As your business becomes more complex, so does your efficiency. As you add more people to your team, you need more advanced infrastructure to keep your company running smoothly. Without a plan, you won't know if you're maximizing productivity in all areas of your growing business.
Understanding business operations helps business leaders maintain efficiency while scaling. Here's how to optimize business operations to support the success of your company.
What is business operation?
Business operations are the collection of day-to-day tasks and processes that a company performs to generate revenue. Efficient operations make the most of a company's resources, reduce the costs associated with day-to-day operations, and increase a company's productivity.
As a business grows, its operational needs become more complex. Small business owners in the ecommerce space may choose to handle every aspect of running their business themselves or outsource some tasks, such as accounting and payroll processing.
On the other hand, larger companies may employ 100 or more people in just their accounting department.Large companies typically delegate operational management to a Chief Operating Officer (COO), who is responsible for overseeing and improving all aspects of day-to-day operations.
Elements of business operations
The four key elements of a business operations strategy are people, process, technology and place. Here's what each brings to the table:
people
As a company grows, management becomes less involved in day-to-day operations and focuses more on business development tasks like meeting with investors and long-term capacity planning, meaning the company's employees become responsible for running all (or nearly all) of the day-to-day operations.
Human resource considerations include hiring the right people for the right tasks, and keeping an eye on employee morale and productivity. In large companies, the HR department is usually responsible for talent-related tasks such as recruiting, onboarding, training, and development.
process
A business process is a clear protocol for getting things done in a business. Successful businesses have clear processes defined for everything from developing products to scheduling social media posts. Best practices include establishing and documenting consistent processes, which can help identify and mitigate operational inefficiencies, reduce errors, and increase transparency.
Business processes can make it easier to onboard new employees and ensure compliance with state and federal laws. For example, if you document your processes and follow them exactly as they are written, it's much easier to ensure that your payroll system is legally compliant.
technology
Technology refers to the tools we use to perform operational tasks. This can include software, hardware, machines, and other physical resources.
Different industries require different equipment for their businesses: for example, a manufacturing company may need hundreds of thousands of dollars worth of heavy machinery, while a small e-commerce business may invest primarily in a Software-as-a-Service (SaaS) platform.
position
A location refers to a physical location associated with your business, including office space, manufacturing facilities, warehouse facilities, retail stores, etc.
In either case, optimal locations reduce costs and maximize revenue. For example, a retailer might invest in physical stores in high-traffic areas and warehouses near major distribution centers.
How to improve business operations
- Set goals and identify KPIs
- Improve existing processes
- Automate the process
- Invest in the right tools
- Evaluate resource allocation
- Stay up to date
- Seek outside help
- make a plan
At its core, improving your business operations is about increasing efficiency, which means achieving your goals faster or at less cost. Here are eight strategies to help.
1. Set goals and identify KPIs
Improving your business operations is a long-term endeavor. Set goals and identify key performance indicators (KPIs) to focus your efforts and track long-term performance objectives.
Have different departments set specific operational goals that connect to larger business objectives. For each goal, identify the KPIs you'll track to measure performance and determine success.
For example, if one of your business goals is to increase your customer base by 10% in the fourth quarter, your customer service department might set a goal of increasing customer satisfaction scores by 15%, while your marketing department might aim to increase organic search traffic to your online store by 20%.
2. Improve existing processes
Once you have established your goals, you’re ready to consider the different business operations that can support them.
Start by documenting your current processes and making sure what's written there accurately reflects your actual business practices — if not, ask relevant team members to make notes about what they do.
For example, your company handbook may have a 10-step process for onboarding new employees, but a better starting point for optimization is the process your HR managers currently use.
Once you've recorded your processes, look for overlaps, use of outdated technology, or misalignment with company values, and work with relevant team members to identify areas for improvement. Because optimization is an ongoing effort, allow employees to test and iterate on new processes.
3. Automate the process
Process automation technology is advancing rapidly, which means that even if you audited every aspect of your business operations last year, new and relevant automation opportunities may have emerged since then. For any process that needs to be run multiple times, look for automation opportunities.
For example, if you’re a retail business, you could automate parts of your inventory management, social media scheduling, and customer service and support.
4. Invest in the right tools
Part of your process improvement strategy is evaluating the tools your employees use to perform key job tasks, but sometimes it can be hard to know what's missing. Reading industry publications and looking at your competitors' tools can give you some ideas.
For example, if you run a technology company, you could compare your sales team's tools to those of your competitors. If your main competitor uses a sales-focused customer relationship management (CRM) tool and you rely on Google Sheets, you could gauge your team's interest in adopting CRM technology.
You can also ask team members to identify their most time-consuming processes (such as lead generation or contract negotiations) and estimate how much time they spend on each task. You can use this information to perform a cost-benefit analysis before investing in a new tool, and if you do decide to implement it, share your reasons for doing so to increase buy-in from team members.
5. Evaluate resource allocation
Evaluate your current budget, infrastructure, and team capabilities.
For example, if your accounting team is stretched thin but your marketing team isn't, and you have the funds to hire, you can make a plan to grow your accounting team or invest in contract helpers to support your accounting department. You can also instruct your marketing head to use your excess resources to support the goals that marketing identified in your initial goal-setting session.
6. Stay up to date
Monitoring industry and market trends can help you focus your efforts appropriately and stay competitive. For example, if you monitor trends in the retail industry and find that your target customers are increasingly preferring to purchase products on social media platforms instead of face-to-face, you can allocate more of your budget to developing a social commerce strategy instead of opening new brick-and-mortar stores.
7. Seek outside help
A director of business operations is responsible for maintaining a high level of focus on business goals, managing day-to-day operations, monitoring market fluctuations, and keeping up with technological advances. It's a demanding job, and even a good operations manager can benefit from an outside perspective. Consider engaging a business operations consultant who can audit your current operations and suggest improvements.
Business consultants usually specialize in a particular field, so hiring a consultant can also give you industry-specific operational insights. For example, a manufacturing consultant may specialize in supply chain management strategies that can help reduce shipping costs. They can also help you source quality raw materials more efficiently or find improvements to your production systems to reduce energy demands.
8. Make a plan
Optimizing business operations is an ongoing task, which is why most large companies have a Chief Operating Officer as a permanent executive role. In addition to conducting thorough operations audits on a regular basis and/or engaging the assistance of an operations consultant, make improving your business operations a daily task — an area of your business operations.
You can monitor KPIs to track progress towards previously identified goals and hold yourself accountable. You can also consider setting up regular times to check in with specific departments, gather feedback on new processes or tools, and further identify areas for improvement.
Business operations FAQs
What does a Business Operations Manager do?
The Business Operations Manager oversees the day-to-day business activities and leads the company's operational optimization efforts.
What type of business operations do you operate?
The four main types of business operations are production, finance, marketing, and human resources.
- Production activities produce goods and services for distribution
- Finance manages funds and handles accounting.
- Marketing promotes and sells a company's products and services.
- HR is the management of a company's employees.
What is the purpose of your business operations?
The main objective of business operations is to increase efficiency. Business operations strategies can reduce costs and increase the productivity of your company.
