Your business needs systems. Your business thrives on systems. Business systems help you scale. Business systems help you know what works and what does not work. Business systems help you build strong legal documents. But, an often ignored part of system development is that systems can help you prove your case in court.
If you have a system in place, you do the same thing every time. If you document your system, you create a paper trail of everything that is happening in your relationship. Lawyers love documents.
Business Systems Protect You from Liability
It is one thing when you are running your own business and you are doing everything. You can do things the way you want to do them. You are taking the risk of not documenting something or of not making sure the contract is signed on time. That is your risk. You may reap the rewards of playing fast and loose with your sales process, but you may also see the downside of it (especially in a lawsuit). When you grow, however, there are others who are creating liability for you. That means, you need to limit your liability as much as possible. That is where systems come in.
Systems help you control the places where mistakes can be made. Control the places where you may be exposed to liability. If you create a sales system that works with your customer agreement, you will limit the number of ways you can be exposed to liability. Everything drives to the customer agreement. And, if you make sure your customer agreement is fully integrated, you can document the process from start to finish, but you can also limit your liability by making sure your system drives to the legal document you work so hard to create. And make sure it protects you.
So, your system gives you a clear method of documenting what is happening. That way, you will know if it is working or not. Systems give you protection by ensuring that nothing contradicts the contract and voids any of the terms you worked so hard to develop. It also gives you a paper trail to confirm that everything was done the right way. This can go a long way, not only in limiting your liability, but also in limiting any expense or time in proving that you are not liable in litigation.
Business Systems Control the Authority of Your Staff
If you have a clear system in place, you only give your employees authority to do what is in the system. You train your employees on the limitations they have and you encourage employees to go up the chain of command for more authority if necessary. Much like using your governing documents as a platform for your business, you can use your business systems to deal with any major issues of authority in your business.
As a matter of company culture, you may want to give your employees some leeway in what they can do, but it is important that the system limits them to what the contract ultimately says. If you make promises that are not in the contract, or maybe worse, promises that are explicitly excluded from the contract, you run the risk of voiding your entire contract, or worse, on alienating your customer because they don’t know who to believe.
If you don’t have a system and you don’t do things the same each time, your contracts may not help you when you need them most. Contracts are only helpful when they accurately describe a transaction. When you are using template contracts (like your client agreement), your system dictates whether or not the contracts apply the same each time they are used. Especially when more than one person is operating the system. This helps with your brand identity. It helps your business scale. It helps people know they can trust anyone associated with your company. And, it protects your business so it can continue to grow.
Scaling Not Required
Even if you never plan to scale your business, systems are an absolute necessity. Systems will allow you to take a vacation. To pass your business to the next generation. More than that, limiting your liability with strong legal requires systems. You need to know how you will treat your customers, manage a program, or offer your products to know if your legal documents make sense. Further, you need a system that creates the proper records to prove you did, in fact, do what you said you would do. Remember, litigation happens on the messy deals. With the difficult customers. Those deals are when the system can save you. If you do things the same every time, you will protect yourself when everything does not go according to plan.
Without systems and a scalable business model, you can never be sure you will be protected when you need it. If you do not focus on your systems, you will always be putting out fires. You will always be searching for records and struggling to stay ahead. Create systems. Develop legal that protects your business for growth. Once you have protected your rights.
Once you have limited your liability, how you grow your business is up to you. Whether you like the freedom of working for yourself, you are developing a family asset to pass down to the next generation, or you are looking to grow and exit.
Whatever your exit is, you need business systems and legal protection to get there.