ORGANIZATION IS KEY

Organization is Key

What’s the difference between an Organization and a Business?

At first glance, that might seem like a straightforward question, but it isn’t. Why?
Because a business is an organization, but an organization is not necessarily a business. Also, in spite of what I just said, the business may not be the whole organization, but just a part.

It is quite common for non-profit organizations to have a business within their various activities — usually to help fund their non-profit sectors. Obviously, the non-profit itself is not a business. Government — local and national — departments/authorities also sometimes have business components. Once again, the government department/authority is not a business. (Let’s leave the political things aside here — some people would say that government is a form of business…!?)

Which brings us to the definition of business. A business is a person or group of people, aligned in whatever format, engaged in buying and selling goods or services for the purpose of making a profit. This may include making those goods, or outsourcing service provision. It is usually done in exchange for money, but sometimes in return for some good or service of a similar value. But it’s all about the money — even in a socially-responsible business (the more profit, the more they can assist non-profit causes).

As you will appreciate, a non-profit can be involved in providing goods or services in any one of a number of ways, none of which are done with a view to making a profit — far from it. Their core purpose is to assist people with a need in the area/sector for which the non-profit was set up. Governments of all kinds, and by default their departments/authorities, are there to provide social good (although some have forgotten this). Once again, their core focus is not making money for its own sake.

Just to round out this discussion, and as mentioned earlier, there are various formats for a business. These include:

• Sole trader — a person trading in their own name;
• Partnership — two or more people trading under a trading name (often the names of the partners) — which should, but often doesn’t, have a partnership agreement in place;
• Company — an incorporated entity with separate legal status to the owner(s), of whom there can be one too many; and (less frequently)
• Trading Trust — an entity established under a trust deed for the purpose of trading.

Joint ventures are a mixture of the above — approximating a partnership between two of the other options mentioned — usually between two companies.

One further thing worth mentioning is that family trusts are sometimes also used as trading entities (=business vehicles). This is uncommon and may not be a good solution. Like non-profits, the business is not necessarily their primary purpose.

To come back to the question, a business is usually run by an organization (a sole trader being the exception) simply for profit, but that organization is not necessarily (solely) the business, as ‘business’ may not be its primary focus (because it has a non-profit primary purpose).

The Key

And, now, to the key. I said at the start that a business is an organization. So, what’s the connotation of that statement? Organization!

Yes, a business should not only be an organization, but it should also be organized!

What do I mean by that? Simply, that everything the business does should be systemized. What can be systemized? Everything! A business’ systems should include documentation covering the procedure to be followed for every system, in every circumstance. (This documentation should form part of the induction of each new team member, as a core foundation of the organization.) Consequently, this documentation should cover things like:

1. The process to be followed in every interaction with:
2. External parties, including:
3. Prospective customers,
4. Existing customers,

• Prospective suppliers,

1. Existing suppliers.
2. Bank employees, and
3. Suspects (= people who may become prospects, but you don’t know them well enough yet to know if they qualify as prospects).
4. Internal parties, including:
5. Owners,
6. Managers, and

• Other team members.

1. The process for doing the things we do for those parties, including:
2. General and brand marketing,
3. Identifying prospects (from suspects),
4. Getting in front of prospects to present an offer,
5. Presenting the offer,
6. Dealing with their response,
7. Preparation, delivery, and follow-up of quotes to advocates, existing customers, and prospects,
8. Dealing with their response,
9. Design of products,
10. Ordering of materials or finished goods,
11. Receiving of materials or finished goods,
12. Treatment of stock returns,
13. Manufacture of finished goods,
14. Quality control,
15. Despatch of orders to customers,
16. Treatment of sale items returned,
17. Credit control of customers,
18. Payment of suppliers,
19. Hiring, paying and managing team members,
20. Recording of all the above transactions,
21. Preparation and provision of financial statements to relevant parties,
22. Running meetings,
23. Creating budgets and KPIs — and measuring performance against them, and
24. Preparing business plans and monitoring their achievement.

You will note that the above refers to ‘people’ first. That’s because, without people there would be no business — no team members, no customers, no suppliers. So people are important. In fact, people are essential. As the saying goes:

If we put people first and train our people to do the same, then the rest follows.

That said, we need to also ensure our systems are designed to put people first. Henry Ford had it right when he said:

Dave Allen must have had this in mind when he commented:

To build that brand, that reputation, we need to put in place people-focussed systems so that our business treats people as they want to be treated every time.

James Cash Penney summed it up when he said:

No business can succeed in any great degree without being properly organized.

It is the systems, enabling everyone within the organization to make those interactions effectively and do those tasks efficiently, that enable an organization to achieve. As Benjamin Franklin stated:

The achievements of an organization are the result of the combined effort of each individual.

If your results seem to be in lockdown, now you know the key — it ’s the systems that unlock the performance of the people.

Time to get organized?

Oh, and if you’re not sure what I mean by suspects and advocates, look out for my next post Growing Sales Using the Ladder.