Why is SOP important for your business?

With a standardized set of procedures, or SOP from Business Advisory any firm- small, medium, or large can significantly reduce the time required for carrying out operations, increase the productivity of the team, eliminate induced errors and reliance on anybody, and improve industry compliance. This will increase the profitability of the firm and provide a defined path for solution creation, and protect employees in a healthy and safe environment.

Benefits of having SOP:

• Effective Team Management: Through SOP, training recruits of the team becomes much easier as they are facilitated with a go-to manual which resolves the majority of their questions in the proceeding. Also, they will get to know entire particulars associated with the process such as frequency, responsibilities, and completion signals, so that they can act fast even while being in the training period. By the following SOP, employees work within specified timeframes and generate confidence; reducing errors and can easily delegate their work, if required.
• Quality Improvement: If a certain set of procedures or SOP is followed, the quality of the product delivered is consistent. This is achieved by different quality checks at different phases in the process of product development. Through SOP, necessary amendments for quality improvement can be communicated with staff and officials. This also assists in creating a benchmark for product development or improvement.
• Mitigating business risk through compliance: In a highly regulated activity business, compliance is the firm’s utmost priority. Through SOP, the set of procedures for compliances can be documented, acting as a guideline for staff and firm activity, deemed quintessential for compliance. This can be carried out in guidelines such as OHSAS etc.

• Reducing risks of accidents: The majority of the businesses around the world are accident-prone- both tangible and intangible. For ensuring a safe and secure environment for employees, employers provide guidelines through SOP in handling complex or sensitive procedures where there is a high degree of risk involved.
• Finding flaws: Complex business problems can be simplified and resolved by jotting down the procedures via SOP documentation. The flaws and gaps are thus revealed, such as any avoided or forgotten step in the process. A thorough examination will also reveal how the procedure can be improved to hasten the process and make it efficient.
• Standardizing Customer service: Through SOP, the proper process for any customer complaint or issue resolution can be drafted for a quick resolution. Through the process, critical problematic areas can be identified and improved. Sometimes, an unsatisfied customer is not reached, as there is no well-defined procedure regarding follow-up. A similar approach can be utilized in requests for service for enforcing reliability and credibility in the business.

SOP or Standard Operating Procedure can be written for hire, customer satisfaction, risk mitigation, and improving business, by the management or SOP experts too. A symbol of a good or perfect SOP is its conciseness, easily comprehensible, and easy to follow. Make sure not to make the process complex at all, and assume knowledge of any associated process for granted. On the contrary, guidance from the SOP and Business Advisory experts can be sought, who have immense experience in drafting procedures like us. 

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Lead in a Way that Lifts Others and Leverages Strengths

Entrepreneurs are among the most driven and vision-minded individuals around. While vision is critical, it can’t reside in only one person if a business is to achieve sustainable success. Are you a leader who sees yourself as smarter than everybody else in the room and gets frustrated that people can’t keep up? Or are you a leader who hires others you believe to be as smart or smarter than you in one or more areas and moves with little ego towards common goals? This personality type can be highly effective; however, All-About-Me, Inc. is not a viable path to long-term business health.

Practice and Appreciate Patience

Being highly driven and restless for results is admirable, and so too is patience. Rome wasn’t built in a day, and Google wasn’t either. You can’t perform brain surgery by simply watching a YouTube video. In our space, controllers don’t all become fully realized CFOs in 90 days, and for those that do, it happens over years of experience. In short, the passage of time is important and something to appreciate. Think about your career and business over a longer continuum and avoid self-induced pressures that create anxiety about the destination and lessen your enjoyment of the journey. Time will expose you to experiences and insights that collectively, not instantaneously, advance your objectives.

Balance “Let’s Go Do It” and “Let’s Stick to It”

Many entrepreneurs are idea people with grand designs on changing the world. This can lead to an ever-shifting focus on shiny new objects. There’s a balance to be struck between acting with urgency to try and capitalize on potential opportunities and in staying the course.

Prioritize Your People

Focusing on one’s core product, technology, service, whatever, is great, but it can’t happen at the expense of people. Finding and keeping excellent employees is incredibly tough today, and so too is navigating compliance issues, development needs, and related responsibilities required to manage a workforce. Successful leaders put the necessary support in place for their people. Ensure that you or someone on your leadership team treats this as the top priority it is. You can also tap outside experts for help if needed.

Mind the Money Like It’s Someone Else’s

In CFO early days, an Austin-based venture capital firm hired CFO to produce accurate, repeatable, and consistent reporting packages across their portfolio companies to provide better information for making decisions and to keep a finger on the pulse of their respective financial health levels. We have since done that for numerous other funding sources. They did so because, in the early stages of a business, it’s important to know how long one can last without securing more funding and how effectively existing resources are being utilized. Discipline in managing money can unknowingly and unintentionally relax too much. Minding the money like it’s someone else’s (and often it is) with accurate measures and objective processes, brings about a mental discipline and accountability that new businesses need.

