Trade Talent For Processes To Maximize Your Company Value
When starting out, entrepreneurs often exchange time for money. For example, they might paint their own office to save costs. Over time, as their resources grow, they outsource tasks to professionals, saving time to focus on high-value activities.
This same principle applies to scaling a business: investing in systems and processes makes your company more efficient, scalable, and, ultimately, more valuable.
Scaling Up Your Business with Processes
In the beginning, when your company is just getting off the ground, you’re resource-constrained. The one investment you make is hiring the very best people you can afford. And when you’re growing a startup, everyone wears multiple hats to do whatever needs to get done.
But this isn’t always sustainable. At some point, to scale effectively, transitioning to repeatable systems and processes becomes essential.
Michael Gerber’s The E-Myth emphasizes that businesses relying too much on talent can stagnate. Building scalable business systems allows you to:
- Reduce dependence on individual expertise.
- Support employees with clear workflows.
- Hire average performers (B players) and enable them to achieve great results.
Over time, you need to shift to a more process- and system-focused methodology because that’s how you can best support your people. Better yet, sound systems allow you to hire B players and help enable them to perform at a higher level. It’s too hard to keep hiring A players over the long run. Systems are what allow you to grow and scale rapidly.
Learning to Love Scalable Business Systems (Why Entrepreneurs Resist Systems)
The catch, of course, is that most entrepreneurs hate systems. For many of us, starting our own business was a direct result of rejecting the bureaucratic corporate environments we had worked for in the past. When entrepreneurs start something on their own, the last thing they want to do is build systems or processes—which is understandable but only to a point.
However, what great CEOs understand is that process-driven businesses not only scale faster but also:
- Deliver consistent results.
- Enhance operational efficiency.
- Increase the company’s market value for investors and buyers.
That matters if you ever intend to sell the business. The more you can demonstrate a reliable delivery of results in the company, the more premium you build inside it. People will pay more for that.
Consider a pharmaceutical services company that excelled in client delivery but struggled with customer acquisition. By introducing a reliable and repeatable customer acquisition process, they saw revenues spike and significantly increase their company’s sales value.
How Systems Add Value to Your Business
Systems transform your company into a predictable, profitable, and scalable operation. Investors and buyers value businesses with structured systems because:
- They reduce risks associated with talent turnover.
- They ensure consistent delivery of products or services.
- They enable sustainable growth.
For example, a travel-based company pivoted to consulting services after declining demand in its core market. By creating efficient systems, they not only adapted but thrived, achieving greater profitability.
Steps to Build Scalable Business Systems
- Identify Key Areas: Focus on functions like customer acquisition, service delivery, and operations.
- Document Processes: Write detailed workflows to ensure consistency.
- Invest in Tools: Use automation software to streamline repetitive tasks.
- Regularly Evaluate Systems: Continuously improve processes based on feedback and results.
By embracing systemization, you trade short-term effort for long-term value, ensuring your business thrives even without you at the helm.
Reaching the Next Level
Entrepreneurs don’t like systems. But they play a key role in delivering predictable results for your clients, your shareholders, and, eventually, the investors who want to buy the business from you.
In other words, maybe it’s time to put away the DIY paintbrush and invest in an expert system that will pay off big time for you and your business.
