Even the smallest of businesses are composed of many moving parts. As a small business owner, you’re the person grinding all these gears to achieve success. And with all that work comes the potential to lose track of essential tasks and consequently fall behind on your goals. This challenge is equally likely for new and longtime companies, so this small business operations guide is a vital read for all entrepreneurs. Read on to learn how you can get a handle on your affairs.
Your day-to-day operations comprise all activities your team undertakes to keep your business functioning and earning revenue. They include:
- Working capital. When your business has positive working capital, you’ll have the resources required to cover all your operational basics. These basics include paying your employees, repaying your debts, and covering other expenses such as rent and vendor services. If you find yourself unable to cover these costs, SBA working capital loans may help.
- Accounts payable and receivable. Issuing an invoice isn’t the same as collecting payment. To ensure your cash flow remains steady, you’ll need to make sure that these invoices are being paid. Likewise, you should track all your vendors so you’re not suddenly without cash after sending a bunch of unexpected payments at once. Accounting software or an in-house accountant or bookkeeper can help.
- Hiring and onboarding. A bad hire can cost you as much as 30 percent of that hire’s salary, so making smart hiring and training choices is key to business success. Enact a system that shows employees what good performance means, how to be accountable, and how they’ll be rewarded for excellence. Employee development plans and internal mentoring programs can help.
- Inventory and supplies. Managing your inventory helps ensure that all your products remain in stock as your company grows. This way, you always have what customers demand. A robust inventory management system shows you how much stock you’re moving and how much raw material you have available for creating your products. This way, you and your team have everything you need to succeed.
- Customer service. You could have all the working capital, cash flow, and stock in the world and still fail if your customers can’t reach you. Clear and frequent customer service is vital to ensuring consistently high-quality products and services. Proper customer service training can help you achieve this consistency even if your team members bring different approaches to the table.
How to improve business operations
Your day-to-day operations provide a foundation from which your business can work, but a foundation needs structure atop it to be successful. Constantly improving your business operations can give you the structure that keeps everything organized and flowing flawlessly. Some ways to do so include:
- Regularly editing your business plan. It’s a common mistake to view your business plan as relevant solely to your company’s launch. It’s much better for your operations if you regularly review your plan instead. This way, you can modify it to reflect your current market conditions and other challenges. Your modified business plan can act as a roadmap for adjusting and reimagining your operations.
- Reassessing your pricing. Somewhere at the intersection of your customers’ demographics, your revenue goals, your market, and your competitors’ prices lies your ideal price point. Of course, all these factors are in constant flux. That’s why regularly reassessing your pricing is key to business success. You’ll know if and when you can demand more and figure out how to adjust your operations accordingly.
- Bolstering your marketing efforts. Operations are easier when you have enough cash – as in, working capital – coming in to cover your costs. A great way to get more cash is to increase your marketing efforts. You can target your current customers to increase their lifetime value or pursue new customers. Make this decision carefully, though, as Acquisition is much more expensive than retention.
- Paying attention to industry trends. Let’s say you’re a big-time subscriber to industry newsletters and find that companies in your realm are seeing excellent returns on new employee training methods. You’ll then know to try the same for yourself to improve your operations. If you too have similar successes, your business’s day-to-day operations will all flow smoother.
- Putting your business intelligence (BI) to work. The most successful businesses take the data from their marketing campaigns and surveys, often known as BI, and use it to change. BI analysis, visualization, and other tools can help you understand your competition, see what your customers need from you, and track your performance. All these aspects of your operations are ripe for regular refinement and optimization.
Company improvement suggestions
Tweaking your operations should improve your company as a whole. And often, finding suggestions for how to improve your company is a straightforward pursuit. Some ways to improve include:
- Asking your employees. Your team has unique exposure to your operations and can thus offer perspectives often unavailable from customers. You also might be too close to your operations to see the obvious gaps that your team can identify. To solicit team feedback, distribute surveys that employees can answer anonymously. Then, hold a meeting to discuss their ideas and how to implement them.
- Connecting your employees. It’s one thing for employees to work together. It’s another for them to feel genuinely connected to one another. You can help form these connections by encouraging your employees to talk about more than just work. Create opportunities for employees to gather that have nothing to do with the tasks at hand, such as happy hour or a company outing. After all, team members who have full trust in each other and feel at ease working together will do better, faster work. The result is, of course, better operations.
- Allowing for flexibility. Assuming you’ve clearly set goals and expectations for your team, moving towards flexibility can enhance your operations. If your highest-performing employee does better working from home half the week, consider allowing them to do that. If your sales manager has recently made it through an intense sales period, make sure they’re maintaining a proper work-life balance. Giving employees the structure they need ultimately leads to more engagement and thus better operations.
