Standard Operating Procedures aren’t sexy. SOP’s tend to be the last thing most Business Owners want to think about. The myth is that there are always other things to spend money on that are more directly related to the bottom line. Procedures can wait.
In truth, the lack of SOP’s puts you at constant risk of failure and directly impacts your bottom line. Errors, refunds, product replacements, shipping failures, customer complaints, overtime, excessive inventory orders, duplication of effort, lost opportunities, and all the other things that happen in your Operation every day impacts your bottom line.
You may think you’re in good shape, but unless you can guarantee that you are consistently operating at a predictably controllable level on each one, then you aren’t. And, the only way you can make that guarantee, is by pointing to a documented process that is followed by your staff.
There are numerous classic stories of employees who know everything about the business suddenly becoming ill or incapacitated leaving the entire company in chaos, trying to figure out how to get the work out the door. Or, I’ve seen highly valuable employees leave without notice because they can’t take the constant crisis mode any longer.
Unless you’ve taken concrete steps to ensure that your Operation is being run in an orderly fashion, you’re leaving everything to chance. You’re playing Russian Roulette with your business. All it takes is losing a couple of good clients due to sloppy service to find yourself in deep trouble.
So, how do you recognize where SOP’s are missing?
The easiest way is to look at what has been breaking down in the last 30-60 days and evaluate the real cost of each one. Here are a few questions to get you started:
- How many customer complaints have resulted in refunds or replacements and what was the cost?
- How many customer deadlines were missed and what was the monetary impact?
- How often do the same mistakes happen over and over again?
- How much overtime have you been paying to catch-up on the work?
- How many times were you unable to make critical, time-sensitive decisions because of incomplete or late reporting?
As a Business Owner, I’m sure you’re keenly aware that all of the situations on this list contain the critical element of time which directly translates to money. There are also the elements of materials, shipping, inventory, and other monetary elements that are specific to your business model. The items having to do with customer satisfaction and professional reputation, or lack thereof, contain the element of lost revenue or opportunity cost.
Looking at these situations in the macro probably feels overwhelming, but my guarantee to you is that every single one of them can be resolved permanently with well-written procedures that have been incorporated into the daily process.
What would it mean to you to have SOPs in place to mitigate your company’s randomness and unresolved problems once and for all? What effect would it have on your financials, your customer relations, your employee relations, your growth prospects and your peace of mind?
The cost of putting a good set of procedures in place will be a fraction of what each of the above situations have been costing you for as long as they’ve existed. Here’s a simple approach:
Take one issue that’s giving you the most trouble. Determine how much it costs you to continue with your current process. Determine what you believe you could save on that process. Now, estimate what it will cost you to put an SOP in place, and you’ll have your ROI. Start with one and work it through until you get the hang of it. Soon you’ll be moving through the SOP issues faster and faster with increasing and compounding monetary benefits.
You’ll always face risk, but once you have your SOPs in place, you’ll be far better prepared to handle whatever comes your way.
Look, I know that change isn’t something you view as a good thing. But, change that will allow you to bring order to chaos, put more control into your hands and allow your staff to operate more effectively, efficiently, independently, powerfully and profitably is a change worth embracing.
I encourage you to consider this seriously. The Fall season is a great time to launch an SOP project that can be easily completed before year-end paving the way for a more productive 2019.
If you know of a business owner who needs to read this article, please pass it along to them. And, if you like this article, I would sincerely appreciate it if you would leave a comment in the space below.