As your business becomes more complex, it can also become less efficient. As you add more people to your team, you need a more sophisticated infrastructure to keep your company running smoothly. Without a plan, it's difficult to know whether you're maximizing productivity in all areas of your growing business.
Understanding business operations helps business leaders maintain efficiency as they scale. Learn how to optimize your business operations to support your company's success.
What is business operations?
Business operations are the collection of routine tasks and processes that a company performs to generate revenue. Efficient operations maximize the use of a company's resources, reduce costs associated with daily activities, and increase a company's output.
As your business grows, your operational needs become more complex. Small business owners in the e-commerce space may handle all aspects of business operations themselves, or they may outsource some tasks, such as accounting or payroll.
On the other hand, large companies may employ more than 100 people in the accounting department alone. Large companies typically delegate business operations management to a chief operating officer (COO), who is responsible for overseeing and improving all aspects of day-to-day business operations.
Elements of business operations
The four key elements of a business operations strategy are people, processes, technology, and location. Here's what each brings to the table.
people
As companies grow, executives tend to become less involved in day-to-day operations and instead focus on business development tasks such as meeting with investors and long-term capacity planning. This means that a company's employees are responsible for performing all (or nearly all) day-to-day operations.
Talent considerations include hiring the right people for the right tasks and focusing on employee morale and productivity. In large companies, the human resources department typically handles human resources-related tasks such as recruitment, onboarding, training, and development.
process
Business processes are clear protocols for how a business does things. Successful companies define clear processes for everything from product development to social media posting schedules. Best practices include establishing and documenting consistent processes. This allows you to identify and mitigate operational inefficiencies, reduce errors, and increase transparency.
Business processes make it easier to onboard new employees and help ensure compliance with state and federal laws. For example, it's much easier to ensure your payroll system is legally compliant if you document your processes and follow them exactly as written.
technology
Technology refers to the tools you use to perform operational tasks. This may include software, hardware, machinery, and other physical resources.
Businesses in different industries have different equipment needs. For example, a manufacturing company may require hundreds of thousands of dollars worth of heavy equipment, while a small e-commerce business may invest primarily in a software-as-a-service (SaaS) platform.
position
Location refers to the physical location associated with your business. This may include office space, manufacturing and warehousing facilities, and retail stores.
In both cases, optimal location reduces costs and maximizes profits. For example, a retailer might invest in brick-and-mortar stores in high-traffic locations and warehouses near major distribution hubs.
How to improve business operations
- Set goals and identify KPIs
- Improve existing processes
- Automate processes
- Invest in the right tools
- Evaluate resource allocation
- Get the latest information
- seek outside help
- make a plan
At the heart of improving business operations is increasing efficiency. In other words, improvements reduce the time and cost it takes to achieve goals. These eight strategies will help you:
1. Set goals and identify KPIs
Improving business operations is a long-term endeavor. Set goals and identify key performance indicators (KPIs) to focus your efforts and track long-term performance goals.
Have different departments set specific operational goals that connect to larger business goals. For each goal, identify the KPIs you will track to measure performance and determine success.
For example, if one of your business goals is to grow your customer base by 10% in the fourth quarter, your customer service department might set a goal to increase customer satisfaction scores by 15%, and your marketing department might set a goal to increase your organic search traffic by 15%. may be targeted. Get 20% more on your online store.
2. Improve existing processes
Once you have set your goals, you are ready to consider different business operations that can support them.
First, document your current processes and ensure they accurately reflect the reality of your business practices. If not, have the relevant team members take notes on what they are doing.
For example, your company's handbook may include a 10-step process for onboarding new employees, but the best starting point for optimization is the process your HR managers currently use. .
Once you've documented your processes, look for redundancies, use of outdated technology, and misalignment with your company's values, and work with relevant team members to identify areas for improvement. Optimization is an ongoing task, so allow your employees to test and iterate new processes over time.
3. Automate the process
Process automation technology is advancing rapidly. This means that even if you audited every aspect of your business operations last year, new relevant automation opportunities have likely emerged since then. For processes that need to be run multiple times, look for automation opportunities.
For example, retail companies may be able to automate some aspects of inventory management, social media scheduling, and customer service and support.
4. Invest in the right tools
As part of your process improvement strategy, evaluate the tools your employees use to perform key business tasks, but sometimes it can be difficult to know what's missing. You can get ideas by reading industry publications and looking at your competitors' tools.
For example, if you run a technology company, you might compare your sales team's tools to those used by your competitors. If your top competitors use sales-focused customer relationship management (CRM) tools and you rely on Google Sheets, you might be able to gauge your team's interest in implementing CRM technology. I don't know.
You can also ask your team members to identify the processes that take the most time (such as prospecting or contract negotiation) and estimate how much time they will spend on each task. You can use this information to perform a cost-benefit analysis before investing in new tools. And if you decide to implement it, you can share your reasoning to increase buy-in from your team members.
5. Evaluate resource allocation
Assess your current budget, infrastructure, and team capabilities.
For example, if your accounting team is at capacity but your marketing team is not, and you have the funds to hire, plan to increase your accounting team or invest in contract support to support your accounting department. maybe. You can also ask the head of marketing to leverage additional resources to support the goals identified by marketing during the initial goal-setting session.
6. Stay up to date
Monitoring industry and market trends allows you to focus your efforts appropriately and stay competitive. For example, if you monitor trends in the retail industry and find that your target audience increasingly prefers to purchase products on social media platforms rather than in person, instead of opening a new brick-and-mortar store, consider creating social commerce. They may allocate more budget to strategy development. .
7. Seek outside help
The Director of Business Operations is responsible for maintaining a high level of focus on business objectives, managing day-to-day operations, monitoring market fluctuations, and responding to technological advancements. This is a tall order, and even the best operations managers can benefit from an outside perspective. Consider engaging a business consultant who can audit your current business practices and suggest improvements.
Business consultants typically specialize in a particular field, so hiring a consultant also provides insight into industry-specific operations. For example, a manufacturing consultant may specialize in supply chain management strategies that help reduce shipping costs. It also helps find improvements to production systems to more efficiently source high-quality raw materials and reduce energy demand.
8. Make a plan
Optimizing business operations is an ongoing challenge. As a result, the chief operating officer serves as a permanent executive in most large companies. In addition to regularly conducting intensive business audits and enlisting the help of business consultants, make business improvement a daily task, an area of business operations.
Monitor KPIs to track progress toward previously identified goals and monitor KPIs to maintain accountability. You might also consider setting up regular times to check in with specific departments, gather feedback on new processes and tools, and identify additional areas for improvement.
Frequently asked questions about business operations
What does a business operations manager do?
Business Operations Managers oversee day-to-day business activities and lead the company's operational optimization efforts.
What types of business operations are there?
There are four main types of business operations: production, finance, marketing, and human resources.
- Production operations create goods and services for distribution
- Financial operations manage money and handle accounting operations
- Marketing operations promote and sell a company's products and services.
- Human resources operations manage a company's employees
What are your business operational goals?
The main goal of business operations is to increase efficiency. Business operations strategies reduce costs and increase a company's output.
