As a small business owner one would be inclined to believe that these words do not apply to you. You would assume that this belongs in the realm of large corporate enterprises with Enterprise Risk Management Frameworks, Internal Audit departments and large complex operations.
My challenge to you is to rethink and consider how small changes in the way things are done can increase your collection of revenues, decrease any unexplained shrinkage and streamline your daily administrative tasks to focus on the business you dreamed of starting. Bear in mind that when you started the focus was on top line growth, however the critical path to success is now in the management and maintenance of your cashflow. It is at this point where effective policy, procedure and internal control will help to achieve this objective.
Initially your business could be run off a spreadsheet, you understood every transaction, and knew exactly when to do what. Suddenly your client base has begun to grow, you may have had to employ more staff and now you are spending more time worrying about when what is due, why you are not getting accurate invoices out in time and cash is slow to flow back into your bank account.
This would can be explained away by a lack of formal policy and procedure outlining a step by step process for every transaction you undertake in your business. This does not have to be a volume of “War and Peace” gathering dust on the bookshelf behind you. It can be as simple as a checklist or flowchart pinned on a notice board. It is never too late to begin documenting your processes using them and refreshing them as required.
Here is a sample list of processes that should be documented:
- Employee hiring procedures
- Stock ordering and accounting procedures
- Job creation and completion procedures
- Invoicing procedures
- Payroll procedures
- Collection of outstanding monies
- Month end, BAS reporting, superannuation and year end procedures
WHAT ARE POLICIES & PROCEDURES?
This is documentation that outlines the operational and organisational structure of a company and is essential to the health of a business, and specifically a growing business, they bring structure to any business no matter the size. At the same time these policies and procedures provide a framework for long-term goals and processes by creating a structured environment through rules and guidelines. This will make taking on new employees and even succession planning for key personnel in the business easier.
RETENTION OF PERSONNEL
For small business owners, these plans ensure that you leverage your individuals for your own success. If you don’t have structure, you won’t retain good people. You will retain people that like chaos.
By creating policy and procedure you will be gearing the business for operational efficiency and success. Employees will know what the rules are and how to measure the success or failure of business processes.