Search SMBresource

Business operations made easy (Or at last tolerable)

In the small business operations generally go in either of two directions. Too much time and energy is spent, or no time at all. Both can result in a loss of efficiency .

Let's first define business operations. Basically operations are the tasks and responsibilities involved in running the business as an entity. Operations includes tasks like invoicing the customer, paying bills, organization of the sales and marketing effort, and organizing and planning the base functions of the business.

In the small business the CEO or owner usually handles the lion's share of these duties. When business is good, operations tend to take a back seat to production. As time goes on this inattention to detail can eat in to profits, and stifle further growth.

So how do you get a handle on operations?
The first step is to honestly define how much time and effort you can put in to it, and how big the need is to either hire a person to fill some of the roles, or use outsourcing. If your business has grown to a level that allows you to function soley as the CEO, and your still spending most of your time on basic operating tasks you need to delegate.

Delegating doesn't mean you pile the load on to someone else. Unless the person has time available you'll just be moving the inefficiency to another person, but the problem will persist.

After you've made an honest assessment of the time you have available (and the time you are currently spending on the problem) you should divide the operations in to two groups.

Things that need to be done on a daily or weekly basis
Things that need attention only occasionally.

Things done on a daily or weekly basis
-paying bills
-sending invoices
-receiving payment from customers
-answering sales calls (Yes, in small companies this is tied to operations)
-Customer service and complaint handling
-Other various and sundry duties related to back office tasks.
-Running payroll

Things done less frequently
-Budget planning
-Performance reviews
-marketing planning
-Business partnerships and alliances
-internal auditing of costs
-quarterly tax and other accounting issues

Once you've complete your list you can group these jobs by function and then determine if hiring an internal person makes sense, or if it would be more cost effective to hire an outside firm to help.

For example, many payroll companies will also handle your workmens compensation insurance and quarterly payroll filings. Bigger accounting firms will also handle payroll.
Marketing plans can be outsourced to a company, or even individual contractors on an as needed basis.

Performance reviews can be very time consuming. An easy way to increase efficiency is to have a lead person, or supervisor complete the initial performance assessment.

The bottom line is you need to spend your time, and the time of other people critical to the business as efficiently as possible. To do that you may need to incur a short-term, or even long-term cost to free up the much more valuable resources of managers and executives. Many small and even mid sized company leaders struggle with when to pull the trigger on these expenses. These same people often have a difficult time transitioning to the role of CEO or COO because they are so burdened with repetitive tasks that could be better performed by an employee or contractor at a fraction of the cost of an executive's pay.

Executives who are performing at the highest levels need to focus their attention on generating new business, increasing the value, and profits of existing business and stabilizing the business to prepare for growth. This is an on-going cycle that every business must adhere to in order to grow and prosper. Streamlining business operations is an easy way to generate more time for executives to concentrate on the core critical functions of the business.

If you're not in a position to increase costs you can still increase operating efficiencies. I am constantly meeting with executives who spend hours and hours every month pouring over spending reports, labor reports and other financial data related to operations. The cold hard fact is that in most businesses this information isn't changing on a daily,or even weekly basis. To become more efficient look over the last several months of reports and see if anything really is changing quickly enough to determine that level of attention. If not, set aside time once a month, or even just once every quarter to study these reports. You'll find that you actually will be able to make much better decisions because you'll be looking at things from a wider, and longer term perspective.

Lastly, incorporate these operations changes in to your business model. This is something even large corporations struggle with but it can be vitally important. By incorporating the operations in to a more structured approach you can avoid the trap of having to scramble to fix everything at once when sales start to slow.

Eric Gurr
Editor in chief
SMBresource