The Wonderful World of Systems [Video]

Cracking the cash flow code is every small business owner’s dream, right? Well, Susan was a guest of Josh Patrick on his podcast, Cracking the Cash Flow Code. Susan and Josh talk about the wonderful world of systems, and, how to set them up. Listen as they speak about:

• Why systems are important in a small business
• How to set up systems in your business
• Workarounds for designing and documenting systems

Please find the full video transcript below. 

Narrator:  Welcome to Cracking the Cash Flow Code where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when emergency strikes, fully fund a growth program and fund your retirement program. When you do this, you will have a sale‑ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want, in the way you want.

In Cracking the Cash Flow Code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable. Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.

Josh Patrick:  Hey, how are you today? This is Josh Patrick. We’re at Cracking the Cash Flow Code. And my guest today is Susan Fennema. And I hope I pronounced your last name right. I think I did. I have a memory like a gnat.

But Susan is an expert on systems. She has a company called Beyond the Chaos. And we put that up here so you can find out where she is. And if you happen to be listening to this podcast and not watching us on YouTube or Facebook Live, it’s beyondthechaos.biz. So, instead of me talking about Susan and how smart she is, we’ll just bring her right on and start the conversation.

Hey, Susan. How are you today?

Susan:  Hey, Josh. I’m doing great. Thanks so much for having me.

Josh:  Oh, it’s my pleasure. So, you’re a systems expert?

Susan:  Yes. I would say that that is absolutely part of what we do. Technically, a fractional COO. So, if you’re thinking of Chief Operating Officer, any sort of operations, management, consulting, that kind of thing, and my company also helps with project management as well. We do that for all sorts of service businesses, usually very small. Your contractor base would be a great example of the type of client we serve. We really help those overwhelmed small business owners figure out how to systemize their world so that they are not being drug around by the bull ring in the nose, like a bull, by their business and instead are able to actually lead it around instead.

Josh:  So, let’s start this at a 20,000‑foot view and we’ll go down from there. Why are systems important in a small business? You get a big business. But a small business, the owner tells people what to do. Why do they need systems?

Susan:  Well, for the same exact reason as in a big business, although less bureaucracy than in a big business. Unless you’re able to repeat what you’re doing over and over, systematically, the same way every time, you are not able to scale. And if you are spending a lot of time talking to everybody, every day, and explaining the same thing over and over again, instead of having a written system or process that they can refer back to, that takes a lot of the owner’s time which distracts them from being able to focus on getting that bit out to the next potential customer or going on to troubleshoot a problem that’s going on on a site. Those types of things are limited if the owner is spending all of his time saying the same thing over and over again to the team.

Susan:  So, there’s an awful lot of small contractors or distribution companies, but they don’t really want to grow. They have 10 employees, five employees, are happy being there. They’re not interested in scaling. So, if I say, “Hey, you need to have systems to scale.” They’re going to say, “Well, I don’t care because I’m not scaling.” So, what do you say to somebody like that?

Susan:  Okay. How about if you want to make more money, or you want to get your life back, either of those things is also side effects of building systems. You might not need to grow your company and people but maybe you want to take on more clients so that you have more income. And you can’t do that if you’re, again, repeating the same things without being able to systemize them. Same thing if you’re spending all of your time doing this and you don’t have time to go to your kids’ soccer games and hang out with your spouse after work and all of those good things that your business tends to start to take over your whole life if you don’t have some systems in place.

Josh:  One thing I almost can guarantee with almost all business owners I know, unless they’re engineers, they personally hate systems. And if I say to them, “You have to design and document systems.” They might say yes but they will never, never, never do it. So, with that as a fact pattern, how do you kind of workaround that?

Susan:  So, we have a lot of that. Small business owners, many of them, got into being small business owner because they don’t like bureaucracy and they’re not interested in it. And this is not adding a level of bureaucracy. It is adding some structure that should be able to set you free from your business.

So, when we work with people that fight that, we talk about how simple we want to make it. We talk about that it needs to be in a common location so that people know where to go. Now, I know a lot of people are not that technically involved if you are talking about contractors and distributors and that kind of thing, but it still doesn’t mean you can’t have even a notebook somewhere that is at a job site that people can refer to for “What do you do when you need more supplies?”

