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Using Checklists To Manage Your Business And Eliminate The "Oops" Moments

Authored By: Jim O'Donnell
Have you ever encountered the "Oops" situation? Ever said "oops" when the customer received a damaged or non-working product, when the price rang up incorrectly, when the bonus wasn't included in an employee's check, or when a quarterly insurance payment was missed? We all have experienced an "oops" situation, and we know how that feels as well as what it costs. Using checklists can help to reduce the number of "oops" moments.

Checklists are a key component of a successful business operation. Utilizing checklists throughout a business leads to higher profits, more efficient and productive operations, satisfied customers, and a better quality of life for you and your employees. This White Paper addresses all aspects of a checklist, from what they are, to how and where to use them, and what benefits you can expect to realize.

A checklist is a list of items or tasks that you "check off" as you complete each item/task on the list. Checklists are everywhere and are an integral part of most activities - both personal and business. In our own daily lives, we make checklists for organizing ("To-Do Lists"), planning (birthday party), prioritizing (bills to pay), shopping (grocery list), and so forth. Business is no different; checklists are essential to an effective, efficient, and profitable operation.

Checklists are used to plan, market, operate, and manage your business because checklists provide an effective means to organize, prioritize, direct, control and measure business activity. Simply put, without checklists there would be chaos. What would happen if each salesperson processed an order differently? Or there was no budget? Or you didn't know what was in inventory? Or what items were already on order? Or who was scheduled to work the evening shift? This not only would be chaotic, it's simply not good business. Checklists are essential to the successful operation of a business.

Let's look at the primary functional uses of checklists in business:

Planning: The strategic plan is a list of goals to be accomplished in the next year, and prioritized according to importance. The tactical plan is a list of action steps to take to meet a particular goal. A budget is a list of income and expenditure accounts and amounts intended to produce a profit. Planning checklists may divide into sub-lists, which, for example, might address store (or office) goals, customer goals, or product goals.

Marketing: The sales (or marketing) plan is a list of targets to achieve. These targets can be sales dollars, unit volumes, growth levels, new markets to enter, or market share. Sub-lists can be developed to address products, territories, major customers, advertising, and even individual salespersons.

Operating: "How to" lists are the mainstay of an efficient and effective business operation. Checklists cover the opening and closing of the store, recording a sale, dealing with customers, packing and shipping, handling inventory, ordering from vendors, depositing receipts, paying bills, and accounting activities. These checklists provide employees with the proper steps, in the correct sequence, to finish a particular task, such as completing an order form. The checklist also ensures that mistakes are minimized, time is well spent, revenue is optimal, and the customer is well taken care of. As for the latter, how would you feel if the clerk forgot to enter the serial number of the appliance you bought and your warranty wasn't in the system? A checklist makes sure that necessary steps are accomplished in the correct order.

Managing: Management uses checklists to report on how well the business is doing (revenue, expenses, profit), how to manage employees (timecards, payroll, performance), how product is moving (inventory, sales, turnover), how customers are being serviced (repeat sales, complaints, warranty service), and measure how the planning, marketing, and operating plans are progressing.

Checklists can be organized in any number of ways and are chosen to meet the specific needs of the task at hand, serve to minimize time and cost, maximize profit, ensure customer satisfaction, and provide meaningful metrics. Some of the more popular ways to organize a checklist are discussed below:

Ordered List: This type of checklist is a list of tasks needed to be accomplished in a particular order. Usually the checklist is numbered, starting at the first task or step, and proceeding to the last task or step, in increasing numerical order. For example, an order process has ten steps, numbered 1 through 10, starting with the order form (#1) and ending with the customer's signature (#10) on the form. The ordered list ensures correct and complete processing.

Itemized List: This is a list of items that need to be addressed, usually with some meaningful information alongside, and is used as a guide or reference. Examples would be a general ledger listing of accounts, a product list, a customer list, a vendor list, a sales target plan, etc. The purpose of an itemized list is to provide a complete accounting or reporting of the information present.

Sub-List: A sub-list is a branch or subset of an ordered list. For the sales order processing example above, sub-lists might exist for handling options on the product being sold, or for processing the type of payment (cash, credit card, check). Sub-lists can exist for almost any of the above types of lists.

Prioritized List: A prioritized list is any of the above lists placed into an order based on some priority scheme. For example, if we organized a listing of all inventory based on size, weight, price, or frequency of turnover, we would have a prioritized list. This type of list helps us to use our time effectively, to focus our energy where it's most needed, and to address the important items or tasks first.

General List: This is any of the above lists with a space for a check mark, initials, or additional information. As tasks or items are addressed, the line is checked or initialed as being done. Examples include (1) an inventory checklist might be a listing of inventory items to be counted. As each item in the list is counted, the count is written next to the listed item; (2) a bill of lading from a trucker would be a checklist itemizing all the items being delivered. As each item is received, counted and inspected, the item on the list is checked off; (3) a procedure checklist is a listing of steps/tasks to take to complete an operation (such as a sales order). The use of a checklist ensures accuracy, accountability, completeness, and efficiency.

