, be ready to receive a bonus. The initial act of defining processes brings new clarity of roles, objectives and activities. For every team that I have worked with, this new shared understanding has uncovered many areas for improvement during the initial mapping process.

Once your teams have completed mapping their key processes, turn them into continuous improvement teams. Not only do the documented maps serve as the agreed baseline for ongoing process improvement, they also make for excellent induction and training resources. Now sit back and watch your business soar.

 

I hope this information helps you build your business as it has helped me build my business Wash Rite House Washing.

7 Cash Flow Management Tips for Service Business Owners

7 Cash Flow Management Tips for Service Business Owners

Business owners in a service industry contend with a host of problems every day big and small – producing products or services cost-effectively, increasing sales or production, satisfying unhappy customers, and motivating employees – and they quickly learn that most of these problems can be solved with cash. Cash flow is the life-blood of an organization big and small and regardless where in the world you are, its means to pay salaries, buy supplies, and make capital investments in infrastructure (CapEx). Owners who cannot efficiently manage their business cash flow are almost certain to fail. Those who can are able to improve nearly every aspect of their business and out grow there competitors as they now have a competitive advantage.

Tips to Improve Cash Flow

Converting sales into cash as quickly as possible, while reducing and extending your payments to build a cash cushion, is the basis for long-term, sustained growth, whether your company is large or small. Implementing some or all of the following suggestions can help boost your cash flow.

1. Plan for Future Needs

Avoid surprises. There is nothing more difficult or disheartening than searching for cash when you’re desperate. To start, keep accurate, timely accounting records as they are essential to understanding your business’s financial standing. Use your past monthly income and cash flow statements as well as your balance sheet to calculate available cash and project likely results for the next three to six months. These pro forma statements can help alert you in advance of any shortfalls, giving you time to prepare for them.

Some business owners, anticipating a future need, open a relationship with a bank for payroll and general company accounts and regularly supply the bank officers with operating statements in order to build trust. Depending upon the authority of the bank official, however, these efforts are not always successful. To improve your chances, notify your banker that you are eventually going to seek a loan, making it clear that the intent of the relationship is to have access to financing if needed. It is always preferred to build a long relationship with New Zealand banks before asking for any business line of credit.

2. Build Connections With Financial Institutes

The odds of being able to borrow cash or entice investors to put more money in your company when you absolutely need it are low. Bankers are least interested in lending to a company in desperate straits since their first objective is to be paid back. Build connections in the financial community before you need its help, not when you need it, and you may be able to secure a commitment of future loans. Bankers generally make secured loans on such assets as the following:

Accounts Receivable. Typically established as a revolving line based upon a percentage (60% to 80%) of total accounts receivable (AR) due within a 60 to 90 day period, accounts receivable financing is one of the most common corporate loans. The balance due moves up and down as AR varies: When sales and AR increase, the bank advances more cash on the line, when sales and AR decrease, you are expected to make a payment to bring the loan in line with the negotiated loan-to-AR ratio.

Inventory. Lenders generally like inventory as it is expected to be sold and turned into cash. Bankers generally prefer finished or raw inventory since it is most marketable in the event of default – many do not lend on in-process inventory as additional investment is required before it can be sold. Like an accounts receivable loan, an inventory loan moves up and down as inventory levels change. A typical ratio of loan to inventory is 50%.

Equipment. While technically not a short-term loan, owned equipment in good condition can secure a fixed-term loan for a single shot of cash in an emergency. Remember, however, that the more specialized the equipment, the lower loan-to-value ratio you may receive. For example, a 2016 Ford Ranger is likely to have a higher loan ratio than a variable drill press or a customized trailer. If you have old or excess equipment that is marketable, sell it for cash – having extra cash is more valuable than an idle asset.

Some business owners elect to sell their accounts receivable to a third party rather than borrow on them, a process called factoring. Specific terms are negotiated between the third party, or “factor,” and the company, including the ratio of value paid for each invoice, whether the sale is “recourse” or “non-recourse,” and any fees which might be paid to establish and maintain the relationship between company and factor. The advantage for a company, especially if it is newly established or has damaged credit, is that the factor looks first to the creditworthiness of the customer who owes the money, rather than the company which sells the AR.  (This form of finance is called factoring or invoice finance) I recommend this be a last resort type finance.

3. Keep Your Cash Working Hard for you!

Keep your cash balances in interest-earning accounts, which are available at most banks. In some cases, you might encounter a minimum balance requirement. However, since interest rates on these accounts are often lower than those of savings accounts, certificates of deposit (CDs), or money market accounts, consider keeping the bulk of your funds in higher-paying accounts, then transferring funds to meet the minimum balance requirement in your interest-bearing trading account (plus the total payments due that week or month). Avoid long-term certificates of deposit (term deposits), which lock you in for a specific period of time, since redeeming them early may cost you interest. Either invest in penalty-free certificates or that portion of funds which you are not likely to need during the life of the CD.

