HR & Management

Why businesses need management systems

4 min read

21 June 2014

The term ‘management system’ refers to the processes and procedures that any business goes through in order to achieve its objectives.

Setting out your management systems will make clear what you plan to achieve, what you need to do in order to achieve your goals and the checks you put in place to monitor your performance, as well as the actions you’ll take if you fail to deliver what you’ve set out to.

In simple terms, your management system might be the system you use internally to manage a particular activity or operation or it might be how your overall business is managed. Either way, setting out your management systems and making sure you have the right systems in place will help you achieve your objectives, demonstrate compliance, ensure consistency, establish best practices and set priorities.

Why bother with a management system?

Darshana Ubl, marketing and entrepreneurial guru as well as CEO of Entrevo UK, recently worked with 500 small business owners in the service industry who typically had 1-10 employees. Most of those businesses earned between £100k and £1m. She found that the reason these small businesses failed to become as profitable and scalable as they might have been was at least in part due to a lack of systems. She went on to point out that this weakness can be overcome inside 12 months if the business owner develops (among other things) the right systems.

There are a number of other reasons why having the right management systems in place should be a priority:

1. Improved decision-making capabilities

First and foremost, in business, any decision you make is only as good as the information that your decision is based upon. As a result, making sure you have access to the most up-to-date, relevant and accurate information will make your decision-making process better and your business stronger. Having the right management systems in place for gathering information about your business and your competitors as well as the marketplace in general means that your business will be better positioned to make the right decisions at the right time.

2. Your business lifecycle will be more predictable

Start-ups typically go though a lifecycle that involves discovery, validation, efficiency, scaling and sustaining. The stages in this lifecycle from efficiency onwards are heavily reliant on effective systems, processes and procedures. Here’s what you might expect from putting the right systems in place:

  • Business is all about maximising limited resources and not about reinventing the wheel. Using tried and tested processes increases efficiency immensely;
  • When a small company grows rapidly, the process can be painful. Cash flow is often referred to as ‘start-up cancer’ and in some cases this term is no exaggeration. Appropriate financial management and planning systems help you predict potential issues and take proactive, remedial action before things become problematic;
  • As more people become involved in a business, effective processes and procedures help ensure everyone is working on their key tasks and not on administration. Working this way means that synergy can be achieved by ensuring that everyone is pulling together and singing from the same hymn sheet.

3. Your business will be more credible

Business is about credibility and official accreditation such as ISO 9001 (quality) and 14001 (environmental), whilst difficult to obtain, can greatly help when it comes to gaining the credibility you need, particularly in a competitive marketplace like technology.

Peter Andrew is Head of Innovation at Alba, which is a technology business incubation centre, providing advice and support to early stage businesses.