Whether you are a new small business just starting out, or an established company looking to achieve a new phase of growth, the effectiveness of your business operations will have a huge impact on your success.
Business operations are at the heart of any business. In fact, businesses thrive or fail depending on how well they run their business operations.
Your small business operations encompass all the processes and resources that enable you to offer your customers the highest quality products or services, in the most efficient way.
Smooth-running business operations are critical for providing an excellent customer experience – to earn customer loyalty, referrals and a good reputation – whilst keeping your business lean, and fulfilling your business functions efficiently to deliver maximum profit to your bottom line.
Let’s take a look at the four cornerstones of effective small business operations…
1. Location – Where you do business
Choosing an appropriate physical location to run your business from is critical if your business relies on passing trade, or being close to a particular set of suppliers, customers, or a pool of specifically skilled employees (such as highly skilled tech experts in Silicon Valley).
It is also important to consider where your competitors are based, to ensure there is enough business opportunity in your preferred location.
Location may not be an important factor to some Internet-based companies if they are able to offer the same level of service operating from anywhere in the world.
2. Equipment/Supply – What you need to get the job done
If you are a service-oriented company, you might primarily supply data or expertise – although there will need to be systems and processes in place so everyone in your business produces the same high standard of work (see point 4). Service companies will also need office supplies, hardware/software…
Manufacturers need to tightly manage how they purchase raw materials for making their products, ensuring sources are dependable, and offer best quality for best price. They also require the equipment for making the products, quickly and to a high standard.
Retailers require good supplier relationships, reliable supply chain, the ability to negotiate good prices, and equipment for storing/displaying/selling their stock…
3. Labour – Who is responsible, the human side of your business operations
Without people, nothing will get done. Whether you are a one-man band or have a large team of employees, it is important to define everything that needs to be done and by who. Make a list of what tasks need to be done, what skills are required, how they will take, and your estimated labour costs. You can then decide who is responsible for what.
It is useful to regularly review the capabilities of your workforce as their skills develop, or as employees come and go – offering long-standing employees the opportunity for increased responsibilities, recognition and progression.
4. Process – How you do business
Your business processes encompass how you get business done, highlighting opportunities for improvement to increase your future efficiency and profitability.
Effective management of information systems monitors key business functions (e.g. sales and marketing – tracking how many prospects are targeted/converted to paying customers each month) highlighting if adjustments are needed for better results.
Inventory management is also key to business efficiency, in order to avoid being out of stock and missing out on potential sales.
Another important area is quality control, which monitors whether your product/service is of a high enough standard, and any changes required for a better customer experience.
The importance of each of these cornerstones will vary depending on the size and nature of your small business, but it is very useful to take time out regularly to focus on all four areas of small business operations, and highlight whether there is anything you could do differently to improve your business efficiency, and ultimately your profit.
If you’re a small business owner in need of expert accountancy and business management advice please get in touch to find out how we can help you.
Bibbys are a friendly firm of Chartered Accountants based in Devon, helping individuals, entrepreneurs and business owners with all their accountancy, tax and business planning requirements.