The Definitive Guide to Scaling Your Business
How To Grow Your Business Without Sacrificing Your Life
A step-by-step guide for business owners that want to experience true growth and time freedom.
From Priceline.com founder Jeff Hoffman and Maui Mastermind CEO David Finkel.
|The information contained is this guide comes from over 20 years of experience building and selling businesses. It will benefit you to stay alert, take notes, and follow the action steps. When applied, these proven principals will change your life and give you time freedom, financial freedom, and piece of mind.|
Day 2: Build Your Stable Base
Most business owners build their companies on a one-legged stool, with that one leg being “team.”
When you scale based solely on hiring “key” people, you just create a new problem for yourself. You move the critical dependency from your shoulders to those of your key hires. If anything happens to your people, your stool topples over.
Instead you want to build on the stable, scalable, three-legged base of systems, team, and internal controls. Sure, you’ll still want great talent on your team, but you’ll also create stability and scalability by empowering your team with the structure (i.e., systems and controls) they need to produce more, better, and faster for your company.
Scaling on the stable base of systems, team, and controls means that your business can handle the loss of a key team member. Plus by having the other two legs of systems and controls, it’s much easier to find, hire, and onboard new team members.
Systems and controls are the key ingredients in designing a business that is both capable of scaling and no longer dependent on you alone to achieve that scale.
What Do We Mean By Systems?
Systems are the reliable processes and procedures that enable your business to consistently produce excellent results for your clients or customers.
They are the documented best practices and tools that increase your company’s efficiency, reduce costly mistakes, and make your business more scalable.
Systems include the checklists your operations manager follows when working with a new client, the orientation process you use to onboard all new hires, the sequential process for producing your core product or service, and the automatic email sequence that goes out to each new prospect.
Basically, business systems include any essential company know-how that you have captured in a tangible format as opposed to information locked in the brain of an individual team member.
The Two Layers To Every Successful Business System
Every successful business system has two layers: the process layer and the format layer.
The process layer consists of the step-by-step process or procedure you’ve created to complete any given task or process. Your system should accurately capture the steps of the process so that when you follow it, you consistently get the desired result.
It does you no good to formalize poor processes; you want your systems to document your winning moves, making it easier for your company to replicate and scale those successes.
But having a solid process isn’t enough. You have to package that process in ways that your team will actually use. This is where the second layer of your system comes into play.
The format layer deals with how you package and present your system to your team. Systems should be easy to use, transparent so that team members intuitively understand how to use them, and automated to an extent that much of the work happens via technology instead of manual work.
How do you know if your system has a good, usable format?
Ask yourself one simple, unambiguous question: Is your team using it?
The real test of a system’s utility is whether your team embraces it, ignores it, or, even more tellingly, creates an ad hoc shortcut for the task.
Will team members use your systems?
Your team members want to do a good job.
If your business systems are simple, intuitive, and effective, they will use them. If they’re confusing, complicated, or cumbersome, they’ll ignore your systems, even creating their own “cheat sheet” hybrid versions instead.
These homespun, individual hybrids normally aren’t scalable; in fact, they usually only work for that one team member and only as long as the volume of your business stays relatively level. Plus, even if these private shortcuts work, rarely are they ever captured in a way that the rest of your business can use.
To get the format layer right, watch the way your team members use, or don’t use, your systems.
Don’t argue, preach, or cajole— simply observe their interaction with your systems.
Take their behavior as critical feedback to refine and improve your systems, whether it reveals that you need to simply adjust the design of your format, or that you need to revamp the process in order to streamline the steps or more reliably produce the desired result.
Remember, systems are meant to leverage, empower, and simplify the lives of your employees, so don’t fall in love with any specific system. Rather, fall in love with the result it’s intended to generate.
32 System Formats You Can Use
Here is a quick list of 32 potential formats for packaging your systems to make them easier and more effective for team members to use:
Don’t Step Away To Write Systems
Does all of this talk about building systems inspire you to step away from your business for a few months to write out all your systems into a complete policies and procedures manual?
