McDonald’s is one of the most successful franchises in the world. Is it because they have the best tasting hamburger? (Or is it the french fries?) Actually, one of the reasons McDonald’s is so profitable is that a hamburger in Chicago, New Orleans and San Diego all tastes the same. This is something that customers actually come to expect. What produces McDonald’s sustainable competitive advantage is not how good its food tastes, but its rigorous operational processes in every stage of its business. Everything is closely documented from taking orders to cleaning the restaurant's floors.
Remember that in a small business, continued product excellence is always a temporary and expensive competitive advantage. These types of operational processes are critical to long-term success. Profit happens when all employees can leverage what they know from the same system. It also allows quantitative measurement of critical business goals that can be linked to financial incentives for all employees.
Every area of a small business can benefit from operational excellence.
Processes in this department can create the type of “systematic relationships” required to have a constant stream of prospective customers. People buy from who they know, like and trust. Consistently giving prospects value without directly selling them your product will constantly create this type of long-term relationship. The first step is to implement a customer relationship management (CRM) system to keep track of your prospects. Record only the essential elements like contact information, notes on historical interactions or conversations and a reminder on when to contact the prospect back. Implementing a complicated system that needs to be fed a lot of information will result in failure. Popular CRM systems including Salesforce, Microsoft Dynamic and High Rise.
Every small business needs to keep track of their pipeline of hot prospects even if it's only in a spreadsheet. Track where the prospect is in the sales process (no more than four identified steps). Next, build a library of proposals so your staff is not reinventing the wheel every time they need to create one. This library should include boilerplate content that goes into every document as well as information that can be inserted in the top three types of proposals. There also should be a methodology for calculating pricing of the proposal so profit remains consistent.
As a small business grows, consistency of delivery becomes critical as a variety of employees get involved in the process. Document every stage of the delivery of your product or service and train to a set standard. Consistently inspect and measure the results against this standard.
This is the area where most small businesses are typically strong since developers are educated to execute a logical process. Again, document and inspect the process that your company establishes. Consistently train all new and existing employees to follow it.
This is traditionally a very weak area for small business. Most owners do not review the critical financial statements (profit and loss, balance sheet, cash flow statements) on a monthly basis. In addition, very few owners can identify the critical components of each statement and analyze what it means to their business. This is a huge problem, since these statements tell where the business has historically been and helps guide where it can go in the future. Do not hesitate to get help from an outside accounting resource until you become proficient in this area. Make reviewing these statements monthly a critical part of your process.
Do you have operational processes for every phase of your business? How has it help you to succeed?
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