Have you ever walked into a business and ever thought to your self how amazing a it is operating? Or perhaps you were on the other side and had a bad experience where you thought the people in the business were completely incompetent. Either way, your experience and the way you interact with a business likely comes down to their processes and procedures.
So what are business processes and procedures and why is it important that you use them in your business?
It all comes down to doing business better. If you want your business to have the ability to operate without you or you simply want to save yourself time, energy and money then you need processes and procedures.
They create efficiency, quality output and uniformity throughout your organisation. They also help keep everyone in your business safe, involved and included.
Developing procedures can seem daunting but the return on investment in the long run is enormous.
In this article, I will be introducing you to processes and procedures and why they are important in your business.
I will share with you the key ingredients on how you can make use of business procedures in your business too.
But first, we need to understand what procedures, processes and systems are and how they apply to your business.
What Is a Business Procedure
A procedure is a term used to define a series of steps that when followed, achieves a consistent result in your business. In other words, a procedure explains how to complete a desired task. They are a set of instructions compiled by someone in your business to help employees carry out routine tasks.
A procedures aim is also to reduce miscommunication by describing the who, what, where, when, and why of a task. The “how to” part of a procedure is generally the largest part. It provides goes into detail on how to complete the task.
A procedure also ensures accountability and that any industry regulations are strictly followed if applicable in your business.
Procedures are often referred to as a Standard Operating Procedures (SOP), Good Manufacturing Practice (GMP), a System or Work Instruction depending on what industry or who you speak to.
A procedure is very specific and usually only addresses one task in great detail.
What Is a Business Process?
While procedures go into depth, a process defines the bigger picture. The difference between processes and procedures is one is of breadth and the other is of depth. A process is often made up of a number of procedures.
Processes and procedures each have their own role in defining the operating model of your business.
You may not realise it, but processes and procedures are everywhere. They are in every aspect of our leisure and work. A few examples of a process might include:
- Preparing breakfast – I’m sure if you have a morning routine then you prepare your breakfast the same way each time.
- Buying something online – You need to add the item to the cart, add your shipping details, pay for the item etc. Many procedures are involved for both the customer and the seller.
- Changing oil in a car – I assume the average person would not know how to change their oil because they have never learnt or it is better left with a mechanic. Your mechanic knows the procedure very well.
- Walking your dog – You may change into walking clothes and shoes, put the lead on your dog, walk the dog, remove the dog’s lead etc.
Although most leisurely procedures are not documented like you will find in business, everything we do has a set of steps to complete each “task”. It may not be so much in leisure but in business, it is important that your procedures are very well documented otherwise you are setting yourself up for failure.
What Are Business Systems?
Procedures are often referred to as business systems. This term is very similar. A system is a set of procedures created to carry out a specific activity, perform a duty, or solve a problem.
The business is made up of a number of processes and procedures to form the system.
Some smart marketer came up with the acronym for system as:
A Quick History on Processes and Procedures
“Procedure” was first used by the French in the early 1600’s. It originated from the word procédure. Procédure translates to “fact or manner of proceeding”.
Throughout history many people have used procedures to get sh!t done.
Scottish economist, Adam Smith demonstrated the use of procedures in his theoretical pin factory. The procedure enables 18 pin making specialists to focus on one step to making a pin. As a result of creating the procedures, they were able to produce 24,000 percent more pins in the factory.
Moving through history by a couple of centuries to the early 1900’s and Henry Ford built America’s first automobile production line. He created America’s first mass-produced affordable car.
Ford worked out that if each worker learnt to do one simple repetitive job instead of all 84 jobs required to build the entire car, he was able to cut the manufacturing time of the Ford Model T down from 12.5 hours to 2.5 hours.
His creation of these procedures meant huge gains for Ford Motor Group’s bank account. The invention of the production line is one of the most revolutionary moments to occur in business history.
Why Use Procedures
When you are the only person in your business, you might not think your need processes and procedures. After all, you do not need to answer to anyone and you are the expert at what you do. All the operations come second nature to you and you could almost do your work with your eyes shut.
But what happens when you realise you are having a bad day and forget to do something or maybe you hire your first employee. They need to be shown how to do what you expect of them.
