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Entrepreneurs sop

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By Dave Touhill

Dave Touhill

Contributing Writer

Dr. Dave has developed the marketing strategies for some of the fastest growing brands in the world and has his...

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Jan 23, 2023

Reviewed by Hannah L. Miller

Hannah L. Miller

Senior Editor

Hannah L. Miller, MA, is the senior editor for Leaders Media. Since graduating with her Master of Arts in 2015,...

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What Is a Standard Operating Procedure (SOP)?

Table of Contents
  1. What Is an SOP?
  2. What Types of SOPs Are There?
  3. Benefits of Having SOPs in Place
  4. How to Develop SOPs as You Scale
  5. SOP Example
  6. When in Doubt, Create SOPs

When you first started your company, you were likely the only employee. At most, you might have had one or two other people working for you. Most companies start this way—there are goals in mind, but you’re just taking it day by day, doing whatever it takes to be successful. Up until this point, maybe the thought of creating standard operating procedures (SOPs) has never really crossed your mind.

As you grow and add more team members, problems tend to arise. A simple thing like communication becomes far more complicated. It’s then you realize that to maintain high quality while having a larger team, there needs to be more structure.

As Theresa Baretta, the operations consultant for Loop Link, points out, “Every year, businesses lose 20–30% of revenue due to inefficiencies.” These inefficiencies often come from trying to operate a larger company like you would a smaller one. But once you go past a million dollars in revenue and introduce new employees, it can quickly become apparent that you need systems. The old way of doing it all yourself simply won’t cut it.

Rahul Alim, president of Custom Creatives, has described how adopting systems and developing standard operating procedures helped him. “I went from doing 100% of everything in my business to letting things go and stopped micromanaging everyone as we grew by headcount,” he said. “It gave me flexibility to delegate and focus on high priorities rather than cold calling, filing, or other administrative tasks.” 

Through SOPs, you create automation and remove yourself from being involved in every task as an entrepreneur. So when you plug something in, a series of other things trigger without needing your input. This can be extremely valuable to any business, especially growing ones.

In this article, learn what an SOP is, why companies need them, and how you can develop one.

What Is an SOP?

Standard operating procedures consist of easy-to-follow instructions that anybody can use when performing a specific task or activity. These instructions usually take the form of a step-by-step process. The more detailed each step is, the easier it will be to perform the task, even when done by someone who is relatively unfamiliar with the activity. An SOP ensures consistency in following important tasks while also improving efficiency. These should be a part of your main principles, much like it is with Amazon leadership principles.

As with any set of instructions, a standard operating procedure must be followed for the task to be performed correctly. If you don’t follow the steps in order and as outlined, something will go wrong. Think of following an SOP like putting together a couch from IKEA. If you don’t follow the instructions, you won’t construct the couch in the right way. What you’ll end up with is a mess, a whole new set of annoyances, and probably some bumps and bruises along the way.

What Types of SOPs Are There?

Standard operating procedures come in several forms, many of which you may already be familiar with. As you look at the following types, think of which ones may work best for the procedure you want to record.

1. Step-by-Step

The step-by-step format is one of the most common SOPs you’ll find. Simply put, this type of standard operating procedure lists out in numbers or bullets the steps you need to do to complete a task. Each step is easy to understand and leads right into the next. There are no branching paths and no optional steps unless noted at the end. Instructions for setting up a new electronic device usually follow this format.

2. Hierarchical

The hierarchical SOP format takes a different approach from the step-by-step variety. While it still shows steps that the user should follow, each step provides some additional instruction. These additional instructions may not apply to every user who tries to follow them. For example, a standard operating procedure following this model may require more input and verification from managers or executives before moving on to the next step, while a subordinate may choose to ignore those items.

3. Checklist

The checklist type may appear to be a set of steps, but those steps don’t need to be completed in order. Instead, the user may simply check off each task in whatever order they wish as they continue on toward an overall goal. This operational method is great for larger tasks that feature a bunch of smaller tasks that have minimal connections to each other.

4. Video

Written SOPs aren’t the only types you’ll encounter. The video format can also be used for standard operating procedures, especially when the visual is so crucial to getting the job done right. One example of this would be a repair video. Performing the activity becomes much easier when you see how it’s done in the first place.

5. Flowchart

Finally, the flowchart SOP type is a format needed when it’s possible you’ll encounter different results and need instructions on how to tackle each possibility. In a way, it functions almost like a step-by-step guide, only you follow the flowchart based on what you do and see. Flowcharts can be relatively simple, featuring only a few branching paths, or they can be extremely complex. The goal should be to keep things simple and still easy to follow from a visual standpoint.

