Systems- The Secret to Building a Profitable Business By Gary Shotton #000078
Profit With Systems
by Gary Shotton
Building a profitable and successful business requires systems. Not just one system. Multiple systems. Growing your business and achieving success hinges on your ability to create systems that are clear, concise, and reflexive. Systems that everyone in your organization knows and understands. To illustrate the power of systems, let’s consider the first story told in the Bible. I firmly believe that God created the heavens and the earth. It says in the first chapter of Genesis that God did so in just six days. I don’t know if that was six literal days or six 1,000-year days. I don’t know. I really don’t care. I just know I can’t create anything in any time period. Yet God created it all. And I thought that was the miracle of it, but the miracle was not that he created it in six days. The miracle to me now is that what He created was so good—so perfect—that He rested on the seventh day. More importantly, God has not created or changed a single thing since creation. Why? How? He created systems. God created mankind after their own kind and animals after their own kind. That’s the reproductive system. He also created our respiratory system which allows us to breathe. He created our circulatory system where our blood flows. He created our system of hearing. He created our nervous system. He created the heavens and the earth with a solar system and a lunar system which help create waves and the tide which we call the tidal system. We have plants that take in carbon dioxide and give out oxygen. People take in oxygen and give out carbon dioxide. We have the solar system. We have the ecosystem. Everything God created is a system and all these systems work in perfect harmony with each other.
So if God created systems shouldn’t I look at my business from a systems perspective, too? I believe God wants us to work on developing systems and I believe profit comes by creating and maintaining those systems. Let’s say I was in the pizza business and needed more profitability. Most would think it a simple matter to just raise my prices. But if the going rate for a medium pizza is $10-12 I can’t just arbitrarily raise the price to $15 in order to make a profit. My customers will soon abandon me for my competitors. The better solution is to create systems with more efficiency and less waste, thereby getting my expenses down. Earlier in life I was able and blessed for about 12 years to be a Ryder Truck Rental dealer. If you were moving to Chicago, you would come in and rent a truck from me. As a dealer, I got to watch how Ryder operated their systems, changed their systems, and made their systems better. With thousands of trucks all over the United States and they had to develop a way to keep track of them. I also became a dealer or agent for a major van lines. I had seven trucks that went throughout the United States hauling furniture–the Smith’s furniture going to Dallas—the Jones’ going to Fort Worth—all over the country. This was a massive process of about 700 agents with some 7,000 trucks loading and unloading every day with all kinds of issues that could pop up. The van lines company had to create and improve and work on systems continually.
So I had received a good dose of systems before I bought my current machine shop business. And when I bought the machine shop, I realized it was a perfect fit for me because I’m so focused on systems. We are a systems machine here. We have a hiring system. We have a training system. We have an on-boarding system. We have a quality control system. We have a production system. We have a system for everything. We went through the shop and created a system to save time and money on every process we have. The economics of good systems make it a no-brainer. Most of our machines are billed at $2 a minute. That’s $120 an hour. We can’t afford to waste even ten minutes a day because that’s money down the drain. Just do the math. $20 a day for 52 weeks means $1,000 less profit to the bottom line. And that’s just one machine. I want efficiency so I see to it that our machine shop thrives on efficiency. We’re not perfect, don’t get me wrong. Right now we’re working on our scheduling system. We are targeted towards 100% on-time delivery with every single part and order that goes out this door. Are we going to get there? Probably not, but that’s our target.
I’m the only outside salesperson. But I’m not really selling, I’m building relations. I am able to build great relationships because of systems. When our company offers good prices, high quality, and on-time delivery my sales job is really simple. We’re constantly tweaking our on-time delivery system, or our scheduling system. If a part or order is going to be late we can quickly communicate that to our customer so adjustments can be made. The system keeps us informed. We are blessed with 65 great employees. But it’s easy to fall into a trap and start blaming people when things don’t go right. Joe, why didn’t you do this? Bill, why didn’t you do that? Frank, work harder, work faster. That’s not the answer. We don’t blame people. We don’t even criticize people. We look first to see if our system is right. Have we done enough training for this person? Has this person got a system for replacing the parts right? Do we have enough computers for them to do the job? Our on-boarding system starts by hiring people we think want to be at our company. If, over a period of time, we find they don’t want to participate in improving our systems, guess what? They probably need to go work for another company because they’re not a good fit for us. How do you fire someone? Well, there’s a system for that. One of our systems is a dismissal or firing system. We have a buying system for material purchases. The system of recording and pricing every purchase requires computers. The computer is so critical to us we have a backup system so we know nothing’s going to be lost. But if something should get lost we have a system so we can easily restore it. We’re working on a disaster recovery system in the event a tornado came through or a fire hit us. We’re proving what we would do with recovery systems and be quickly back in business so our customers would not miss their shipments.
All our business systems work together much like the systems God created when he made man and this universe. If one system is lacking the whole is severely hampered and malfunctions. Each system is dependent on the next. So then, everything requires a system. But how do you go about developing those systems? People are the key. The people that will participate in and improve your system. Don’t hire an expert to build your system. Train your people to be the systems builders. Why? If someone external builds it for you, guess what? Nobody’s going to follow it anyway. It’s going to be in a manual over on the shelf gathering dust. If you get your people involved with developing systems you have a much better chance of improving your efficiency. You improve your efficiency, you up your volume, and profit drops to the bottom line.
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