Without a well-thought-out structure in place, your business will NEVER achieve the success you desire…and may ultimately meet its demise.
Regardless of where you are in your journey as an entrepreneur, be it preparing to launch your new venture or celebrating a milestone anniversary for your business. Business operations management is an area that requires your constant attention. Yet, the OPERATIONS PILLAR is most often forgotten or regarded as something that gets done as things ‘happen’ or become necessary. This approach can have devastating consequences at a critical time to even the most established business.
Is your business operationally sound? Think for a moment and answer honestly, are you fully prepared for almost anything, with a planned, choreographed response, procedure or action that can easily be located and implemented by your leadership team? I can all but guarantee your answer is a resounding “no.”
The vast majority of entrepreneurs build their operational policies and procedures as they move through the various stages of building their business. In short, something happens; they react and devise a plan or policy to address the situation and then move on.
In most instances, this means that the response was created ‘on the fly’ without proper consideration for the potential ramifications and without being properly documented for future reference.
‘On the fly’ reactions put tremendous stress on the ‘go-to person,’ as they become the keeper of all knowledge and decision making. This situation is why so many small business owners work incredibly long hours, experience burn-out, and ultimately never achieve the success they can and deserve.
Their perception is that the business cannot operate without them continuously available as the only decision-maker. This dependency is the root cause of the inability to grow the business and enjoy the fruits of their labour while doing what it was that drove them to start a business in the first place.
I have put myself in the position as the ‘go to person’ many times in my career, as both an entrepreneur and an organization leader. It can be exhilarating, ego-boosting and fun…in the beginning. However, this can quickly become the bane of your existence as you realize your days are spent putting out fires and answering questions that could easily have been answered if an operations management system were in place. A little logic had been applied by the person asking the question.
It is paramount to realize how this situation came to be and that you are the business leader. You have to implement a structure and procedural guidelines (business operations management) to empower your people to make their own decisions with a system to guide them through processes and key reference points to help them along the way.
Without having taken the time to develop a proper operations management system and a well thought out and crafted OPERATIONAL PILLAR, a business will suffer greatly and never realize its full potential. Employees become dependent and stop thinking for themselves, good people feel less empowered, their motivation declines, and you lose good people.
Great ideas never come to fruition as the ‘go-to person’ becomes immersed in daily operations, micromanaging and working within the business. This takes away much-needed time and energy that should be spent enjoying life and developing the business by focusing on ALL of the PILLARS and enjoying work and life balance.
Suppose you have ever worked for an organization that ‘had it all together,’ with operating manuals, policies and procedures and empowered people in place who knew their role and were both comfortable and able to make decisions. In that case, you understand how well-defined operations management can free up the key people to focus on building the business, creating new products or income streams while improving existing areas. Which, in reality, is what you pay employees for!
Well-prepared organizations tend to function with far less stress and wasted energy. Their people have a sense of direction; leaders can focus on their most important tasks, such as putting their efforts toward developing new business, enhancing existing business and improving efficiencies throughout the operation. Folks can take holidays, work regular hours and enjoy life outside the workplace without the need to be on call 24/7.
The ultimate goal of any entrepreneur is to build a thriving business that operates and performs efficiently, even when you are away for an extended period.
The truth is that operating a business, maintaining work-life-balance while remaining true to your values, morals, and ethics is undoubtedly a difficult task. Then add the requirement to fully understand and ‘live’ the six Pillars of a successful business structure while taking care of YOU, as the foundation of your operation can seem downright impossible.
It isn’t impossible. However, it is a skill that requires discipline, commitment and continual self-education, such as that provided at EntrepreneursRx.
Operating a business without a well-crafted management information system is akin to building a house without a solid foundation. Eventually, it collapses. I have never seen a business survive and prosper without a commitment to creating a good, well thought out and systematized operating structure.
I have seen many businesses experience success in varied sectors, rapid growth, accolades, and seemingly out of nowhere, they ‘crash and burn’. But, anyone on the inside would have been able to recognize the signs and predict what was coming. Hindsight truly is 20/20.
Let’s examine what is required to develop an effective, well-designed operations management system that grows with the company and is constantly being updated and refined.
I won’t get too granular here because every operation will have different needs, wants and requirements. The more regulated your industry is , the more it becomes vital to have your operations management completely mapped out and in full compliance with the requirements of your industry. No one wants a lawsuit on their hands.
Let me be clear. Every business, in every sector, no matter the size, needs to have a well-laid out and adequately planned operating manual in place, with clearly defined operating procedures that cover every potential situation. Time and expertise must be committed to creating a living library of information that details literally everything that can, might or will happen within your operation.
The operations manual provides comprehensive documentation as to how your company should function daily. When documented properly, anyone new to the organization should quickly understand the expectations of your business’s day-to-day procedures and policies.
