Defining Business Operations: How to Operate a Business Efficiently
How to Plan Your Business Operations
What are ‘business operations’?
Simply put, business operations include any activities that help with running a company and maximizing profit. It’s important to have an efficient and streamlined operations process so you’re not wasting your time or money on anything that is hampering the ability of your business to run smoothly.
What’s included in business operations?
The umbrella term can include myriad activities, depending on the type of business. For instance, operating an online business is substantially different from operating a brick-and-mortar store. Online businesses generally require fewer staff members and have lower launch and infrastructure costs. However, online businesses can bring their own challenges in a space where purchases can be made 24/7 and customer service has to reflect these hours.
Initially, you’ll want to include an operations plan in your business plan, which you can develop as you grow. Your business plan should include a comprehensive list of the most common things included in business operations, such as production processes, staffing, location and any required equipment or technology. For example, if you’re opening a coffee shop, you’d want to think about who your local customers will be, what kind of coffee machine you need to purchase, where the beans will come from and how many staff you are likely to need. Your plan should also include a marketing strategy (see our guide to writing a killer one).
Within these plans, it’s also important to include areas relevant to potential investors, if you intend to seek funding. Location is a major consideration — where will your business be based? Considerations about location should include data about foot traffic and local demographics, details about your lease, and a list of major equipment needed (or an explanation of why you decided to operate as an online business).
Next, be sure to include your supply and inventory management processes (see our guide to maintaining a good relationship with your suppliers). Explain how you’re going to manage your inventory and ensure efficiency. Square Inventory can help you keep tabs on your stock, while your Dashboard allows you to check sales to see which products are selling well. Production and distribution are also important factors if you will be manufacturing something — consider how and where you will source, make and distribute your products.
The way you choose to organize your business will affect the processes that you use to manage operations. Most businesses should include a framework for human resources: Who will be running your business? Will you be bringing in outside consultants or hiring staff? Be sure to set into place an infrastructure for any staff - these will be the the people responsible for implementing your business operations.
As for managing your team, business operations best practices highlight the importance of setting expectations, being transparent, and providing clear steps to success. Great bosses are also a source of inspiration.
For more information on planning, Citigroup’s guide lays out standards and best practices for creating business operations plans; covering the legal, physical and regulatory structures of a business.
Analyzing your operations
As you move forward, be sure to document your process and take ownership of each stage of the operations plan. At any level, businesses can streamline existing operations by looking at the efficiency of the business. Where possible, make data-driven decisions to improve processes and test new systems. Square Analytics can help you see your sales in real time and make decisions based on historical data.
The strength of your bottom line is the best way to gauge whether or not things are running well, but there are questions you can ask yourself to delve deeper and see if there are any other snags in the system: Are you spending most of your money and time in the right ways? What’s your current return on investment; if it’s not great, could you have higher margins? Think about times when you’ve run out of stock or had a supplier issue and create a plan based on how you can rectify these problems in the future.
Business operations are an evolving part of your business that can be streamlined and refined using your sales data and feedback from your team.