Policies and Procedures – What Are They And Why You Need Them.

Conglomerates, multi-national corporations, banks, and governmental organizations all have processes, it is one of the reasons they can grow, expand, and dominate a market. Another reason they put processes in place is the protect their interest and that of their inventors.

In a recent engagement with a client the conversation around policies and procedures was easy as they understood the need for such and to have them in place for employees, customers, and owners. They, however, did not have these in place nor the appetite, there were no checks and balance or separation of duties, essentially the door was wide open for fraud and misrepresentation of assets. I know many might think, why do I need policies and procedures? I am everything to my business. While this maybe a legitimate argument, holding yourself accountable to your business especially if you have a growth plan (which you should) will assist once your business starts to expand. The transition from a “one man” shop to hiring employees, seeking financing from lending institutions or investors will be seamless.

I had an encounter with a small business owner recently, they needed to have audited financial statements to take to their bank to establish a line of credit. They approached an accounting firm to have their financial statements signed off, however, they had no way of allowing the firm to come in an audit their books before they issue such financial statements. This goes to show, no matter how small your operation is, having the right processes, keeping proper records will be an advantage once your business expands.

Unless you are willing and content to have a small no growth business, having your “docs” in a row is important. This is one of the reasons I decided to focus most of my attention on small business owners, the ones who have good businesses but do not know how to align their business goals and objectives from a financial standpoint. You do not need elaborate systems, you just need to have a systematic way of record keeping, policies and procedures, so once your business move from one level to another the transition is seamless. This also makes it easy for accounting firms to audit your records and issue audited financial statements when you need them for financing.

The plight of this small business owner is not new, however, if you are serious about your business and you have long term goals and objectives, putting the right policies and procedures in place from the beginning will make the difference in you meeting those goals and objectives and expanding your business with relative ease. So, ask yourself what you are going to do differently to ensure you are ready for the next phase of your business. Be objective, critical, write these questions down along with the answers. If your business is just a hobby or pastime, then no need to ask these questions. However, if you are serious about your craft, take out a pen and paper or your phone “notepad” and start writing.

We tend to think because we own the business, we can run it anyway we please – yes you can, there is no disputing that. But if your business is more than just a side hustle or more than just a hobby, get serious, seek advice from a business consultant. Stop limiting yourself to only the here and now, set your goals, iron out your strategy, set yourself up for success, open your eyes and see beyond the here and now. Even though we all need to stay present and do not try to control the future, it is wisdom to start building your future today.

MOMENT OF TRUTH: Policies and Procedures are only good if they are implemented, followed, and reevaluated on a regular basis. Speak to a business consultant if you do not know how or where to begin and start with this simple step in taking your business to the next level. Good luck!