Tag: systems

9 Reasons Why You Need A Business System

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If you want to build your business, it is essential that you have systems and processes in place as they serve as the building blocks for your business and without them you cannot grow your business. Here are the 9 reasons why you need business, systems:

1. Consistency – With a business system you can repetitively produce the same products and services with no variation. Systems can be implemented for sales, marketing, operations, training, etc. This allows you to monitor your business so that you can make changes to improve it.

2. Change – Because change in any business is inevitable by having systems in place and knowing how your process works you can modify it quickly to suit the required changes. Also, with systems in place you will be able to review it and apply continuous improvement which will improve your business overall.

3. Training – A system will allow proper training to take place which in turn will increase productivity and effectiveness. Procedures will be in place which allows employees to have consistent, high-quality performance on relevant tasks.

4. Focus – When deadlines or new projects are required, business systems will allow the activities to be performed on autopilot as everyone will know the processes and procedures that are required.

5. Customer Expectations – Systems will allow you to measure and analyse customer satisfaction, this will give you information on how to improve your products or services that will give you the competitive advantage in your market.

6. Reduce Costs – The business system is the only way of providing quality assurance as you don’t have to repeat activities several times due to defects. Systems will also allow you to remove waste from your business.

7. Profitability – Because systems are in place your business will be efficient and effective and you will have reduced costs by removing waste from your business. Customer satisfaction will have increased and you will have improved your on-time delivery therefore you will increase your profitability.

8. Value of your business – By having systems in place your business instantly becomes more valuable to an investor, this is because the investor knows that your business will run smoothly, and quality is assured. This will also help you to sell your business and command a higher price.

9. Strategy – By having business systems in place you will be able to step back and work on your business instead of in your business, therefore you will have the time to become more strategic and be ahead of the competition.

 

What’s your strategy?

Introduction

How often do we hear people at network meetings ‘What’s your strategy?’ and the answer is usually goes something like ‘Baby buy to lets, then move up to HMO and eventually commercial properties’, and everyone is satisfied and they then move onto the next person and ask the same question. This always begs the question why are using this strategy, what are you hoping to achieve? You then get the blank looks or a mumbled answer which indicates that this has not been thought through.

According to the Business Dictionary strategy has the following meanings:

  1. A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.
  2. The art and science of planning and marshaling resources for their most efficient and effective use. The term is derived from the Greek word for generalship or leading an army.

Integrated Method

As can be seen by the above definitions strategy is linked to a plan to bring about a desired future and we need to bring our resources together to be efficient and effective. What do we mean by this and how can we achieve it? Because we need everything and everyone to work together rather than in isolation we need to consider an integrated systems approach. This method is about people and systems coming together and working as a team. Why as a team? If we think of the system as a football team and now the manager calls each team member one by one and tells them what the tactic is that he wants them to play. The team then go out on the field and they play badly because each member of the team only knows what his specific task is, they have not had the benefit of listening to what was said to everyone else and knowing what their roles were. Now that you get the idea why we need an integrated approach let’s model it so that you can see how it fits in together.

 

As can be seen by the model you need to understand where you want to be in your future, as this is the starting point. This could be your why, or it could be your financially free figure. Once you have decided what your future should look like then you can work on your strategy to see what you need to achieve your future. Then you need to understand what methods and tools are required to make it a reality. Do you need training in the tools and methods? If so this needs to be added to your integrated approach. Finally you need to consider what systems need to be put in place to support the integrated approach and KPIs (Key Point Indicators) to measure your success. By having flow down and feedback throughout the integrated approach everyone understands what is required to reach the future state.

If we take each of the headings and place it into a table we can then work on each section to come up with our integrated approach e.g.

 

Where do I/we want to be? What is my/ our strategy? How can I/we do this? What capabilities must be in place? What systems are required?
Financially Free Figure of £10k per month Buy to Let = £200 per month.

£10k/£200 = 50 Buy to Lets

 Money in Money out.

 

 Training Courses KPI’s
HMO = £1500 per month.

£10/£1500 = 7 HMOs

 Joint Ventures Mentors Standard Work Procedures
Serviced Accommodation = £2700 per month.

£10k/£2700 = 4 Serviced Accommodations

 Investment area(s) Benchmark against successful investors Lessons Learnt

Work with suppliers (Estate Agents, Letting Agents, Sourcing Agents etc.) so that they can deliver to our requirements

 Power Team Visual Management

 

You can see by using this method you start to build up a picture and you begin to see how everything is linked to your future state. This is your birds’ eye view of where you want to be. This can then be broken down further e.g. you may decide that you only want HMOs as your strategy, in which case everything below the strategy needs to be geared for HMOs e.g. Finance, Estate Agents and Letting Agents that deal in HMOs, Training, Regulations, Commercial lending, vetting, house rules, etc.

