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Process-Based Business

Business owners often dream of taking their business "to the next level," by which they usually mean reaching a point where it takes on a life of its own and ceases to become a mere extension of the founder. This can occur when annual revenues are half a million dollars or $10 million. Or it can never happen at all. In that case the company faces a decidedly unhappy future, if much of a future at all.

Making a transition to the "next level" rarely just happens. It is usually the result of a determined and focused effort. Two Successful Manhattan entrepreneurs, Deb Wasser, the founder of Deb's Family Disco, and Ruth Ko, owner of RRSK Studios, employed different strategies to transform their companies from "personality-based" to "process-based" businesses. Looking closely at how they went about it can help other owners save their businesses (and their sanity) from the weight of their own success.

Solution: Specify Jobs and Responsibilities

When Deb Wasser started Deb's Family Disco, her main goal was to create a profitable business from the key factors of her life: her 4-year-old daughter, Savvy; her natural gifts as a promoter; and her fondness for "partying and dancing with friends.” The result was Deb's Family Disco, a weekly "ball" where kids and adults could dance together in a real discotheque for birthday parties, fundraisers and other events.

Before she knew it, Deb's Family Disco was a smashing success: It won awards for "Best Birthday" and "Best Family Activity" in New York magazine's Best Of issues, and 25 families a month were celebrating at Deb's Family Disco. "In the beginning," says Wasser from her busy home office in midtown Manhattan, "I ran the whole thing: taking sales calls, creating the gift bags and custom birthday cakes, and playing DJ at the actual parties. But after we appeared in New York magazine's Best Of issue, the phone never stopped ringing," she says.

Her "fun family business" quickly became a job that required 60 hours a week. She constantly worried that details might be slipping through the cracks. "I had reached this point," she says, "where I wanted the business to grow more, but there wasn't enough of me to go around. I felt stuck and stressed out. I really enjoy certain parts of the job, but I didn't know how to remove myself from any of the daily details."

Sound familiar? Despite her success, Wasser had fallen victim to one if the most common mistakes made by small-business owners: she was running a personality-based business. In a personality-based business, there is no organization of job responsibilities or business procedures.The major pitfalls associated with running a personality-based business are that there are no plans for training employees, delegating work, or hiring new people. As the work piles up, the owner (and other key employees) simply works more hours. Eventually mistakes are made: Customer care slips and orders aren't filled correctly, for example. Additionally, there are no plans for the owner to take a vacation or be replaced if he or she becomes sick or injured.

Wasser concluded that continued growth, and even the survival of the company, would require a fundamental change in the way it was run. Specifically, Deb's Family Disco would have to quit acting like a start-up and become what consultants call a "process-based business," with formal job descriptions and clear lines of authority embodied in an operations manual.

Process-based management can unlock a company's growth potential. It allows the business to increase volume without decreasing product and service quality. It lowers operating costs. It lets the company more easily add, and adequately supervise, full-time and part-time workers. And it frees the owner to develop business opportunities.

Evolving from a personality-based to a process-based business can be frightening to company owners, especially those who believe their gut instinct is an important reason for their success. Most entrepreneurs are anti-bureaucratic by nature. Sooner or later, however, they realize that owner-dependent management is holding them back. And once they've taken the step, many are surprised that the transformation to a process-based business is not only easier than they feared, but gives them a new and valuable perspective on their business.

Deb Wasser started by mapping out all the jobs at Deb's Family Disco. "The key point was to make a distinction between the people doing the jobs and the jobs themselves," she says. "When we began to focus on the jobs, we created a fairly long list."

Officially or not, most businesses have a CEO/president (that's you, making decisions to grow your business), a CFO, a sales manager, a chief technology officer (yes, even if you have nothing more than a laptop, phone, and fax machine), a marketing director, a customer service manager and a human resources manager. Many businesses undertake such functions as procurement management (purchasing raw materials for production as well as office supplies), inventory managemcnt, production management, and distribution/shipping.

