Why Business Processes are Important for Small Businesses?

It’s no secret that business processes are an essential part of every big corporation. This is fairly easy to notice whenever you walk into a bank or when you need to renew your driver’s license. Most likely, it even frustrated you at some point. You might’ve come to a bank teller with a complex request, and they couldn’t help because it was beyond their authority or scope of duties.

But how does this apply to small and medium businesses? You might be thinking that managing a business is difficult enough as is. Processes might even seem like another hurdle. They might even seem like a bureaucratic addition to your business. 

Yet the fact that so many corporations use processes shows that this approach makes sense. In fact, it is hard to imagine how a big company could function without having processes well defined. 

In this article, we’ll explore the benefits of defined processes for a business. But before diving into that, let’s explore what business processes actually are.

What is the business process?

A business process is a set of activities, sequenced in a particular way, that serve to achieve a specific business goal. In other words, business processes define how things are done in a business. Here are some examples of processes in different segments:

• Customer experience: Whenever a customer walks into a store, greet them and offer them help
• Manufacturing: First, install the front left wheel on the car. Begin the process by tightening the topmost bolt to 10 Nm, as read by the torque meter. After that, tighten the leftmost one to 10 Nm.
• Sales: Whenever you receive a call from a new lead, make note of it within your CRM. Create a follow-up event on your calendar.

Every business does things in a certain way – but it may be more or less defined. If a process is well defined, everyone involved in it knows what is expected of them. On the other extreme, if a process is not defined at all, then the involved people are improvising at every step. Most businesses have processes that lie somewhere between the two extremes.

Having your employees improvise every step of the way probably feels like a bad idea. But let’s not just leave it to intuition. In the next section, we’ll dive deeper into some of the benefits you might get from well-defined business processes.

Benefits of well-defined business processes

Efficiency

Being more efficient might mean different things for different businesses. Yet it always revolves around better utilization of the resources. We’ll explore a few common areas of business in which a process-oriented approach might help in that.

Automation

If tasks are sequenced in processes, many things that would otherwise be done manually can be automated. This can speed things up, lead to less errors, and allow you to scale up your operations.

For example, in manufacturing, a product typically goes through a sequence of steps. Each step consists of a very specific task, such as tightening a bolt, or putting two parts together. If there’s a clear process defined, the company might notice that some of these tasks can be done by robots.

Many of today’s businesses are less tangible, but that doesn’t mean that they don’t need automation. Almost every business has marketing and sales. Much of this involves repetitive tasks – like follow-ups with clients, sending newsletters, and so on. Wouldn’t it be a lot easier if that were automated?

Specialization

Every person can do the task best suited to their interests and abilities. By specializing, your employees can become experts in their specific tasks easier. Furthermore, in some areas, you might not need a person with broad experience. This can make both hiring and training easier, and cheaper.

For example, your doctor and your lawyer are probably not the same people. Each of them specializes in their own field and probably has years of experience. Because of that, you can trust each of them to serve you well – each in their own field. 

However, you’d probably be reluctant to get medical advice from your lawyer. Do you think it would make sense to make employees be doctors and lawyers simultaneously?

Robustness

Defined processes will make the business more resilient against different risks and threats.

A business is facing risks daily. Your employee might quit. You might lose an important client. A competitor might release a new product that’s superior to yours. Or your employee might simply call in sick today.

Of course, you want to avoid these, but this is not always possible – and some of these risky scenarios will inevitably play out. With that in mind, having a clear set of standardized operating procedures can mitigate some of these risks. Let’s look at a few examples:

• With clearly defined roles and responsibilities, it is easier to fill in for a sick employee
• Hiring is easier as the exact skill set for every position is known in advance
• Training new employees is easier. Since their role is clear, and the skills they need to learn are well defined, you can create a more focused onboarding program for new employees.
• Less stress for employees, as they know what is expected of them at every moment. This leads to lower employee churn.
• Ensure knowledge is not focused in given people.
• Disadvantages of knowledge focused in given people:
• These people become increasingly difficult to replace
• They become “oracles”
• Increased costs of replacing them
• Increased risk / decreased robustness

Employee satisfaction

Another point related to the previous one is whether your employees are happy. If they aren’t, the probability of them quitting at the worst moment quickly increases. Furthermore, working in an environment with satisfied colleagues is surely more pleasant.

Having established processes will let your employees know exactly what you expect of them. The clarity achieved in this way can itself lead to less stress. 

Furthermore, having defined processes can make it easier to establish criteria based on which performance is evaluated. This way, an employee can know whether they’re doing a good job, or whether they’re likely to be shouted on by their boss. 

If the quality criteria are not clear, the work is often evaluated arbitrarily. While this is indispensable in some cases, in other cases it might be error-prone or risky. Can you be certain that a bad performance review is actually based on a bad performance, and not on an office disagreement from the day before?

Scalability

If you don’t know what you’re doing, how can you do more of it?

A business can be very successful on a certain scale, but not have the necessary ingredients to grow and scale. Do you have a few people that just “know” what’s the right thing to do? If so, you may be able to provide a great experience to your customers. 

Yet your business will ultimately be limited by the people and what they know. To grow your business beyond that, you will need to formalize that knowledge. This’ll enable other people (or machines) to take over some of the responsibilities.

This particularly applies to the owner in a personal business. As the business grows, the owner’s stress levels tend to constantly increase. This often leads to stress levels so high that the owner has to close the business, or worse.

This often happens when the owner didn’t learn to delegate. By preemptively thinking about processes, the business owner can be ready to delegate when needed. In contrast, if these aren’t in place, the business owner will be the bottleneck of the business.

Consistency

If there is no “official” way how things are done, then they are done differently every time. 

The less defined business may work very well. However, it will often be dependent on one person or a few people making all the ends meet. 

A common example of this would be a really good restaurant gone bad after moving to a bigger location. The restaurant probably had a very good chef, who was able to consistently make great food. However, after scaling up, they had to hire another chef whom they failed to train to the same level.

On the other hand, consider McDonald’s. While may not be on par with the food experience with the restaurant from the example above, you can be fairly sure Big Mac will taste fairly similar in New York, Shanghai or Berlin. Did you ever find yourself in an exotic country wanting to avoid the unpredictable local dining experience of the local cuisine? 

Unsurprisingly, in such a situation, people escape the unpredictable by turning to known flavors of chains such as McDonald’s.

How does McDonald’s make your french fries taste the same every time? They do so by having a protocol on how to make them. The potatoes are cut to a defined shape, and they are fried at a defined temperature, for a defined amount of time. If this is followed, you will get a very similar serving of french fries in Shanghai and in London. 

Why is consistency important? 

Humans are hard-wired to dislike unpleasant surprises. We value consistency and predictability, and we’re often bitterly disappointed by the lack of it. So much so that we’re even willing to sacrifice quality to get consistency.

Suppose a business partner is coming to your town. You know they like Italian food, and you decide to take them to an Italian restaurant. There are two in your town. The first one will consistently serve good food. On the other hand, the second varies quite a bit. Normally, you feel that the food you’ve had there is slightly better than the first one. Yet on a few occasions that you’ve been there, the food was too salty and it tasted like overcooked gum. Would you be willing to risk taking your business partner to the inconsistent one?

Conclusion

We’ve explored how integrating business processes can make your business more efficient and more robust. It can also make employees happier and less stressed. Furthermore, it can allow you to scale up your business and serve more customers. And you can make your customers happier by providing a more consistent experience.

Your turn

Etrellium is specialized in helping businesses organize and optimize their processes. We focus on leveraging technology to do that. 

If you need help with improving your business processes, feel free to message me here on LinkedIn.