3 Key Benefits of Capturing SOPs
I frequently hear that I get extremely passionate when it comes to business operations. People tell me that they don’t understand how I can get excited about the mundane duties involved with the creation of processes and manuals. I just laugh and tell them that after 20 years of working inside small businesses developing internal processes and writing manuals, I see there is a simple harmony created when an organization has formalized their operations. Conversely I have witnessed the utter destruction of a great business model due to lack of continuity in leadership, skills transferring and internal communication. When a business is humming along and performing optimally, revenues are steady, employees are happy, and the owner is better able to pursue new opportunities. Having strived to help many companies over the decades, I believe there are three main benefits that are accomplished by creating and recording your Standard Operating Procedures (SOPs).
Increase your personal and professional efficiency.Uniformity in transferring your skills from the top down in your organization. Scale up your services to promote sustainable revenue growth.
Increase Your Efficiency
Learning to face being a productive contributor to your company can be a large mental wall that a business owner faces each day they wake and continues to dream about long into the night. The big question for all entrepreneurs is; How do I do everything necessary to make my business successful and still have time for a life? The answer as I see it is to create and write down standard processes for the tasks you preform regularly. Let’s face it we’d all love to be that person who just wakes up each day and get 200% of all their tasks completed. For a rare few this can be accomplished naturally, however for the vast majority of us we need habits and parameters to get through all of our to-dos in a timely manner. For a business, especially in the early years, there is a huge need to decide, define, and record how you perform your daily operations. From how you get your service to the customer to all those little internal activities that keep operations moving. Creating written processes ultimately reduces the amount of errors you make and eliminates redundant tasks which can wreak havoc on your time. When developing a business it’s easy to create habits that occupy your time because you have so much time to fill. For example you may enter clients into multiple databases manually. This works at the beginning however as you grow will you have time to spend on such tasks? No, this habit creates unnecessary duplication and therefore initiates a huge time suck for you. Thus taking away from the time you need to generate revenue. When you notice problems like the one from the example happening in your business, this is your key moment to create a process. Develop a way to merge or integrate tasks, especially at the administrative level. Additionally, these types of administrative process help you begin to develop new positions for your organization. Becoming more efficient early on will help you create positive habits for yourself and your business. The types of habits which add hours back into your day rather than suck them away.
Improve Your Hiring and Retention
Increasing your personal efficiency as a business owner leads to a smoother transition when you begin to hire employees. Now you may have years of experience hiring and firing employees or you may have zero. Honestly experience is great and definitely makes the hiring process easier. However, if you don’t have a method for transferring your skills and knowledge through a well developed system of training, following up and communicating corrections, then all the experience in the world won’t save you from a bad hire. Consider the fact that the average cost to hire an employee is currently around $4000 per hire, and this is before they even step foot in the door. At this cost a single bad hire becomes less of a funny story and more of a restraint on your current and future cash flow. Are you prepared financially to hire and rehire for the same position every 6 months? Absolutely not! No matter how big or small a company is that type of turn over on a regular basis will eventually eliminate any benefit you gained from hiring in the first place. You may think you don’t need to write anything down, and it is tempting to believe that you can simply demonstrate all the tasks to your new employee as they need to perform each one. However in reality it is impossible to transfer your skills as the need comes up because likely your new employee won't be there to learn the new skill. According to a 2018 Skill Gap Report completed by Udemy, 51% of employees state they would quit a job that lacks formalized training. Now, couple this with the fact that we are also at historically low unemployment rates, it becomes even more vital for you to be well prepared to hire properly. You must create a training program for new employees with the purpose of demonstrating processes and providing resources that support the duties you need them to perform, and your written SOPs are the foundation for your training. This training should show exactly what and how you will have your employee work within the organization which is exactly what formalized processes demonstrate. Finding talented employees is difficult enough and losing a great hire because you aren’t prepared can be detrimental to the overall growth of your business. Preparing your organization to hire smart with SOPs in place will not only save time but increase revenues overall.
Create Sustainable Growth
Regularly using your SOPs manual often reveals new opportunities for customer service and operational improvement. A printed copy allows you to keep your processes handy so you can use them as you work throughout your day and engage with clients. Additionally, it allows you to make changes more easily because you can simply writing it down on the fly. When you develop written processes, they become a living part of your daily operations and therefore require frequent adjustment. This is not saying that you should recreate the process all the time, but rather make minor adjustments as needed when you find ways to increase efficiencies or add new layers of service. Beyond regular daily use you should also review your operations manual in its entirety at least quarterly. Reviewing each process keeps you on top of any necessary changes or eliminations which need to be made in your ops. Additionally, having sound written SOPs in place allows you to pursue and accept larger client opportunities. There are always pains when accepting new and larger business projects, but even if an order or service is exponentially larger in scope than anything you have done before all you need to do is scale up your existing processes. By knowing what you do on a smaller scale, you can create an actionable plan for providing larger scale services and thus grow your business. Being prepared and able to scale up provides any new clients with much needed confidence that your company will meet their needs. It is true with a bit of luck and some ingenuity a business can grow without creating and recording processes. However, if you would rather create sustainable and even predictable growth start by creating core SOPs, take the time to write them down, and make sure you review and up date each process regularly.
At every stage of business development there is a need to create and capture all your processes and operational practices. More importantly by implementing these SOPs into your daily operations you will find an ease and harmony will be created. There becomes a uniform understanding across your organization about how you deliver your services to your customers ultimately allowing for increased revenues and decreased stress. I leave you with this the thought that processes are simply a tool like any other in your business. When used properly you will be gaining time by improving your efficiency, using good hiring and training practices, and being able to say yes to new opportunities that will sustain your vision of your business. In a world filled with chaos and uncertainty take one small piece of advice, structure is your peace both in business and life!