Below is an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here.
“Management is doing things right; leadership is doing the right things.” – Peter F. Drucker
Once you’ve figured out how to make at least “ramen money” and sales start rolling in, things may start to get a bit chaotic simply because of all the moving parts (many of which will be newly invented or made up on the fly,) and if you are new to startups, this may be challenging. Remember, you need to grow this machine, but this is where things can get complex, so try to keep them simple. Your goal should be growing sales while minimizing or even eliminating complexity.
Most startups and small businesses are notoriously poorly managed, almost a joke. If you do the basics here, then you’ll be well ahead of the game with, again, just a few hours of planning. The purpose of this chapter is to provide a framework for some order and direction in your company so you can navigate the complexity of what will likely be an almost constantly changing environment and create your management system. If you already have a company that needs a better management system, then this chapter (and the next) will help as well.
I want to emphasize that your focus will likely be making sales at this point and not optimizing the management of things prematurely. There’s little purpose in optimizing a business with few or no sales (unless you have plenty of time or are planning for an expected sales explosion). However, there’s no harm in getting the basics of small business management down and being prepared for the moment when you need to start scaling things. Certainly it is better to organize things before the company’s growth and complexity get out of control.
While I do recommend some basic planning which will save you a ton of time later, one thing I tell founders, especially types who are very well organized, there is going to be some chaos, waste and inefficiencies at first. This is all very natural in a startup, so please don’t think you can organize all this chaos all the time. Just keep a list of things you need to fix and revisit them when you can.
Do the best you can and get a “nicely managed chaos” going until you have the time to set up some proper systems. Keep the Founder Superpowers in mind, get the big things done, and make sure that you schedule time to work on building your management system. The purpose of the next chapter, Step 6: Systemize it, is to bring everything we go over in this chapter together in a beautifully well-run system (and what I call “The Manual”) but realize that may take a while as you figure out and build out all the working parts.
For example, once you start making sales you may have no organized invoicing or sales process. You might find that you need to make a hire and have no idea where to start or your existing hires are not doing well. Or you may start to notice that things in customer service are starting to get sloppy or confused, and you feel you need to write things down to stay organized.
Whatever the trigger, there are some pretty simple and clear solutions to a lot of this chaos, and I put them in these five categories that I call The Five Competencies:
Here are some ground rules for working on your management system:
The Right Plan
“Strategy is not a lengthy action plan. It is the evolution of a central idea through continually changing circumstances.” – Jack Welch
It’s hard to overstate how important having a simple, clear strategic plan is, not only for your clarity of mind, but to get your team to understand where the company is supposed to go. Most small businesses have no clear strategy or goals besides the whim of the founder at that time. The founder may have a vision with no clear goals or action items, which will get you nowhere fast. Some founders have plenty of goals with no vision to guide them, which can actually be counterproductive (“chasing squirrels”).
The Founder Superpowers section of this book provides plenty of guidance on vision and execution, but the guiding light should be a simple one-page plan that organizes everything in one place and shows your team exactly where the company is going and what needs to get done.
Elements of the Right Plan
You may not know some of these elements if you’re still trying to figure out your product, haven’t hired staff yet, or haven’t generated much revenue. The point is that it’s important to get a first version of the plan. It will always be a work in progress and needs to be known by everyone, reviewed and updated frequently as your company grows and changes, which we’ll go over when we discuss The Right Routines.
Take the time to create your first plan and get it in front of your whole team then refer to it and keep improving it forever. You’ll be amazed how this simple one-page document can radically clarify what needs to get done and simplify how you operate your business. The Chapter Resources has a sample version for you to use.
The Right Process
If there is a key to small business freedom (in addition to having enough sales to live comfortably), it’s getting control of and mastery over the processes and procedures inside your company. Every business is simply a collection of activities, most of which can be identified and documented. Once documented, it can be simplified and taught to others.
Having others (either employees or contractors) take over working procedures is how you stop working in your business and start working on (improving) your business. Procedures free up your time to work on strategy, growing and systemizing your business further. The rich get richer because of this cycle; they delegate the little things and focus exclusively on the big things that generate huge returns. They then delegate the implementation of those bigger things and repeat.
When I first started my company in 2001, there was very little information on how to properly structure process in a company (outside of some internal documents for very large companies). There was The E-Myth by Michael Gerber and some vague references in other books and articles, but nothing that showed exactly what I needed to do. I was hopelessly lost and overwhelmed. Now, there’s not only a lot of information online about “standard operating procedures (SOPs) but several good books and even software that will make systemizing your procedures much easier (which I will reference in the Chapter Resources).
How to Get the Right Process
First, some quick definitions:
You will probably have about 5–10 big processes in your business, for example, your marketing process, your hiring and training process, or your customer service process. Then, within each process, you will have specific step-by-step procedures. For example, within the marketing process, you may have “Writing a Blog Post” or “Managing our Google Adwords Account” as written procedures. Finally, you’ll have various policies dealing with things like employee time off, safety, customer service and more.
Over the years, these are the steps and best practices I’ve learned to get process right in a business.
Two Processes to Get Right
I think two procedural and policy areas that are important to get right early for a startup are the 1) customer service and 2) money and compliance issues. All the processes and procedures are important, but I want to emphasize these two because getting them right will remove a lot of vulnerability and problems in a fragile startup.
Customer Best Practices
Within your Operations written procedures, you should start documenting how to take proper care of your customers. This will vary from business to business but providing good service is an antidote to complaints, bad reviews, angry clients, angry employees, lawsuits, and generally being miserable all day. You will kill momentum and morale if you have angry customers, so take care of them as best you can from the beginning.
At the very least, manage expectations and provide plenty of self-service information that’s easily accessible or provide it with your product or service. Well-written documentation, FAQs, welcome packages, emails, or other helpful information will answer your customers’ questions before they ask them. The best service in this regard is no service; the best companies have a system or product where customers rarely or never have to ask for help at all.
Finally, one thing in small business I think is important is to realize that the customer is not always right. There are simply some humans who cannot be satisfied, appeased, or even reasoned with, and they will make you and your staff miserable. In these cases, I try to have a manager (or myself) have a conversation with the customer. But if that doesn’t work, then don’t feel guilty about firing them as a customer, refunding their money if appropriate, and even referring them to a competitor as “more suitable to their needs.”
Money and Compliance Best Practices
Money management, compliance and controls are fairly obvious, but a lot of entrepreneurs drop the ball and pay for it dearly. Some of these are in the category of business-ending, so I mention them here as a cautionary note to make sure you pay attention to them.
Money Management Best Practices
These can obviously be a lot more complicated depending on your situation. Most of them are easily resolved with some quick research and basic common sense.
Compliance is pretty broad but basically means anything you can get into legal trouble or trouble with the government. Generally this means making sure to get your legal ducks in a row and pay your taxes on time. A lawyer can do a good legal review of everything if you can afford it but there are some common sense best practices to avoid most issues.
Compliance Best Practices
Have a systems mindset about your business and keep things in writing. This solves so many problems and makes life so much easier that it astonishes me that most small businesses are so bad at it. Take the time to get the Right Process down.
This was an excerpt from our book Startups Made Simple: How to Start, Grow and Systemize Your Dream Business. Learn more about the book here or see our previous excerpts here.
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