Scaling to 8 Figures: Part II

This is Part 2 of 4

If you have not read my previous post, I highly recommend you do so before reading this one.

In my previous post, we found out that the first step to successfully hiring and delegating is a proper structure and system in place.

Let's dive in…

Concepts

We need to dive into theory first before we put that into action. This is how we get into the right mindset and understand how it all fits together.

Framework

First of all, we need a structure we can operate in. The best way to illustrate this is a simple pipeline.

Okay, but every business is different!... Is it?

Your business is a pipeline - with eyeballs on one end and customers on the other.

In general, every Business is a repeatable process that:

• Value Creation = Creates and delivers something of value...

• Marketing = That other people want or need...

• Sales = At a price they are willing to pay...

• Value Delivery = In a way that satisfies needs and expectations...

• Finance = That the business brings in enough profit to make it worthwhile to continue operation.

(this definition comes from a book called The Personal MBA by Josh Kaufman)

Figuring out what these core business processes are in your business is the first step to taming the chaos.

Let's apply this to our Amazon FBA business. This business model is great because most of the heavy lifting is outsourced by default.

The core pipeline structure of our Amazon FBA business may look like this:

1. Product Development

2. Supply & Inventory Management

3. Operations

4. Marketing

This is a big picture view of our business, but we need to look a little closer to fully understand it.

Process

Since the whole business is a repeatable process, it means that every part of the pipeline should be a repeatable process as well.

So let's clarify what a process actually is:
“a series of steps taken in order to achieve a particular end”

That is fairly simple but what does it mean for our business?

I like to explain this with the following example:
Imagine a production line in McDonald's - each and every step is specified in detail to produce the same output. If followed correctly, the result will be the same every single time - no matter who follows the process.
= A well-defined process has predictable results.

Our goal is to set up a structure that would allow us to operate in a machine-like way. Let's define a simplified model of our Amazon FBA Business and determine the key function of each process.

This is the big picture view of our business:

• Product Development = Develop products

• Supply = Get products to Amazon

• Inventory Management = Maintain optimal stock levels

• Operations = Monitor and optimize performance

• Marketing = Get it seen and get it sold

This will be our core Business Process Map.

I highly recommend creating a visual overview of your business process map. We used our map on regular basis to clarify the objectives of each process.

Now, our job is to turn each of these into a repeatable process with predictable results.

Why this matters

It may sound relevant only to people running large businesses, but that is far from the truth

• It enables you to wear many hats and still keep your focus

• It enables you to hire less experienced labor, saving on Overhead

• It enables you to easily define accountability and transfer ownership

If you do not have a process in place, it is not only complicated to hire someone and actually transfer the ownership to them, but it is also nearly impossible to:

• Analyze their performance

• Optimize your business

• Replace them if they are not performing/decide to leave

Imagine a scenario...
You finally find someone to manage your supply chain and you train them for 4 months so you can finally focus on your priorities. They decide to leave for some reason and you have to repeat the whole process all over again - wasting almost a year of your efforts.

What if you had a process in place - with instructions, checklists, KPIs, and workflows. Replacing them would be a matter of a month.

That is the only way to ensure that knowledge will accumulate in your business.

Key Components of a Process

We already know the benefits of a well-defined process. Now it is time to clarify what it really means and how to develop one. The truth is that pretty much everything we do can be broken down into steps.

There are 5 integral components of a process we need to define:

• Objective = What are we trying to achieve? What is the problem we are solving?

• Inputs = What are the inputs we need to perform the steps?

• Steps = What are the steps and routines we need to follow?

• Outputs = What do we want to create?

• Desired Outcome = What is the result?

Going back to our McDonald’s example, it could look like this:

• Objective = Accurately fulfill customer's order in time

• Inputs = (List of ingredients), (+ labor, time, effort, money, …)

• Steps = Recipe to prepare the meal

• Output = Big Mac

• Desired outcome = Tasty Big Mac burger as advertised, ready in 2 minutes

To truly streamline our operations, the outputs from one process need to feed as inputs into the next one in order to create the "pipeline".

Once each part of our business is transformed into a process with predictable results, we have a business we can scale since we are able to identify bottlenecks.

The most important part of a process
The first thing we need to define and also the most important part of every process is the Objective. Most people tend to overlook this and then wonder why their business does not work properly.

To define an objective, we need to think deeply about the thing we are trying to achieve. It may be tempting to say that our objective is to get the outputs, but that does not have to be the case!

Think about it like this:

Objective = a solution to a problem

So this is the thought process:

Problem -> Objective -> Desired outcome

Let's illustrate this with a simple example:
We plan to hire a Customer Service Agent to delegate our Customer Service tasks. We need to create a routine for them. Their main responsibility will be replying to buyer messages.

First draft:
Objective = Reply to buyer messages in time
Inputs = Seller Central Messages
Steps = 1. Open seller central, 2. Reply to new buyer messages
Output = Replies
Desired Outcome = All buyer messages answered

Well, that is it. Perfect, now our Customer Service Agent knows exactly what we want them to do. Is that really the objective of our Customer Service? Or do we want to use every chance we have to show our customers that we care deeply about their experience with our products?

Let's try that again...

Second draft:
Objective = Keep our customers happy
Inputs = Seller Central Messages, Customer Service SOP, Customer Service Templates, Defect Tracker

Steps =

1. Open Seller Central

2. Read Buyer Messages

3. Use CS SOP and your own judgment to determine the best solution to make them happy

4. Use CS Templates to find an appropriate reply (if there is none, create it)

5. Track recurring defects in Defect Tracker

Output = Replies, Refunds, Replacements, Recurring Defect list
Desired Outcome = All customer queries & issues solved within 24 hours

I spent a few extra minutes writing that, but I saved myself dozens of headaches down the line.