Set up a separate payroll account and establish a bi-monthly cycle. Bi-weekly payroll systems require 26 pay cycles a year, bi-monthly only 24, which means they save the extra administrative costs of collecting, verifying, and tabulating payroll information. Finally, transfer payroll funds immediately before payment to keep your cash earning interest.

4. Educate and Train Your Customers

As a small business owner, your goal is to collect payment for your services or products before or shortly after incurring the expense of producing or delivering them. The optimal outcome is to receive payment on delivery (COD), but that is not always possible. Invoice your customers the day you deliver your product with the notation that “payment is expected on invoice receipt.” Don’t suggest that waiting until the end of the month is an option. Include a notification that interest is charged for all payments later than 30 days and collection procedures may be initiated. Also, stay on top of your accounts receivable aging – a report categorizing accounts receivable according to the length of time invoices have been outstanding – with an established process for following up with late or delinquent payers:

  1. An initial form letter 10 days following receipt asking for payment.
  2. A second follow-up letter – more aggressive – in 20 days demanding payment.
  3. A third letter in 30 days and a phone call from your collections clerk seeking payment.

It is important to have early contact with potential delinquent payers and to offer a variety of options for payment if they have difficulties. These options might include a credit card charge or a payment plan. Be careful about instituting a policy of discounts for early payment since big customers are likely to delay and take the discount at the same time. Remember, a customer who doesn’t pay isn’t really a customer, but an expense. Determine how you want to handle late or non-pays before they arise, document your decision into policy, and stick with your policy.

5. Work With Your Vendors and Suppliers

Just as you want customers to pay you, your vendors want payment as soon as possible. However, early payment to vendors can hurt your cash flow and should be avoided if possible. Delay payment as long as you can while remaining consistent with the terms of the sale. If there is no penalty for late payments, set a pay cycle of 45 to 60 days from receipt of an invoice. While slowing the outflow of cash is important, it is equally important to maintain a good credit rating and cordial relations with critical vendors. Be aware that slowed payment might result in contact from the vendor that has been affected. In those cases, be vigilant that all future payments are as promised. If you are forced to delay payments, contact the vendor as soon as possible with an explanation and a plan to become current on your debt.

6. Maximize Cash Inflows

There are a number of methods to increase cash flow, especially if you sell custom products or engage in extended contracts. Require security deposits equal to 50% of the order if the product or service is unusually large, complex, or one of a kind. If you work with contracts, set up payment schedules and amounts that parallel or exceed your sunk costs. If your customer demands modification of standard products or services that have not been identified in your contract, seek additional payment through fees or change orders.

Small businesses which provide a regular service or product should consider subscription sales whereby customers prepay. Newspapers, magazines, cable television, landscaping, and pool maintenance are examples of products and services which lend themselves to a subscription model. In addition to receiving upfront cash to cover future costs, you have the advantages of securing future sales and easier resource scheduling.

As another option, layaway programs have come back in vogue as an alternative to sale and payment plans. A layaway program allows customers to select a specific product, which is then reserved for a future purchase and delivery when payment has been completed. This allows the seller to have use of the cash prior to incurring the product’s cost. Special accounting treatment of the cash received is required, so be sure your accountant is aware of the program. Consider taking credit cards to ensure timely and probable payments, as well. If you elect to do so, raise your prices to compensate for the extra costs and give those customers who pay cash a discount equal to the fee that would be paid for a credit charge.

7. Minimize Cash Outflows

The combination of cutting or avoiding expenses overall and delaying payment as long as possible reduces demands on cash. Strategies to reduce cost include the following:

  • Repair Capital Equipment, Don’t Replace It. Save money by having a regular maintenance program, using reconditioned replacement parts from third-party suppliers (rather than factory parts), and contracting with a local repair facility to handle jobs too big or complex for in-house personnel.
  • Buy Used Equipment. Used equipment in good condition is generally just as good as a new piece of machinery. Search local advertisements and auctions in your area, specifically looking for companies whose assets have been foreclosed and are being sold by a lender. You may be able to buy quality used equipment for savings up to 80% without a comparable degradation of capability.
  • Delay Product Upgrades Until Absolutely Necessary. Delay product upgrades and consider open-source software, which is generally free or available for a small donation. Any software you use should have a focus on safety and security, which should always come first for any business.
  • Barter Products For Supplies and Services. Suppliers who are also customers might be interested in a “trade” whereby each company receives all or a portion of its respective payments in the form of finished products. Since the exchange value is usually set at each company’s respective retail price, a barter agreement effectively provides a “discount” equal to the net profit margin on your product and allows you to maintain cash that would otherwise be used. From an income tax perspective, be sure to report the products you receive from your suppliers as gross income in the year of accounts, while expensing the products or services you provide as a “cost of goods.”

