What Unclear Processes Could Be Costing Your Family Business
By Kyle Danner - August 09, 2019
There is a very common problem that almost every family business faces—including your own.
It’s something you and your team deal with every day. It leads to mistakes, frustration, and sometimes resignations. It even keeps you from reaching your full potential.
What’s the problem? It’s not your leadership or the family or your legacy employees. It’s your processes.
Too often, family businesses don’t have clear, repeatable methods of doing business, methods that everyone understands and follow on a regular basis. Instead, they have everyone doing things their own way, usually based on personality and preference, rather than the way that best serves the business strategy.
Messy processes is a common problem because it’s natural. The owner of a family business usually builds their company from scratch. Employees get added on as needed, and everyone does their own thing. The owner has too much on their plate to worry about how things get done; all that matters is that things are getting done.
So if things are getting done and everyone seems to be working well together, are processes truly a necessary part of success? They might seem like a problem to deal with after you’ve got a handle on your family business, but if you address your processes sooner than later, you might be surprised by the results...
Are Processes Really That Important?
While running your business without clear processes might work for a while, and you might squeeze by despite yourself, more often there will be a time when something goes wrong. Someone can make an error or mistake that will cost the business significantly, and you may not have the foundation to survive.
Clear, deliberate, efficient processes are critical in every business. Without them, terrible things can happen.
NASA’s lack of processes resulted in a loss of $193 million (not to mention all the lost time and reputation damage) when Mars Climate Orbiter satellite disintegrated due to a measurement mess-up.
The cost of the Chernobyl disaster was even greater: 30 deaths, $720 billion, and unthinkable environmental damage—all due to a chain of six preventable human errors.
On the other hand, the right processes can save lives. By simply introducing a checklist for every surgery, hospitals were able to cut patient mortality in half and surgical complications by more than a third. Taco Bell went from a failing business to a business worth $1.98 billion just by re-engineering their processes.
The risk of not having clear processes—as well as the benefits of clear processes—can be seen in every business around the world. Not having them in place is like sitting on a ticking time bomb. How can anyone be at their best when the foundation underneath them isn’t stable?
Signs of Ineffective Processes in the Family Business
Maybe the risk of your business inefficiencies aren’t life and death, but it could mean life or death for your business. According to IDC market research firm, companies lose 20 to 30 percent in revenue every year due to inefficiencies.
So how do you know you’re one of the family businesses without clear processes? These are the top three warning signs to look for:
The Silo Effect
When people and departments don’t communicate openly, they start to feel detached. In other words, the left hand doesn’t know what the right hand is doing. Now imagine you are in the clapping business.
Ask your employees if they feel out of the loop. If your team members seem like they don’t understand what other employees do—or how their job impacts the businesses success—they might be experiencing the silo effect. Another sign of the silo effect is work not getting done because an employee thought another employee was working on it.
This happens when a team is micromanaged or a lack of helpful technology keeps a process from moving forward. A business may not recognize bottlenecks because of the Silo Effect. They might suspect bottlenecks but continue with business as usual simply because,“That’s the way we’ve always done it.”
If you don’t see results or jobs take a lot longer than they should, chances are you have some bottlenecks. To find out the cause of the bottleneck, consider asking your employees directly. Managers often don’t realize that they’re micromanaging, and you want to get honest feedback from your team so you can determine the true cause of the problem.
When people and departments duplicate work, either their own or one another’s, you’re paying double for the same results. Some examples of this can include:
- Having to rekey information
- Two of the same orders being filled
- More than one employee running the same report
Even if your business is making it without clear processes, it’s still losing out on revenue and opportunities. And it’s only a matter of time before the true cost of those losses catches up with you.
How to Clarify Your Processes
There are lots of ways to improve effectivity and clarify processes in your family business, and it all begins with business process management. Business process management (BPM for short) is like a framework for looking at your business and how it functions. It is an active discipline that discovers, models, analyzes, measures, improves, and optimizes business processes.
In today’s tech-savvy world, BPM often includes automation. But, at its core, it’s really about understanding what your business is made of and what it needs to be successful, from the macro to the micro aspects of your business. You don’t need fancy equipment to help your business run more smoothly. You just need a weekend and some honest hard work!
The main goal is to get everyone in your business on the same page, in both big and small ways, so you can get everyone rowing in the same direction and reach your maximum potential.
My favorite business process management system is the Entrepreneur Operating System (EOS). This system is a complete set of simple concepts and practical tools that covers the six major areas of any business.
Without identifying and documenting the processes of your business, you can’t create consistency or safety in your business. But with EOS, you get to the bottom of your processes and also identify how each of the six parts of your business is connected.
This allows you to avoid costly mistakes and instead feel confident that your business, and your family, are secure.
Fine-Tune Your Processes with EOS
Do you think EOS might be a good fit for your family business? Let’s talk.
As a Professional EOS Implementor, my ultimate goal is to help you get to the point where you can run EOS on your own. The process is simple, takes only 90 days, and gets your leaders 100% on the same page. And, if you don’t feel you have received value, you don’t pay a thing.
What do you have to lose? Schedule a 90-minute meeting with me to learn more about how EOS can help your business and your family be the best it can be. You can also download a free chapter of Traction to see how the system works.