A problem many small business owners face is that they are the business. Nothing gets done without them, and the hours spent each week grow longer and longer. This leaves staff waiting on you, which then slows down your operations. You simply donโt have time to do it all.
This is where standard operating procedures (SOPs) help make your business independent of you. By having SOPs, your staff and operations run more reliably and with structure.
What are standard operating procedures?
SOPs are the how-tos. They help bring people up to speed when performing tasks, whatever they may be. SOPs are used widely because they break down processes into step-by-step instructional guides.
SOPs come in different shapes and sizes depending on the task, but usually can be found in these formats:
- Step-by-step: Simple procedures. You start here, then move on to the next step once the first is completed.
- Hierarchical: Complex tasks. This involves multiple moving parts in a process that goes from high to low priority, with subsections to add context.
- Flowchart: An adaptable SOP that can be simple or complex. A sequence or more that requires decision-making.
Why small businesses should use Standard Operating Procedures
SOPs arenโt just beneficial for big companies with hundreds of employees; small businesses can use them too to improve their own operations โ and should. The immediate benefits that SOPs provide to small business owners:
- Independent decision-making: Staff make the decisions to complete tasks. This gives owners time back immediately
- Consistent work quality: creating repeatable actions and tasks gives a professional standard, reducing errors and the chance of rework.
- Faster, easier training and onboarding: instructions are available to quickly train staff and speed up onboarding.
These benefits lead to a more independent business that is built on structure. If business owners can delegate day-to-day operations, they have time to pursue more opportunities or, even more importantly, take time off.
There are also indirect benefits to what SOPs can help small businesses:
- Consistent customer experience: Customers receive a consistent experience that can improve over time through SOP refinement.
- Business growth and value increase: More free time means that owners can focus on growing their business.
- Business resilience: Standardising your work means fewer errors and less compliance risk. It can also soften the impact of staff turnover, since youโll have an easy manual to train new hires.
When time is crucial and resources are limited, SOPs give small businesses breathing space and more opportunities to grow.
How to create SOPs
The principles of every good SOP are:
- Defined goals: What is this going to achieve? What does this bring to the business?
- Clear and simple instructions: How to achieve the goal. Efficient and easy to understand.
- Identifiable processes and gaps: Why is it important to do it this way? Creates context. These are important
- Refinement: Improve over time with experience.
Even a basic checklist can be considered a SOP, but itโs the thought behind a SOP that makes it effective.
Example of a standard operating procedure:
A brick-and-mortar retail business, every so often, needs to process refunds. To minimise the number of people involved (what), the business owner created an SOP to shorten the time it takes to process refunds (how) and simplify the process, so refunds donโt interrupt ongoing service (why).
Processing a customer refund
| Eligibility check | Y | N |
|---|---|---|
| Does the customer have proof of purchase? | ย | ย |
| Is the item within 30 days of purchase? | ย | ย |
| Is the item unused and in original condition (or faulty)? | ย | ย |
No answer is a refusal to refund and requires supervisor input.
Refund Steps (eligibility confirmed)
| 1 | Find the original transaction on the POS: Transactions > Find Sale. Search by receipt number or the last 4 digits of the card. |
|---|---|
| 2 | Press Refund. Select only the item(s) being returned. Confirm the amount with the customer before proceeding. |
| 3 | Refunds over $100: call your supervisor for their PIN before continuing. |
| 4 | Process the refund to the original payment method. Never give cash for a card purchase. |
| 5 | Hand the customer their receipt. Advise card refunds take 3โ5 business days. Place the item in the returns basket. |
With a clear and concise refund checklist, the owner halves the time it takes to process them, cutting back their involvement and the time a register and staff member are unavailable.
Over time, as the business evolves, the owner can review the checklist. In this case, say if there is an increase in prices. Instead of a supervisor getting involved when the refund is $100 or more, the threshold is raised to $200 (refine) to reflect changes in the business.
Tips on creating a SOPs for your business
When drafting a SOP, focus on making it readable and understandable. Not every staff member is at the same level, and, of course, not everyone has the knowledge base that owners have for completing a task. This is about transferring your knowledge onto paper and making it universal.
- Write for the reader and keep it simple.
- One action per step, and avoid combining multiple actions.
- Active voice: โComplete thisโ, not โshould be completedโ.
- Test it on someone unfamiliar with the process.
- Review when necessary. Staff can help signal that a SOP is outdated.
Improving your processes and procedures
As an owner, you want to make sure the job is done correctly and that you arenโt always needed to do it. By using standard operating procedures, you get time back to improve and grow your business, and eventually, if itโs the goal, hand it over when retirement comes along. It also makes your business stronger by building repeatable processes that are resilient to changes. When SOPs are used effectively, running a business becomes easier.
