- What are business operations?
- Why are efficient operations important for business growth?
- How can I organize and measure my business operations?
The business is running all right, but there’s a sense that not everything’s up to par. A bunch of orders go unfulfilled every month, and they seem to run out of croquet mallets before garden party season gets in full swing every year.
These issues sometimes lead to bad reviews for Gymmer Jammers, and Gina’s starting to get concerned.
So what’s the best way for her to bring a little order to these orders?
Let’s find out
For Gina, the ability to receive and fulfill orders is what her entire business is built on. And any action that impacts her orders is part of her “operations.”
Operations are the actions that affect your bottom line. So anything your business does that generates income or incurs an expense is an operation. It’s as simple as that.
Different types of businesses have different operations. For example, a clothing manufacturer’s operations deal with making apparel, while a restaurant’s operations involve everything that goes into serving food to customers.
Operations can help your company create value –especially when they’re efficient. See, if you’ve set up your business practices to maximize income and limit expenses time after time, you’re likely creating revenue for your business.
This also means that operations can affect your business’ profits. If Gina’s team can only ship 35 out of 40 orders a day without messing anything up, she’s losing out on the money she’d earn on those extra 5 orders.
Lastly, good operations can help your business stand out. Gymmer Jammers, for example, offers the largest selection of any sports store, gloves down. But if her orders are filled incorrectly, no one will care what she carries.
Operations are generally comprised of numerous smaller tasks. Each of these individual steps is referred to as an “operational activity.”
Operational activities vary with what a business does. As a distribution business, Gymmer Jammers’ operational activities include getting orders, communicating with a warehouse, and sending products to their customers.
Understanding each of your operational activities in depth helps you measure how well each aspect of your business is performing. So you can see which tasks are profitable and which give your bottom line a frowny-face emoji.
A great way to make sure your operational activities (and entire operations) are profitable is to link each of them to a business goal.
While you might not always be able to form these links, clearly identifying each of your activities gives you the best possible start.
Identifying your operations clearly can help you repeat, measure, and improve on them. And a great way to add clarity is to write down what you do in a manual.
An operations manual details the steps involved in your operational activities. It’s the kind of thing your employees should have, so if you suddenly run off to a desert island for a while, the business can thrive until your tanned self returns.
Start by detailing the processes you follow to get stuff done. If you have employees, sit together and have them document how they do what they do. Go for clarity, so you can ensure things are done the right way every time.
List the resources needed for each activity, including any templates or forms. For example, when writing out how to handle customer complaints, include a script your staff can use, so they don’t go rogue and land you in a world of 1-star reviews.
In addition to detailing operational activities, your manual can also include some basic documents like company policies, an organizational chart, and employee contact info. That way, it kind of becomes a one-stop-shop for your shop.
If you’ve made your operations clear and repeatable, you’ll also want to make them easy to measure, so you know if they’re really successful.
Statistics on how your operations are doing are called key performance indicators (KPIs). They might include things like the time it takes to resolve customer complaints or the percentage of orders that get sent back.
Associating a KPI with each operational activity lets you measure that activity’s success. That way, you know if that step in your operation is as strong as it can be, or if you need to improve it so you don’t get stuck in a massive hole.
Remember athletic outfitter Gina? She figured out that customers weren’t getting what they ordered because of bad communication between her online store and her warehouse.
To remedy this, she set a KPI for the warehouse to receive 98% of the orders correctly. Then, she worked with her employees to improve the operational activity of getting orders to the warehouse until she hit that KPI.
As you create KPIs for your business, focus on ones that really create value – having to consider a lot of variables is hard on the brain. You can even check out software to help you track KPIs as you work to become a lean, mean, business machine.