Do policies and procedures have a place in mum and dad businesses
Last updated: 20 Jan 2014
Working with my clients I am always concerned when I hear comments like 'I how know how to do that, I've done it before but it's been a while', particularly in areas of compliance.
More concerning is the response I get 80-90% of the time when I pose the question 'do you have the process documented?', invariable I receive one of the following responses, 1. we don't have time to document things here! 2. I did have it stuck on my monitor on a sticky note but that was before they replaced my old monitor with a new one!'
I understand that when you work in your own business time is one resource that is tight. That acknowledged, if this resource is so scarce why do we operate in such a way that finds us spending excessive amounts of this supposedly scarce resource repeatedly asking the same questions and seeking the same answers each time we need to complete our weekly, monthly or annual compliance tasks.
If this only related to areas of compliance (non direct revenue raising), you may have an ever so slight basis of defence, however this is not my experience, we also see this in many other aspects of business management be it manufacturing, distribution, sales, purchasing and bookkeeping just to mention a few.
If you need to stop and consider how you manage any aspect of your business and you can't refer to properly maintained documentation relating to how you managed it successfully in the past then you have no other option than 'flying by the seat of your pants' and there is one thing for sure, you have an increased likelihood of getting it awfully wrong using that method.
Then what happens? You got it first time, you are going to need to use up more of that recourse that is in such short supply, 'time', when you get it wrong it may well have cost your business a sale, worse still maybe a long standing customer, but that's not the end of the cost to your business. You lost the time from your initial efforts, you lost time trying to resolve the customer concerns and you may have lost product.
Time for a cost benefit analysis, I've worked in or with small business for the majority of my working life so I understand that when you are small or micro business the majority of the 'stuff' that makes thing in your business run is hand-balled to your support staff, like the bookkeeper, the marketing department, the sales staff or the admin staff and so on, you get the picture, and I, also ‘I know all of these are you’!
The importance of using your time wisely is likely to impact most areas within your business, family and social existence, so: let’s look at the 'cost/benefit' of having documented policy and procedure within your business enterprise. Could I just explore one concept I have shared with many of my clients in the past?
I promise I'll be brief and then we'll get back on the subject.
For many years (probably more like decades) now I have made the bold statement that I can show a great many of my clients how to save 10% of specific expenses within their business* if they followed my instruction and monitored this specific expense forensically for the next 30-90 days. My explanation is that they invariably they will start to ask the question, why are we spending so much on this 'expense'. This exercise leads them to ask another question next time they go to make a purchase involving this expense, do we really need this or this so much of this?
All I have done is ask them to 'look' carefully at their expense.
Now getting back to your policy /procedure cost benefit analysis. I make no bones about the fact that documenting your policies and procedures will take time and effort, having said that the benefits are many fold, firstly if we take the example above, in developing your documentation you are forced to 'look forensically' at how you 'currently' conduct different aspects of our business. This gives rise to opportunities to 'polish' or in some instances completely abandon or revamp the way things have 'just happened' in the past, replacing them with well thought through business practices.
There is a very good chance that this exercise alone will introduce more cost effective practices into your enterprise, potentially saving time (remember that scarce resource, well you just got a return on the time you invested earlier in developing your policies and procedures), just as importantly this documentation will lead to ongoing efficiencies changing the culture of your daily business routine, continually clawing back more and more time and increasing your bottom line.
After all isn’t that why you started your business, to give you added freedom (time) and don’t you have a plan to increase the value of your balance sheet, including your increased equity (or potential equity)?
I’m yet to have anybody claim that having well documented policy and procedures has cost them any more than the initial time and effort to develop them. Once you have them, if you find them contributing the efficiency of the business, keeping them current will enhance the ongoing efficiencies already realised.
Enjoy your business!