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CHECKLISTS FOR THE SMALL BUSINESS

By HEATHER BAIN
May 1, 2017
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The effective use of checklists can streamline operations and increase efficiencies over time.

 

Small businesses rarely have enough resources to have specialized personnel. Each role within a small organization involves performing a wide range of duties, often combining responsibility for leadership, operations, accounting and finance, project management, marketing, and compliance. The complexity and variability of these daily tasks can make them error prone. Furthermore, the small business environment is especially riddled with distractions. Each time a multistep process is paused and resumed, some steps may be left incomplete or skipped altogether. Add in the pressure of deadlines and customization, and the results could be dissatisfied customers, late or unreliable reporting, tax penalties, undocumented transactions, regulatory fines, or even the suspension of the right to do business. The main causes of such failures are faulty memory, distractions, and shortcuts. The remedy? A checklist.

 

The most familiar types of checklists are item checklists and procedural checklists. Item checklists include packing lists, shopping lists, and lists of tasks. The procedural checklist is best suited for completion of complex tasks. A procedural checklist may be either a read-do or do-read checklist. The do-read checklist is used with routine tasks that don’t have to be completed in any particular order. This allows the user to perform the tasks as usual and check the list to make sure all tasks and communications have been executed. A read-do checklist requires the user to read the entire checklist and follow the order listed on it. This is used when sequential order matters. An example of the read-do checklist is the construction checklist—a line-by-line and day-by-day listing of what needs to be done, by whom, and in what specific order. A small business can improve internal controls and segregation of duties on a lean personnel budget by effectively creating and implementing procedural checklists.

 

One of the benefits of using checklists is maintaining operational efficiency without the use of shortcuts. Shortcuts often omit steps randomly based on the individual’s biases and values, but operational efficiencies purposefully omit unnecessary redundancy and remove steps based on a predetermined set of criteria. The problem with shortcuts is that they work well until they inevitably fail. Shortcuts may omit steps based on momentary judgment that may be biased by pressure or lack of communication. Checklists serve to control the order and completeness of tasks, and they work well to coordinate teams. Small businesses often have fewer technological resources to enhance productivity and consistent workflow processes. Properly developed and implemented checklists invite collaborative communication and improve operational efficiency.

 

A good checklist is precise, easy to use, and practical. It should be both tested and revised, and it should contain both the key communication points and the critical steps that might be missed or overlooked. A checklist should align with people, policy, and process to verify that the people involved in the process understand the checklist and the need for communication. Each step listed on the checklist should be critical to the success of the intended objective, and the outcome of each step must be clear, measurable, and achievable. Use natural breaks in the workflow to move to the next step. Any step that is redundantly checked by another step can be omitted from the checklist. By including the names and roles of the users of the checklist and identifying specifically who must use each step, the checklist serves as an accountability tool.

 

CHECKLIST SPECIFICS

 

Purposeful and consistent formatting of checklists makes them easier to use and integrate into the unique organizational culture of the small business. Minimize clutter by using consistent, easy-to-read font size and style. Color-code only critical next steps that require special attention. Use clear titles for each step so that the objective is evident to the users. Format the checklist as a flowchart using questions and answers to guide users to the next step. Date the checklist, and list the revision number so that everyone utilizes the most current version. Keep the checklist short enough to fit on one page, and, if necessary, refer users to a separate checklist or set of instructions for a specific task to keep the list short. Build a user customization feature into the checklist to allow for adaptability. A well-designed checklist may become the template for the next project.

 

As each step is completed, mark it off on the checklist. Print a new version of the checklist periodically, indicating the steps that need to be completed within the specified time frame. When autonomy isn’t an option, include or integrate a checklist of communication tasks as a collaboration tool. Clearly define the specific day or event when team members must discuss a process with each other to deal with unexpected problems. Schedule the steps on the calendar.

 

CHECKLIST REVISION

 

Use the checklist in a simulated environment, especially if the outcome is critical. Once the first several tests have flawless outcomes, move the use to a live environment. If at any time the users of the checklist encounter difficulty or outright failure using it, modify the descriptions or tasks. Revision is often an area that doesn’t get the attention it deserves. Some participants can become too attached to the perfection of the original checklist or simply get too busy to revisit the brainstorming phase to seek out process improvements. Changes in technology, personnel, or regulations can occur rapidly, rendering the checklist obsolete. So ongoing revision is crucial to long-term success.

 

Feedback from users indicates whether the checklist can be used within a reasonable length of time and that the use of the checklist doesn’t cause delay. It’s useful to examine whether the checklist maps to the natural workflow and if it helps users detect errors while they can still be proactive to correct them.

 

With all the benefits associated with using checklists, why are so few small businesses using them effectively? A common argument is that jobs are too complex to reduce to a checklist. Sometimes it’s a matter of people simply not wanting to change. The key to getting started is to develop a simple system for creating the checklist and to form the habit of using checklists consistently. One immediate step toward successful use of checklists is to download a checklist app, such as checklist.com, to a computer or mobile device. Many of the available apps offer collaboration and scheduling to virtually automate the process of implementing the checklist. Impending distractions may be mitigated through the productive use of technology. Effective checklists offer an inexpensive way for small businesses to overcome constraints and fully leverage their limited resources to compete in a disparate environment.

 

Heather Bain is the owner of Bain CPA Business Strategies, LLC, a small business consulting firm in Houston, Texas, and a member of IMA’s Small Business Financial and Regulatory Affairs Committee and Houston Chapter. She can be reached at heather@baincpafirm.com.
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