By Cristhine O

How SOPs Increase Valuation and Morale

Recall the classic elementary school activity where students instruct their parents on making a peanut butter and jelly sandwich. It sounds straightforward, but the room quickly fills with laughter. For instance, if a child forgets to mention removing the bread from the bag, you might find a jar of peanut butter balanced atop a sealed loaf.

While amusing in a classroom setting, in the business world, misinterpretations due to vague instructions are far from funny. When business leaders fail to clarify processes, resources are misused, and employee morale dips. Often, entrepreneurs mistakenly attribute these issues to employee negligence or incompetence. However, the root cause might be the absence of clear directions.

Large corporations rely heavily on SOP

Many large corporations rely heavily on Standard Operating Procedures (SOPs) or Standard Works. These detailed procedures cover everything from logging into computer systems to sending emails. But SOPs aren’t exclusive to big corporations. Any business aiming for efficient systems, streamlined processes, and well-equipped employees should adopt SOPs.

Understanding SOPs

An SOP isn’t just a bulky manual filled with legal jargon. While such manuals are essential for legal and accreditation purposes, employees need straightforward guidelines for daily tasks.

An SOP can be a simple list of steps. Some businesses might include additional columns detailing the rationale behind each step or the broader business function it supports.

Consider this example for a beauty salon:

Advantages of implementing SOP

  1. Greet the customer with a smile and maintain eye contact.
  2. Say, “Welcome to The Beauty Shop! How can we assist you today? Do you have an appointment or would you like to schedule one?”
  3. If they have an appointment, check them in. If not, book them for the earliest available slot.
  4. After checking in, inform the customer about the monthly special and ask if they’d like to avail it.

The Advantages of Implementing SOPs

SOPs provide a consistent framework, eliminating the need for employees to make on-the-spot decisions. They also reduce the frequency of calls to managers or owners for guidance. SOPs set a standard, making employee evaluations more objective.

Indicators that your business needs an SOP:

  • Frequent employee queries.
  • Over-reliance on the owner’s decisions.
  • Inconsistent outcomes for the same process.

Every action within a business, whether it’s answering the phone or taking out the trash, is a system. Uniform handling of customer interactions strengthens brand identity. It ensures that customer service isn’t solely dependent on the employee’s personality.

SOPs enhance business valuation, making the company more appealing to potential investors. They allow new owners to train staff without in-depth knowledge of the business. SOPs also highlight areas of improvement. By standardizing processes, it becomes easier to distinguish between employee-related issues and procedural inefficiencies.

Crafting Effective SOPs

Crafting effective SOP

Most small to medium-sized businesses lack an operations manual, let alone SOPs. The process of creating SOPs is straightforward, and there’s no better time to start than now.

Begin by documenting existing processes. If you have employees, involve them in the process. Ask them to jot down the steps they follow for their tasks. This not only aids in SOP creation but also uncovers potential inefficiencies.

Testing Your SOPs

SOPs should be flexible and open to revisions. Before rolling them out, test them with a few employees, asking them to follow the SOPs verbatim. Their feedback can help refine the procedures.

Employee participation in SOP creation and testing fosters a sense of ownership and increases adherence. Periodically, review and update SOPs to ensure they remain relevant and effective.

Get Your Business Valuation Booster Kit

Click on the button below to get INSTANT ACCESS to the $997 Business Valuation Booster Kit for FREE.

Akbosh Investment Group is an investment management company that acquires, scales, and sells companies that benefit all stakeholders at large.

WANT TO STAY IN TOUCH?

    Subscribe to stay up to date with Akbosh Investment Group and hear recent news about its investments.

    Copyright © 2023 Akbosh Investment Group, Inc. All Rights Reserved