Final Thoughts

Business owners usually learn two principles early in the life of their companies. “Cash is king” refers to the importance of cash in any company, and the Golden Rule – “He who has the gold makes the rules” – the validity of which is apparent to anyone who’s gone hat-in-hand to a lender. Building and keeping an adequate stockpile of cash provides maximum opportunity and flexibility to any business while enabling its owners to sleep soundly at night.

If you have any questions or comments i will be happy to answer them the best i can.

Systems are the Key to success

I am sure everyone has herd the term “Business Systems’ or to “systematize ” your business. What this means is for every function in your business there is a system or procedure set up in place and implemented.

What this means is that when it is fully implemented your staff know exactly what they have to do and how to do it and if there ever unsure they always have the operations manual or system manual to fall back on to.

What this allows you as the owner to do is not have to run around and micro manage the business and this will allow you more time to do the important things like work on sales, customer service, marketing they key jobs that actually bring in work.

As a new business owner its hard to work out where to start in systematizing your business. By this stage you should have the basic operations manual for the practical part of your business weather its mowing lawns, washing roofs, or cleaning carpets in place but we all know there is a huge amount of work done behind closed doors in any business. I recommend for one week keep a note pad on you and write down every single job you do for the business that’s not on the job site related, Such as pay roll, order supplies, health and safety, accounts ,marketing, sales, website and social media, and so on. After the week you will be surprised at everything you have done. Now over the following month site down and write a manual for each and every task you have on your list. The manual needs to be detailed and in simple plain English so all your staff and understand it as they will be the ones implementing it.

Once you have done this compile them all and ad them to your company’s operations manual, Over time you will ad, change and adapt the manual as you find new ways to be more efficient.

The key is to be as detailed as you can be, In my business Wash Rite House and Roof Wash i even have manuals for how the guys wash the service vehicle’s. Why may you ask? I have them to ensure all the vehicles are washed and presented in a uniformed way and so i can easily know who is not doing it to the required standard as it will stand out from the rest which are all the same.

Dont think this is a quick process, you will always be working on and updating your manuals as long as your in business, But now you have them in place your main role will be to manage the manuals as the manuals will be running the business for you. A key point to know is that you will have staff that wont like to follow the manual or think they have a better way to do things, Listen to there way try it but if its not more efficient than stay with the manual. If they refuse to abide by the manual fire them and get someone who will.

When your team is on board you will find that you will be able to take 2 weeks or even 6 weeks off and your business will still be running and still making you money while your not there, And this is the whole point of systematizing your business. To give you the freedom to either work on growing the business or doing person things outside of work you like to do.

Client Interaction is the KEY!!!!!

Now your business is up and running and you have done your first paying job or two you need to turn your attention to client interaction. What i mean by client interaction is you need to interact with your clients post job completion, Why may you ask? Well for a few key reasons. first you want to try and up sell to that client any services you offer but they have not used as of yet, second of all you want your company’s name to be front of mind for them when they think house washing or any field you operate in.

The first question i always get from new business owners is how to i interact with the client without sounding desperate for there work? Well its easy below is a list of a few ideas that i do in my house wash and roof wash.

  • After the job send the client an email asking how they found your service.
  • If they reply saying they where happy with your service reply with a short email offering them the chance to post a review on your Facebook or google page. Most people who will do this will also like and follow your page, now they will see all your updates and they will never forget your business,
  • When quoting always get an email address and ad that to your email marketing database to send out monthly or quarterly newsletters.
  • If you know there birth date or see there birthday on social media send them a short message wishing them a happy birthday or if there a really good client send them a small gift.

By doing these small steps and they are very basic which is good for new business your clients will think you really care and they will never forget who you are the great work you did for them.

Another great idea is if a client refers a friend to you send the original client a thank you card and a bottle of wine or the referral, I do this all the time and you will soon have a list of 20 clients who refer 2 or 3 jobs a month to you, There is no better advertising than free advertising.

If you live in a small town i would recommend that every time you drive around your local neighborhood you wave to most cars you drive past at slow speed regardless if you know them, It wont take long until you get the reputation of the nice guy in the house wash truck that always waves to to them and you will be surprised how often they will mention that to you when you go and quote there job that they see you waving to them.

