The Importance of Process

The Importance of Process

By Keith L. Scott

Whether you are running a retail store, an accounting firm, or a large corporate entity, you cannot avoid the “process” of doing business.  The companies that get it right tend to have high efficiency, lower operating costs, reduced waste, and proper utilization of human resources.

Don’t let the size of your business lead you into a state of opulence.  Large companies can and often do, hide their lack of process in their ability to access capital to cover the cost of inefficiency.   Smaller companies however, cannot afford to ignore intricate processes that make their business operate.

There is a process involved in every aspect of your business from acquiring and retaining human resources, marketing a product or service, supporting a product or service after the sale, or researching new market opportunities.  A company will not understand the details of their business processes until they are well documented.  Without the proper documentation of processes, individual teams tend to work in independent silos.  In other words, the right hand does not know what the left hand is doing.  In addition, a business does not “own” their process until it is well conceived, documented, and archived for future review, alteration, and/or enhancement.

Documenting your business process, regardless of the size of your company, will help establish a “turn-key” operation.  In a “turn-key” operation employees require minimal training, have shorter learning curves for new hires and create a highly efficient operation through economies of scale.  The following are benefits of how the proper documentation and design of business processes can help your business

Increased Efficiency.  Companies can increase their efficiency through fine-tuning the way work is performed.  Having identified key processes to your business and the methods which to deliver them will reduce operating cost and increase profit margins.

Understanding Roles and Responsibilities.  With clearly defined processes employees will fully understand their roles and responsibilities along with those of their co-workers.

Reduced Learning Curve.  Through the acquisition of new employees or the promotion of existing employees into new roles, documented business processes will reduce the learning curve and set expectations.

Expansion.  Clearly defined processes create the ability to expand operations into new locations.  As your business grows, a fully documented operating procedure will allow the company to operate “out-of-the-box”.    Having processes fully defined and documented can allow a company’s operation to expand more efficiently.

Speed to Market.  Organizations that have defined processes can build new products or services faster by leveraging their efficient operations.

Vendor Reduction.  Companies reduce the need for consultants and outside vendors by leveraging repeatable and measurable processes within the organization.

Replicable through Franchising.  Your business processes are the most valuable intangible asset of your company.  The proper documentation of operations will position your business model to be franchised.

Positioning for Acquisition.  Companies or investors that look to acquire other businesses, whether in an attempt to expand their service offerings, strengthen their market position, or reduce competitors in the market, are shopping for companies with finely tuned business models and operating efficiencies.  The investors are buying profitable systems that are clearly defined through well documented processes.

Reduced Operating Cost.  Through economies of scale, an operation becomes better as it becomes more familiar with the standard repeatable procedures of the organization.

Employee Retention.  As employees become more familiar with their roles, they become confident and efficient.  The implementation of processes set the expectation for an employee to exceed in terms of performance.

The proper identification and documentation of business processes is imperative to an organization’s success.  Clearly understanding the business of your business will eventually assist your company in overcoming the short-term obstacles of market competitiveness, capital shortages, employee retention in order to obtain the long-term objective – profitability.

Of course humans are not machines.  There are times when an individual will have to deviate from the normal procedure to get the job done.  However, properly defined and documented business processes set a benchmark from which an operation and organization can grow.

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