Best insurance is to write it down

By ASHLEY CAMPBELL

What would happen to your business if you suddenly had to spend three weeks in hospital?

Without hesitation, David Reid, franchisee of the Cheesecake Shop Birkenhead says: "It would keep going."

Nigel Smith, director of taxation accountants Nigel Smith and Associates, is equally certain that his firm would cope in the absence of any staff member.

"If my office manager didn't turn up," he tells me, "you could do her job."

Many business owners and managers cannot be so certain. They and their key staff carry so much critical knowledge in their heads that if they're not around, the business is in danger.

Smith and Reid run highly documented businesses - companies in which key tasks, and many not so key, along with who is responsible, are down in writing for everyone to refer to.

Reid and his wife Lyn bought a franchise that came with ready-made procedures.

Operating the computer system, stock-taking and ordering, monthly profit and loss, recipes, job descriptions, sample rosters - you name it, it's set down on paper.

And they added to that. Laminated lists itemise shop opening and closing procedures: when and how to turn the air-conditioning, gas and lights on and off, how to lock the doors, everything needed to do the job properly - even when the boss isn't there.

"I can be fairly relaxed when I'm away," says Reid.

Smith's firm adopted an intranet-based procedure manual when stresses started showing in the company's systems.

"New staff weren't being trained adequately, people were doing the same things differently and we weren't reusing the knowledge that we already had."

So they called Modus Operandi, systems implementation specialists, to document every task and put it on a user-friendly, and constantly updated format.

Seminar co-ordinator Sandy Mayo has found it a godsend, both when she joined the firm 18 months ago as a typist and when she took up her new position in May.

"For someone who'd been out of the workforce [raising children] it's brilliant, because you don't have to keep harping on at people. You are quite self-sufficient."

Many business owners don't believe they have the time to commit their firm's procedures to paper or screen. They get caught up in what John Corban of Inspired Business Solutions calls "the tyranny of the urgent".

In doing what has to be done now they seldom make time for any sort of planning. It is, he says, a big mistake.

"In a very small business, the owner-operator often ends up doing the mundane jobs, the $10 to $12-an-hour jobs. It's not a good return on time and effort."

But how can you find the time to change? The answer, says Corban, is that you simply have to. And the best place to start is those $10 to $12-an-hour jobs.

Once you've a list of easy-to-follow instructions detailing what you do, how you do it - how you want it done - you hire someone else to do it, freeing you to concentrate on higher-level tasks.

For example, says Corban, a bakery owner might start by putting those secret recipes down on paper.

"This is how I make a loaf of bread. If I have a nice, easy-to-follow system, I can get someone to come in and follow the instructions rather than asking me all the time."

One big emotional hurdle is the "nobody will do it as well as me" objection.

"Let go of the need to control everything," says Corban.

"People will probably not do it as well as you unless they are owners - they are not going to be as committed. That's just par for the course.

"Document how you want it done, train people in your way of doing it, then let them do it to 80 or 90 per cent of what you could do.

"You free up time so that you can step back and see the wood for the trees, and say, for example 'my sales manager is the next target because she is the next most indispensable person'," says Corban.

As Smith's firm shows, the owner or manager's tasks are not the only mission-critical ones. If a vital staff member is away the business is just as much at risk.

One of Corban's former clients, an electronics firm with about 400 staff, hired him to help with business planning.

"They had one guy who knew all the ins and outs of their mainframe system. He didn't want to talk to us about what he did - he was trying to argue that he couldn't tell anybody else how he worked, from a security perspective."

Corban pointed out the obvious danger: If that guy got hit by a bus tomorrow, nobody would know how your system worked.

There are three advantages to having a well-documented, and constantly updated, procedure manual, says Smith.

"It improves efficiency; it's better for new staff they are trained consistently; and when selling the business you have a transferable set of knowledge."

But even though setting up the intranet was "the best money we ever spent", he can't quantify the benefits.

Reid can. When working for Allied Foods, he was appointed accountant at Denhards Bakery in Wellington.

"They had 26 staff in a bakery the same size as one in Auckland that had 14.

"Staff tasks were not documented, and there were no job descriptions. Everybody was creating work for everybody else."

By importing documented job descriptions from the Auckland bakery, Reid reduced staff numbers to 12 within three months.

Each of the unnecessary staff had been earning around $30,000 in today's money. The maths is clear.

Perhaps the last word should go to Mayo, who works in a highly documented environment and sings its praises.

"It's so simple. If you want to know something, you just click on it and refer to it.

"You are more efficient and more confident, knowing that you are doing what the company wants."