Your business cannot function and grow without the proper systems in place. Having the proper systems in place allows you to expand and scale your business with less effort. You can also react to changes in the marketplace and changes in your business more effectively.
Having the right systems in place could potentially free you from being involved in the day-to-day operation of your business. Once this happens, you become a true business owner versus having a job or being self-employed.
Developing your systems and documenting everything is especially important if you think you may want to sell your business in the future. Creating and putting systems in place is the first step in becoming a true business owner. Think about McDonald’s. I am sure you would agree you can make a better hamburger than McDonald’s, but you would be hard pressed to develop a better system for making the hamburger. When someone purchases a McDonald’s franchise, they are actually purchasing a system that can potentially generate income without the owner being present.
Here are six of the main systems you need to have in place:
1. Financial System.
I am not just talking about installing accounting software on your computer and then you are done. Although that may be important, having financial systems in place involves much more. Consider the following questions:
How much business do you want? Do not answer this question with some pie-in-the-sky response. Think about how many clients you really want and how much money you want to make. Do this with real numbers. Be very specific. For example, “I want 10 clients that will generate $150,000 in revenue in the next 12 months.”
Which strategies will you use, and what will you need to do to make this happen?
What systems will you need to have in place to implement and track your efforts?
What product, service, and pricing structure do you need to have in place to generate $150,000 in annual revenue?
What is your main revenue stream? Every business has certain areas that outsell all other areas. Find what these are for your business and put all your energy behind those main revenue streams.
How much money do you need to make to maintain your current lifestyle? If you haven’t already done so, make a personal budget and a budget for your business. Use real numbers to calculate how much income you need to maintain your current lifestyle. Know exactly what is coming in and what is going out. Put it on paper or in a spreadsheet. You can also use Quickbooks™ or another software program. Don’t just keep this stuff in your head.
What is your profit margin on your product or services? Most people know the profit margin on the physical products, but many service providers can’t tell you what their profit is on their services. They don’t take into consideration the time they spend on a project. Your time is one of the most valuable assets you have. So track the time you are spending on projects and charge accordingly.
Going back to the $150,000 a year goal. If you just use a very basic calculation of $150,000 / 2000 hours, it comes out to $75 per hour. You have to consider that when pricing a project. Unfortunately, only experience can tell you how much time something will take. So you may have to take a couple of hits before finding the sweet spot on your pricing for services.
2. Marketing System.
Plan your marketing, and put systems in place to hold every piece of your marketing accountable whether it’s online or offline. This does not have to be complicated. It could be a simple Excel spreadsheet.
For example, you are launching a direct mail campaign and you are mailing a sequence of seven pieces over a 90-day period. In the spreadsheet, you will notate direct mail piece one and when you mail it; how many pieces you are mailing; and cost of the mailing.
Then direct mail piece two, etc. Now you know when you are mailing each piece and can track your results on the spreadsheet in a column labeled number of phone calls, or number of website visits, or whatever it is you want to measure. Track the number of actual sales and profit.
This is a very simplistic example, but if you are doing this, you are so far ahead of your competition. They are probably not tracking anything. This is the only way you will know how much to spend on future marketing campaigns.
Also create a marketing calendar that shows when you are implementing specific marketing strategies. This includes direct mail campaigns, content marketing, social media campaigns, and everything else you are doing to market your business.
You are much more likely to implement your strategies in a timely manner if you have a marketing calendar. Your chances of success in your business will increase significantly by simply writing down what you will do, when you will do it and tracking your results.
3. Contact Management System.
This is without a doubt the most important tool in your arsenal for marketing your business and growing your customer base. Don’t be one of those people who collects stacks of business cards and does nothing with them. One of the best investments you can make immediately in your business is some type of contact management system.
There are many options when it comes to contact management systems. Act!, Goldmine®, and Salesforce are probably three of the most popular. But there are many in the marketplace. Understand there will be a learning curve associated with using any of these products.
Most people have a very powerful contact management system already on their computer. Microsoft Outlook is a powerful tool for managing contact information. Most users of Outlook do not use a fraction of the power that can be tapped from this program. For Mac users, there is Mac Mail. Both of these are good choices for managing contact information if you are starting your business with just a few contacts.
If you are using a professional email service provider, such as Constant Contact or Convertkit you will have a basic contact management system (CMS).
You could even use a simple Excel spreadsheet to get started. Most contact management systems, including professional email service providers, allow you to upload your contacts from an Excel spreadsheet. So if you start here and upgrade to something more advanced later, you can use the spreadsheet you create to populate your new contact management system.
4. Follow-up System.
The money is in the follow-up, so having a basic follow-up system in place will have a huge impact on your business. Again, keep it simple when you are just getting started. You can use a basic CMS and manually check your database to see who you need to follow-up with.
You can use something like Salesforce so you get reminders when it’s time to follow-up with a potential client. You can also use an automated online system or a reminder in your calendar app on your smartphone.
5. Referral System.
One of the best referral tools you have at your disposal is your message. What do you tell people when they ask what you do?
Having the ability to clearly articulate what you do, who you serve, and the transition that takes place for your client or customer is crucial to your success. And if you keep your message simple, so it is easy for someone else to remember and repeat, then you have a very powerful referral tool.
You can also make an arrangement with anyone who refers a paying client to give them a percentage of the sale. The main thing is to always ask for the referral. If you have a customer who says good things about you, ask them if they would mind referring someone to you. You have to ask.
6. Onboarding System.
What is the process of working with you? When someone hires you, what can they expect? Not being clear on this one thing will keep people from doing business with you. If they are confused over where to start or what will be involved in working with you, they will hesitate to make a decision or make no decision at all.
You should make it as easy and as comfortable as possible for people to do business with you by having a step-by-step onboarding system in place.
What is the first step?
What is the second step?
Third step?
Having a clearly defined onboarding system reduces the hurdles your potential client will have to go through in their mind to do business with you.
All the systems mentioned above have a place in every business regardless of the business you are in. It doesn’t matter if you have an offline brick and mortar retail business, a service business, or an online business.
Think about what you most want to improve in your business and the systems you need to have in place to make those improvements. Measure your progress. Hold yourself accountable.
Having the proper systems in place may be the edge you need to be a major player in your market. It worked for McDonald’s.
All the best,
Mike Coleman