Benefits of Having SOPs in Place

  • Maintains what you want to create for customers when it’s more than just you
  • Facilitates growth over a long period of time
  • Limits problems created from turnover and onboarding by improving people management
  • Helps leaders stay focused on the tasks that really matter to them
  • Provides more clarity, intention, quality control, and direction
  • Ensures everyone stays on task and working toward the same goal and vision
  • Makes training easier and allows people to get started on what they need to do more quickly
  • Improves communication across the organization
  • Maintains the quality and order of the systems you set up
  • Fights against work burnout since you won’t be doing everything alone

How to Develop SOPs as You Scale

1. Know Your Vision for the Next 3 and 10 Years

One of the first things you should do is define your vision for the next three and ten years. This vision will help you determine what your goals should be for both the long-term and the short-term. From there, you can start to develop more detailed steps and tasks that will lead toward those goals. For example, when you know your vision, you can figure out what you want to accomplish in the coming year and even the coming quarter.

Learning how to create a vision starts with asking big questions and identifying issues you want to solve. Once you know that, you can create a simple vision statement that will serve as a compass for everything you do in your company. From there, you can create the best practices and business procedures to lead you in that specific direction. You’ll also be able to define the roles and responsibilities of people so you can reach those goals.

2. Document Systems and Processes for Company Goals

Documenting the systems and processes needed to accomplish these goals means recording them so anyone can reference them at any time. Think of it as a way of reverse engineering with the end in mind. Write down these systems as you create them. Just like with setting goals, if you don’t write them down, they won’t mean anything.

Just because you write down your systems and processes doesn’t mean they’re set in stone. Standard operating procedures can always use a bit of correction over time. Be flexible as you create them and refine them as needed. But you first need to start before you can refine. Determine what you’re already doing that produces favorable results and build out the systems from there.

3. Format and Write SOPs for the Designated Audience

Remember that formatting and writing standard operating procedures isn’t necessarily for you. You’re writing them for other people to be able to do their work correctly. Doing so, however, requires you to think of just who it is you’re writing to. In other words, you need to determine your audience. This is easier said than done. Not only do you have to consider the objective of the SOP, but you need to account for who will be reading them. 

Here are some items you should consider:

  • Will the people reading the SOP be new workers?
  • How many people do you anticipate reading it?
  • What kind of knowledge do you believe they’ll already have?
  • What information is absolutely essential for them to follow the SOP correctly?

Defining the audience in this way will help you craft the SOP, keeping things simple and efficient. From there, determine what type of format would be most effective based on the types listed above. Will visuals aid in completing the work? A video format might be best. Is a step-by-step format the most straightforward way to follow the SOP? If so, that format may be the perfect option. After determining the format, you can begin writing the SOP.

4. Focus on the Core Areas That Need SOPs

Writing standard operating procedures for everything that can happen in a company can be time-consuming. Instead, you should focus on the areas that need it most. 

Here are several to keep in mind:

  • Operations: This is the system that keeps your business’s economic engine running.
  • People Ops: This represents the hiring and onboarding of new employees.
  • Leadership: This area looks at how to grow your team and particularly how you build up your team members to become leaders themselves.
  • Marketing: This is how you get and keep customers

You need SOPs for those things that keep your business humming along. Some SOPs can be less formal. They can be like a playbook—one that changes over time as circumstances, conditions, and needs change. No matter what SOPs you have, it’s always a good idea to have a record of the procedure and to review your SOP document regularly.

5. Adjust SOPs in Your Weekly Level 10 Meeting

This last point is where you should change your standard operating procedures. During your weekly Level 10 Meeting, take the time to review where you’re at. It’s during this meeting that you can make any necessary adjustments.

See where you’re making the biggest impact. Doing so will help your team stay focused on the most important things in the business. Identify where the biggest frustrations are and be sure to eliminate them. Set clear goals as you determine what needs the most attention. Doing this on a regular basis ensures you won’t go a long time without addressing and solving the most pressing problems.

SOP Example

The following SOP example is a basic look at addressing customer service complaints. Think of this as a template you can follow but not a concrete format that you must adhere to all of the time.

Purpose

This standard operating procedure aims to ensure every customer interaction resolves with the customer satisfied and enthusiastic to return to our company.

Application

This SOP document outlines what steps our employees and managers should follow in order to address and solve any customer complaints.

Procedure

Every employee should follow these steps:

  1. Read the customer complaint.
  2. Respond to the complaint within 24 hours.
  3. File the complaint with the company database.
  4. Notify the acting manager of the complaint.
  5. Send the customer an offer of a full reimbursement or store credit.
  6. Mark the complaint as “resolved” within the company database.
  7. Inform the acting manager that the complaint has been resolved.
Resources
  • Proper complaint response template
  • Document on acceptable language
  • Database access login procedures

When in Doubt, Create SOPs

SOPs are good tools to have for any business. They aren’t always necessary, such as with one-off events, seasonal conditions, or issues that constantly change. However, it’s always helpful to have a skeleton outlining common processes people will need to follow.

While it might take time to develop them, you’ll thank yourself later. SOPs are the way you scale more easily. In the long run, you end up saving many hours when it comes to training and employee growth.

As you create your SOPs, you’ll also need to record a business plan. Here’s what you need to know about writing a business plan.

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