Importance of Policies & Procedures

Small businesses often overlook the creation of policies and procedures. This simple task has the ability to save time and money in a variety of ways.


Businesses should establish policies and procedures and commit them to print before hiring the first employee. Policies, defined simply as rules as to how the company and its representatives should handle specific scenarios, and procedures, meaning instructions as how to accomplish certain tasks, are crucial to every business, regardless of size.


Establishing a company’s policies and procedures provides several benefits. The company is able to operate with greater consistency, both in its internal and external workings. Company morale generally increases because guidelines are available on how to accomplish a task. Set policies and procedures can also circumvent certain legal issues.


The policies and procedures manuals of a business should be in accordance with local, state and federal laws, as well as conscious of Internet use. The books need to appear professional; a financier may request a copy of the policies and procedures of a company under review.

Procedures Manual

The procedures manual clearly describes processes, such as how to enter an invoice into the system, processes with which the new employee will not yet be familiar. Describe procedures specifically. This may seem quite simplistic to the writer who is familiar with the tasks at hand, but to the novice, a precise explanation of the procedure may be invaluable.

The Policies Manual

This manual should contain the company’s policies on employment, disclosure, competition, customer service, purchasing and so forth. When writing a policies manual, keep in mind whether, if the owner could not be reached, what would an employee need to know to accomplish his assigned tasks.

The Employee Handbook

This will be the first formal communication the company has with a new employee. As an abbreviated policies and procedures manual, it defines standards of behavior and outlines what will happen when those standards are not upheld. The handbook should contain the company’s employee policies and procedures for asking for leave and similar requests. Management may find this to be an empowerment tool should it need to discipline an employee.