 Conclusion

When you work on things in isolation it is quite easy to lose your way, by having an integrated approach to your business you will become more focused and achieve quicker results. Planning for your future state is important so take your time to think and make your plans. As Abraham Lincoln said ‘Give me six hours to chop down a tree and I will spend the first four sharpening the axe’

Systems & Procedures

According to the Oxford English Dictionary a system is:

  1. A set of things working together as parts of a mechanism or an interconnecting network; a complex whole.
  2. A set of principles or procedures according to which something is done; an organized scheme or method.

Many people say that they have a system in place for their property business but when you ask questions about their systems and dig down it turns out what they really have are processes and tools that help them carry out things like analysis of an area or a deal, so it becomes a bit of a shock when you tell them that these are not systems. To understand this, here is a simple definition of a process and a system:

  • Taking an egg and converting it to an omelette is a process
  • A system is a series of processes where the output of one process becomes the input of the next process. An example of this is baking a cake, where you have equipment, correct ingredients, following an exact recipe, applying the method, utilisation of the equipment, transformation into a cake, adding value by adding a filling, presentation.

So why do we need systems?

Well if you want to be successful then you need systems and procedures as this will allow you to work on your business and not in your business. Some of you may be thinking that you got out of the corporate world because you were restricted by all of the red tape of systems; after all you are an entrepreneur. However the reality is whether you’re a one man/woman company or employ fifty people plus, you will need systems and procedures to free up your time and make you money.

Some of you may be thinking that you are just starting out and therefore until you get going you will just wing it for the moment. That would be a big mistake, it is in fact far easier to put systems and procedures in place at the start of your journey rather than leave it until later as it will take you a lot longer to do and in the meantime will have lost time, energy and potentially money, so take heed.

From a business point of you what do we mean by systems and procedures? The short version would be a step guide to perform any function within your business. Examples of this may include but is not limited to the following:

  1. What do you do/say when you are contacted by a vendor?
  2. What are the steps do you take when screening a potential tenant?
  3. What are the roles and responsibilities of your team?
  4. How do you get paid?
  5. How do you pay your suppliers?
  6. How do you run the back office? (Administration, Accounts, etc.)
  7. How do you draw up a contract with your suppliers? (Architect, planners, builders, etc.)
  8. What are your “Opening” and “Closed” hours and what happens when “Out of Hours” is required?
  9. What are your policy and procedures for joint ventures?
  10. What is your strategy and how do you communicate this to your team, joint venture partner, Angel investor etc.?
  11. What are your objectives?

As can be seen by the above examples systems and procedures are required to handle these sorts of questions. Do not be deterred by thinking that you need to write a massive manual documenting everything. Keep it simple and easy to follow, use pictures, diagrams, screenshots etc. if this helps to describe your processes. Where there are regulations that needs to be understood within a procedure e.g. HMO requirements, break it down and strip out all of the things that are not necessary and bullet point those that are needed so it is easy to read.

Advantages of Systems & Procedures

The advantages of having systems and procedures in place are as follows:

  1. Productivity will increase as you will not have to re-invent the wheel every time you do something.
  2. It can give you a perspective as now you can have an overview of your business, and the competition so now you can make informed decisions.
  3. There will be consistency in your work as things will be done exactly the same way each time.
  4. Reduced risks as you will have agreements etc. in place that spells out exactly what is expected.
  5. Quality will increase as you will have a framework in place to deal with builders, vendors, tenants etc.
  6. Growth can take place as you can use your systems and procedures to train people.
  7. You will have continuity because if someone is away on holiday, ill, or leaves then you are not reliant on that person as the systems and procedures will kick in.
  8. You will find freedom as now you can work on your business and not in your business, also it will allow you to be away from the business as it will run without you.

Take action now and put systems and procedures in place, once done these will just need to be kept updated as your business evolves.

 

Recommended Reading:

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It. By Michael E. Gerber

Scaling Up. By Verne Harnish

Right First Time Property Investing. By John A Foster

Exit Strategy – Selling your Business

When starting a business always look at what your end game is and keep this in mind. You may decide that you want to build a legacy, therefore, you will be passing it on to your heirs. But you should still look at setting up the business with a mind to selling it, as you may find that you could make more money by selling and so you can give more money to your heirs, or you may find that your possible heirs may not want the business as they have no interest in it or they are not capable of running it.

