Kuldip Maity

Processes become particularly important when the entrepreneur starts employing others. When one person handles everything, instructions can remain largely in her head. Once other people become involved, knowledge needs to be shared.

Suppose an entrepreneur employs three women to help produce packaged food. Each worker cannot follow a different method. There should be clarity about quantities, hygiene, packaging, storage and responsibilities. This becomes even more necessary to handle attrition and new hires.

Without basic processes, the entrepreneur may spend much of her time correcting mistakes or repeatedly explaining the same tasks. Processes allow knowledge to move from the entrepreneur to the team.

This is an important transition. A business cannot grow indefinitely if every decision requires the founder's personal involvement.

On this note, it might be worth mentioning that financial processes deserve special attention. As the business expands, financial discipline becomes increasingly important.

A small home-based activity may initially operate with household money and business money coming from the same purse. With growth, this becomes risky.

Sales should be recorded. Expenses should be tracked. Customer dues need monitoring. Loan repayments need planning. Money required for working capital should not disappear into unrelated household expenditure.

These practices provide the entrepreneur with something extremely valuable: visibility.

She can begin answering fundamental questions. Is the business actually profitable? Which product provides the best margin? Are sales growing? Are customers taking too long to pay? Can the business afford another employee or machine?

Processes turn transactions into information. Information supports better decisions.

There is another danger: copying systems designed for much larger companies. As touched upon in an earlier blog of this series, let me repeat that processes must grow with the business.

A five-person enterprise does not need the administrative structure of a 500-person organisation.

If every small purchase requires several approvals or every minor decision needs extensive documentation, the business can lose one of its greatest strengths—speed.

Processes should be proportionate to the size, risk and complexity of the enterprise.

A useful question is: What problem is this process solving?

If there is no clear answer, the process may not yet be necessary.

How do we know when a process needs a fresh look and redefining?

Repeated mistakes often signal that a process is overdue. Frequent stock shortages suggest a need for inventory tracking. Confusion over payments suggests better financial records. Customer complaints about inconsistent quality indicate a need for production standards.

Processes should often emerge from actual business needs rather than from a desire to appear organised.

Now that we have emphasised how people and processes are both necessary, what role does technology have in this entire journey? Let’s discuss it in the next blog.

Continuing from my last blog on the importance of processes in micro-enterprises, especially those started by first-time entrepreneurs, I had promised that this week I would discuss the requirement of processes in a growing business.

Why is it different?

What works for ten customers may not work for a hundred.

Suppose a food entrepreneur who set up the business as just a part-time hobby starts receiving regular orders from nearby villages and shops. Production increases. She employs two people. Raw materials are purchased in larger quantities. Some customers pay immediately, while others pay after a week.

Suddenly, remembering everything becomes difficult.

How much stock is available? Which customer has paid? How much money is due? Who supplied the last batch of raw materials? What was its price? How many units were produced yesterday?

These questions indicate that the business has reached a stage where informal management may no longer be enough.

Processes now begin to protect the entrepreneur rather than burden her. And it does not have to be a big overhaul of how she is operating her business.

A simple stock register can prevent shortages. A record of customer payments can reduce confusion over outstanding dues. A standard method of calculating costs can improve pricing decisions. A basic production checklist can help maintain consistency.

The business is becoming less dependent on memory and more dependent on systems.

Growth brings more customers. More customers bring greater expectations.

A person buying a homemade product occasionally may accept small variations. But once the product becomes a recognised business offering, customers begin expecting consistency.

The same pickle should broadly taste the same each time. A handicraft product should maintain an expected standard. A dairy business must maintain hygiene. A service provider should deliver within the promised period.

Processes help create this consistency.

This does not necessarily require lengthy manuals. For a microenterprise, a process may simply mean deciding that raw materials will always be checked before production, finished products will be counted before dispatch, and every sale will be recorded.

Simple routines can prevent avoidable mistakes.

In the beginning, processes should provide direction without becoming restrictions. With maturity and further growth, they should provide consistency without eliminating flexibility.

There is another critical aspect of having people and processes in sync. I shall delve into the topic in the next part.

Many business consultants stress the importance of processes to help a business grow. Processes are very important as they ensure quality, efficiency, and many other factors that help a business grow. But are processes always productive? Or do they also cause harm to the business in certain stages? Let us discuss.

Every business starts with an idea, a skill or an opportunity. In its early days, much of the business may depend on the entrepreneur personally. She starts it as a hobby, knows the customers, buys the raw materials, manages production, keeps track of payments and decides what needs to be done next.

At this stage, flexibility is often an advantage.

Putting too many processes in place too early can actually make a small business more difficult to run. However, as the enterprise grows, depending entirely on individual memory, judgement and informal arrangements can create a different set of problems.

The challenge, therefore, is not simply to introduce processes. It is to introduce the right processes at the right stage of growth.

In the beginning, simplicity has value.

Consider a woman who starts making snacks at home for a few customers in her village. She buys ingredients according to the orders received, prepares the products herself and collects payments directly.

Does she immediately need detailed purchase procedures, inventory systems, customer databases and multiple registers?

Probably not.

At this stage, complicated systems can consume time without adding much value. The entrepreneur needs to focus primarily on understanding the market, improving her product, finding customers and establishing a reliable source of income.

The same applies to many first-time rural entrepreneurs.

A person starting a small dairy business, handicraft enterprise, food-processing activity or service business needs enough structure to understand income, expenditure and basic business requirements. But excessive documentation or rigid procedures can make entrepreneurship unnecessarily complicated.

Early-stage businesses also need room to experiment.

The entrepreneur may change the product, alter the price, find different suppliers or discover that customers prefer something completely different from what was originally planned. Too much structure at this point can restrict that flexibility.

Processes should support the business, not make the business serve the processes.

But with growth, the situation changes. Let us discuss that in my next blog.