So one of the primary components to building up a business of any kind, that many people miss over, is systems. Systems are what let the business operate independently of you, the owner, and prevent you from having to micromanage every little aspect of the operation. Not recognizing this fact, I have a feeling (I don't know of exact statistics), is one of the reasons why so many businesses fail. Because so many of the people who start them just don't realize this.
The first person I saw to really point this out was Michael Gerber, in his book "The E-Myth." This book really opened my eyes up to how a business should be run, as I had never thought of it in this way. Some entrepreneurs will understand this kind of thing instinctively, but many others must be taught it. For example, many of the entrepreneurs and businessman of the 19th century understood all this about the need for organization, efficiency, details, standardization, etc...for an industry instinctively.
Michael Gerber's main points are that few of the people who start businesses are actually entrepreneurs and most people do not start businesses for entrepreneurial reasons. He says one of the main problems with people starting businesses is that they start them thinking that because they know how to do the technical work of a business, that they know how to run the business itself.
For example, being a fantastic hairdresser doesn't mean one knows anything about how to run a hair salon, or say a chain of hair salons. Being a great computer programmer doesn't mean one knows anything about how to run a software company. Being a brilliant chef doesn't mean one knows anything about how to run a restaurant, or a chain of restaurants. And so forth. Thus the person, who had a job and would like to seek "freedom," ends up now having to do their original job, but also having to do a bunch of other jobs that they likely do not even like in addition to not knowing really how to do them.
This then leads into the other big mistake of trying to do every little aspect of the business as opposed to systemizing things. Thus "the business" is what arises up as a result of the efforts of the person starting the business, as opposed to planning the business from the get-go and implementing systems. The true entrepreneur, on the other hand, will think up the concept of the business from the get-go, and think about everything from a business plan, to marketing, to systems implementation, so that it becoems a professionally-run operation.
This is very important because the systems do a few crucial things (also pointed out by Gerber):
1) They create a sense of ORDER out of the chaos of the world. The world we live in is extremely chaotic. Crime, pollution, loud noise, weather, life overall. As a result of all this chaos, people crave order. Businesses are a big part of this. When a person goes into a business, a chaotic business will turn them off. What turns people onto an enterprise is if it is ordered, efficient, where they can expect the same experience each time. For example, whether you go into a Starbucks in Los Angelos or a Starbucks in New York City, you get the same experience each time. Same with McDonalds. You know what to expect. And the reason a Starbucks operates the same anywhere, or a McDonalds, or a Wal-Mart, or whatever, is because of systems.
2) Systems allow quantification. Think about the different components of the business. Finance, accounting, marketing, sales, ordering merchandise, etc...(just a few off the top of my head). How can one really determine if their business is doing this stuff efficiently without use of systems? Quantification allows one to increase efficiencies and quality of service to customers.
3) Systems allow freedom. One thing pointed out is that while initially you may work in your business, you want to get where you are working on it, not in it. If you are working in it, you can't work on it. And in order to work on it, much of it must be able to function without you. This is how the freedom aspect comes in. The idea for most people in starting a business is to enhance their life, not take from it. And in order for the business to do this, you must have systems in place. What the systems allow is for the business to operate independent of the owner, so that they can enjoy other aspects of their lives.
One protest sometimes given to the idea of even trying to start a business by some people (I have seen it on Internet forums) is that they do not want to be "chained to a brick and mortar store" (or chained to any physical business). One woman said, "I would rather DIE than be chained to a B&M." These people have no concept of the idea of systemizing the business. They would end up working in the business as opposed to on it. Essentially, they would have bought themselves a job. Without their daily presence, the business can't function and they can't make any money.
Systems allow the business to function without them, so they can go see their child's baseball game or attend the PTA meeting or do whatever. A world-class business need not be big at all. One could operate a single bakery, but it be extremely professionally-run and truly world-class, to the point that some people might even think it is part of a chain, even though it is not. But because it is systemized, the owner doesn't need to be there every single day. They can hire a manager to run it with whom they meet weekly. This is part of how a chain of restaurants or stores is grown. Obviously if one starts a restaurant and wants to build a chain, they cannot be present at every single restaurant they open. Managers and systems are needed.
For the entrepreneur who would like to own multiple small businesses, systems are crucial as well.
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