What is Operations? And Why Does My Business Need It?

So you want to extend your product line? Open a branch in an up-and-coming neighborhood? Resolve a purchasing inefficiency? Improve customer loyalty?

If you answered yes to any of these, or have any specific goal in mind for your business, you should look to your company’s operations – the internal engine that powers your business.

Well-run operations are a critical, and often overlooked source of a business’ success.

What Is Operations?

Operations is the work of managing the inner workings of your business so it runs as efficiently as possible. This can help streamline costs, allowing you to do more with less and reducing the need to secure a business line of credit or term loan. Whether you make products, sell products, or provide services, every small business owner has to oversee the design and management of behind-the-scenes work.

The specific definition of operations will depend on your industry and the stage your business is in. Sometimes, improving operations means thinking strategically about your systems and processes. Other times, it means being part of the on-the-ground work to bring every aspect of a project, from tiny to huge, to reality.

At a small business, you may not want to dedicate a single person to an operations role. Rather, both employees and owners should understand how the business works and how various processes impact day-to-day tasks. Here are some examples of operations in different industries–and how mastering your processes can contribute to success.

If You’re a Retail Business

As the owner of a retail business, your daily goal is to stock the items customers want at a price they’re happy to pay.

For your operations, that means perfecting your inventory.

Take a look at records from last season. What is selling well, and what’s sitting, unwanted, on the shelves? Can you negotiate lower prices or better terms from your vendors? Would your customers be willing to pay more for any of the items you sell?

While some of the answers will be obvious when you crunch the numbers and analyze the results, another operational update might be to implement a software program that can manage and optimize your inventory in real time so you can address these questions more quickly and more often.

If You’re a Restaurant

Food businesses have even more challenging inventory problems than retailers, since their product is perishable. At a restaurant, operations applies not just to foodstuffs, but also purchasing, preparation, and the costs of food, beverage, and labor. You’ll also be concerned with customer service and customer experience at your restaurant.

As you look to streamline your operations, you might focus on signing contracts with important suppliers, improving the organization of your walk-in refrigerators to optimize food freshness, or training staff to exceed customer expectations. There’s a big range here, so think through who should be in charge of leading the different aspects of operations, since it likely won’t fall to one person.

If You’re a Service Company

Service companies can divide their operations into two key buckets: client-facing and business related.

Start by thinking through your client interactions: what could happen more quickly? Is the customer experiencing any unnecessary notifications?

Then, you’ll want to consider how your current processes for communicating, collaborating, and managing projects affect the services you’re offering. For example, if client projects are continually coming in over budget, one big operational concern would be the methods used to calculate your estimates at the beginning of a job.

If You Make Products

The origin of the term “operations” comes from companies that made physical goods. Back when economies were industrializing, inventive businesses tried to add efficiencies wherever possible. That led entrepreneurs like Eli Whitney to pioneer the method known as parts-based assembly, so that cotton gins and other products could come to market more rapidly, cheaply, and consistently.

You don’t have to reinvent the assembly line if your small business makes products, but you should take a good look at how you purchase, store, make, and ship your merchandise.

Consider your methods from a time standpoint: Is there a way to consolidate big orders so you can save time by working in bulk? Are there bottlenecks in your production that might have simple solutions? Could your transportation be improved upon? Could you negotiate better with your suppliers?

If You’re a Digital Company

Much of a digital company’s value lies in your personnel. For you, operations has a lot to do with finding optimal ways of hiring, training, and mentoring your staff. Tools to help with employee retention and satisfaction are wrapped into this, too.

With digital products, collaboration is key; most sites, apps, or tools can’t work properly without the help of multiple teams. That means that monitoring processes and updating software as needed to streamline collaboration is an operational necessity.

Another matter to pay attention to is outsourcing: what should your full-time employees spend their time on, and what types of tasks are best left to external experts?

Operations is key to running  a business that’s always getting better and better at what it does. By taking a look at how your business is run and asking yourself questions about existing processes, you’ll be able to define and optimize what operations means for you and your business.