When I was in the Navy, I operated nuclear power plant equipment on board the largest, most complex warships ever constructed: Nimitz class aircraft carriers. The equipment that I was entrusted with on a daily basis had price tags in the hundreds of millions of dollars. In addition, our equipment simply couldn’t be down: An entire crew of nearly 5,000 other people relied on those of us down in the engineering spaces to provide them with water, power, propulsion, and steam (required to operate the catapults that launched aircraft off the flight deck).
The most incredible part of all this? All this machinery was primarily left in the hands of people like me that were barely out of high school, and often with little or no supervision from senior personnel.
How on Earth do a bunch of kids become entrusted with such a task, and how do they avoid screwing it up every day?
The answer is very simple, actually.
First of all, all nuclear operators spend a year in school, learning their trade and nuclear theory. It’s considered one of the most rigorous academic programs in the world, and at the time I went through, there was a fail out rate of over 50%. So, by the end of this training, we knew a ton of theory regarding how everything in a large nuclear plant interacted and operated.
Second, with that theoretical background in place, nuclear operators are introduced to the most important concept in all of nuclear power. In fact, this concept exists in just about all industrial facilities, including chemical factories, oil refineries, and manufacturing plant assembly lines, just to name a few. What is this magical concept?
Simply put, it’s this: Verbatim compliance with written procedures.
See, everything…and I do mean *everything*, in a nuclear power plant has a written, step-by-step procedure for getting anything done. No valve is turned, button is pushed, maintenance performed, without referencing the proper checklist.
This concept is so important to the safe operation of a nuclear power plant that after that year of classroom training, Navy nukes are sent to a training ship for 6 months where they learn and become qualified to operate the equipment on board using the procedures. Basically, it’s 6 months of learning how to follow checklists in books. Then, and only then, is that sailor sent to the fleet to operate a seafaring vessel.
What does this have to with your tax practice?
My good friend James Orr was also a Navy nuke. He applied this checklist-driven system to his real estate investing business, and became very successful because of this approach. Everything he did in building his real estate portfolio, from how he marketed to get leads, how he presented offers to sellers, how he evaluated properties for their investment potential…all of it was checklist driven.
What does running a business from checklists do? By using systems and procedures that guided his investment decisions, James avoided allowing emotion to enter into a purchase decision. In addition, systems and procedures kept the machine humming along smoothly. On any given work day, there was no question about what needed to get done, by whom, and when. In other words, his real estate investment business ran like a balanced, well lubricated motor-generator set (nuke joke, couldn’t resist!).
When it comes to accounting and taxation, we’re already used to using procedures. We may not be used to call them checklists, but that is what they are. From GAAP to tax forms — they all represent procedures and checklists.
Since we’re already used to using these, and we know that they work, why don’t we use them in actually running our practices?
By having checklists and systems for doing everything from your client acquisition marketing to your employee management, your practice will run more efficiently, and you’ll ensure that you get done certain things every day that need to get done in order to build your practice. Without systems, it’s extremely easy to keep your nose in your client work all day, every day, and then wake up one day and discover that you’ve done all the client work you had to do, and you worked yourself out of a job and have no new prospective clients coming.
Numerous studies have demonstrated time after time that the use of structured systems and procedures increases productivity and reduces rates of error, even among highly trained professionals such as yourself. In the future, I will write more about specific systems that can benefit your practice, and provide example checklists that you can adapt to make things run smoother around your own office.