Do You Need Policies?

From the beginning it is wise for any Small Business Owner to develop a Standard Operating Procedure Manual(SOP).  Even if it is just you, the manual helps you as you deal with difficult clients or vendors by giving you a reference point to as to why you handle a situation a certain way.  Writing policies and procedures forces you think through different situations before those situations occur.

As your Business grows it is nice to be able to hand an employee or contractor a document that explains how to handle a situation, or have a manual that the employees can go to when they have questions.  It helps to insure that similar situations are handled the same way.

What is the difference between a policy and procedure? According to, a policy is a guiding principle used to set direction in an organization. A procedure is a series of steps to be followed as a consistent and repetitive approach to accomplish an end result. So policies are the rules for your business to follow and a procedure is how your business conducts business.

The manual does not need to be elaborate or cover every aspect of your business, but it does need to cover the main areas of your business.  Start with a three ring binder and begin writing the procedures and policies you want followed in your business. View the creation of these policies and procedures as if you are training a new employee and you have to explain what they need to know to do their job and educating the new employee about your company’s culture and philosophy.

Two areas that you need policies are your employees and your business’s interaction with customers.  These policies and procedures will help to protect your business from litigation.

If you have employees then you are required to be compliant with many federal and state laws. Your business needs to have policies and procedures for your employees that ensure that you are following the laws.  Take time to educate yourself on the rules that employers are required to follow.  Companies order generic policies and procedures for their employees and believe that they are covered. However, it is worth the investment of time to customize any standard policies to ensure that your company is covered.

Many small businesses do not have a policies and procedures for sick leave or vacation days.  With one or two employees there may not be a need for these rules, but as your company grows it will become a requirement.  Start putting those rules in place, so as you grow you are not making drastic changes that effect your long time employees.

A must have policy and the accompanying procedures are those that allow an employee to complain if they feel like they have been discriminated against.  Failure to have these rules can make you liable for any discriminating behavior of an employee.

Your company needs to have employee hiring policies and termination policies.  These do not have to be detailed, but need to ensure that when hiring an employee, you have followed federal law and when you terminate an employee you have protected your company.

The most important thing to remember is that if you don’t follow the policies and procedures that you develop then they will not protect your business.

Customer Relations
It is important that you have a guideline for your employees to follow as they work with your customers.

Areas that you need to address is providing credit to customers, return policies, discounts for customers.  Your policies and procedures in this area are the ones that get modified the most, as your company grows so it is wise to review these policies and procedure on an annual basis.

Make sure that your employees have access to the policies and procedures and that your customers know about the policies and procedures that affect them.