Josh:  Sorry. I want to cut you off, just for a second, because we get that’s where the documents live? Who’s putting the documents together?

Susan:  Hmm. Okay, I see where you’re going with that. So, the owner is probably the one that has to do it, but they don’t want to do it. So, that’s where you come into hiring somebody from the outside, temporarily – not forever, to help get that information out of the owner’s head. It could also be a spouse. If you have a spouse that’s very good at being detail-oriented or process-oriented, they might be able to help get that information out of the owner’s head and then create that whole process or structure around where it’s located, how to update it, and all that, and make it easier for the owner who is fighting that a little bit.

Josh:  One of the things that we like to tell people to do, with that particular situation because it’s almost universal, is we tell the owner, “Don’t do it yourself. Have the person doing the job write down what they’re doing and put together a bunch of checklists.” And the truth is the person doing the job is the expert at the job, not you.

Susan:  That also works.

And if it’s something that is done on a computer, it can be a video that’s recorded of the steps that they go through. And then, you could even transcribe that video, so nobody’s writing it. It writes itself. The one thing is that, if you have the workers doing it, you do want somebody, probably the owner, going back through those steps to make sure that they are as simple as they can be. They are as streamlined as they can be. And that all of the people doing that same function are doing it the same way.

Josh:  Yeah. You just hit on something which I think is really, really, really important which is a simplification. One of the challenges that business owners face is they often hire really, really smart advisors. And the problem of hiring a really, really smart advisor is that really, really smart advisors like to show how smart they are by putting together things that are really complicated and can’t be implemented.

I love Michael Gerber’s stuff. I think Michael Gerber’s great but his stuff is not operationally doable for a small business because there are nine zillion steps and I don’t know any small business that’s got under 25 employees, that’s going to do nine zillion steps unless they’re an engineer.

Susan:  Software developers also will do 9 jillion steps. But they’re–

Josh:  They’re engineers.

Susan:  You’re right, a different kind of engineer. Absolutely.

So, that is absolutely correct. And so, what you also want to do is make sure that the person doing the job still has room, in that structure, to use their judgment and to use their expertise because you are hiring very skilled laborers that do these things in a very professional way. I mean, hopefully, that’s who’s on your team.

But there are ways too if you want to get more business from a client, somebody that you’re already helping with – the next job in 10 years, or the next job in five years, you want to make sure that they are having an experience that is comfortable for them, too. And so, some of those processes that you’re putting in place, from the worker’s perspective, might not take into account the client’s perspective. So, some of that might have to be ironed out to get to that simplified form too. What is the simple thing that we are selling to our clients? And, now, we’re going to take a big step back. And what is the vision that we’re trying to create for our company? How does this actually even fit into our marketing? It all becomes one thing.

Josh:  One of my favorite statements about systems is that the reason you want systems in your company is not for you as the owner. It’s so your employees know what excellence is and your customers know what they can expect on a regular, consistent, and ongoing basis. That’s my advertisement for systems, usually.

Susan:  I like that. That’s pretty good. And that’s absolutely correct.

Let’s take an example. If you have a worker that is going to be late. How do you communicate that to the client? Is it the worker’s job or is it yours? How do you make that part of your business structure so that, if you’re always the on‑time contractor, that you are somehow communicating that to the client so that they’re not sitting there for eight hours wondering when someone’s going to show up? Who’s homesick?

Josh:  Yeah. Well, that’s a good point. If somebody in your office– I would likely have somebody in the office do that. But that’s just my sort of way of doing that.

So, you hit something on something a little bit. You were talking about what is the vision of the company and how do you get there. So, one of the things I like to start with, every time we work with any business, is to help them understand how to become values‑led. So, do you have any great tips for that?

Susan:  Well, one, you have to say it a lot. You can’t just hope it happens. If your intention is for your team to work a certain way, you have to tell them, and you have to set that expectation, and you have to hold them accountable to that expectation. That is another thing that systems and processes help you with. If they are written down and if you’ve made it clear what you expect, now, your ability to hold people accountable becomes much easier.

