Most business owners are very familiar with using systems in the operation of their business.
A system is a procedure, process, method or course of action designed to achieve a specific result. It is a group of interacting, interrelated or interdependent elements organized to meet a particular set of business objectives. Creating effective business systems is the only way to attain results that are consistent, measurable and ultimately benefit customers.
Some examples of Business Systems used by most businesses include:
- Marketing
- Sales
- Operations
- Order fulfillment
- HR
- Training
- Accounting
- Payroll
- Collections
- Service delivery
Let’s take Marketing for example. Marketing is a collection of people, systems, processes and platforms that combined make up the “Marketing System” for your business.
Under Marketing you might have the following subsystems:
- Lead Generation Systems
- Newsletter Systems
- Social Media Systems
- Direct Mail Systems
- Podcast Systems
For each of these systems you may have more systems but will certainly have processes. A process helps you run systems more efficiently.
Using systems in a business is a more efficient way to get tasks accomplished and manage the company.
One of the biggest mistakes I see a lot of small business owners and executives make is that they look at legal as being done in piecemeal, or simply addressing it when an issue comes up, viewing it as a series of on/off projects; and thinking that they’re covered and that it is solving all their problems. Compounding this mistake is the fact that most law firms operate in a way that supports this logic; they only step in when there’s a problem (there’s a reason they do that: they know you’re in trouble and will pay a higher price, or it will require a significant amount of hours to address), and tell you that they can fix everything and get you back in business. Sure, that may be true, but why aren’t you taking steps to prevent it from happening in the first place, or at least prevent it from happening again? It’s cheaper and more efficient to address issues proactively, before they become full blown legal problems.
The truth about legal and businesses is that it’s better done as a business system, just like the marketing example. It’s not just one thing when it comes to legal for businesses, there are numerous risk areas, and company’s can set up processes within their legal system to help minimize their potential risks. What you want is a legal system with a set of processes designed to produce the desired outcome of protecting the company and minimizing risk, built around the business strategy. The added benefit of a legal system is the efficiency of the company; saving time and money.
Businesses are full of processes that have legal implications; contracts, employees, independent contractors, regulations, interns, management decisions, etc. Almost every company that does not have a full-time lawyer working in-house handles legal work on a piecemeal basis; sporadically, without considering how legal could help achieve company goalsas a part of the bigger picture. There’s a better way: companies should customize legal systems that are turn-key and predictive to meet their strategic initiatives or company goals.
Where this becomes a problem for many small businesses is that there just doesn't seem to be any legal needs to address, and if they aren’t facing a legal dispute or a lawsuit, there’s no sense of urgency to put a system like this in place. Adding to that is the fact that most legal services are extremely unpredictable in terms of price (there is a better way), and companies aren’t willing to shell out an unknown amount to address something they don’t even view as a problem. It’s certainly a business decision to be made in terms of how much risk you’re willing to take on as an owner or executive, but proactively putting in place systems and processes around major legal risk areas that are regularly reviewed and updated, can save a lot of valuable time and money down the road.
A study by the Small Business Administration (SBA) found that businesses who were involved in either potential or actual lawsuits learned that they could have prevented some of their problems if they had a better handle on dealing with complaints, managing documents and paperwork, understood how to handle intellectual property and were more formal in dealing with employees, clients and other companies. All things that can be addressed by treating legal as one of your business systems.
It might take some careful planning to integrate all your legal activities into processes, but the result of doing so could significantly limit some of your risks down the road and give you some peace of mind.
Have questions about what your business's legal system might look like? Contact us for a free consultation.