Your business must be able to run without you, if your business cannot run without you then it will die with you, therefore before you even think about selling or passing on your business make sure that you have processes, systems, manuals and procedures in place. This must be your number one priority above anything else, if you do not know how to set these up get help, as it is worth paying someone to put these in place for you, remember this adds value to your business so don’t cut corners or skimp on the price for the consultancy, so think of it as a short-term loss for a long-term gain.

When selling your business, it is critical that you understand the processes involved. After all, unlike other business decisions, this will only be made once!

So here are a few questions that might help you in the process.

Why are you selling? Are you selling because the business has reached its full potential, or do you want to get out because you have had enough? It’s important to have a reason for the sale as you will get asked this question from all potential purchasers.

Is your property on a lease? If a buyer is looking at your business, your buyer will want to see a long-term lease in place. Negotiate with your landlord an extension to your lease and make sure that you have a clause in there which allows you to transfer the lease to the new buyer.

When did you last value your assets? This is especially important when it comes to property as prices are constantly changing and you might get a very pleasant surprise.

Do you want to sell just the goodwill and still own the property? Often when selling a business, it is possible to keep the property and lease it to the new buyer. If you do not need the full proceeds it is often wise not to sell the property as long term it will be an appreciating asset. Make sure though that you get a full repair and renewal lease put in place with the buyer.

Are you the one hundred percent owner? If not, what do the other shareholders think about you leaving? One of the easiest ways to get out is to sell your stake to the other shareholders.

Do you want to protect some workers in your business once the sale has gone through? You might have members of the family or close friends who work in the business and they might need some security after you have left. One way to do this is to provide them with decent employment contracts prior to the sale.

Is the timing, right? The best time to sell the business is just after you have had a good year of trading. Even economists disagree about what the future may bring so try not to predict how the trading environment will change but get out when profits are high.

Prime the business for sale. Just as a house will achieve more with a lick of paint and the garden in top condition so a business will need as many loose ends tied up as possible so that it is easier for a new buyer to walk in. Get rid of all the dead stock and dispose of all old and useless machinery and equipment.

Tidy the place up. Make it look as attractive as possible and make sure all the light switches and bulbs work. Make sure the place is as bright as possible by using higher power bulbs than normal.

Get professional help. If you have a small business all you need are the services of a good accountant and solicitor. If the business is more complicated a decent business broker might be required to get the maximum price for your business.

The easier you make it for the buyer to move in and start running the business from day one the higher the price you will achieve for the sale.

Are Forums the new Mentor?

It is interesting to see how more and more people are turning to forums to obtain the answers to their business rather than going to a mentor or coach. It is practically an untapped resource that many more people are getting into, here’s why no matter what you do in this life there is usually someone out there that is a lot better at it than you. You could teach yourself until you get good enough to beat them or you could learn from them gain all the knowledge in less than half the time and beat them at their own game.

This can be related to forums, for an example, I will use someone who wants to succeed in an internet home business. We will call her Jayne, Jayne has just got his webpage promoting a product or service Jayne doesn’t know where to start. So, she starts researching, she finds all the info he needs after a few months and applies it. After a few years Jayne is making some money but nothing serious, she knows it will take her a few more years to be successful. Let’s take the alternate path Jayne starts her product or service and joins a forum relating to it, she asks people questions only to come back the next day to find they are answered. After a couple of months, Jayne is making a bit of money, after a few years, she makes a full-time income.

My point is it increases your learning curve dramatically, hence this accelerates your growth exponentially. Let me explain further from a more practical point of view, say we want to promote an affiliate service. First, we go to the search engines and type something related to it such as a home business forum. The search engines come up with various home business forums join one, make sure that it is centred around a home business, not multiple subjects. The reason for this is that it will take a lot longer for your question to get answered. Once you have joined anything that you are unsure about just ask about it if you want more information on a subject just ask. People in forums are generally very experienced and will be happy to help you never be afraid to ask a question regardless of what it may be.

Take the time to get familiar with the forum and try to post at least once a day, this will get you credibility and build up backlinks to your website. After a while of posting you will notice that you are learning a lot quicker and realise how long it would have taken you to learn yourself.

However, if you want to build up a business very quickly and have accountability to make sure that it happens then you will need a mentor/coach. Your mentor/coach needs to be experienced in the field that you are looking at so that you can be guided correctly. You may also need more than one mentor/coach due to the nature of the business. For example, you may have a mentor/coach for investing in property, but that person may not be versed in setting up systems or know how to take waste out of your business. If you want to scale up you will need a variety of mentors, think of how corporations work, in that they have specialist departments and leaders to run the business, your mentors can be compared to these specialists.

In conclusion, forums are a good starting point if you want to take it steady and stay small, however, if you want to move quickly and scale up then you need mentor/coaches to help you.