Is your business people based or process based? Did you know there was a difference? Don’t feel bad. Most entrepreneurs and business owners either don’t know the difference or worse, they do know and for one reason or another they continue on being people based.

So, what is the difference between people based and process based business? It is simple really. If your business relies on someone to decide what action to take next on a continuous basis, then it is people based. Or, if you do not have courses of action for routine and sometimes obscure events, then it is people based. A process based business is one that is run according to and by a predetermined set of steps or instructions. Typically all courses of actions that are encountered on a daily basis have a procedure telling you exactly what to do and how to handle things. Franchises are great examples of process based businesses.

Why would you want to have a process based business over a people based one? People based businesses are at the mercy of attitudes. People decide to carry out a routine course of action based upon their attitude or feeling. For example, someone does not like the way a client asks for assistance and subsequently does what they can to make the client leave. Or, a person does not feel like sweeping the floor today so they simply do not do it. People based businesses do not return consistent action therefore they do not return consistent results.

Conversely, process based businesses are built upon consistency. The same, pre-determined course of action is taken every time. For example, at 4pm every weekday the floor is swept by whomever the closing shift person is. Or, a client wants to buy a widget that you sell and they are treated in a predetermined way that leads them down the best course of action that can result in providing them with the solution they seek and provide the business with the client satisfaction and revenue it seeks. Mc Donalds is a good example. Almost anywhere in the United States, if you order a Big Mac and fries, you can be certain that it is going to taste the same and cost the same no matter which Mc Donalds you visit. I like to use Mc Donalds as an example because it shows the true power of a process based business. It is the most successful restaurant business in the world. However, when you walk in, what is the typical average age for most employees? And their education level? The average is teenagers to early twenties and many have little to no college education. This statement is not to denigrate teens and twenty somethings. It is meant to show that a bunch of teenagers can implement the processes that Ray Kroc designed and make almost any Mc Donalds a profit machine. How many Mc Donalds have you seen actually go out of business?

A few other points to be made are, when you have a people based business, you are always looking for ways to motivate people. Why? Because your business is people based. It’s that simple. Motivating people and making people happy are two completely different subjects. Continuously having to find ways to motivate your people is a sure sign that you are people based. Regardless of what type of business you are in or foundation you have, you should seek ways to make your employees happy. It leads to higher efficiency and less turn over. But that’s a separate topic.

When you base your entity on processes, the processes can take ordinary people and allow them to accomplish extraordinary tasks. There is a company in New York that put on various seminars and speaking events. The company made millions upon millions of dollars and organized thousands of participants. That company employed a total of 6 people. One of them was the founder. How can they continuously return revenue numbers that high with such little manpower in comparison? They have very efficient and effective processes.

As you can tell, I am a big proponent of process based businesses. If your business is not process based, get started with your migration from people to process. If you are unsure how to start, no problem. It’s rather easy. Document everything that happens as soon as a client walks in the door, calls on the phone, or sends you and email. From there you branch off like a decision tree. If they have a complaint, then you need a process to handle that. If they want to buy something, you need a process to handle that. If they have questions about your product or service, you got it, another process. It’s easier to start with the initial client communication and develop processes for every scenario. Anytime an employee asks, “How do we do whatever?” You are missing a process. Teach your employees to ask, “Can I get a process” when they do not know how something is done. When it is explained, document the answer and you just developed a process. You should have processes that cover every normal aspect of your business. Once you do, you will realize where communication is breaking down, where inefficiencies are happening, and what areas you can tweak to increase you revenue. The key, as with many other things in business, is to just get started. So don’t put it off any longer. Yes, I’m talking to you. Get going!