Regardless of what your business does, this fully applies to you.
Take the time to do it right.
If you’re just starting, it is imperative to properly establish a process for OPERATIONAL MANAGEMENT SYSTEMS – DEVELOPMENT, REVIEW AND UPDATING. If your business is already established, take the time to create, refine or improve this structure. Implement a system for updating and reviewing your operational procedures.
Even in the most respected, established and high-performing businesses, the operations manual is often years out of date with no longer relevant content. This document must is as a living entity, which has to be regularly reviewed and updated.
Another key requirement is that everyone in your organization must know where to find the operations management guidelines and who is responsible for updating the content. It can be frustrating for someone to search out the information and follow the guidelines, only to find the instruction were out-of-date and no longer valid. It is imperative that the person assigned to oversee this task regularly and is held accountable for their actions.
As the leader, your management information system must document every procedure and policy and convey the expectations of where specific items, such as contracts & physical objects, are stored or located.
(i.e. the tools are kept in the toolbox when not in use OR Key cards are returned to the lockbox before leaving the premises).
There are generally four key components you will want to include in the Business Manual.
- How-to procedures (i.e. steps to create a new client account in the CRM software).
- Business policies must be succinctly defined. (i.e. no product is to leave the building until paid in full)
- Physical or virtual location of items. Make it clear what the expectation is. (i.e. All tools are to remain in the workshop and be returned to the appropriate toolbox drawer at the end of each day OR HR files are located on the mainframe in the folder named XX )
- Contracts, legal documents, etc., must be updated with appropriate language, terms and conditions clearly stated and properly signed by the appropriate parties.
Contacts must be reviewed regularly and updated accordingly and be adequately maintained. Unfortunately, once signed, they are often filed and forgotten. No one wants to find out after the fact that a contract was expired and no longer valid.
Following is an excellent reminder of how this can quickly happen:
Many years ago, a very popular local restaurant I frequently visited burned to the ground one weekend. As is usually the case, arson and insurance fraud were immediately suspected; fingers were pointed at the owners.
Shortly after that, arson was, in fact, proven. Fortunately, the owners were cleared of any wrongdoing when it became obvious they had let their insurance policy lapse and were no longer covered for the multi-million dollar loss.
This oversight ended their business. A lifetime investment was wiped out because of an oversight. This situation would not have happened if a had installed the right system in place.
This life changing event would have been averted had they initiated the following measures with a detailed business operations manual:
- How-to procedure: An assigned employee trained how to review policies on a set schedule.
- Business policies: Scheduled updating or renewal of contracts within a specified timeframe related to expiration.
- Physical or virtual location of items: Knowing where to locate the contracts within the computer or physical files.
- Contracts, legal documents: An understanding of the ramifications of allowing a contract to lapse and the importance of maintaining them.
This life-altering event is a real-life example of a successful, founder-led (operated by a husband and wife team) business that went bankrupt, literally overnight, because they did not have a simple operating system in place.
Remember, leadership starts at the top.
Understand, your team will follow your lead. If you don’t place a high level of importance on any task, it will be viewed as insignificant and not worth their effort.
It is imperative that everyone in your organization ‘buys in’ to the operations manual and understands the importance of creating it, keeping the content updated, and making all new employees aware of its existence and significance to the operation’s overall success. It isn’t about ‘rules.’ The operations management system and operations manual must be crafted so that everyone can understand the expectations and work more intelligently, more efficiently and stress-free.
Get everyone involved and understand that they all have a vested interest in using and helping to build this vital component of the business.
While the business founder will initially create content for this document, once in place, ownership of this task can easily be transferred to a key employee who understands the importance of building and maintaining the manual.
Regardless of who assembles the manual, it must be clear that this is a continually developed and refined company-wide project. Everyone should be comfortable offering input to keep this document up to date and view this as a shared responsibility reliant on information from the entire team.
The more their involvement is encouraged, the more your team will want to be involved and the easier it will be to gain acceptance from the entire company and invoke their participation.
A word of caution, the operations manual is not an encyclopedia! Keep the sections short and to the point. No ‘fluff’ is required. Provide simple, concise details that outline the expectation and provide enough detail for someone to understand the procedure or expectation. Also, the operations manual is NOT a training manual. Don’t go into step-by-step detail of how to accomplish a task; this is not the purpose.
As we teach here at EntrepreneursRx, there are SIX PILLARS to business. Within each PILLAR, there are multiple Sub Pillars. Every entrepreneur must become well-versed with the content contained within each one. The OPERATIONS PILLAR must include specific detailed guidelines and procedures for every aspect of your business management operational system.
