Blog Post

10 Reasons Why Documentation is a Startup Secret Sauce

Congratulations for reading this far. Most people won’t, because there is nothing less flashy than the idea of writing things down. But I’m going to tell you why documentation is the major difference between a large successful business and a small struggling one.

In my telephone answering service, Centratel, we handle emergency after-hours calls for nearly a thousand accounts across the United States: doctors, veterinarians, HVAC companies, funeral homes, hi-tech companies, etc. The answering service business is a private 9-1-1 operation, and can be a breeding ground for chaos. For 15 years, I endured 100-hour workweeks, failing health and minimal income before I got a clue that my business problems had nothing to do with inherent challenges within the industry, my lack of a college business degree, a shortage of “good” employees, or finding proper financing.

It was literally a midnight awakening that made me a believer in documentation. This change of perspective saved my business and maybe even my life. In the process of discovering this new vantage point, I was super-energized by the realization that 99 percent of my competitors don’t do the work of thorough documentation. Why? Very simple: It’s too hard. That’s it! It’s just too hard! Of course, that is good news for me because I overcame that “too hard” hurdle and did what I had to do. Now, I work two hours a week and make more in a month than I used to make in a year. (Tim Ferriss, eat your heart out!)

So if you’re the kind of person who doesn’t walk away from a problem, doesn’t finger-point, and is not afraid of hard work, read on for my 10 reasons why documentation will set your founder’s mind free:

1) It keeps you on track. If you write down your strategy and your principles, personal emotional storms or distractions won’t throw your operation into backsliding or paralysis. You may slow down a bit when things get hard, but you will still be headed in the right direction.

2) Your employees won’t have to be mind-readers. If you want them to do things the most efficient way every time – the way you prefer – write down exact instructions for doing those processes, and then get your people to buy into the strategy. This documentation is for those workplace tasks performed over and over again. I call them “Working Procedures.” Have your people assist you in this effort, writing up your procedures in a 1-2-3-step format. Take the time to document every single recurring process.

3) Your employees won’t have to be fortune-tellers. In your documentation, you will lay out your ambitions, strengths, target markets, and how you will get there. It will all be there: no mysteries, questions or confusion.

4) Everyone in your organization will be pointed in the same direction. By outlining the what’s and how’s of your business, your group-effort will become focused and directed. By traveling in a straight line, your organization will reach goals sooner.

5) You will find yourself working on the causes of problems, not in fixing problems that occur. This is subtle but profound positioning; something that CEOs of large, successful corporations know intuitively.

6) Training time is reduced. At Centratel, we reduced our six-week osmosis-like training regimen to three days: Three days of focused study – three days in which the new employee spends his or her time alone, learning the job through our documented training procedure. They do it themselves, and our senior people are not caught up in one-on-one training of newcomers.

7) Your workweek will be shortened. Documentation will guide other people in performing the routine chores that you do now.

8) Your income will rise dramatically. Why? Because your documented procedures will make your organization dramatically more efficient. No longer will there be endless fire-killing because you will have documented all of your processes and, in doing that, described in detail how they should be done: efficiently, quickly and cost-effectively. With every system functioning super-efficiently, your overall business will be efficient and profitable. The end-result will be great bottom-line profits.

9) Documentation signals that you are a professional and someone who cares enough about what they do to write it down and analyze it. They will be proud to work for you.

10) You will have created an entity that will be easier to sell. Since everything is documented, the new owner can take over the business without having to go through the learning-by-osmosis process.

Yes, boring but true: Documentation takes some initial hard work, but in the long-term, the investment pays off a thousand times over.

Sam Carpenter, is the founder and CEO of Centratel, a specialized telephone answering service based in Bend, Oregon. He is also an author and speaker. Visit Sam’s author site for Work the System to purchase a copy of his book. A free download of “6 steps to working less and making more” is also available on the site.

11 Responses to “10 Reasons Why Documentation is a Startup Secret Sauce”

  1. I am running a small web design company in India and have similar problems in effective management and marketing. I realised for the first time importance and need of documentation. I shall adopt your method and ask all my staff to do the same.Thanks for the tips.

  2. Yep, this is the main gimmick of “The E-Myth.” Think of your business as a potential franchise, and document it in such a way that you could in theory bring in all new people, give them the docs and a few days training, go on a yearlong vacation, and the business would still work.

    A side effect of this is that you can hire inexperienced (i.e., cheap) staff.

    It’s also the “Is it a job or a business?” test. You can sell businesses, but not jobs.

    Your’ restatement was much better than the book, which is terribly written and frustrating. Why don’t you write a book?

  3. Documentation is very important for company startups as it lays down the strategic objectives/goals of the company leading to the company vision. Documentation also helps you to keep in track of your progress and achievements. It improves the work efficiency and quality.

    But be aware too much of documentation will prevent innovation which is very important to become competitive and successful in this global competitive market. Documents also make your associate more followers then the leaders.

    So, my conclusion is that keep documentation flexible enough so that there is room for innovation. Find out which task need to be fully documented and which need to be flexible. Make a strategy and succession plan for it. For example: It can be like this: Write step-by-step documents for the routine and daily works to improve efficiency and quality. But always make flexible documents for company strategies, plans, objectives and goals which needs to be evolved as the situation demands.

  4. This is one of the central messages of the book, “The E-Myth Revisited.” “E” as in entrepreneur. It’s a great read, and I recommend it to anybody who is serious about starting their own company and being successful.

    The author calls what you have described as the “Franchise effect.”

  5. dtenner

    I think you should draw a line between documenting information and documenting plans and expectations. Writing down thing like a business plan or a development plan fits your description very well and is indeed worth doing at every stage of a company. But at the other end of the spectrum, documenting, say, the process by which you log in to your company’s bank account to make a payment has very little value early on in the life of a company.

    Not all documentation is equal. The key is to document the right things and ignore the rest. How do you tell what the right things are? Well, experience helps. If you got shafted by not having documented it before, you’ll probably make sure it’s documented in the future!

  6. Documentation is great for routine-based businesses – like the one you describe -> answering emergency calls. It might actually be the key here, as you describe, although it sounds like it’s the process of defining and standardizing your processes that was what benefitted you – not the documentation itself.

    I believe it’s important to stress that in more creativity oriented companies – like software companies – documentation can be a stopper. My belief tells me that documentation should only be written down if is has a purpose, which it clearly did in your case. Documentation for the sake of documentation will only lead to bureaucracy and a comprehensive compilation of documents that constantly screams to be updated. In the latter case, your company might suffer from the infamous “death by documentation”…