At the heart of a systems-driven business is your company’s operations manual. The operations manual is the authoritative guidebook of how things are done in your business. It gives you an effective way of communicating policy and procedures, and gives your employees the independence and security they need to operate in their jobs for maximum results.

If you’re like most of us, you probably have a folder filed away at home that’s full of all the manuals for the various electronic devices in your household. When you need to know how to work your microwave or your television breaks, the first place you go for help is that folder. In your business, your operations manual acts in the same way. It serves as the single-point reference for all important company information. And when used properly, it’s not just a place to go to look for “fixes,” rather it’s the first thing employees familiarize themselves with so they know how things work, right from the start.

What’s in an Operations Manual?

Content will vary from business to business, but the structure of an operations manual is universal. It should be comprised of the following areas:

• Company History, Vision & Organization
• Products & Services
• Policies
• Position Statements
• Systems (Action Plans)

Your operations manual should essentially cover two main areas: companywide information that every employee in the organization needs to know and position-specific information.

The first three bullets in the list above (Company History, Vision & Organization, Products & Services and Policies) make up the portion of the manual that apply to everyone in the organization. They help people understand the “whole picture” including the organizational structure of the company, what you offer to your customers or clients and the general policies under which you operate.

The last two bullets (Position Statements and Systems) contain information specific to an individual position. Obviously the accountabilities of a CFO are different than that of a lab technician, so you’ll want to create operations manual for each position. Ultimately, you’ll have a manual for every position in your organization.

Getting Started

Begin by gathering and/or defining companywide information first. While the documentation of your company’s day-to-day operational systems, policies and definitions is no small feat, it’s absolutely critical and serves as the foundation for every manual you’ll create.

Next, document all the individual systems necessary. For a simple example of a documented system or “Action Plan” as we refer to it, see the Coffee Making Action Plan, under the Resources tab. If you need help getting started documenting your proprietary systems, we invite you to participate in our next Documenting Systems virtual training event.

Often one of the more challenging components of an operations manual is defining tasks and accountabilities to specific job positions. In E-Myth terminology, this is called a Position Statement.

Start by listing all positions in your organization, and create a paper file location and a digital file location to store all documents pertinent to that job position. Once this document inventory has been established, you will be able to identify information gaps, and determine what materials still need to be developed.

These individual Position Statements will describe where employees fit into the organization, for which systems they'll be held accountable, a list of work tasks that must be completed, the standards to which the work must comply, and what results employees will be expected to produce. The Position Statement provides you with a document that clearly defines accountabilities and empowers your employee to meat your expectations.

Updates and Distribution

Remember that change is inevitable and your manuals must get regular attention. Schedule regular update sessions and make a plan for distribution. Annual or bi-annual review sessions should be scheduled to ensure that elements of the operations manual are kept up-to-date. At these sessions, gather managers and administrative support members to do a quick review of the manual’s contents, make updates, add new material, remove out-dated content and redistribute the document.

A well-constructed, relevant operations manual becomes a company resource of key importance.

Keep in mind that you’re operations manuals can be physical binders and/or electronic files. Whatever format suits your business best is the right way for you. Just be sure that you have back ups stored in a safe place.

Operations manuals sound like a good idea; they’re certainly an organized approach to conducting business, to creating a great system. But will people use them? Will they have any real value for your business? Are they worth the time and effort it will take for you to build and implement them?

Look at it this way. Your business may run reasonably well without operations manuals, but aren’t you aiming for something more? Aren’t you building a business that works—really works—without your having to run the whole show all the time? If you want your business to have true value to a potential buyer or successor, don’t you think having a clearly-defined systems-based way of doing business will give you a leg up?

The longer you delay establishing business credit,
the longer you delay taking advantage of business loans.

— Wells Fargo Bank

Putting personal assets at risk

Each time you provide a personal guarantee for any type of credit extended to your business, you jeopardize your personal assets, such as savings and investment accounts, your car and even your home. If your business can’t pay off its debt, the bank will come looking for you to make good on the loan.

A business entity established as a sole proprietorship is most susceptible to this risk. Although you can build business credit as a sole proprietor, you will be completely liable for all personal and corporate debt.  Your credit history will be based solely on activity associated with your social security number because you will not have a corporate tax ID number.  As a sole proprietor, you also have no legal means for separating corporate and personal credit.

The System for Protecting Your Personal Assets

The best way to protect your personal assets is to incorporate your business. You’ll shield yourself from personal liability for the company’s debts and typically will also reduce your tax burden.

If you need help incorporating or building good business credit, click here for a complimentary business credit consultation and to obtain our free e-Book, "Unlimited Business Financing – Without a Personal Guarantee” – a step-by-step process for building a business credit asset.

Flickr photo credit: wwworks