| 16 July 2009
In his book, The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It (HarperCollins © 1995), Michael Gerber talks about creating your franchise and uses McDonald’s Hamburgers and Ray Kroc as an example of how this was done very effectively.
So how does this relate to your business you might ask? What’s important to you about building a franchise? How can a Practice Policies Manual assist you in building your franchise?
I believe this concept relates to ALL businesses. You as the business owner need to know that your way of doing business is carried out on a consistent basis and one way to do this is develop a Practice Policies Manual. By developing this set of procedures, you are saying to your employees “this is how we do business here. If you can’t do business this way, this is not the right place for you”.
So why develop a “franchise”? There are many reasons but the most important are:
- It keeps everyone accountable to your way of doing of business
- It helps with compliance. If tasks are being performed in compliance each time, it will eliminate “deviations” that may cause problems or errors
- To cut down or eliminate frustrations created by “re-creating the wheel” each time a particular task is undertaken
- To eliminate the “scramble” created when an employee leaves and takes knowledge with him/her that only they had
- In the event something happens that causes you to become temporarily incapacitated, you will have a set of “rules’” under which the firm is to be run
- In the event you wish to sell the firm or are forced to by health or other issues, a Practice Policies Manual will make your firm much more attractive to a potential buyer
- You are creating a proprietary operating system which will differentiate you from your competitors by allowing your individual vision to take shape
- You allow your business to run without you – after all, isn’t that why you’re working so hard? So you can afford to take time off and be with your family and friends?
So how do you go about developing a manual? The first thing that must happen is you, as the owner, must fully endorse this, believe in its importance and communicate your intention to get it completed. Sit down with your staff (or if you’re a sole practitioner, set some time aside) and develop a plan of action. Start with a general table of contents and then include “completion by” dates.
Below is a sample Table of Contents that should fit just about any firm with some minor tweaking if need be:
- ACCOUNTING
- BILLING (Your clients)
- CLIENT SERVICES
- COMPLIANCE
- DATA DELIVERY/REPORTING
- FINANCIAL PLANNING
- GENERAL OFFICE ADMNISTRATION
- HUMAN RESOURCES
- MARKETING
- TAX RELATED (As if relates to your client’s returns if applicable)
- TECHNOLOGY
- TRADING & REBALANCING ASSETS
Under accounting for example, you might have policies on how payroll checks are administered, when, by whom, etc. Under billing (in this case it refers to client billing), you would have policies that address how management fee calculations are verified, if you upload electronically to a custodian you want to document how this procedure is completed. I would suggest that before you start your manual, you have an organizational chart in hand and assign each policy to a title, not an individual (people come and go but the positions within your company should remain substantially the same). If you are a sole practitioner and add folks down the road (whether they be employees or outsourced vendors), you can make changes to these policies later with relative ease.
The best way to write policies is to start with the first step and the last step and then fill in the rest. By starting with the first step and last step, you are establishing the jumping off place and the result that must happen for the task to be successful. Then it becomes a matter of simply filling in the rest of the steps and before you know it, you have started your Practice Policies Manual.
I would suggest you do one a day, every day, five days a week until you have your manual completed (or have the staff that perform these task do them). Additionally, I would recommend someone in the firm be responsible for a quarterly review of processes and verify that no new processes have been added that have not been documented and that existing processes are still valid as written. You can store this in hard copy format such as a binder or electronically but either way, make sure each of your employees has read it and have them sign a document yearly as verification. This will hold everyone accountable and leave little room for confusion as to how tasks are to be handled in your firm.
Again, make this a commitment and you will be glad you did. It will pay off in less frustration, more available time, more accountability and higher value for you firm!