And the other thing is is that, if the person is struggling to do it, you can go back and look at the process and blame the process, instead of blaming the person. ”Where in this is it confusing? How can we make that more clear so that you’re more able to do your job, but we’re still including the end intention in it?” And then, you streamline that. And over time, as you grow these systems, you start to even bring that value system more and more into your systems.

Josh:  Yeah, that actually is one of Deming’s 14 points. W. Edwards Deming was a guy who, in the ‘30s, taught the United States how to be this incredible war machine. After World War II, for whatever reason, all US manufacturing decided to ignore him. So, he went to Japan. And the Toyota Production System, which is otherwise known as Lean, came out of Deming. In fact, there’s a Deming Prize in Japan for the best quality out there. And one of his 14 points was, “Don’t blame the person, blame the system” because Brene Brown has a great saying, “We’re all doing the best we can” which means your employees really do want to do good work and it’s up to you to give them a support system for doing that.

Susan:  They absolutely do. And many of them will exceed your expectations if you make it clear what those are. But if they don’t know what they’re trying to meet, that is virtually impossible. The other thing is that it can open up the option there that you find out that you don’t have the right employee because they’re not doing what they say. They’re not doing what they’re told, no matter how many times you go back to blaming the process. At some point, that accountability of the individual has to come into play. But, definitely, start with blaming the process.

Josh:  Yeah. Well, if you have a process and someone’s not following it, you give them probably one or two tries to follow the process. And then, you go to your values and you say, “Hey, we have a value of X and you’re not doing X. And if you don’t start doing X, you can’t be here.”

But that actually moves on to another thing which is I’m about to write out a screed on policing which is we should really pay more attention to how we hire cops, not how we train them. And I would say that’s true for every business I’ve ever worked with. If you’re not hiring for values, you’re going to get the wrong person in your company. Is that something you work with your folks about?

Susan:  I totally believe in that. And it is certainly something that should always be taken into consideration in the hiring process. And the first step to that is making sure, during the interview process, which also you should have. What is your interview process, right? Another system right there.

You should be including those values, and speaking to them, and asking questions about them throughout that interview process so that you’re sure that somebody isn’t just saying “yes, yes, yes” without digging a little bit deeper to find out what does that look like to you? What does that mean to you when I say, “One of our values is that we always leave the homeowner’s home clean when we leave it every day? What does that look like to you? Can you tell me what you would do at the end of your day?” Ask some questions like that to bring that into the interview process upfront.

Josh:  When I do values questions, as far as a job interview, one of my favorite strategies is I use a thing I call tell me a story, “Tell me a story about a time where you were working on a job and it wasn’t left to your satisfaction.” And they get to tell me about it. And then we have a conversation which will reveal what they really think. The thing I have a problem with is when people say, “Our value is X. And tell me why you’re going to support that.” They’re going to be able to figure out what you want. But if I say, “Tell me a story about something that happened in your past” which really was them, they are now going to reveal what they really think about that particular value and how they’ve dealt with it in the past.

Susan:  I think that’s absolutely dead on.

And the other is, have an interview with different people because sometimes they will connect with a person a little bit differently than they might connect with you, who’s the boss.They might be more open to saying things that maybe you need to hear before you hire them. And that is another method to get to that. You kind of divide and conquer with your co‑interviewers of what value are you going to try to figure out from the interview? What skill set are you wanting to try to figure out? And then, put them all together at the end. You’ll have a better picture of the person.

Josh:  And you’re also going to want to use, again, a system for how you go through hiring, how you go through interviewing, how you document what your thoughts are in the interview because you can’t let people try to remember because, I’m going to tell you, when I’ve done that, 45 minutes after they talk to somebody, they don’t remember what they said. So, we have a very simple grading system that we use for that.

We only have a couple of minutes left. So, I want to change to a little bit different topic. One of my favorites. Delegation. So, if I’m using systems and the reason I like systems is that it should allow me to be a better delegator. So, when you teach the people that you’re working with how to delegate, what are some of the tricks that you have?

