The System is The Secret

Many business owners ask me the secret to a thriving business. My answer to them can be summarised in one word – System.

Yes. I fully believe that systems run our lives. In fact everything that we do on a daily basis from making our breakfast in the morning to putting petrol into our cars involve systems. We can never run away from any system per se. Without it, our world will be in chaos. This is how important systems are to our livelihood. Whether you like it or not.

So how do systems make a thriving business?

Essentially I believe there are 5 main systems any business owner must look into in order to thrive in their business.

  1. A Sales & Marketing System
  2. A Financial System
  3. An Operations System
  4. An Administration System
  5. A Talent Management System

A Sales & Marketing System Explained

Let me start be saying that Sales and Marketing are two different entities. Many Sales and Marketing people including business owners tend to see them as one but they’re NOT. Sales is about converting a prospect into a customer for your products or services. Marketing is about making the differentiated features of your products and services known and standout in the crowded marketplace.

Do you have a system for researching your prospect, contacting your prospects, qualifying your prospects, presenting to your prospects, converting your prospects, thanking your new customers? In most case, most business owners DO NOT have all these sales systems in place and it is no surprise that they’re always in the “feast and famine” situations. Sales is paramount to any business. Without adequate sales, very soon you will have no business to run.

On the other hand, business owners tend to be too extreme on their marketing efforts. They think marketing is the “Holy Grail” to bring in the sales number they need. They just spend too much and very often they overspend and blow their budget. Personally I believe that all businesses must do some form of marketing to get their brand names and products or services at the top of their customers mind but I am truly against NON-TARGETED marketing efforts and expenditures that most SMEs fall into. These efforts are just a waste of time and money and very often these non-targeted marketing efforts back-fired on them and as a result their business suffer.

Do you have a system to evaluate your market demand, your market share, your targeted customers size and demographic, your customers needs, your competitors actions, your differentiated features, your marketing channels, and your marketing message? Most struggling businesses DO NOT have these systems for their marketing efforts and that’s why they struggle from month to month.

A Financial System Explained

All business owners know that finance is the backbone of any business. However statistics have proven over and over again that financial distress have caused more than 80% of businesses to fail within 5 years. How can this be possible when all business owners know this fact from day one of their startup? The answer is a poor financial system.

Do you have a system to evaluate the cost of each product or service that your sell to a customer, the cost of each business process? The cost of each value and non-value added activities in each of your business process? The break even sales volume or dollars that you must achieve each month? The cost behaviours that moves with increased or decreased in sales revenues? Your monthly cash flow needs? Credit assessment of your customers and suppliers?

Without a credible financial system in your business, you may not have the opportunity to celebrate the fifth anniversary of your business. Period.

An Operations System Explained

Operations is what your do to service your customers after a new sale has been concluded, a complain made, a delivery missed, or a payment delayed. The level of service you provide to your customers at these circumstances determine whether they will continue to be your customers or not.

An effective operations systems are process driven. How long a customer have to wait for their problems to be resolved is key to operations effectiveness. The shorter the processes the better as this will increase the customer experience with you. The nearer you are to the customer the better as you get to see the problem just as the customer sees it.

Therefore if your business processes are long and cumbersome, then your customer satisfaction levels will be low and defection rates high. It is no surprise that most businesses are chasing new customers all the time to replace those defected ones when they can actually look to satisfy their existing customers to build their business.

An Administration System Explained 

An administrative system is all about the internal consumption of data within your organisation. It is all about the Key Performance Indicators (KPIs) and results that your track for the purpose of reporting and performing diagnostics.

It covers all financial and operations of the entire business like the Profitability, Cash Flow, Leverage, and Liquidity ratios, rejection rates, defect rates, customer complain rates, life-time-value of customer, missed delivery rates, absenteeism rates, employee productivity rates, vendors performance index, product profitability, and customer profitability etc.

Without these measurements of KPIs, you will never know where you need improvement. You would be running your business in the dark without really knowing the actual health of your business.

A Talent Management System

Many SMEs do not place a lot of emphasis in this area. To them, they make their hiring decisions based very much on the costs and not the value they expect from the new hire.

One client of mine said it well when he told me he hires people “to solve a business problem by employing them do the job he dislikes doing or not competent in.” It is no surprise that his restaurant is thriving so well while the majority are not.

Do you have a competency assessment tool to assess each interviewee? Do you have a hiring process to screen and evaluate the potential employee? Do you know where you need extra help with those new employees?

Sadly many SMEs are still operating from the “hire and fire” culture and wasting a lot of head hunting and recruiting fees when a simple and effective hiring system can be set up and have all these unnecessarily costs saved.

These are the 5 systems that I believe all business owners must have in their business if they want to thrive year after year. In my clients’ engagements, I use these 5 systems to evaluate the current state of their business performance.

I hope that with this article, readers will start to think about implementing these 5 systems into their business. I can be reached here if you need any assistance. Thank you.

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