Thursday thoughts: SOPs
Six months ago this week I joined Steadfast Bookkeeping as COO. When I joined Steadfast, it had a lot of good practices in place, some that I wish I had thought of in my prior firm. And both staff and clients were generally happy with results. But these relied on direct training or some inherently shared idea of what the outcome should look like. As we redesign and grow the firm, maintaining consistent results has proven challenging.
So we’ve begun documenting our processes to ensure desired results in written standard operating procedures (SOPs). And we’re developing an internal database to store these in our practice manager and make them available to staff.
What is an SOP?
We repeat lots of tasks or operations in our professional and personal lives, most of them without thinking about them. Do you tend to follow the same steps, in the same order, when you onboard a new client, prepare for a big meeting, cook your favorite meal, or get ready for bed?
We want to standardize how we onboard new clients because we want to give them a professional-appearing experience, not a haphazard one that makes the new client question signing on with us. If I break my evening routine, like when I travel, it’s more difficult for me to relax that night, so I don’t get enough sleep. When we don’t follow our standardized processes, we don’t get the desired results.
To make sure we get our desired results, especially when we rely on others to complete steps for us, we document those processes in a written SOP. An SOP is a documented process that outlines how to perform a specific repeated task or operation.
It’s a more constrained concept than a project or job, such as “Prepare a tax return.” Specific tasks within those projects or jobs might need SOPs. For example, “Post an adjusting journal entry to record depreciation” should probably have an SOP to ensure the staff know who should post the entry, when, and what details to include. I don’t think you can get too granular here: if you have a repeated task or operation that requires more than one step to complete, you probably need an SOP.
Why your firm needs SOPs
The primary reason to have SOPs is to ensure consistent desired results for your clients. Following the same steps the same way each time you need to complete a task or operation helps you stay on time, avoid errors and omissions, and arrive at the same result with the same set of information.
A secondary effect is less stress and more efficiency for the firm, as SOPs reduce confusion and decision fatigue. Rather than searching through the client’s files to figure out how you recorded that transaction last time (“SALY”), you can reference the relevant SOP instead.
Whether you have staff or are solo, SOPs also enhance the value of your firm. Firms built around consistent processes generally appraise at higher multiples and valuations than those built around ad hoc processes. Buyers want scalable operations with documented processes. They want to see and read the institutional memory. Whether you intend to sell or not, building your firm as if you intend to sell it pushes you to build a better business.
How to write an SOP
The most common objection to writing SOPs is lack of time; however, the investment in drafting the SOP pays returns in reducing stress and decision fatigue later on. And modern tools help simplify and automate the process of developing SOPs.
I frequently use and recommend two tools to get started with documenting processes:
Loom records a video of whatever you see on your computer screen, or you can focus on a single window or even browser tab. You can also add your voice to the recording. This makes it incredibly easy to provide walkthroughs to staff and clients. For example, I have a video showing how to pay the IRS. (I recorded that video a few years ago. It took about 20 minutes. It would have taken about five minutes to write an email explaining the steps to pay the IRS. But since I recorded that video, I’ve sent the link to it to dozens of clients. That’s now hours of writing emails I didn’t have to spend because I recorded that video. Exchanging 20 minutes three years ago for hours since is a good investment.)
Scribe records each mouse click or keyboard stroke with a screenshot. Unlike Loom, instead of a video, you get a step-by-step record of everything you clicked or typed. You can edit the steps and screenshots before publishing, so you can remove any sensitive information. I have a Scribe showing how to apply for Employer Identification Number (EIN) online. Getting an EIN is a clerical task. I can share this guide with a staff member or the client instead of spending time doing it myself.
These tools are great to get started with creating your own SOPs, especially for your own use or sharing with clients. I’m formalizing the process a bit for Steadfast with a a custom SOP template. I based our template off the Library of Congress guide on how to write an SOP. You definitely don’t need anything this formal. (It might even be overkill right now for Steadfast, but I’m building for a vision larger than where we’re at today.)
SOPs might not be the most glamorous part of running a firm, but they’re indispensable. They provide the structure and consistency needed to ensure your firm operates smoothly and efficiently. Plus, once they’re in place, they can save you time and stress in the long run.
Now for your thoughts…
Do you have written SOPs in your firm? If so, which one has come in handy for you? If not, what’s the one process you’re repeatedly doing you could standardize right now? Could you use Loom or Scribe to create the SOP?