Susan:  Well, the first thing is that we want to start with, yes, write it down. But I prefer even the person you’re delegating it to be the one writing it down. So, go through the steps with them of what you want them to do, kind of a show and tell. Have them take the notes. Then, have them do it the next time and you watch.

So, the first time you do it, they watch. The second time they do it, you watch. Then, ask them to write it up. And so, now you should have a written system of what you just delegated. That person should be off and running by themselves to be able to do it without your support.

And, again, always telling them, “If something changes, if there’s a new question, update that process so that we know, when we come back to this, what we’re doing.” So if you’re interviewing, for example, and that’s a thing you’re delegating to a co‑interviewer, you never know when that next interview is. Most small business owners don’t hire all the time, so having a document to go back to, or even as you’re doing it, updating it, helps you the next time you have to do it.

Josh:  It makes a lot of sense to me. So, when someone’s delegating, they rarely do it right the first time. In fact, they rarely do it right the 10th time. There’s a learning process that goes along with that. And one of the things, I think, with delegating, that owners have a really hard time with is the process of others making mistakes. They’re fine with themselves making mistakes but others making mistakes. How do you coach people through that? Because people are going to make mistakes and you need a process for handling that.

Susan:  They’re absolutely going to make mistakes. And that’s one of the challenges of growing. If you just do it all yourself, you can live with your mistakes.

Josh:  Well, you really shouldn’t but they do. That’s it.

Susan:  Right, right.

One is make sure you’re not berating the person. Like, we’ve been talking about going back to the process, blame the process. Let’s clear that up so that that doesn’t happen again.

And then, I’m a big fan of One Minute Manager. I don’t know if you’ve read that book but it’s a very small book. And its whole point is to address it, when it happens. Address it clearly. And that’s a positive or negative thing. So, also be giving praise all the time for the good things. And then, when a bad thing comes into play, it’s not a big deal. It’s just part of the day. “Hey, why did you do it this way? Is the process a confusion there? Do we need to clarify that because I didn’t get the outcome I expected? So, I want to make sure that we’re on the same page on how to move forward.” That helps the person learn. It helps them feel comfortable and not blamed. And it helps them then bring even more suggestions to you which is important.

Josh:  Again, I have lots of stupid little sayings I use in life. But one is praise in public, criticize in private. And that’s an issue that owners often get backwards. They criticize publicly and they praise privately. It’s just devastating when you do that because people lose all sorts of trust in you. And they’re not going to tell you the truth.

So, Susan, unfortunately, we are out of time. So, how would people find you if they’re interested in doing so?

Susan:  Go to my website and download our free ebook which is 3 Ways to Control Chaos in Your Small Business. And you can find that at beyondthechaos.biz/ebook. All of our contact information and everything is there, too. You want to look at that. Feel free. You can contact in many different ways.

Josh:  Cool.

And I have two things I would like you to do. One is please, please, please, please, please, please, please, please go to wherever you’re listening to this podcast and give us an honest rating and review. If you love it, say you love it. If you hate it, say you hate it. I hope you love it. But, if you hate it, well, I guess, that’s how we’ll learn something.

And the second thing I’d like you to do is, normally, I have some sort of a giveaway thing, but I’ve got something to happen that’s really exciting. It just happened. We just launched our new upped on the website for The Sustainable Business. So, I’d love to have you go check it out. And then, let me know what you think. It’s at www.sustainablebusiness.co. That’s .co and not .com. Again, it’s www.sustainablebusiness.co. Check it out. Walk around. Push a bunch of buttons and let me know what you think. And you can even sign up for a free 20‑minute conversation with me there.

So, this is Josh Patrick. We’re with Susan Fennema. You’re at Cracking the Cash Flow Code. Thanks a lot for stopping by. I hope to see you back here really soon.

Narrator:  You’ve been listening to Cracking the Cash Flow Code where we ask the question, “What would it take for your business to still be around a hundred years from now?”

If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102, or visit us on our website at www.sustainablebusiness.co, or you can send Josh an email at [email protected].

Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.