{"id":76665,"date":"2016-01-30T05:00:56","date_gmt":"2016-01-30T12:00:56","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=76665"},"modified":"2021-03-16T11:52:06","modified_gmt":"2021-03-16T17:52:06","slug":"2016-01-30-document-business-processes-long-term-success","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2016-01-30-document-business-processes-long-term-success","title":{"rendered":"How to Document Your Processes for a Business That Runs Like a Well-Oiled Machine (With Examples!)"},"content":{"rendered":"

Are you running your business, or is your business running you? A consistent theme echoed throughout the BiggerPockets community is the idea of\u00a0developing systems to streamline your investing business.\u00a0<\/span><\/p>\n

After all, one of the biggest draws of real estate investing is the ultimate goal of gaining passive<\/i> income. Many investors struggle to achieve this passive income because they get caught up in the day-to-day operations of their business. An investment business is successful to the degree that it is scalable. To be scalable, processes and systems must be built, documented and executed.\u00a0<\/span><\/p>\n

One of the most popular business book recommendations on the BP Podcast<\/a> is The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About it<\/a><\/em> by Michael E. Gerber\u00a0(Josh and Brandon interviewed Michael on Podcast 125!<\/a>). The basic concept of The E-Myth<\/em> is to work\u00a0on\u00a0<\/i>your business as opposed to working in<\/i> your business. To help you achieve this level of entrepreneurship, you must understand the big picture of your business. <\/span><\/p>\n

What does your business do, and how does it do it?<\/p>\n

\"rental-systems\"<\/p>\n

Business Process Framework<\/span><\/h2>\n

As an operations consultant, the business process framework was the bedrock from which I assessed\u00a0the efficiency and proficiency of organizations. I have spent countless hours interviewing employees of Fortune 500 companies to gain an understanding of how they do their jobs. A key reference point within the world of Operations Management is the Process Classification Framework<\/span><\/a>.\u00a0<\/span><\/p>\n

This framework outlines a generic set of business processes and several layers of sub-processes that one would expect to find in an average organization. We used this framework to document the tools, processes, and\u00a0resources utilized to accomplish tasks within an organization. Once we have completed this documentation, we are able to illustrate the big picture or\u00a0view of the organization.\u00a0<\/span><\/p>\n


\nRelated:<\/strong> The Ultimate Guide to Adding Systems & Outsourcing to Work Less in Real Estate<\/a><\/em><\/p>\n

To gain a strong understanding of your real estate operation, you should create your own\u00a0process framework that is unique to your investment business.\u00a0<\/span><\/p>\n

Outlining Your Business Processes<\/span><\/h2>\n

Start by making a high level outline of your business processes. Ask yourself the question, “What are the different things my business does?” If you are a buy and hold investor, this list would include processes\u00a0such as acquiring property, arranging financing, managing property, accounting, selling property, etc. These processes can then be broken down into one or more sub-processes. Eventually, you will have established a high level outline of the core functionality of your business.<\/span><\/p>\n

Below is an example of what your outline may look like:<\/span><\/p>\n

Property Management<\/span><\/strong><\/em><\/p>\n

    \n
  1. Fill vacant units<\/span>\n
      \n
    1. Develop rental strategy<\/span>\n
        \n
      1. Specific necessary repairs\/improvements<\/span><\/li>\n
      2. Determine marketing channels<\/span><\/li>\n
      3. Establish rent price\/security deposit<\/span><\/li>\n
      4. Plan rental timeline and establish key\u00a0milestones<\/span><\/li>\n<\/ol>\n<\/li>\n
      5. Prepare unit for rent<\/span>\n
          \n
        1. Notify tenant of landlord access schedule<\/span><\/li>\n
        2. Perform necessary improvements<\/span><\/li>\n
        3. Perform final make-ready\/clean-out<\/span><\/li>\n<\/ol>\n<\/li>\n
        4. Execute marketing campaign<\/span>\n
            \n
          1. Create rental advertisement(s)<\/span><\/li>\n
          2. Update\/renew advertisement(s)<\/span><\/li>\n<\/ol>\n<\/li>\n
          3. Manage inquiries<\/span>\n
              \n
            1. Receive rental inquiries<\/span><\/li>\n
            2. Respond to rental inquiries<\/span><\/li>\n
            3. Schedule appointments<\/span><\/li>\n
            4. Confirm appointments<\/span><\/li>\n
            5. …..<\/span><\/li>\n<\/ol>\n<\/li>\n
            6. …<\/span><\/li>\n<\/ol>\n<\/li>\n
            7. Receive & Process Rent<\/span>\n
                \n
              1. …..<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

                This exercise may seem laborious and tedious. However, I can assure you that\u00a0creating your business outline will force you to take a deep look into the core function of various areas of your business. You may be surprised that, while most of your business exists in your head, there are some areas that may be neglected.<\/span><\/p>\n

                After you create your\u00a0business outline, it’s time to add some meat to your business process framework.<\/span><\/p>\n

                Business Process Framework: Your Business Owner’s Manual<\/span><\/h2>\n

                Imagine you plan to branch out and franchise your business. To ensure consistency among your franchises, you\u00a0would need to create comprehensive documentation as to how the business works. How would you write the owner’s manual for new franchise owners? The business process framework is a great place to start! <\/span><\/p>\n

                Related:<\/strong> 7 Top Business Books to Help You Put Vital Systems in Place<\/a><\/em><\/p>\n

                Your business outline should act as a table of contents for your business process framework.\u00a0Your next task is to dive into each of the processes and sub-processes from your outline and indicate how the process is executed. In the simplest form, you want to answer the who, what, where, when and how of\u00a0the processes within your business.\u00a0<\/span><\/p>\n

                Below is an example for the sub-process of “create rental advertisement(s).”<\/p>\n

                Create Rental Advertisement(s)<\/span><\/strong><\/em><\/p>\n