by Edward D. Hess, author of “Grow to Greatness: Smart Growth for Entrepreneurial Businesses“
Any entrepreneur knows that when it comes to running a business your work is never done. From the moment you wake up in the morning until you go to sleep at night, you’re worrying, planning for the future, and more often than not, putting out fires. In fact, like a fireman, you feel like you’re always on call. Always prepared to rush in and extinguish a customer’s complaint, a lost order, a disagreement between employees, or whatever the day’s blaze seems to be.
The best way to keep these flames from permanently harming your business is to “leave a fire extinguisher behind” after putting out each fire. Do so and you’ll turn each one of them into an opportunity to improve.
I learned this lesson from Dave Lindsey, a successful entrepreneur and founder of Defender Direct in Indianapolis. When you fight a business ‘fire,’ your job is much more than solving the problem. It is to leave behind processes — or as Dave put it to ‘leave behind fire extinguishers’ — to prevent the problem from happening again or to make it much easier to fix the problem if it does occur.
Dave Lindsey is just one of 54 successful entrepreneurs who participated in my study of high-growth entrepreneurial businesses. The study was designed to illuminate the common challenges entrepreneurs faced as they pursued growth after surviving the start-up phase. The results of the study are the subject of “Grow to Greatness“.
Much of “Grow to Greatness” discusses processes, because they are the ‘how-tos’ of your business and they are essential to its growth. When you’re starting up your business, institutionalized processes aren’t as important because you’ll do much of the work yourself. But as your business grows, there will simply be too much for you to do on your own. You’ll hire employees, and, being human, they’ll make mistakes or come across situations they aren’t sure how to handle. Without the proper processes in place, they’ll guess what to do, and that often means you’ll have to come sprinting in with your fire hose.
Read on for advice on how to keep your business blazes to a minimum and how to make the most of them when they do pop up:
Determine the cause of the fire.
As a small business owner, you can spend your entire day running around, fire extinguisher in hand, putting out fires. Unfortunately, when you’re the resident fire marshal, you don’t have time to do any long-term planning for your business. Marketing plans for advertising to new customers, new service or product initiatives, hiring needed staff, etc. all fall by the wayside. You have just enough time to keep the business standing and not much time for anything else. That’s why it’s so critical to determine the cause of a fire once it happens.
You certainly don’t have the time to be putting out the same fire over and over again. For one, a customer might give you a second chance, but disappoint them again and it will be very difficult to win them back. It’s also bad for your high-performing employees’ morale. They don’t like being slowed down by these fires either, and when they feel no solutions are ever put in place, it exhausts them just as much as it exhausts you. When you take the time to really examine why a fire started, it’s much easier to fix. It also allows you to put the right fire extinguisher in its place to make sure the fire can be quickly put out if it ever pops up again.
Once a fire is out, put a process in its place.
As we touched on above, after you’ve put out a fire — say, acting on a customer complaint or dealing with an employee who repeatedly breaks a rule — and determined its cause, you must leave a process behind to prevent the problem from arising in the future, or, if it does, to provide employees with a fire extinguisher so that they can put out the fire themselves. Sounds simple. But as you’ve probably guessed, it’s not. Why? Creating and writing processes take time, and, next to cash, time is probably one of your scarcest resources.
Every time you correct a mistake, write a short process statement saying if Problem X happens again follow the instructions on Checklist X. Then, make sure every employee understands this new process. Every day new problems will pop up — that is the nature of business — but by taking the time to write a process, you will save yourself time in the future because you won’t have to be constantly correcting this same problem. Instead, you’ll have time to handle new ones. What results is a constant state of improvement, which is foundational to success.
Start with the hard stuff.
By now you are probably (and correctly) thinking to yourself, Well, everything needs a process. Where do I start?
Start by focusing on those actions and problems that if handled incorrectly can do the most harm to your business. That usually means product or service quality issues, customer interactions, brand reputation issues, and purchase or cash problems. You may have 20 fires that need putting out, but you can prioritize by focusing on the ones that could have the biggest impact on your business first.
Create checklists for important tasks.
Even airline pilots with decades of experience and exalted careers go through a safety checklist before taking off. No matter how much entrepreneurial experience you might have, your business shouldn’t be any different.