Build a Business, Don’t Idle with Ideas

Business ideas and fully sustainable business models are two very different things. Bringing an idea to fruition requires a clear articulation of what you can do, where you can go with it, and how to get there. That means laying out a multi-year business plan that answers fundamental questions – Is there a market for this? How much capital will be needed and when? How many people will it take? What will sales look like? What are key milestones? Developing sound business plans and projections give leaders something to measure against to gauge progress and provides evidence to potential investors as to the company’s viability and promise.

Don’t Go it Alone

If there’s one bit of advice to leave new and emerging business leaders with, it’s that you don’t have to do it all by yourself. Sure, it can be lonely at the top, and early on one’s responsibilities typically span a very wide range by necessity. The good news today, however, is that even if you can’t currently develop or hire for specific capabilities within, you can rent them in small doses – whether it’s getting someone to build a website or handle your payroll. For example, not everyone needs a full-time CFO, but anyone managing a business model of any complexity can get a slice of a CFO, which was the genesis of our own business. Engaging fractional experts to fulfill certain functions for you is far more advantageous than trying to do it all yourself and foregoing some crucial advice and guidance along the way.

To every new and emerging leader out there who is diving into the daily grind of building a business, we thank you. We would not have a business if you weren’t doing what you are! We also offer you a challenge – before you look for those individual fires to fight each day, reflect on the bigger-picture perspectives that will help you and your business be healthier and more successful for the long haul. It will be time well spent.

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We compare the two based on some of the main factors that come into play.

Experience

Finding an in-house CFO isn’t a quick interview away. It may require an extensive search to find a CFO who has prior experience working with your type of business. However, a virtual CFO (or vCFO, short) tends to have more experience in a variety of SMBs since they tend to work with more clients overall. Plus, they often work for companies that have other CFOs they can collaborate with to give you the best service.

Cost

When you hire an in-house CFO, you’re looking at paying a full-time salary, plus benefits and paid vacation time — a significant chunk of change for startups. Now, this may be cost-effective for you if you require a lot of work done every day and can factor in the cost of benefits, etc. On the other hand, you can find a full-time, part-time, or fractional CFO who only charges for the work they actually do for you — and don’t require any extras.

Plus, when you have an “employee” who doesn’t actually work in the office, you’ll save on overhead by not having to have a desk and/or office set up for them. Perhaps you only have a home office or small space to work in, so it’s beneficial for you to not have extra people on site.

Fit

Whenever you hire a new employee to work in-house with you and the rest of your staff, there’s always the question of “fit.” Will they fit in seamlessly into your office and work well with the rest of your employees? Company culture is an essential part of a working environment, but when you hire a virtual CFO, this is one less thing to worry about.

Communication & Training

Training a new employee generally means a lot of face-to-face time and being on-site to clarify anything as they need it. While this might be true, vCFOs have a lot of experience working with a variety of businesses, meaning they can slip into a position quickly. They also tend to have knowledge of different computer systems, formats, and reporting styles so they can adapt to the way your organization does things. 

Any employee on-site is there to address any questions or solutions that crop up on the spot, but that isn’t to say that a virtual CFO won’t understand the importance of quick responses. Working on multiple projects means they’re excellent multitaskers, so they’ll know how to respond promptly.

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A CFO can help with strategic hiring for startups by offering data-driven advice around when to hire, as well as around what to offer new hires. This can include guidance on wages, benefits, and other perks. Ultimately, CFOs can provide financial leadership to help startups make better-informed decisions around all areas of growth, including hiring. 

CFOs & When To Hire

As we said, startups are eager to grow. They want to move out of the startup phase as quickly as possible, and this typically requires more people.

But given that payroll and associated expenses are typically a company’s biggest expense, knowing when to actually hire is a delicate balance. Just because it might be helpful to have a few extra hands around, that doesn’t mean you can afford to pay them.

Presumably, your CFO will help you build a budget for your startup. This budget will be a jumping-off point they can use to help determine when is the right time to hire new staff. Alternatively, they can help your startup determine whether it makes more sense to hire new employees or contractors right now, which is an insight that can prove invaluable.

 CFOs & How To Hire

Maybe you’ve made the decision to hire … but now what? What can you afford to offer in terms of salary and benefits? What can you afford not to offer? As we all now know, we’re in the middle of the Great Resignation, and it is absolutely an employee’s market. The only way to attract and keep top talent is to offer the most competitive compensation you can afford.

And the best way to figure out what compensation you can afford? You guessed it – a CFO.  The right CFO can help you determine the right salaries, raises, bonuses, health care plans, and other benefits for all your employees.

The Right CFO For Your Startup

We get it. Money is often tight for young companies. You might be at a stage where you’re unsure about even hiring a CFO, let alone hiring anyone else.

Remember that a CFO can do more than help with your strategic hiring. They can also assist with fundraising, help you transition to cloud-based accounting, figure out whether to pay yourself in dividends or salary and determine if or when to incorporate your startup.

In other words, CFOs are essential to helping your startup grow, which includes guidance on strategic hiring.

If you’re still unsure about your needs, see our guide to when startups should and should not hire a CFO.

As a Virtual CFO, we work with companies of all shapes and sizes, but we have a passion for startups, especially tech-based startups. We’re a startup ourselves, so we have special insight into how to help you stay in control of your finances, improve your cash flow, and keep investors happy. 

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