The 5.5 processes your business needs to scale without breaking
What’s stopping your business from scaling? It’s likely to be the resilience and consistency of your back end systems. Here’s how to set up these systems and processes.
Welcome to a free edition of Start Up To Grown Up: Your source for ideas, insights and tactics to take back control of your business and scale it sustainably and profitably by Heather Townsend, award-winning author of The Accountants’ Millionaires’ Club and Founder of The Accountants’ Growth Club
Implementing the lessons from The E-Myth sounds deceptively simple. How hard can it be to document each process, create checklists, and ensure your team follows them? In reality, this can be a challenging task. It assumes you have ample time to capture every process and a willing team eager to adopt them. However, for many business owners, the reality is different. You (assuming you are the business owner) are already working flat out and struggle to find time for the essential “working ON the business” activities. Additionally, your team members may not share the same goals as you. This is more common than you realise!
If you aim to scale, you must carve out time to focus ON the business.
A lack of back-end processes can stunt your growth and lower your business’s capital value.
Far be it from me to criticise an author who has sold more books than I can ever dream of. However, while The E-Myth offers valuable concepts, such as building a business that can run without you, creating robust systems, and designing for scalability, it oversimplifies the challenges of implementation.
What processes does your business have?
Let’s start at the beginning. Your business if it is a service based business only has 5.5 processes. They are:
Create it: Generate a demand for your firm’s services, i.e. marketing
Convert it: Convert this demand into actual paying clients, i.e. sales
Deliver it for clients: Deliver the work you have been hired to do, i.e. operations
Deliver it by your people (this is the half a process by the way): Create the team and human resource to deliver the work.
Get paid for it: Ensure your clients are paying you the right amount and at the right time.
Cultivate it: Win more work via your existing clients, i.e. account management.
Yes, I know I have fudged it slightly here. But let’s go with this as a core premise. If you want to scale you need to scale from a firm foundation. Otherwise you will find yourself stuck in the Work in/Work on trap.
The Work in/Work on Trap
The Work In/Work On Trap is a common growing pain experienced by small growing service based businesses. It occurs when you (I am assuming you are the firm owner) become so consumed with day-to-day operations – working in the business – that you have no time left to focus on strategic activities that will help grow the business. I.e. working on the business. This often happens when the practice reaches a certain size, usually around £150k to £500k in turnover. At this point the you may find yourself overwhelmed by client work, administrative tasks, and managing staff, leaving you unable to dedicate sufficient time to activities such as business planning, developing your team, marketing, and billing accurately and promptly.
This trap can lead to a stagnation of growth, as you are constantly firefighting and dealing with crises, rather than focusing on long-term goals. From personal experience I can report it can also lead to intense frustration and burnout, as you feel trapped in a cycle of reactive work.
But the question still remains, how do you build that firm foundation from which to scale from? The answer is your back end systems. This is the stuff that doesn’t feature highly on social media. After all, there is nothing sexy or cool about, for example, optimising your invoicing process.
Before you can get your systems right, you need to spend some time off the tools, i.e. working ON the business.
How to create the time to work ON the business
You are probably working flat out, and now I am telling you to create some time to work on the business. Don’t hate me! But, if you are going to create that firm foundation to scale from you do need to change how you are working. For example:
Identify and fix personal productivity gaps. This may involve simple changes, such as limiting social media use, or more challenging changes, such as overcoming a reluctance to delegate work.
Outsource some of what you are doing to an external supplier or freelancer. For example, do you need to be doing your own bookkeeping or social media posting? We have a tech VA to support us with set up of webinars and workshops.
Hire more staff to increase headspace and capacity.
Conduct a time audit using the Red/Black/Blue Model and identify tasks to ditch, delegate, or do differently.
The Red/Black/Blue Model is one of my favourite tools for analysing how a firm owner spends their time:
Red work is non-client-facing work, such as back-office tasks and management responsibilities.
Black work is client-facing work, such as client work, account management, and networking.
Blue work is strategic thinking time, such as business planning and attending conferences.
Your goal at this stage of your business, i.e. get it ready to scale, is to increase time spent on Blue work and decrease time spent on Red and Black work.
Another way to create time is to exit unprofitable clients. Exiting unprofitable clients:
Frees up capacity to work with more profitable clients.
Gives the firm capacity to win new clients.
Boosts staff morale.
Frees up the owner's time to work on the business.
Now that you are creating time to work ON the business, where do you start with setting up these back end systems? After all, it can feel overwhelming. There often is SO much to do. Particularly if you have been lurching from crisis to crisis. Being honest, that was us throughout most of 2024. I still have the scars to prove it.
Where to start with setting up your back end systems?
I’m a big fan of Mike Michalowicz’s book Clockwork: Design your business to run itself. Whilst the end output is similar to the Emyth, a systemised business, it seems much more realistic and aligned to the reality of being an owner of a growing business.
In Clockwork, it introduces the concept of The Queen Bee Role.