- Celebrating wins. The work your team does there is their conduit to their own financial stability, and this reality can stymie employee engagement, innovation, and production. To counter these operation-stifling challenges, go out of your way to celebrate wins. Employees will be more likely to remain invested in your operations and take risks if they’re positively reinforced for their work.
- Enacting reward and accountability programs. Celebrating wins should come naturally to you, but you could consider implementing a reward program. Whenever employees reach certain milestones, your program will inform you exactly how to celebrate. You should couple this program with accountability measures through which your team members can help each other stay on track. A team that’s operating at the required pace is more likely to be its best.
Best practices in business management
Operations and business management go hand in hand. Managing your business essentially means overseeing all its processes and thus operations. Several business management best practices can help you achieve this goal.
Among these best practices are keeping your employees engaged, offering flexibility, and rewarding achievements. Cumulatively, these goals lead to a team that isn’t afraid to operate in the way best for its success. Coupling these initiatives with a focus on team innovation, alignment, and communication helps too. This way, your employees can come to you with ideas and concerns without fear of repercussion, all while your team stays on the same page.
While these business management practices reinforce that you are equal to your team members, you’ll still need to lead , and you should always lead by example. Try setting clear goals, missions, and values, holding regular check-in meetings, and outlining clear benchmarks for improvement. The combination of exemplary leadership and working at your team’s level can lead to a workplace culture in which everyone operates as best as possible.
Business operations software
You’re probably getting the sense that business operations involve a lot . How can just one small business owner do this all? Of course, hiring employees is a great start. But whether or not you have a team working under you, business operations software is a must. The best software platforms make tracking and improving productivity, not to mention executing certain operations in the first place, significantly easier.
The many types of business operations software from which your business might benefit are:
- Accounting and invoicing software. With accounting software, you can track your accounts payable and receivable, expenses, taxes, cash, and other accounts. Many accounting software platforms also include tools for creating invoices and sending them to clients. This way, you can begin the accounts receivable process from the same place where you track your revenue and expenses.
- Asset management and database software. This category is the formal name for platforms such as Google ® Drive that form the backbone of many modern-day small businesses. You’ll need them to safely and easily store, share, access, and sync all the documents and data that undergird your operations. This notion holds true whether your team is remote or in-person, as even in-person teams benefit from automatic cloud sync.
- Customer relationship management (CRM) software. To provide the best possible customer service, you should understand your customers’ buying history and needs as you speak with them. With CRM software, you’ll have all this information at your fingertips during customer interactions. Some CRM platforms also come with dialing tools that streamline the actual process of contacting customers in the first place.
- Payroll software. Few small business owners want to spend time calculating employee pay and handing out paychecks. Payroll software automates all your calculations and enables direct deposit that eliminates paychecks. It’s the easiest way to ensure that your working capital is flowing optimally for operational success.
- Project management software. You can use project management software to group tasks by project, client, and team member. This way, everyone on your team knows what they need to do, how to do it, and by what deadline. As team leader, you’ll also get a top-down view of who’s doing what and, based on deadlines, how soon you should check in on progress.
- Sales management software. This type of software is basically CRM with a focus on sales rather than customer service. In fact, you can use most CRM platforms as sales management software. However, there are certain platforms designed specifically for sales that may prove more beneficial.
- Time and attendance software. Paying your employees starts with knowing what hours they worked. Through time and attendance software, you can collect this information in seconds instead of manually thumbing through pay cards. The result is easier payroll processing that keeps your working capital flowing.
How to write an operational plan
Now that you understand how to operate your business, you should put all your knowledge together into a concrete plan. Of course, since operations span a wide array of business concerns, creating your operational plan can get tough. You can expedite the process if you take the below steps:
- Choose SMART goals.
- Indicate the key performance indicators (KPIs) by which you’ll measure success.
- Explain the KPIs to your team.
- Detail your production process.
- Estimate your costs.
- Create budgets for all your expenses.
- Outline your hiring process.
- Determine your team’s working hours.
- Set your work location.
- Address potential risks.
- Enact quality control measures.
- Detail your project management systems.
- List your timeline and milestones.
Additional small business operations resources
Now that you’ve reached the end of this guide, you should have a better understanding of some key operational tenets. That said, day-to-day operations exist in constant flux by their very nature, meaning you’ll need to make changes time and again. With those changes can come a need for skills and ideas you don’t yet have. When those moments arrive, visit the SmartBiz® Learning Center for additional resources that can help you with tips on how to improve your operations.
WHAT YOU NEED TO KNOW: The SmartBiz® Small Business Blog and other related communications from SmartBiz Loans® are intended to provide general information on relevant topics for managing small businesses. Be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed. Please consult legal and financial processionals for further information.