Making money easier
What does business operations mean to the small business?
Answer: How to add to the bottom line without increasing cost?
This is really what efficient business operations is, taking the web of day to day activities, spinning them all together to create an efficient well run business.
I like to call operations the boundary spanning function of any well run business. A well run business typically has a operations focus that deals with::
- planning,
- Organizing
- supervising
Business operations are delivery-focused, a main goal is to ensure that a business can successfully turn inputs to outputs in an efficient manner.
In many small businesses, just like larger ones, they must deal with changes in markets, competitors, technology and it can be difficult to figure out what to do to make sure progress continues.
The techniques and lessons learned from the efforts of the very best large corporations can be leveraged to dramatically improve your business’s bottom line.
In most small businesses the processes and procedures that get the job done everyday have evolved. Typically they have not been designed or thought out, they are: “the way we do things around here” The challenge with these work habits is they often hide loads of waste. The goal of operations improvement is to find that waste and eliminate it.
The profit vampires
Many small businesses grow and improve their revenues and make more money. They are often happy they are making more and growing, but often fail to ask, we made more money and grew last year but how much should have we grown and how much should we have made?
Asking these questions is what we like to call getting rid of profit vampires.
As a business grows and the market changes the needs and requirements that got the business here also changes. The natural course of these changes can often introduce waste and inefficiency. Often, when a company operates at one level and then grows to be operating at higher levels the old processes can start to break down introducing new waste and causing slow downs.
Business Operations main purpose is to help make these changes, build efficiency, and grow the bottom line.
Operations Management Improves The Bottom Line
Business operations aims at the bottom line by providing a framework for monitoring and adjustments to critical business operations. It does this by starting with three key fundamentals
- A clear definition of goals
- A management system to communicate the goals and monitor progress
- Collaboration culture
A clear definition: Your employees have to understand what your objectives are. Your employees are the ones who make it work. If they don’t know or understand the objectives it is unlikely they will be part of the solution, instead of becoming another roadblock.
The management system: A common quote is “what gets measured gets done.” The management system has to be able to define where you are currently at, track progress to the goal and clearly identify when the goal has been reached.
The system must identify who is responsible for achieving the objectives and provide methods to adjust when it is clear progress is not on track, or if the objective needs to be adjusted.
Collaboration: How does your company communicate? The effectiveness of the communication within the company will directly affect your company’s ability to fully realize the benefits of the cost reduction and quality improvement efforts.
To get the maximum benefit there needs to be a communication plan in effect that will ensure all get the message and the message has a long life. Anyone that has been part of a larger organization has experienced changing messages around goals and objectives. What happens more often than not, is there is no follow up why directions have changed, or how progress is being made or is going slower than expected.
Business Operations for Small Business
In large enterprise organizations they have whole departments dedicated to improving quality and reducing cost. They strive to understand every element of cost so they can improve efficiency and squeeze every dollar out of the process.
The techniques and lessons learned from the efforts of the very best large corporations can be leveraged to dramatically improve your business’s bottom line.
Building an operational excellent company
No small business has the resources like a large corporation that can implement things like 6 Sigma. These corporations spend millions puting complex systems in place to manage efficiency and productivity. A small business just can’t spend all of that time and money to create a complex system. But they can keep it simple and realize many of the benefits large organizations gain.
Start With The Fundamentals
- A clear definition
- The management system
- Collaboration
Simple ways to develop and maintain a clear definition of your goals and objectives.
First step: Are your goals and objectives documented? Are they written down where you can easily refer to them. But make sure that the goals and objectives that you have are proper. This is actually a lot more important than you might initially think. Please look at Goals and Objectives to make a difference.
Collaborate: Take time to involve, at a minimum, your key players in developing the goals. This is a simple and critical step but is so often overlooked. Imagine how much more engagement you’ll get if people have a say in setting the goal and how it will be reached as opposed to saying: here do this, don’t ask questions.
The management system: For every goal that is agreed upon,
Document:
- How that goal will be reached, or when is it done
- Who is responsible for the progress
- How will progress be tracked
- How will adjustments be made
This document should be updated regularly, people should know that it is driving decisions and it should be front and center for everyone to see.
Collaboration:
Of the three fundamentals this might be the most important and hardest to implement. This is because collaboration really comes down to a question of culture.
Do you have a culture of collaboration or is it one of turf battles and information silos?
If you’ve been in business for any time, be honest, you know what your culture is. The question: is the culture I have the one I want? If it is, or is not, does your current culture support collaboration?
If it does not, then understand, changing the culture is not overly complex, but it is not easy. It requires consistent messaging from all of management, and all of your managers including you, the owner must walk the talk.
You may be faced with getting rid of people that are not willing to go along. It is not always easy to identify who these people are. Sometimes the people that have been the most difficult will straighten right out and become the most valuable when they understand the goals and their place in achieving those goals.
Others, you may have to let go when it is clear they can’t or won’t adapt. It is not unusual for some of these people to have been key players. If you experience this, make sure you have clearly communicated the purpose of the change and why it will benefit the business.
Cultural change will not happen overnight. Plan on at least a year depending on how big your business is, and how long it has been in operation. The larger and older the business the longer it will take to cement the culture.
But getting the culture you want is always worth the investment. It will save time, improve productivity, and reduce employee turnover.
Just remember a business always has a culture, make sure it is the one you want.
General Guidelines:
- Build the right foundation. A collaborative team that has the same goals, dedicated to achieving those goals can drive to success
- Transparency, business information/knowledge transfer everyone should know what is going on and why as it related to their responsibility.
- Get the right person for the job. Are your employees in the right position, ask the questions to make sure.
- Use data for decision-making. Take the time to collect the right data and then use it.
- Feedback. Encourage feedback from your employees. Create the space and time for your employees to tell you what they think. Make it a regular thing, and make sure if they tell you what you don’t want to hear, you don’t shoot the messenger. Follow three simple steps:
- listen
- take action
- report back
- The long-term plan. What is it? Does everyone know about it? Who is responsible for maintaining it? Who communicates it? Remember, plans are nothing more than a guide, or a map. If you don’t reference it you’ll most likely get lost. If no one else knows about it, how are they expected to follow it? If destinations change update the map.