The point to using checklists in business is to plan intelligently, market effectively, operate productively, manage efficiently, and make a profit. Through the combination of different types of checklists, used in all the functional areas of the business, a successful and profitable enterprise can result. Let's take a look at the specifics:
  • Intelligent planning uses an ordered checklist to conduct the planning sessions, and develops prioritized, itemized checklists for the plans and goals.

  • Marketing involves prioritized, itemized checklists to help achieve their goals, and ordered lists to carry out the marketing plans on a day-to-day basis. Checklists are used to measure the results of the marketing work.

  • Operations uses ordered checklists to accomplish the many tasks that are part of daily, weekly, monthly or other operations. Itemized checklists are used alongside ordered checklists, to address inventory, parts lists, or options.

  • Management relies on all the types of checklists to accomplish their objectives. Ordered checklists drive the functional aspects of managing, prioritized checklists ensure that all reporting is done, and itemized checklists collect the metrics necessary to evaluate the business and report a profit or loss.
So, how do you make a checklist work for you? Let's follow the six steps below:
  1. Organize: Make a list of items or tasks that need to be addressed or accomplished. For example, a buyer would make a list of items to order, a salesclerk would have a list of steps needed to process an order, and a human resource person would have a list of steps necessary to process a new employee.

  2. Prioritize: Sort the list of items/tasks into a meaningful order, from the first or most important to do, to the last to do. For example, the buyer may group items by vendor and/or by earliest delivery date, the salesclerk would align the order process in the correct order so as to avoid mistakes, and the human resource person would process the new employee through all steps to ensure nothing was missed.

  3. Develop: Create the "check" part of the list by assigning a check box, a space for initials, or a place for additional information to be entered. For example, the buyer may annotate each item with the purchase information (quantity, delivery date, purchase order number, vendor confirming number, and vendor clerk's name), the salesclerk would number the steps in the correct order, and the human resource person would have the new employee initial each step as having been read and understood.

  4. Validate: A checklist has little value if it is not reviewed and tested with the person that is going to use it. If it's your own checklist, you should test it (go through it) to make sure it's workable, makes sense, and it achieves the purpose for which it is intended. With anyone else, take them through it (rehearse it) to make sure they understand what the checklist is used for and how and when to use it.

  5. Apply: Have several employees use the checklist as it is intended.

  6. Amend: As you or your employees utilize the checklist, invariably "problems" will be found or efficiencies can be introduced. Be open to making modifications, additions, and deletions. Only through change do we achieve the best we can be.
The point to using checklists in business is to operate productively and efficiently, keep costs low, and make a profit. As we've discussed above through examples, checklists can be used in all facets of any type or size operation. Checklists help to organize tasks, manage time, operate more efficiently, avoid excess costs and wasteful ways, and ensure compliance with laws, policies, and procedures. Checklists can be developed internally, can be purchased through a commercial source, or purchased and modified to meet your specific requirements. Purchasing a commercially available checklist that has been tested by many other business owners can save you a lot of time and money. One highly recommended source of business checklists that have been used by hundred's of businesses is available from Jaguar Consulting, Inc. for a very reasonable cost. However your checklists are created, their use leads to a successful and profitable business.

Up to this point, we've talked about the types, development, and the various uses of checklists in a business. The last question is "Why?" What benefits accrue from using checklists? Let's take a look:

Minimize Mistakes. By using checklists, you stay focused and ensure all steps are processed in the correct order, correct pricing and taxes are applied, correct information is given to a customer, inventory is received and counted correctly, and employee time is recorded correctly. Mistakes are minimized.

Operate Productively. By using checklists, daily operations will proceed in a timely, orderly, and organized fashion, with less chance of "re-do's", less time per customer (or more customers handled), more time to get additional work done, better employee morale, and a belief that the business knows what it's doing.

Advertise Efficiently. By using checklists, the advertising effort will target the customers you want and will give you the feedback needed to fine-tune or re-tune your sales and advertising efforts. This leads to a better return on your advertising dollar and an increase in sales.

Manage Effectively. Through the effective use of checklists, management and supervisors now have a better reporting and communication system allowing them to better observe operations, focus on and address issues, and make changes faster and more effectively.

Reduce Costs. By applying checklists as described in the White Paper (minimizing mistakes, operating productively, marketing efficiently, managing effectively), you will save time and money.

Improve Morale. The use of checklists leads to less stress, more positive feelings, a better informed and educated staff, and an overall belief that the business knows what its doing.

Satisfy Customers. Effectively utilizing checklists leads to customer satisfaction and that leads to repeat business, referrals, and positive feelings toward your business and products, resulting in higher profits and a sustainable business.

Checklists are a valuable and essential tool for any sized business. They provide a meaningful, realistic way to plan, organize, operate, and manage a business and its money, products, customers, employees and results. The effective use of checklists is the key to a well-run, profitable business and for eliminating the "oops" moments!

Take the next step! Contact us at (603) 642-8338 or email Jim O'Donnell today for a No-Cost, No-Obligation phone consultation to discuss how Jaguar Consulting's checklists can help make your company more profitable.



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