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The 3 Types of Business Controls

If you've ever been tempted to hold tightly on to the control within your company and just "do it yourself", here are the 3 types of internal controls to help you intelligently let go of control and safely grow your company.

businessman touching graph in screen
businessman touching graph in screen

One of the most common questions I get asked by audiences when I’m giving a keynote address to a business owner group is how to balance the need to hand off decision-making responsibility to your team as you grow, with the reality that many times they will make poorer choices and obvious mistakes that you wouldn’t have made if you’d just kept control of the decision in the first place.

It’s almost enough to make you want to pull back on the authority and just “do it yourself.”

If you’ve ever felt that temptation, here is a new way of seeing the situation that has helped many of our business coaching clients scale many times larger while at the same time protecting the business and making it more resilient.

At the heart of the solution are business “controls”.

Controls are a subset of business systems which specifically help protect your company from careless, costly, or uninformed decisions or behaviors.

When you build a business versus a job, you want your team to have the authority to get tasks done without running everything past you. You want them to take the initiative and have the discretion to make decisions and get valuable work done without you being the limiting factor that slows the business down.

At the same time, you want to ensure that the business is protected–that the right things are getting done, at the right time, and hence producing the right results. Your business must be confident that resources are focused on what matters most, and that simple mistakes that can and should easily be avoided are.

For example, you might formalize how you give team members levels of decision-making authority that aligns with their experience and the degree of consequence if they decide poorly.

Or you might institute weekly reporting of key indicators that help your team monitor performance and trends and proactively respond to changes in your business.

Or you might introduce a key checklist that your operations team follows to make sure they don’t miss a simple step in the process.

These are all examples of business controls and we’ll give you more, but for now, the bottom line is this: The more you build your business for control, the more you are trapped inside your business.

The 3 Types of Controls: Visual, Procedural, and Embedded

There are essentially three kinds of controls:

1. Visual controls. These include checklists, dash boards, scorecards, budgets, etc. They let you SEE that the right things are happening, of if not, they raise a flag that lets you make sure to focus on fixing the situation.

2. Procedural controls. These include things like having 2 unrelated parties internally check/be involved in the flow of money. Your standard review process for all new hires. Your standardized sales concessions you empower your sales team to use.

Procedural controls establish a known pathway to a consistently secure result.

3. Embedded controls. These are the controls that work without someone having to remember to do something out-of-the-way to use them. These include things like your standardized contracts, automated data backups, and intentionally designed financial controls that work automatically in the background to protect your business from poor decisions or behavior.

The Bottom Line

Remember, the more you do for your business, the more your business requires you to keep doing.

If you make a key decision today, you’ll likely need to be there to make that same decision later.

If you find yourself checking on your team’s work, with no plan in place to help develop them and your business to be self-sufficient, you’ll likely always be needed to check up on your team’s work.

If you want to scale your business and get your life back, you’ve got to find ways to get your team producing more. And business controls (along with solid systems) are one of the key ways you intelligently broaden the base upon which your company is being built.

For more on building systems, including a free tool kit with 21 in-depth video trainings to help you scale your business and get your life back, click here.

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