The operations component of your business fulfills promises made, creates the products or delivers the services you offer, and performs general and administrative back-end functions.
No growing company can stand the test of time without having an effective operations area. Sure you can generate sales, but unless you’re able to fulfill the actual promises you’ve made, your business cannot last.
Operations is critical to sustaining your company. To have a successful business, you need to find the right balance between operations and sales and marketing. If you’re not careful this balance can get out of whack. Too much focus on sales and marketing, and your company won’t be able to fulfill its promises in a timely and effective manner. Too much on operations, and your company starves for sales.
The best businesses find a way to balance the stability needs of operations and the dynamic needs of their sales and marketing team. It’s in creating this equilibrium between operations and sales and marketing that you’ll face the greatest test of your growing business.
A few final comments about operations. Often, business owners operate at one of two extremes. Either they struggle to leave this area of their business alone (can’t keep themselves from micromanaging it) or they ignore it before it’s time. Both extremes are dangerous. The first because it means you’ll always be limiting the growth of your business with your need for microcontrol. The latter because your business won’t survive without having prudent and regular reviews and controls in place to safeguard the operational area of your business.
The most successful business owners are able to walk away from the day-to-day work of the business while still keeping a finger on the pulse of their company. The best way to do this is by regularly reviewing key metrics and checking in with your company’s leaders.
Ultimately operations is all about (1) keeping the back-office function of your company working and (2) fulfilling on the core product or service that you’ve promised your client.
Breaking Your Company’s Operations Down
Is your business primarily a service-based business or a product-based business? In some ways the distinction is arbitrary, but it can still be a useful one. Write your answers down.
Every business can break its operations pillar down into its constituent parts.
Acme Consulting Inc. — Operational components:
- Consultant scheduling (to get the right team members on the right jobs at the right times)
- Consultant services performed (this is the actual “work” of the business)
- Client support (answering questions, solving problems, and building relationships)
- Coordination with sales and marketing (to take the handoff from them, and to give the handoff back to them to work on expanding the client relationship)
- Coordination with finance (to do the billing and collections accurately, in a timely manner, and effectively)
- Back-office administration (keeping the office open, the phones and T1’s working, and the filing systems and document storage organized)
- Technology (keeping the company servers running, the Web sites operating, and the computer systems and network humming)
Johnston’s Grocery LLC — Operational components:
- Purchasing (buying the right products at the right prices to profitably resell)
- Inventory control (tracking what sells and what doesn’t sell and reorder requirements; this is made more challenging by the need for operations to get information to finance so they can account for all inventory on the books, and information to sales and marketing on what’s selling where in the store at what prices, times, and to whom)
- Facilities management (got to keep the lights on, the parking lot smooth, the building standing tall, and the doors open)
- Staff scheduling (who is going to work that holiday weekend? All kidding aside, how can we staff for optimum profitability and how do we handle when John gets sick and Sara goes on vacation?)
- General administration (got to keep those records organized, office supplies in the closet, and office tools working for the management team)
Now it’s your turn. List the key components of your company’s operations. Here are a few hints to help you:
- Follow the path from the client order to the client getting everything they’ve paid for.
- What has to happen behind the scenes for the above to happen?
- What has to be open for your company to be “open for business”?
- What behind-the-scenes tools must be functioning for your sales and marketing team to do its job?
- What behind-the-scenes tools must be functioning for your financial team to do its job?
- What behind-the-scenes tools must be functioning for your team and HR team to do its job?
- What behind-the-scenes tools must be functioning for your executive leadership team to do its job?
Now you know what key areas to focus on when building out your company’s operations.
David Finkel is the best-selling author of more than 40 books and courses, including The Maui Millionaires for Business. He is a successful business owner who has bought, built, and sold several multimillion companies over the past 10 years. To learn more about his tools for business owners, visit him on the Web at Maui Millionaires.