Setting up good systems is a complex proposition that takes time and costs money. If you don’t spend the money, it will cost you more in the long run. You certainly can’t grow without them.
There is good correlation between successful businesses and good information systems. Unless you discovered a wonderful niche where the clients are lining up, the costs are low and the barriers to entry high, chances are you need systems.
Let’s look at an example:
If your business is delivering water to country homes that are not mains connected, all you need is a mobile phone and a truck to get going. You can get by with an order book and an invoice book.
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Now imagine you have grown to have 20 trucks on the road staffed by 35 drivers doing 135 deliveries a day. There are four full-time staff in the office and three sales staff out on the road to keep the 135 jobs a day coming in.
Your simple business just got complicated by scale, and systems are needed.
For starters you are probably sending out 2700 invoices per month. If you could get 50% of these invoices to be automatically generated and sent by email, you could save $675 per month on stamps, $500 on printing and envelopes, $500 on admin time and you may even get paid days sooner, saving you $500 a month in interest due to improved cashflow reducing your overdraft.
Now look at route planning technology, that sorts your deliveries by region and reduces your travel time by one hour per day per truck, and gives you the ability to increase deliveries by 10% without increased cost.
In short, as you grow and your small business gets to be bigger, the only way to beat the smaller startups in your own industry is to have economies of scale through smart systems. If you intend to beat your competition, start looking for the best systems and invest time and money to get ahead.
So, here is a shopping list for you, in the order they are typically needed in a business.
Infrastructure: These are the servers, PCs, laptops and other mobile devices, terminals, networks, security and back-up systems that your business systems rely on. If you expect everything to just work together without design, your people are probably spending more time mucking around with their computers than doing the jobs you pay them for.
Email: Your business needs to make sure it is stable, reliable and secure. You might start with Gmail or Yahoo, but may need more soon, such as shared calendars, domain hosting, archiving and backup solutions. Then get really smart and hook your email up to your customer relationship management (CRM) or document management so that key emails are shared knowledge.
File storage: This very simple component is still done badly by many organisations, but the idea is to centralise your files, keep them secure, and create backups of them. Avoid multiple versions across multiple hard drives. Avoid key information being stored on local hard drives or in local email folders.
Delivery systems: These are industry specific, but no matter how simple your business is, as it grows to be done by multiple people your business processes must be automated to create a consistent, efficient and quality outcome. In many cases your delivery systems should drive your choices of ALL your other systems – because ideally you want to buy delivery systems which integrate to all the other systems in your business.
Also, wherever possible, you should buy a system that is built for your industry that incorporates best practice for that industry. Do NOT build your own unless you have a clear strategy to be a market leader in your industry and can invest the hundreds of thousands of dollars needed to make it work properly.
Financial systems: Managing money successfully in business does not happen by accident. Apart from the tax and legal implications, a good financial system provides regular indicators of what is working in your business and what isn’t, and where you are spending resources. Then integrate it with your delivery system.
CRM systems: These may be general or industry specific but they help you keep track of interactions with people and other organizations. They are the key to sales growth and should be part of your marketing strategy. Once you get the basics right, you can then extend CRM to integrate all your sales and delivery systems so that your whole business knows what any prospect or client is up to.
Document management systems: If the only way anyone can find information in your business is by asking a key person where it is, your business is at risk. One of these in your business as you grow can assist with the storage and recall of information and can create massive productivity gains when multiple people deal with documents.
You can keep adding as you grow. Web sites, HR, payroll, auto responders, project management, CAD, CAM, GIS and so many more. Whatever it is, get good advice early to avoid investment in the wrong solutions.
Just contemplate what it would take to grow from 20 trucks to 100. Often it is the scalability of the systems that determines the growth factor for the business. I say this having grown my service business an average of 70% a year over three consecutive years.
David Markus is the founder of Melbourne’s IT services company Combo. His focus is on big picture thinking to create value in IT systems for the SME sector.