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Developing excellent business systems print Print

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This guide covers why poor systems can lead to business failure; shares 3 reasons why business systems need your attention; lists 7 things you should keep an eye on, and offers tips on how you can improve these.

Business systems

The downside of poor systems

"I'm far too busy for that" or "I'm not really interested in admin tasks" are commonly heard excuses. But all the time and energy you put into making and selling your products or services could be wasted if you don’t pay attention to the administrative side of things. Don’t be the kind of business owner who is so wrapped up in doing or making that the administrative side of the business suffers because:

  • Invoices and statements are sent out late, are sometimes inaccurate, or even completely forgotten.
  • Debtors and late payers are not followed up, so the business restricts its own cashflow and in effect offers free finance to others.
  • Creditors are not paid on time, so any early payment discount opportunities are lost and lines of credit may be tightened, exceeded or withdrawn.
  • No funds are set aside for GST and tax commitments, resulting in 'unexpected' tax bill shocks and possible late payment penalties.

3 reasons why business systems need your attention

1. They set you free
Once you have good systems set up, you’ll free up time, meaning you can spend more time working on your business rather than in it. Also:

  • Gaining a good overview puts you in a better position to make changes and improvements.
  • You’re reducing stress, because you understand how things work.
  • It is far more time-consuming and wasteful of your energy to play 'catch up'.
     

2. Independence
Good systems make your business stronger and more efficient. If something were to happen to prevent you from working for a while, you’ll at least have peace of mind knowing you’ve got systems in place to keep the business going.

3. Ready to sell
There is much to be said for developing clear business systems as if you were going to franchise your business or sell it tomorrow.

If you’ve got great systems in place, your business is much more attractive to potential buyers – it’s more likely to be seen as an independently viable unit and less dependent on the owner(s), plus it means the business can be transferred to new ownership with minimum disruption.

7 steps to building good systems

1. Record-keeping
You don’t want to be worrying about the Inland Revenue, so make sure you can meet all your tax obligations. This is a major stress reliever, and we can help you with these articles:

2. Business planning
Good planning helps you set goals. Without them, your business has no direction. So check out these articles to help you plan and set goals:

3. Cash flow control
The ability to conduct a cash flow forecast means you can anticipate any problems and take steps before it gets out of control. We have some articles to help with your cash flow forecasts:

Also ask an ANZ Business Specialist about accounting software providers that can provide an accounting package that can help you keep track of your finances.

4. Creditor and debtor control
Sloppiness in this department is one of the most common causes of small business owners experiencing stress and anxiety. Pay your creditors on time. Don't let your debtors use you as free banking service. This article can help:

5. Pricing
It’s important that you price accurately, and understand your costs. We can help with:

6. Monitor everything

If you can’t measure it, you can’t manage it. So keep on top of your business by monitoring its performance. Business ratios are a good way to measure progress, and it’s also important to monitor how successful your marketing tactics have been. These articles can help:

7. Record your systems
Developing operational manuals is important because:

  • If you or a staff member is sick or on leave, others can take over.
  • Creating an operations manual and writing the process in simple and easy-to-follow steps forces you (and your staff members, if applicable) to think through activities and refine them.
  • It also adds value to your business by helping with quality control and making sure everything’s done in a systematic way e.g. making sure that all credit customers are invoiced as soon as possible, or documenting a set procedure for following up unpaid invoices in a timely manner. Small simple steps can make a big difference.

And finally

Want to brush up on some of these systems? Attend a free ANZ business workshop on a topic you may have avoided up to now, such as accounting or understanding financial statements.

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