Business Process Management is Key for Small Business Success

Indian businessman writing on whiteboard
It's very helpful to use visual diagrams for process management rather than a linear list. Blend Images - Jon Feingersh / Getty Images

Most entrepreneurial businesses start up organically and figure out "how we do things around here" pretty much on the fly. Owners and managers are often too busy to document their processes unless the business is highly technical or scientific, or unless process control is mandated by clients like the government. If you're the boss in a business ranging from food catering to retail clothing boutiques to wealth management, you won't get fired for not having documented processes.

(After all, you're the boss.) But you'll be missing out tremendous opportunities.

Reasons for Creating Written Processes

There are compelling reasons why your small business should have written processes, even if you're the only one currently involved:

  1. Adding and training employees: If your processes are written down, you can more easily and quickly train employees. If you do not document your processes, you'll be resistant to adding employees because the thought of training them is too daunting. Catch-22!
  2. Ability to get business loans: If you need funding for your business, a bank or other lender will need to understand your operations. It makes a powerful statement when you can show a lender how organized you are and that you really have a handle on processes.
  3. Secure greater profits: Documenting processes exposes flaws in how you do things. You'll see bottlenecks and inconsistencies that you didn't realize were there. Extra motion in a business process costs you time and money. Eliminating it equals time saved and greater profits.
  1. Position for eventual sale: If you want to sell your business someday, a buyer will want to evaluate the inner workings first. Showing the buyer your process manual increases the likelihood of a sale as well as the buyer's perceived value of your company. After all, if your processes are clean and well-documented, the buyer can more easily imagine herself stepping right in and continuing what you've done. Time saved for the buyer equals less cost down the road, which translates into a higher price for you.

    Getting Started

    So how do you go from having processes firmly (or not so firmly) in your head and getting them written down? You have to define and then document your processes. Let's say you're in the catering business. Whether you realize it or not, you have certain overriding processes that are common to every catering company. For example, every caterer has to get jobs, do events and follow up with clients so you get more jobs. Each of those actions is its own process.

    So for your business, write down your steps and try to organize them in sequential order (even though there will be overlaps). If your process has more than about seven steps, look to consolidate several processes as sub-processes of another key step. Otherwise, the process becomes too difficult to manage and explain to others.

    You might come up with a list like this one for a caterer and then within each process you'll document the sub-processes that are part of it:

    1. Job acquisition: Marketing, proposal generation, sales process, contract
    2. Event preparation: Menu creation, food prep, staffing, venue selection and prep
    3. Event operation: Day-of-job checklist, delivery and setup, staffing assignments, breakdown procedure
    1. Post-event follow-up: Client follow-up, in-house debrief

    Resources

    It's very helpful to use visual diagrams for process management rather than a linear list, although if you're not great with Excel or other programs, a list is better than nothing. Learn how to do process flow diagrams in Excel and see if it works for you. The advantage of using a flow chart is that you can easily see the inputs and outputs of each step of the process. A good process is like a good piece of writing: there are transitions between paragraphs. If a process step makes a leap to an action and it's not clear how you got there, go back and make sure the input and output are clear and strong.

    If you want to read the best book ever written about process control, take a look at Reengineering the Corporation by Michael Hammer and James Champy.

    Even though the book is nearly two decades old and was written with large organization processes in mind, it's a perfect resource even for young startups. It'll help you see the bottlenecks in what you're doing and fix them.