This post is a build on to another post I did a couple of weeks back called A Day In The Life Of A Startup where I recounted my experience working in a startup for a day and also shared my learning points of startups – one of which was ‘Systems and Processes’.
A couple of months back I attended a seminar by Mr Boyd Au, the ex-CEO and executive chairman, and co-founder of ENZER. He is worth listening to because he tells the typical (or rather, not so typical) rags-to-riches story and listed his company in 2001, boasting sales turnover close to S$80million.
During the seminar, he shared with us about his business and one thing that really struck me was this line he said.
“You must know the processes of running a business. If you know the process, profits will automatically come in.”
This struck me because it made me reflect upon my business and whether I had the right processes in place. It also made me recall something else one of my ex-bosses said to me once when I was interning in his company back in 2011 when I was still fresh to the world of entrepreneurship.
He knew I was interested in going down this path and one day he asked me if I knew what a business was; to which my answer was that it was an entity that generates profit by creating value. He then asked me another question which I then could not answer (I’m guessing most of you probably would know this but I really didn’t back then!). He asked me what was the difference between a business and a sole-proprietorship. I was stumped because by my definition of a business, a sole-proprietorship was the exact same thing as a business!
I was enlightened when he told me his answer:
A business is something that has a system and runs on its own. If the founder/CEO/boss is not around, the business will continue running on its own, generating revenue and profit for the business.
A sole-proprietorship is something that ceases to operate if the founder/CEO/boss is sick and does not turn up for work. An example is a doctor who runs his own clinic. If he does not turn up for work, the patients cannot be treated and the sole-proprietorship does not generate any profit.
So with this in mind, I urge all aspiring and current entrepreneurs to think about creating systems and processes from Day 1. In fact, if you have not started a business, think about it now before starting. A few things to take note of are:
1) How will you plan for your business to function without you? (How can you make it earn passive income for you?)
2) It can be easy to start a sole-proprietorship and put all your effort into building up your product or business, but do think about how you will plan to get more people to come on board to work for/with you. (Internet startups allow you to scale internationally but if you want to build your company, essentially you are going to need people to believe in you and your business to really scale it.)
3) Find a balance between having a system and being flexible. Forming strong systems and processes are great for the business but sometimes you have to be flexible enough to make changes or seize opportunities when it arises. Facebook’s ‘Move Fast Break Things’ is definitely something to consider greatly about too.
StartupCHEW 