Systems, Processes, SOPs, Policies: What's the Difference? A Small Business Guide

Are you new to business systems? You might have heard words like “systems,” “processes,” “process maps,” “SOPs,” and “policies” thrown around, but what are they? If you're not clear on the differences, don't worry - you're not alone!

I’m going to break all of these terms down for your and show you how they fit into your business. But more importantly, I’ll explain why having these systems in place can make a massive difference for you as a business owner.

By the end, you’ll not only understand what these terms mean, but you’ll also see how they can help you build a business that doesn't just run smoothly day to day, but actually gives you the freedom to step away, knowing everything will still operate like clockwork.

Why Do You Need Business Systems?

Let’s start with the big picture. You’ve probably got big dreams for your business - whether it’s increasing your sales and profits, expanding your team, or maybe even selling the business one day. You might be able to do all of those things, but without solid systems in place, your business will always rely on you being there to keep everything running.

Imagine being able to take a holiday without worrying about what’s happening back at the office, or onboarding a new team member without spending hours training them personally. That’s the freedom that business systems can give you. They help turn your business into a well oiled machine that doesn’t depend on any one person - even you. And when your business isn’t dependent on you, it’s not just easier to manage; it’s more valuable as an asset.

So, what exactly are these systems, and how do they help you achieve that level of freedom?

What Are Business Systems?

In simple terms, a business system is a set of connected processes or systems that work together to achieve a specific goal. For most businesses, that goal is to make a profit. For nonprofits, that goal is to fulfill their mission and create a positive impact in their community or area of focus. So your business system is how you make that profit, or achieve that impact.

For example, if you’re running a tax preparation business, everything you do - from attracting clients to filing their taxes - works together as one system to make sure you’re delivering value and making money. Simple, right?

But within this big system, there are smaller systems that keep everything moving smoothly. For example:

• Marketing System: How you get clients through the door.
• Sales System: How you turn those potential clients into paying ones.
• Finance System: How you keep the cash flowing.
• People Management System: How you build and manage your team.
• Operations System: How you deliver your product or service to your customers. In our tax business example, your operations system might involve meeting clients face-to-face, using tax software, or offering a fully online service. While marketing, sales, finance and people management systems are roughly similar in most businesses, your product or service and the way you deliver it can be completely different to any other business.

But why does this matter? Because when all these smaller systems work together, your business runs efficiently without constant oversight. This efficiency isn’t just about saving time; it’s about freeing you up to focus on what really matters to you - whether that’s scaling your business and making more money, being able to spend time with your family, or working less and taking more breaks.

What Are Processes?

Let’s break it down even more. A process is just a fancy way of saying "what you have to do to get stuff done." It’s the series of steps you take to reach an outcome.

In our tax business example, the process for doing a tax return could include steps like collecting client documents, reviewing the information, preparing the tax returns, and then submitting them to the tax office. The process tells you the high level steps of what you need to do get those tax returns to the tax office on time.

Now, let’s think about why this is important. When your processes are clearly defined, it’s easier to train new team members, keep everything consistent in your work, and stop making mistakes.

When all the steps are laid out clearly, it's less likely that you're going to miss one.

More importantly, it means that you’re not the only person who knows how to get things done. If you can step away and know that your team is handling everything just as you would, that’s a huge relief - and a big step toward creating a business that isn’t dependent on you.

What Are Process Maps?

Now imagine that you could draw all the steps in the process. That’s exactly what a process map is – it’s a visual representation of everything you have to do to get the result you want. You can even include who does what, when, and what tools or documents they need, alongside the steps.

Seeing your process visually can help you to see the big picture. It can be easier to spot bottlenecks and inefficiencies, and where you might be able to automate and streamline.

Process maps can also be a great way for team members to see where their work fits into the big picture and understand that everyone is working towards the same goals.

Want to know how to map processes in your business? Check out my simple, step by step guide. 

What Are SOPs?

Standard Operating Procedures (SOPs) are detailed, step-by-step instructions on how to perform a specific task. They’re the "how-to" guides that ensure everything is done the right way, every time, no matter who’s doing it.

In our tax business example, the SOPs might outline how to securely collect client documents, how to enter data into tax software, or how to review a tax return before filing. Each SOP breaks down the process into simple, actionable steps that anyone on your team with the right skill level can follow.

Here’s why SOPs are so important: they create consistency and reliability in your business. When everyone follows the same procedures, you get the same results every time, which means fewer mistakes, higher quality work, and happier clients. Plus, SOPs make it incredibly easy to onboard new employees or train a backup person in case someone leaves. You’re building a business that’s process-dependent, not people-dependent, which is key to your long-term success and peace of mind.

Let’s look at how this all works together for our imaginary tax business:

• Process: Preparing and filing taxes.
• Process Map: A visual flowchart showing each step, from collecting client documents to filing the return.
• SOPs: Detailed instructions for each step in the process map. For example, how to collect client documents securely, how to enter data accurately, how to double check everything before submission, and how to submit the information to the tax office.

This is how you build systems are are reliable, repeatable, and ready to scale.

What Are Policies?

Policies are the guidelines and rules that govern how your processes and SOPs are executed. They explain the "why" behind your actions and ensure that everything aligns with your business’s mission, values, and legal obligations.

For example, a policy in your tax business might be to handle all client data with strict confidentiality or to ensure that all tax returns are reviewed by a senior accountant before submission.

Your policies set the standards for how tasks should be performed, and they help protect your business.

How It All Fits Together

Here’s how everything works together to help you build a business that gives you freedom:

• Business Systems: The big system that’s all about making a profit by doing what you do best.
• Processes: What you have to do to reach the outcomes within your business systems.
• Process Maps: Visual guides that help you understand and optimise your processes.
• SOPs: Detailed guides that show exactly how to do each task within a process.
• Policies: The rules that explain why things need to be done a certain way.

When you have all these parts in place, your business will run like a machine, ready to scale and grow.

More importantly, it will free you from the day-to-day grind, allowing you to focus on what really matters - whether that’s growing your business, spending time with your family, or just taking a break without having to worry about what’s happening back at the work.

Final Thoughts

I hope this guide has sparked some ideas and given you a clear picture of how systems, processes, SOPs, and policies work together to keep your business running smoothly. Start by picking just one process, map it out and create an SOP.You’ll be amazed at how much easier it is to manage your business when even small part of your business are systemised. 

Freebie & Next Steps

Ready to take your business organisation to the next level? Check out my course, The Complete Simple Business Systems Starter Kit. 

It’s the ultimate guide to systemising your business (even if you’re not sure what a business system is or have no idea where to start). I’ll show you how to create systems so that you can scale your business, take back your life, and get the time and money freedom that you deserve.