CAUTION! Don’t do it.
This is a recipe for disaster. Even if you were to write up all your systems into one long manual, you’d end up with a static and dated policies and procedures manual that no one would actually use. (Between 2009 and 2022 we surveyed more than 1,000 businesspeople, and fewer than 3 percent reported ever using a policies and procedures manual to do their job after the first 30 days on the job.)
What’s worse is that the moment you write a policies and procedures manual, it is already out of date. For your business systems to work, they must be firmly rooted in reality. The best way to create them is bit by bit as you grow your company. What’s needed is a living, breathing discipline inside your company of creating, refining, following, and, when need be, replacing systems
Early on, the systems you start with are going to be rudimentary and incomplete. That’s OK; over time, you’ll upgrade and flesh out your business systems so that they are a powerful leg in the stable base of your company.
Controls: Specialized Systems That Protect Your Company
Controls are the intelligent processes, procedures, and safeguards that protect your company from uninformed, inappropriate, or just plain careless decisions or actions by any team member.
To scale your company, you want your team to have the authority to get tasks done without running everything past you. To do so, you want to make sure there are safeguards in place to protect the business and give your team the feedback it needs to make adjustments and stay on course.
Take, for example, a financial control. To reduce the potential for embezzlement, you could have one person make deposits and a second, unrelated person reconcile your bank statements.
The Three Kinds of Business Controls
There are essentially three kinds of business controls.
- Visual controls. These include checklists, dashboards, scorecards, budgets, etc. They let you see that the right things are happening; if not, they raise a flag that alerts you to fix the situation. The best visual controls empower the person doing the task with real-time feedback to do his job better. Visual controls aren’t just about giving management better control, but ideally give your team autonomous control to do a better job without needing as much oversight. And at the same time, they create a clear accountability structure so that if things aren’t going well, management knows about it early enough to work with a team member to improve the situation and get things back on track. We are constantly surprised at how few businesses use the low-cost and highly effective tool of visual controls. A simple real-time dashboard can enable your employees to evaluate and correct their own performance without waiting in line to talk to you and get your feedback.
- Procedural controls. These include things like your standard review process for all new hires, a rule ensuring that two unrelated parties internally check or be involved in the flow of money, and a clear process for escalating customer service issues to get the problem resolved in a smart way. Procedural controls establish a known pathway to a consistently secure result. They are especially important in institutionalizing key learnings so that your entire team follows your best practices. The consistency you get from procedural controls also helps build your company brand by ensuring that customers know what to expect from your business in various situations, and comforts you with the knowledge that in these situations, your team will know how the business wants them to respond.
- Embedded controls. Embedded controls work automatically in the background without someone’s having to remember to do something to use them. They make the default behavior the right behavior. These include things like standardized contracts, automated data backups, and automatic tracking and reporting of your sales team’s call metrics directly out of a database.
Building strong internal controls is not about you, the business owner, being in control, but rather about enhancing and giving control to your business.
The best controls make the default behavior the right behavior. And they empower your team to get better results with less effort by giving them immediate feedback and a more defined playing field.
You don’t want your controls to be a police officer hiding in a speed trap to catch and ticket an unwary team member. Rather, you want your controls to be more like a speedometer or cruise control system that helps individual team members autonomously do better work.
The best controls also empower your managers and leaders with immediately clear and actionable information on how to coach and redirect their team, by letting them know what’s going on in an area at any given moment.
Collectively, your systems, team, and controls are what allow you to scale your company.
21 Examples Of Business Controls (Sales/Marketing)
Refine Your Systems and Controls as You Grow
The systems that worked for a $500,000‑a‑year business are no longer sufficient to cope with a $5 million business, and not even close to being adequate for a $50 million business.
At first, the additional sales will cause a few “leaks,” but before long, your business will have burst pipes and water everywhere.
This is why you need to approach your systems and controls as a work in progress, never a finished, static thing.
As you grow your business, your systems and controls must grow with you.
Action Steps – What To Do Now: