It does not do to leave a live dragon out of your calculations, if you live near him.” -- J.R.R. Tolkien, The Hobbit
Regina’s grandmother had suffered from painful arthritis ever since Regina was a little girl. Looking back on it, she can pinpoint the moment she fell in love with chemistry and helping people. She was determined to make her grandmother’s life better. From that early childhood chemistry set to her now full-fledged holistic herbs medicinal line, she was not only helping people like her grandmother but also people who walk into her shop and present with various ailments daily.
She found her passion and ran with it. Regina opened her shop just over a year ago after connecting with locally sourced growers and distributors allowing her to scale production, obtain a business license and shop location, and get the word out through her dedicated customers. And, then the dragon showed up on her doorstep. She received notice that one of her locally sourced product ingredients had been tainted with E. coli.
Regina watched the news and understood how devastating this could be, but she didn’t have the first clue about what she should do to protect her customers and her business. She immediately removed any product containing the tainted ingredient and posted a sign in her shop. Unfortunately, she didn’t keep customer records, so she had no idea who had purchased the products or how to contact them.
Fast forward to a year later and Regina is having lunch with her new boss, Sylvia. Sylvia, interested in getting to know Regina more, asked Regina why she closed her business. When Regina finished, Sylvia asked, “What about your standard operating procedures???”
Operating a business without a set of written policies, procedures, and processes that define and list tested and approved step-by-step instructions on how to handle and execute specific tasks is risky, at best. Businesses across industries leave themselves open to expensive and embarrassing incidents—and possibly worse—when they fail to implement standard operating procedures (SOPs) that cover hiring, compliance, quality control, and replication and growth. Implementing SOPs isn’t enough. Perusing the Food & Drug Administration’s warning letters online repository yields example after example of businesses cited for “Failure to follow procedures...". Businesses must provide employees with relevant SOPs and follow up with training and evaluation to ensure knowledge and consistent application.
Small and new business owners and large corporations alike may fall prey to the same misstep. Launching and managing a business can consume all available time and resources. Factor in recruiting and hiring new staff while securing vendors, equipment, brick and mortar space, operating software, website design, and marketing and there’s very little time to focus on what might seem like the nice-to-haves. Katie Weaver-Johnson’s article, 10 Reasons for Ongoing Policy and Procedure Management, outlines a comprehensive list detailing the reasons SOPs matter to business leaders. Lists, like this, can be distilled to four core elements:
Whether a business owns the task of creating, vetting, and implementing SOPs on its own, or engages external support, guidelines exist to create a roadmap to completion.
But it doesn’t stop there. There are two components to consider and complete: One, is to identify and tie metrics to procedures. In so doing, the procedure--and those responsible for executing it—can be measured and evaluated. Establishing this mechanism to gather data informs performance and allows for optimization before it’s too late to respond.
For example, a business might want to track their Customer Churn Rate. This metric indicates the percentage of customers that either fail to make a repeat purchase or discontinue their patronage altogether. It’s always less expensive to retain a customer than to acquire a new one. Monitoring churn yields information to help identify actions necessary to increase customer retention rates. Perhaps customer service is to blame. Creating a customer service program complete with training and articulated customer service standards is less expensive than constantly acquiring new customers.
Second, businesses often follow the ‘one and done’ philosophy after implementing their SOPs. SOPs represent living documents that grow and change as the business grows and changes. A best practice is to schedule updates based on the business life cycle. This mitigates forgetting or overlooking a document that is key to a business’s success and longevity.
Protecting customers, business assets, brand, and future growth relies on a solid strategy rooted in SOPs. Regina could have avoided the dragon next door by creating and implementing a set of SOPs that held her vendors accountable to detailed safety measures, tracked her customers’ purchases, captured her customer’s contact information in a CRM, and outlined emergency procedures for just such an occasion.
 How Do I Write a Standard Operations Procedures Manual? By Kristie Lorette
 Various key performance indicators (KPIs) serve as useful metrics to evaluate procedures and employees. For a list of possible KPIs, review Ted Jackson’s 18 Key Performance Indicator (KPI) Examples Defined.
 For more information on Customer Churn rate, visit Churn Rate 101.
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