People may have prior experience in their role but what happens if they have bad habits or do something that goes against what your business stands for.
Businesses looking to become “world class” or the best in their industry need procedures as part of their day to day work. Anyone who does something in your business needs a procedure to get the job done.
As your business grows and more positions in your business get added, you will need more procedures. This will grow into a full business manual for all of your employees.
Not only will it help your employees own their role in your business, you are creating a very valuable asset that can be sold for far more than your business may have initially been worth.
Procedures are helpful for training. When you have procedures in place, you have a resource to train your employees. Once you have written the procedure, you should never have to teach someone that job again.
Over time people come and go and if their role is not documented in a process then you will have to teach the next employee exactly what you taught the previous.
The process should be documented well enough that it should be able to teach your employees how to do the job for you. Of course someone will have to oversee the new employee. They will need to make sure they are following the procedures. Following procedures takes far less resources than having to completely train the new person from procedures stored in your head.
If/when it comes the time when you sell your business, a complete business system manual will provide extra value to the sale. This means that you have the ability to sell the business for more money than what you would without.
Procedures Protect Workers
Employees who follow established procedures have more confidence in the workplace knowing they are following industry best practices. They know their actions are supported across management, the owners and any other regulations.
Using procedures means there are less mistakes needing correcting. This results in reduced liabilities and more productivity.
A professional and organised work environment helps employees feel respected and appreciated.
Procedures Protect Customers
Customers expect a certain standard of product or service delivery. Having procedures in place means that each customer gets treated to the standard that is set. It also helps to treat customers in the correct way should something go wrong.
For example, if you are in a restaurant and a drink gets spilt. The procedure gets created to ensure no customer slips over, the drink gets cleaned up and (if great service is a priority) the drink is replaced for the customer. This kind of mistake will happen more than once in a restaurant so it is important that customers get treated correctly and consistently each time this happens.
What a Procedure Looks Like
Procedures vary between workplaces because they reflect the values, culture and commitments specific to that business. They always share the same role to guiding you through the specific task.
Each procedure should contain these major elements:
- Who does what. Responsibilities get defined by a role in the organisation rather than set to a specific person. This is because the role will always remain the same whereas a person inside the role will come and go.
- What is this for? Describing the outcome and objectives to achieve as the end result.
- How to successfully complete the task. Steps, checklists and decisions describing how the work should get completed. Each step in the procedure should be a precise action that progresses the person towards the end result.
A procedure is written text but can also be in the form of audio, visuals or video as well. The written text may include bullet point instructions or forms, checklists or even flowcharts.
Successful procedures are usually a combination of written instructions and video tutorials. Video is usually used to train the user on how to run through the process. Written procedures alone are not meant to be a substitute for training. Although a video showing someone completing the task is a good place to start.
Remember, most workers know how to do their job and may only need to refer to the procedure for less frequent tasks or when making certain decisions. So it is best practice to keep the procedure as short and precise as possible.
A simple task may be described by a single procedure whereas a complex process may span multiple departments and have many procedures attached.
An example of a process that may contain many procedures is “completing a sale on an online store”. There will be inventory management, product packaging, product shipping etc.
If the procedure is straightforward then it may be one procedure or can be broken into many. It depends on the size of the tasks, the type of business as well as the size of business and who is involved.
Types of Procedures Every Business Needs
There is an endless number of procedures that could be created for the most niche of businesses. There is also no rule for how many policies and procedures should get created for your business. The aim with Lemodus is to provide you with a good place to start with common and recommended procedures.
There are always common types of procedures that most businesses will rely on. These are usually broken into the following team departments:
- Accounting and finance procedures for controlling assets and managing cash.
- Sales & Marketing for generating cash flow and growing the customer base.
- Human Resources (HR) procedures to manage the team and minimise employee liabilities.
- Operations procedures which manage the process of delivering the product or service.
Writing Your Procedures
To make an effective procedure we need to ensure that each time the procedure gets completed, the same result happens each time.
It’s up to each business on how formal or informal your procedures should be. Larger organisations often have staff whose job is to manage policies and procedures. Smaller businesses may not want (or need) to mirror large corporates.