The Queen Bee Role
Every business has a core function or activity that is most critical to its success. This is the “Queen Bee Role”. Your aim as a business owner is to identify what this role is and then protect it. For example, our Queen Bee Role for The Accountants’ Growth Club is to deliver value to our future and current members. Everything we do in our business is focused on this. If it doesn’t deliver value to our future and current members, we will question whether we should be doing it. Your processes and systems should be built around your Queen Bee Role to ensure that everything in your business, whether front end or back end, is delivering value.
Do a software audit
As a business grows so does its software stack - and often in a fragmented way. There is one system for this, one piece of software for that. This leads to the following inefficiencies:
Manual entry as systems don’t talk to each other
Duplication of features as your tech stack as multiple pieces of software that all do some but not all of what you need
Extra cost due to the duplication
Let’s be honest, I’ve been around the ‘cloud’ ecosystem for a while. There is a well trodden path by software companies. They all start with a fairly cost effective option which works really well. Then they add more bells and whistles which you may or may not need. Then the inevitable external investment happens in the plucky start up and the price of a licence suddenly increases significantly. Before you know it the £10 per head (or more) per user is £50 per user. And that presumes in all the upgrades and improvements that the software still does what you want it to do!
Part of your work to set up your back end system is to rationalise and streamline your software. We review our software stack quarterly to make sure we are not spending money on software we no longer use or licences we no longer need. Ideally your software needs to all work with your central source of truth, your practice management system.
Choose your one source of truth
When our business decided to create our practice management system it was so we could see where everything was and what needed to be done. However, we realised that our whole team was working in a way which suited the individual. Whilst this can work with a team of 3 it doesn’t work with a team that is much bigger than this. We did an audit and realised that we had about 6 or 7 different systems or ways of capturing our workload. And most of these ways didn’t connect or talk with each other.
The first step we did was test drive a project management system which was flexible enough to support us with putting in place repeating core processes and project managing ad hoc tasks. We chose Monday.com for this task. But there are many software products out there that can help, for example Notion, Asana or a practice management system that is specific to your industry. For example, our members at the Accountants’ Growth Club love Client Engager and Karbon for their project management systems.
Be aware that not everyone in your team will come with you on this journey to sort out your working practices. Introducing Monday.com was one of the factors in a key team member disengaging and then leaving our business. The cynic in me suggests that this was because it brought a level of transparency to what they were doing and when. And they didn’t like this level of accountability! When you get your systems working it should bring this transparency - which may not be to everyone’s liking. You have been warned!
Start small
If you go all out you are probably going to end up overwhelmed and either not starting or doing a half-hearted job of creating your systems. Start with an area that is giving you personally the most amount of pain. This could be because you are spending lots of personal time on it. Or it’s leading to severe problems with your business. For example, I’m currently working on capturing best practices within ChatGPT to produce copy and content. That’s copy for email, articles and social media. This helps me and my team to save time by rinsing and repeating. It also means that when I review anything I know it’s already up to a certain standard.
Create and optimise your standard operating procedures
As you go through the journey to create your back end systems document the processes you repeat most often. For example, how to onboard a new client. You can either document them by yourself or with a team. Documenting and optimising processes with a team is often more effective. Here is how I do it:
Give the whole team post it notes. Then for each step of the process ask them to create a post it note and put it in the order that tasks are done. Then as a team agree on whether this is truly the ‘as-is’. Then with the team ask them to adopt the mindset as laid out in the Clockwork book: how can you trim, trash or transfer the tasks in the process. Then move the post it notes around to create a streamlined and best practice process.
As I go through this exercise I ask the team to think, Trash, Trim or Transfer.
Trash: Eliminate unnecessary tasks. Particularly those that don’t help your Queen Bee Role.
Trim: Streamline and simplify recurring tasks. For example can you eliminate manual entry or duplicating data or manual tasks?
Transfer: Delegate tasks to team members or systems.
Test your systems: Could you go away for 4 weeks?
When you are creating the back end systems which will power your business, you want a business that will function without you. This is where the 4-week holiday test comes into play. It’s a simple test, would your business be able to function without you for 4 weeks. The 4 weeks is key as it typically includes the whole monthly cycle of your business. For example, paying people and suppliers, producing and reviewing the monthly reporting and so on. In my experience its often the paying people where a business has sole reliance on the owner to sign off the payroll and then press the button to pay the wages.
Test and improve your systems over time
As already alluded to in this article, things change. Perhaps you change your service offering or your software tech stack changes. Your role to have your back end systems working smoothly is to always be critically looking at how things are done.
This is where leading and lagging indicators come in. For each of your critical processes, i.e. those that support your Queen Bee Role, add in Key Indicators that show you that everything is working. For example for the ‘get paid on time processes’ how much money is owed to you? You’ll be surprised how quickly this amount can grow if you take your eye off the ball on this one.
Your actions this week.
Work out what your Queen Bee Role is
Do a software audit to find out where you have duplication or stuff not working
Pick one process or system to optimise over the next month.
I love the red blue black model. It’s very similar to a system I use when I work with clients to streamline their processes. Thanks for sharing!