Why You Should Create and Use Systems
A few years ago, I saw a shift in the economic environment in Oklahoma and how it was affecting contractors. It appeared as if it was getting more difficult for contractors, through no fault of their own, to collect their money and stay out of the courthouse.
Business moves fast and is becoming more complicated. Owners are contractually shifting more risk to contractors. Accounts receivables are increasing. Collections are getting more difficult. More people are filing lawsuits, and attorney’s fees are more expensive.
In other words, the risk of doing business is going up.
Two of the biggest threats facing contractors in Oklahoma are the risk of getting sued and the risk of not getting paid. Both have huge consequences, which can put a construction company in financial ruin. By creating simple, standardized written systems, construction companies can reduce their risks and achieve better, consistent results.
What are written systems?
A “system” is simply a regular method or way of doing something over and over that allows you to achieve consistent results, i.e., getting paid and not getting sued. Systems are not subject to interpretation or change, and they are not dependent upon the person who is using the system.
Why you win with proactive systems
I started practicing law in Oklahoma about 30 years ago. I spent most of those years representing construction and real estate clients in litigation. Representing someone in litigation is like a doctor performing surgery on a patient who is already sick. Both are expensive, reactive, time-consuming, and stressful for the patient (or client). Sometimes, it’s just too late to cure the problem.
A better solution is to be proactive in reducing the risk of illness before the patient gets sick. Preventing disease is better, easier, and less expensive than treating it. The same is true in law and business. Helping a construction company become healthier and reduce risk, i.e., getting paid and avoiding lawsuits, is better than treating the problem through litigation after it’s arisen.
Systems for addressing risk management do for your business what a healthy diet and regular exercise do for your body. Once you get over the initial hurdle of creating those healthy habits, they become second nature. It takes thought, intention, and effort to develop good systems for your company, but the consistent results are well worth it. Once you have a system that works for you, using it becomes quick and easy. It’s worth putting in the work upfront to avoid costly, stressful litigation in the future.
How to create written systems
When you create written systems, you put yourself and your employees in a better position to recognize and reduce your risk of not getting paid or getting sued. Part of your written risk management system is identifying and documenting ways to reduce risk. A good place to start is by writing down all of your existing processes and systems so that you can begin standardizing them for all members of your company.
Oklahoma law is continually evolving and can be very complicated. Also, every project is unique, so contractors benefit from consulting an attorney to create a risk management program that is appropriate for their company. Get in touch if you’d like to learn more about written systems and to start managing your risk.
