Systematizing

Background

When I bought the business, the vast majority of the systems were manual pencil and paper systems. They were all logical and thorough, but very manual.

First, I spent ~6 months learning all the in’s and out’s to make sure anything I put in place is actually solving a problem, and not creating more than it solves. The one exception to waiting, was moving the accounting, invoicing, over to Quickbooks online from an outdated desktop version and a second invoicing software for a portion of the business that was acquired over a decade prior. This move was made to combine to one system, and that being the hated Quickbooks online (QBO).

The choice for online vs desktop was not easy as you lose functionality with the online version, but both are software as a service (SAS) now, and the most important reason for me was to be able to have one of my team able to also enter stuff into the system. Because he is on a PC, and I am on a Mac, we could not use Quickbooks desktop. This move allows me the tinniest of steps toward not being in the business. The team member I tasked with adapting to this system has done really well, and currently does at least half of the invoices.

Customer Relationship Manager

Next, I began investigating customer relationship managers (CRM) systems. Since I had used one for a portion of my search, and still had an active account, I investigated its usefulness for LT Engineering. This CRM, Pipedrive is great, fitting it into the current systems would not be easy. All of our customers are in QBO and to get them into Pipedrive required some gymnastics using things like Zapier. These things get messy and might require recreating all the parts sold and customers again in Pipedrive, which is counted in thousands of entries. Additionally, this does not allow easy linking of our current network storage structure, so we would be slowly and gradually having to migrate associated files over to this online system. Because it’s only a CRM, it would not handle accounting, inventory, billing, etc. Thus, we would have multiple separate systems that don’t play well together and require too much in the way of gymnastics.

Enterprise Resource Planning

Next, I decided that an enterprise resource planning (ERP) system, which would allow everything in one system, was a better approach. ERPs have all the functionality of a CRM, accounting, inventory, etc. It’s the Swiss army knife of software for a business.

I spent a few weekends reading up on ERP options, from open source to market leaders. The problem is the vastness of the software results in considerable money and time spent trying to tailor it to our needs. There are tailored ERP marketed to machine shops, and others to manufactures. These, while presumably being quicker to set up, cost more on an ongoing basis, and are not a perfect fit either.

After much consideration, I have come to realize that the software shouldn’t drive our business processes. This is not to say, we won’t eventually end up with an ERP, but first we need to hone our systems to fully understand what we want the software to handle.

Spreadsheets

To that end, I began making spreadsheets instead of hunting for the mythical unicorn software that would make everything easier. We already own spreadsheet software and the interoperability across Mac, PC, and Linux makes it easy to use. Further, I use Libreoffice, while the rest of my team uses Microsoft Office, and we have no problem reading each other’s spreadsheets.

You might say this is barely systematizing the paper process, and that is somewhat correct.

As an example, I currently have a finance spreadsheet that we use to go through our accounts payable (AP), accounts receivable (AR), checking balance, and forecast 2 weeks and a month ahead. This spreadsheet is slowly growing more automated, for instance, once you enter the date on sheet 1 it will propagate it as well as the 2 week and month ahead dates. Further, it will automatically draw from the AP those payments that are due in the next 2 weeks, and those that are due in the next month. Currently, I copy and paste in the AR from QBO which is manual, and while I have a method to automatically tabulate the 2 weeks and month ahead, we don’t use it. The reason is simple, in small business, very few of our customers actually pay on time. Currently, we go through and make this determination on a case by case basis. I have started a sheet where we can estimate based on the customer how late they will be, and then use that data to automatically determine the AR, but have not made it that far yet. Obfuscated screenshots of this spreadsheet are shown below.

Summary Sheet

AP Sheet

AR Sheet

For items, we manufacture on a continuous basis, I have an inventory spreadsheet that keeps track of all the parts that make up the products. This also has some automation, and some manual entry. For instance, via a selection box you pick the product being shipped and then type in the quantity, and it will show you what we have in the way of parts in inventory before and after those products are shipped. The manual part is that you have to copy and paste the remaining parts to get it to save, but this is also pasted in a running inventory log. This can and will eventually be automated.

Another spreadsheet I have been developing is a profitability dashboard. This is far too manual at this point, and I believe we should be able to figure out in QBO how to include this information, but have not found that solution yet. This spreadsheet allows me to look per part or job, to determine how much profit we made or how much it cost us to do that part or job. Slowly this has been morphing to also provide the suggested price moving forward.

We have many other spreadsheets from large quotes to job tracking. Additionally, we will probably continue to develop spreadsheets along with procedures for when and how to use them.

Conclusion

In total, it fair to say at this point we are barely past manual systems. Plenty of work ahead as I try to work myself out of the day to day. I am open for suggestions on better ways that you have seen systematizing done, or ideas to consider. Leave a comment below or shoot me an email.