I will have posts later on in regards to email marketing and social media marketing and how to get business from these area’s.

Your First Paying Job

Your First Paying Job

Time has come to do your first job for your first paying client that’s not your mother’s house or a family friend’s house. Your first true customer!

The day before you do your first job site down and write down step by step house you will do the job, What you are doing is writing the first of many versions of your operations manual, For example it should be something like.

  1. Knock on door and introduce myself to the client and talk them through what you will be doing.
  2. Walk around job to familiarize yourself with the job your there to do and make notes of any safety issues you will be dealing with
  3. Set up equipment.
  4. Step by Step key points on how you complete the service your there to do.
  5. Clean and pack away equipment.
  6. Walk around and inspect the job completed with the client to ensure they are happy.
  7. Farewell the client and leave a business card or other promotional material with them.

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As you do more and more jobs you will keep on updating and adding more and more detail to this manual. You can only do this over time and with experience. To give you an experience my Operations manual for my business Wash Rite an exterior house and roof wash company is around 60 pages, The manual for just washing houses is 3 pages long.

The morning of your first job arrives and your all nervous, don’t be you have your step by step manual and all you have to do is make sure the client is very happy at the end of the job. Sounds easy well it is. If you cant make a client happy stop your business and go get a job.

You don’t have to be the quickest or the smoothest contractor in your field but you must be the person with the highest attention to detail and best communicator with the client and if you do these two things in my experience the customer will always be very happy.

A big concept i have always tried to instill into my staff is its always better to go one step above and beyond what the client is wanting than to go one step to short. In short in my industry when we are washing a house and we have only quoted on washing the house but they have a child’s play house in the back yard we will always wash that as well and not charge or even mention it, Little things like that are remember by the clients. By doing these small things you build a brand than people will defend and promote to anyone they know.

It does not take flash brand new equipment to give good service, don’t be ashamed of humble beginnings only be ashamed from bad service.

HOW TO GET CUSTOMERS ??

HOW TO GET CUSTOMERS ??

 

How to get customers?? The single hardest point to master in any business and even more so in a small to medium size service based business.

There are a few tried and true ways that have been done for years and the reason they have been done for years is because they WORK. I am going to list 5 methods i would do and i will list them in the order to do them.

1st – Jump on www.fiverr.com and pay $5 bucks to get your logo designed up professionally, Once you have your logo go to http://www.vistaprint.com and get 2000 business cards designed with your new logo and printed and sent to you, This cost me around $150.00 shipping included. Now you have your new business cards with your new logo. Now walk out your front door with them in hand and start walking the streets in your neighborhood and knock on every door and introduce yourself to every neighbor in a 1 mile / 1.6km of your own house. Now your not knocking on the door to sell your service your knocking on the door to introduce your service to them. You will be surprised how many will ask you for a quote than and there so be prepared for that. I have found this is a great and very cheap way to get your name out there and very very good way to pick up work, every time i do it i average 2 house wash jobs for my house washing business every hour i am out doing it. I have a video explaining this on my you tube channel. You can watch the video at the following link https://www.youtube.com/watch?v=cJyNEj9vxPA

2nd The next thing i would go and do is join a business networking group, I joined one called BNI (business network international) and you meet one morning a week at a cafe or restaurant and you meet other business owner, It costs me around $10 a week. Its the single best way i know to get commercial work from business owners and the whole reason people go is to refer other business in the hope they refer work back to you so its a win win for everyone.

3rd This next step is very important, Open up a Facebook, Instagram, Pinterest, Tumblr account and post on them regular, I post on my Facebook page everyday and twice a week on the rest, I also recommend that you get everyone you know and everyone they know to like and share your page, You need to build a decent audience and you will soon see people making contact for quote’s. This step will help the next step.

4th This step is the only step that will cost any real amount of money. Get a website built. I recommend using someone who uses wordpress as you can make changes to it easily down the track and a lot of the in-depth SEO for the website has already been done by them. My website cost me around about $1000 to get built and its working very well for me. I get a few quote request daily from it so its making great money for us. Now you have a website you need to try and get it ranked on google so people can actually see the website. A good hack to get up on the google ranking can be found at this link https://www.youtube.com/watch?v=1beL1pTDNEc.

5th The final thing i would do is to ensure that every job you do you go above and beyond what the client was expecting so they are so very happy with the job you have done that they are more than happy to give you a review on your Facebook page or your google page. You also want to try and rebook a job for next years clean than and there. If you can do that than next year will be booked out before it even arrives. Remember if these people are happy they will refer you to friends and family.

These are 5 basic steps i would take to get customers for your new service business.

Any question happy to answer them.

Troy