Deb's Family Disco, like many businesses, also has some unique jobs. Wasser identified 17 different ones, including cash-box manager, party coordinator, gift bag manager and dancers. Using a one-page job description template created on a personal computer, she catalogued these details for each job: job title, primary responsibilities, secondary responsibilities, the managing position for the job and the person assigned to the job.

Wasser assigned the 17 jobs to herself and each of her part-time employees. Many of the lower-level jobs were assigned to more than one person, but the management positions were assigned only once. When she was finished, each of her employees was assigned to three jobs or more (Wasser winnowed her own list to a mere 10 jobs). Wasser then met with her employees one at a time and reviewed their jobs and responsibilities. At the end of each meeting, both Wasser and the employee signed the job description. "We saw immediate improvements after defining the jobs," says Wasser. "We all knew exactly what the others were doing. I saved a tremendous amount of time and worry by eliminating the need for micromanagement."

In addition, Wasser now had a plan for promoting herself out of certain positions. She could not immediately hire a fulltime salesperson, for example, but she could hire someone to manage the phones for 25 hours a week. She also found a reasonable resource for managing her mailing lists. These small strategic hires did not cost much, but eliminated 1.5 jobs from Wasser's plate. Since then, she bas made several more strategic hires that all help her gain time to focus on executive-level details.

Solution: Develop an Operations Manual

Ruth Ro, owner of RRSK Studios, provides "furniture for your walls," low-cost ultramodern paintings for the home or office. Although RRSK Studios is new, Ro quickly set up a series of processes for everything from manufacturing the artwork to closing and tracking sales. "I know that this business is about to take off," says Ro from the desk of her studio in the Meatpacking District, "so I've put a lot of time into documenting how I create the art and manage the business.”

Although she hasn't had to hire additional help in her first six months, business has picked up enough that Ro asks friends and family to help on weekends. "When they come in," she says, "I tell them, `OK, today you are doing shipping, you are doing production, and you are managing the e-mail orders.’ And everyone knows exactly what to do because I've written it all down in my operations notebook."

RRSK Studios' operations manual builds on job descriptions by specifying, in step-by-step instructions, how to do the jobs to which your employees have been assigned. An operations manual requires nothing more than observing your actions in the workplace and writing them down in detail for others to follow. It's not difficult to do, and the time invested will be returned as soon as you hire your next employee or need to get out of the office for a few days. A good operations manual sets the rules for how your business operates, whether you are present or not. Along with job descriptions, it is an invaluable tool for removing yourself from the daily details of your business.

To build her operations manual, Ro took the following steps:

1. She made a list of the major processes in her business. Major processes are usually aligned with the management positions described above.They include finance, sales, store management and, for RRSK Studios, art production. Ro created a separate chapter for each of these processes.
2. She brainstormed and defined all of the sub-proccsses that belong under each process. Under shipping, for example, she included preparing the artwork, sealing the box, addressing the box and working with the post office. Each of these sub-processes was a separate section in her manual.
3. Ro then wrote out step-by-step descriptions of how each sub-process should be done.
4. She used the "table of contents" feature of her word processing program so that her employees can quickly find the help they are looking for.
5. She keeps the guide at the office desk in her studio so that everyone can get to it quickly.

The benefits of her user's guide have been "outstanding," says Ro. "If I reinvented the process for every new person I worked with, I'd be spending more time managing the employees than growing my business. With everything written down,the studio can almost operate on its own,” she says. As proof, Ro recently spent two weeks with potential clients on the West Coast while her studio processed new orders, produced products and handled customer issues without her supervision.

As Deb's Family Disco and RRSK Studios continue to grow, their owners are confident that their businesses and their sanity will be safe because of the time and thought they have invested in developing sound, process-based business practices. To the point:

1. Businesses that operate around one person (usually the owner) rarely thrive.
2. Creating and assigning job responsibilities leads to less confusion and less reliance on the business owner.
3. An operations manual makes it much easier for the owner to step away from routine tasks by giving a guide to employees and temporary workers.

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