The difference is obvious, but there are a few things I want to highlight:

• Customer Service SOP is a simple overview of how to resolve common problems, it also gives our Customer Service Agent permission to solve anything that costs <$100 without the manager's input

• Customer Service Templates will save our Customer Service Agent time (our money) and we also tell them to update it, therefore, the process gets better over time without our input

• We extract more value from Customer Service by tracking the defects. We can then use the list to discuss potential improvements with our supplier.

Implementation

Process Development

Now we understand the concepts and frameworks so it is time to learn how to create a process from scratch. It can be intimidating especially if you have no experience in that area. Do not worry, it is a skill like any other and if you put in the time it will become your second nature.

I personally like to start with a flowchart - just pen and paper to create the initial draft. Keep it simple, we just need a logical sequence mapping out the key tasks. Do not write down every single step - our flowchart should be a big-picture overview of the process.

Choose a core process that you already know well - let's say Product Development. Write down the first task on one side and the goal on the other side, space in between:

Product Research ➝ ___ ➝ Product ready in Amazon, selling

To make this easier, we can define phases of the process. I like to keep it simple and define 2-4 phases to break down the process. In this case, it could look like this:

• Development phase = developing the product, figuring out the details

• Pre-launch phase = getting ready for launch, working with supplier, populating listing

• Ranking phase = ranking product for relevant keywords

• Evaluation phase = evaluating product performance

Great, now we are ready to start writing down the actual tasks in a logical sequence.

Development Phase

• Product Research

• Verification and Market Analysis

• Profitability Analysis

• ...

Keep in mind that you should not list all of the steps in your flowchart. Let's say that your Profitability Analysis is a complex task that requires multiple steps - those steps will be defined in your task instructions, but not in your flowchart.

Can some of those tasks happen at the same time? You can work on POs and shipments and prepare the listings simultaneously. Since it is not a sequence, you can put that in a different row in your flowchart. Once you have a team, your Supply Manager can work with suppliers, determine order quantities, etc. While your Brand Manager can do keyword research, work with your graphic designer and photographer to get the listing ready.

You can then add Decision points to your flowchart and add colors to represent each team member. That is crucial to clearly define accountability when delegating - but more on that later.

Once you turn every core process into a flowchart, you can basically visualize your whole business in ONE overview, including all the flows, inputs and outputs, and everything in between. I personally like to use Miro to visualize our business.

Minimum Viable Process

We have the big picture process overview, but we still need the actual instructions and steps. We want to keep it simple and start with an MVP.

In order to do that, we will follow a simple method - we will draft the instructions as we do the task.

Developing your MVP can look like this:

1. Define the objective first = this is crucial

2. Map out key steps and milestones = even though you do not have the process yet, you should have a rough idea of what needs to be done

3. Do the actual work while recording your screen + add steps and inputs you missed with your initial draft

4. Be aware of your assumptions = don’t expect everyone to be as experienced as you, they may need that one step you have not added because it was “obvious” to you. The same goes for inputs (are you using some documents, source of data, etc.?)

5. Identify and fill in the gaps as you go = it may take you twice as long to do the work while developing the process at the same time, but you will save a LOT of time in the future

6. Once you finish the work, go back to your objective and evaluate whether you achieved it

If you do something more than once, you should create your MVP.

It is really as simple as that. If you do this for a few weeks, you will have a database of MVPs and your business will get more and more structured.

BONUS TIP: There already may be a process for the thing you want to do - Search online! You are not the only one with a Supply Chain / Sales funnel / Customer service / etc. Save yourself some time - adjusting and optimizing an existing process is always easier than developing a new one from scratch. Ask experienced sellers about their workflows.

Well, with all of these instructions and tasks, how do we stay organized and keep track of all the moving pieces?

Task Management

We used a combination of Google Drive and Asana, but there are many viable alternatives: Trello, Wrike, Monday, ClickUp...

Choose the one you like and get to work. The key here is to put some structure in place - ideally, a structure that would reflect your Business Process Map.

Start with your routines and reminders - you can easily set up due dates and recurring tasks. Just this function alone will save you a lot of your mental capacity. Most of the days I know exactly what needs to be done without even thinking about it. I just open my Asana and my TODO list is there, created automatically.

I also recommend setting up your routines to create a structured week. Let's say you want to do your Inventory Forecasting and PPC Optimization on weekly basis. Do not schedule both on Monday, dedicate one day to Supply and another day to Marketing. I personally dedicated my Mondays to Management: working with our team, planning, ... Tuesdays to Product Development, Wednesdays to Marketing and Branding projects, and so on.

And that covers pretty much everything.

Final Word

You will quickly see results just by setting up a basic structure. It simply helps you to stay on track and not get overwhelmed.

A structured process is an investment you capitalize on every single time you repeat it, so it is highly beneficial even if you do not plan to hire and delegate yet. It is not just about the time you save, but also about the peace of mind.

So get to work. Start with your Business Process Map, choose a core process, create a flowchart, and start drafting your MVPs. Develop everything as you go, do not try to sit down and systemize your whole business over the weekend. Systemize areas that Maintain your business first - established routines are easier to turn into processes and easier to delegate.

I hope that you found it useful and that once you start implementing this, you will find yourself having more clarity to make the right strategic decisions in your business and more time to pursue things that matter.

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