When developing procedures, its important to involve everyone in the process who will be implementing them to make sure they are useful – and will be used!
Consider everyones viewpoints and test the procedure with everyone involved. This will help determine whether the process is sufficient in achieving the task.
In general, most businesses follow this process:
- Work out what procedures you need. A great way to know what procedures you need to create for your business is to identify tasks that get done more than once. If you are unsure you could find out by asking what similar businesses have.
For most start-up businesses that are time poor, work out the top priorities and start from there. If you have team members, don’t forget to talk with all members to get an idea and comments from their perspective.
- Write your procedures. Create a draft, refine it and finally publish your procedures after they get approved. It is a good idea to have your procedures reviewed and approved by the highest level of staff available. That could be the Board of directors, CEO or Management – depending on what is appropriate to your business.
- Use the procedures. The great thing about having your procedures online means that they are usable straight away. Whenever a procedure gets created, there needs to be training to ensure employees use the procedures. Once everyone is using the procedures, encourage everyone to provide feedback to identify areas to improve.
- Review and refine your procedures. Like anything in business, things change. That is why it is important to schedule in time to audit each procedure you have in your business. This should be an ongoing thing and never limited to just you. Everyone in the business should always be improving and making the procedures better.
The information outline of a procedure often contains the following information:
- General administrative information – the name of the procedure, any revisions that have occurred including when it was created, who by and who approved it.
- Introductory statement. When you create a procedure, it can be long in length. A summary helps the person understand why this procedure exists and what is achieved when the procedure has been completed.
- Procedure responsibilities – which role is responsible for completing the procedure, when its done and whether there are any forms or other prerequisite procedures needed.
- The procedure – this is the steps that explain how people go about actioning the procedure.
It is a good idea that when you are creating your procedures that they all look the same and are identifiable. Lemodus has many handy procedure templates that make creating your procedures much easier. To view them, sign in and create a new procedure. Open up the template library to see all the procedures available.
Even if you view the templates as starting examples, you will be able to decide how you would like to structure your own.
Ongoing Procedure Review
You will know if a procedure is effective or not by whether the procedure is used in your organisation or never to be be seen again. It is our job at Lemodus to make procedure management as simple and streamlined as it can be.
Good employees want to do the right thing and seek procedures as a way to know they are doing their job right. It is up to everyone in the business from CEO down to ensure procedures are used and well communicated to staff.
Training that develops routine is the best way to ensure procedures are followed.
When a procedure is created, all staff involved should be trained on the new procedure. After the training completes, ask everyone for feedback to help you understand if anything needs to be refined.
When a new employee joins your business, ensure that they know where to find the procedures to do their job. If that involves inviting them into Lemodus then that needs to happen as soon as possible. It is best done before they begin to make up their own mind about how their work tasks should be completed.
When your team members ask questions about their job, refer them to the procedures. If they ask a question that is not already addressed, then that is feedback and the procedure needs updating.
It’s important that all employees understand the purpose of processes and procedures. It is to create a safe and welcoming environment for everyone.
Working under well-defined standard operating procedures (SOP’s) is an important aspect of any business.
You will never hear someone say “wow that business is so great because they have great procedures” but you will certainly know if they had a good/bad experience as a result. Procedures are one of those things that play a huge role in the quality and management of your business. They are simply not overly visible on the surface level.
Your processes and procedures aim is to always create consistency and save time and money. When writing procedures, it is important to produce consistent, easy to follow, thorough documents.
Every great business started with nothing more than an idea. As the business grows and evolves, it needs procedures to efficiently operate.
The ultimate goal of Lemodus is to make it easy for you to grow your business. One way we can achieve that is to make managing your business’s procedures simple. We have free templates that you can customise to get you started and to save you even more time.
It is never too late to begin creating procedures for your business. Create a free account so you can begin creating processes to systemise your business today.
You will thank yourself you invested in procedures when your business is running efficiently by itself.
Written by Joseph Chesterton
Joseph is the founder of Lemodus. He's obsessed with building businesses that help businesses grow. He founded Lemodus to introduce better processes and automation to the community. Lemodus is the number one tool to get your business under control.