You should have not only how-to processes written down to handle problems that have occurred in the past. You should also have checklists critical to the operation of your business. For example, how to open for business; how to close the business; what to do in an emergency; what to do if an employee does not show up for work, etc. For some situations, you may need a checklist or how-to process that also explains what NOT to do in a situation. For example, what NOT to do when approached by an unhappy customer or what NOT to do as an employee if your register comes up short.
Eliminate single points of failure.
Processes are important in a growing business for another reason: You never want a single point of failure. Make sure you always have back-up. Every employee’s job must be taught to at least one other employee so that he or she can step in immediately if someone does not come to work because of illness, family issues, or unforeseen circumstances.
You need this kind of coverage to get you through the day. As the owner, you already have enough on your plate. You can’t burden yourself with having to step in and answer the phones all day if your receptionist is ill. When every employee is trained to do two jobs, the business does not have a ‘single point of failure.’ It helps keep the business running smoothly, and it reduces your stress and the stress of your employees.
Update processes as needed.
Putting in processes is not a one-time job. In other words, you can’t spend a day in your office writing up processes and then never revisit the process (no pun intended!) again. First, it is impossible to write up a process that covers every eventuality. To remain effective, processes have to be updated and improved as one uses them. Secondly, as your business grows, my research shows you will need different and more sophisticated processes to handle more volume and more people. That may require software to keep better records and to create information faster so that you know about and can manage mistakes (variances) more quickly and efficiently.
“Huddle up” to keep key processes in the front of employees’ minds.
Use short morning meetings to set priorities for the day.
I learned about these morning meetings from Horst Schulze, who led the creation of the service award-winning Ritz-Carlton Hotel chain. He called them ‘huddles.’ During his tenure, every day, before every shift, in every Ritz-Carlton Hotel in the world, a short ‘huddle’ was held to highlight one key operating principle or process. Each of the chain’s core principles was discussed at least once every month. You can use ‘huddles’ at your business to highlight how a process was successfully used the day before or to remind employees of a process’s importance. These huddles provide a great opportunity for review that help you make sure everyone is on the same page.
Schedule “firehouse” time.
Thinking strategically or on a macro level about how to grow a business is different from thinking tactically and reactively to more immediate business needs. Several entrepreneurs in my study emphasized the need to allocate time to get away from the business to think clearly about their long-term business needs. These entrepreneurs explained that while at work, daily “heat of battle” decision making often interfered with thinking broadly about the business’s direction. It was necessary for them to set aside time to get away from daily business demands to focus strategically.
One entrepreneur emphasized this need by saying, ‘Give yourself an afternoon a week to think about five critical things going on in the business and to make sure you are focused on big opportunities or problems’. One of my colleagues calls this specified time for strategic business thinking ‘firehouse time.’ It is hard to think strategically when you are putting out ‘fires’ and leaving behind fire extinguishers daily. Thus, the term ‘firehouse time’ means giving yourself time away from fighting fires to think about the business and plan for its future.
Think of the processes you create as the structural foundation of the business you are building. A building’s foundation must be strong to support the edifice. And your processes must be strong and effective in order to support your business.
Successful entrepreneurs are constantly fighting fires, and that isn’t necessarily a bad thing as long as the fires are different each time and fire extinguishers — processes — are left behind. When this is the case, progress is being made. You are creating a well-managed business with high standards and quality performance. That usually translates to happy customers and great success.
Edward D. Hess is author of “Grow to Greatness: Smart Growth for Entrepreneurial Businesses“. He is professor of business administration and Batten Executive-in-Residence at the Darden Graduate School of Business, University of Virginia. He is the author of ten books, over 60 cases, and over 60 articles. His work has appeared in over 200 media outlets around the world including CNBC, Fox Business News, Dow Jones Radio, WSJ Radio, MSNBC Radio, NPR, Forbes, Bloomberg, BusinessWeek, CFO magazine, Financial Executive, Journal of Applied Corporate Finance, Big Think, the Washington Post, and Financial Times. His book “Smart Growth: Building an Enduring Business by Managing the Risks of Growth” was named a 2010 Top 25 Business Book for Business Owners by Inc. magazine.