When you first start any business, there’s a good chance you’re working alone or with a very small team. It’s all hands-on deck, everyone does whatever is necessary to get things done, and there’s a lot of communication.
Over time, however, if you are doing things correctly, your business will grow, your team will get bigger, and things will become more compartmentalized. Most businesses reach this point and realize that because they were so busy growing, they haven’t had time to formalize processes.
You might think you can just continue as you are, on a bigger scale. However, that’s almost always a mistake, and here’s why.
1. Processes Improve Profits
When you’re in business, the bottom line really is money. You need to make more than you spend. If you make a lot more, your company will grow and prosper. If you don’t, you face bankruptcy and disaster.
Even if you stop reading right here, you need to know that having effective processes in place improves capability and governance, increases productivity, and lowers mistakes. In short, you will make more money when you have processes in place.
2. Processes Reduce Human Error
If you’ve been driving for a while, you’ve probably had at least one experience where you arrive at your destination and can’t remember the drive. You are so used to the process of driving that you don’t have to consciously think about doing things properly and safely, so nothing stands out in your memory of the trip.
Effective processes, once they become habits, are the same way.
Whether we like it or not, human error is always a factor in any business. Calculation errors, failing to file paperwork correctly and all kinds of other seemingly small things can cause a lot of trouble.
Good processes allow your employees to form habits around doing things correctly, so even when they are having a bad day or are distracted, they will automatically tend to do things the way they should.
3. Processes Increase Productivity
Think about tasks that you do frequently. When you first started doing them, you probably tried various methods, until you found one that was the fastest, easiest and gave the best results. Once you found the best method, you probably used it every time, and the more you did it, the faster and more accurately you could complete the task.
Processes are the same in a business environment. If you were to try to invent new ways to do everything on the fly, you would spend half your day trying to figure out what to do and how, and that would decrease productivity and capability. Time is money, so that also means you would increase the cost to complete every task.
Your processes don’t have to be perfect, and they can always change over time, but having them will make it easier to get things done faster and be more productive.
4. Stability and Continuity
The next reason you need to have processes in place in your business is to create stability, continuity, and predictability.
There are some people who thrive under pressure and in chaos, but they are a very small percentage of the overall population – and you might not have any that fall into that category among your staff.
When ordinary people work in a chaotic environment, it usually results in extra stress. Over time, stressful jobs often lead to job dissatisfaction, and very often, people who are dissatisfied with their jobs will leave for another opportunity.
Which means that not having processes in place, and the stability it brings, can increase staff turnover, which has all kinds of negative effects. You will have the extra cost of hiring, decreased team morale as people are forced to take on additional work, loss of capability, and often, upset your customers by not delivering on time.
5. A Poor Company Culture
When you don’t have processes in place, you and your team probably spend a lot of time “putting out fires.” It might keep your business afloat, but if you’re constantly rushing from one disaster to another, there’s not a lot of time to build company culture.
Company culture is a tenuous, hard to define thing under the best circumstances. In companies that are too busy just trying to keep a lid on everything, there’s no time to work on building culture. Your teams will be fractured, collaboration will suffer, and everything that depends on those things will take a beating.
6. Processes Identify Problems
Aside from telling people how to do things, proper processes also improve corporate governance. When everyone knows how to do things, and there are checks and balances built into every system, it’s easy to spot common problems.
Whether this is an employee that is ill suited to a role or a problem with the way you do things, if you’re consistently having problems, you know where to start fixing things.
Proper processes, including assigning resources and people can also help you to identify if there is an imbalance in workloads. Perhaps one or two departments are doing the lion’s share and need more help. Developing and monitoring a process will help you to find those problems and address them.
7. Processes Improve Employee Assessment
Most companies have some kind of employee assessment, but if yours is based on who stays latest, seems busiest and smiles most often, it’s not worth much.
Proper assessments of your employee’s performance and productivity require you to know what they are supposed to be doing, and to have the tools to measure their performance. You cannot do that if there are no processes and they’re just pulling a new rabbit out of a different hat every day.
Developing and implementing processes for every department and role will help you to set better tasks and deadlines, and to measure employee delivery on those things.
8. Processes Improve Intra Departmental Co-Operation
It would be great if we didn’t have to have different departments, and we could just focus on getting our customer’s orders out the door.
But you need a sales team to get those orders. You need operations and project managers to make sure things get done and made. You need a purchasing team to make sure you have supplies and equipment, and a finance team to make sure your vendors stay happy and are paid.
Most mid-sized businesses have a dozen or more departments, and they all have to know how to deal with each other. Proper, documented processes help people in different departments to understand how other departments operate, and what is required of them.
This speeds up intra department co-operation, because everyone gets the information, they need to keep things moving smoothly.
9. Happier Clients
Good processes not only increase your capability to deliver for your clients, but they also make it easy to keep them in the loop.
When you know exactly how all your processes work, you can answer customer questions much faster, and direct them to the right people for the right information. You can also get their orders completed faster and will know earlier if there is a problem they need to know about.
We all know that in many cases, customers will rate service above price in terms of what matters, and good processes mean you can offer better service.
10. Easier Onboarding
If your company is growing, sooner or later you will need to hire more people. The process will be a lot smoother if they step into a role where you already have systems in place.
In fact, many new hires use the first few weeks or months of their new job to decide if they want to stay. If they arrive to chaos and disorder, and no one can tell them how to do the job, they’re a lot less likely to stay.
Good people will always look for ways to improve processes, but it’s always a good idea to give them somewhere to start.
When Should You Develop Processes?
The short answer is before you need them. The longer and more practical answer is to develop processes as soon as possible.
If you put strategies and systems for good governance in place early, you won’t have to scramble to figure them out when you’re trying to grow a business.
As you identify new problems and come up with solutions, you can keep adding to those processes and policies, incorporating new strategies or modifying them when you add a new department or an enterprise software solution.
Good processes and policies are fluid – not written in stone. You don’t write them and then leave them to gather dust on a shelf. You work with them every day, and when you see an opportunity to improve or build on something, you do.
There comes a time in every business where the owner, founder and upper management take a step back from working in the business to working on the business. Processes help to make that happen sooner, and to make the transition smoother.