In creating OPERATIONS MANAGEMENT SYSTEMS for your own small or medium-sized business, you will need to create your own Operations Manual. Be sure to take the time and brainstorm all of the potential areas to be included.
I have included a partial list below to help stimulate your brain.
Creating the business operations manual is a requirement of the OPERATIONAL PILLAR.
By now, you will realize that many items cross over to other PILLARS. Everything is intertwined and dependent on your ability as the business leader to understand and manage ALL of the PILLARS.
Precisely why we here at EntrepreneursRx are so insistent that every entrepreneur develop their knowledge and skillset within EACH of the PILLARS.
OPERATIONS PILLAR – INCLUSIONS:
- Procedures (How to’s)
- Company Mission
- Hiring Practices
- Termination Practices
- Performance Evaluations & Promotions
- Opening & Closing
- Meeting Agendas & Format
- Disaster Recovery
- Emergency / Weather Situation
- Checks & Balances
- Business Plan / Case
- Updating of Operations Manual
- Policies (Guidelines & Rules)
- Payment Processing
- Property Management
- Directives & Rules
- Overdue Accounts
- Operating Hours
- Accounting Practices
- Client Engagement
- Social Media
- Vacation and Time Off
- Crisis Management
- Performance Incentives & Pay Increases
- Dress Code
- Checks & Balances
- Documentation Requirements
- Technology (What we need, How it works, Who is responsible for it)
- Evaluation & Selection
- Software Updating
- Documentation (Who, What, Where, Why)
- Legal ‘stuff’
- Terms & Conditions
- HR Related
- Lease Agreements
- Certificates & Compliances
- Record Keeping
- Job Descriptions
- Expenditure Approvals
- Passwords & Security
- Organizational Charts
- Note: These areas are just a sample of what may be needed.
- It is imperative that you take the time and create your list of inclusions while considering every aspect of your business.
While this may seem like a long, drawn-out or unnecessary process, it is crucial to understand that once completed; this exercise will provide you with the framework required to properly and efficiently operate your business.
Don’t circumvent this process!
Once completed, your Management Information System / Operations Manual will eliminate confusion, wasted time and considerable frustration. There are also many other benefits of evaluating and defining your operating parameters.
TIME SAVINGS / EFFICIENCY:
Eliminating guesswork means your operation is humming along far more efficiently, your employees are happier because there is far less confusion and stress for everyone involved.
Another significant benefit for the entrepreneur is that your employees will be far more inclined to handle the day-to-day operations – as they are paid to do. This improves efficiency, reduces your workload, and will free up your time focusing on the business areas that generate the best return for your effort.
With everything appropriately documented and readily accessible, growing your business is far more efficient. With systems clearly defined, you can add new locations and employees with ease.
In today’s litigious world, it is imperative that you can justify your actions and adequately protect your business from liability.
Should a legal situation occur – and it most likely will at some point – your Operations Manual provides proof that your company had procedures, policies, etc., in place to protect clients, employees and the business.
We suggest that you have your Operations Manual reviewed by your legal counsel to ensure it is written in such a manner that it is legal and properly protects those it is designed to protect. A poorly or written manual or one which contains vague language can open you and your business and its employees to liability risks.
An obvious benefit of having standardized and readily accessible procedures and policies is expediting and standardizing new employees’ training. This standardization eliminates any guesswork or variation. Everyone is provided with the same baseline training, making the onboarding process much easier for everyone involved.
ADDED VALUE & ENHANCING EXIT STRATEGY
When the time comes to sell your business or seek additional resources, having a well-crafted Operations Manual in place will demonstrate professionalism and enhance your overall perceived competency.
When selling your business (or passing it along to your family), the Operations Manual becomes a significant bonus to incoming owners or leadership—eliminating a lot of guesswork and potential conflict between the ‘old guard’ and the incoming administration. The mere presence of a good operations manual can, in some instances, increase the asking price for a business.
A surgeon demands that the hospital OR is fully prepared with all the necessary instruments in place. The surgical team must be fully equipped with the appropriate training and knowledge of the procedure to jump into action and perform their tasks. If there are missing surgical instruments or techniques are incorrectly completed, the patient can die.
Your business operates similarly to surgery in an operating room. Everything must be in its place, and everyone must follow specific protocols and procedures. The entire team must have the same knowledge and expectation for the outcome of the process with contingencies in place should anything unexpected happen. In business, the patient (business) may not die, but the company could suffer a terminal injury if there are any shortcomings in the process.
In today’s ultra high paced, technology-based world, more and more businesses are servicing clients on a much larger and often global scare. It doesn’t matter if you operate a factory producing and shipping the finest widgets on the planet or a restaurant selling the best lasagna known to humanity. You must have a long-term vision that includes an operations management system covering all areas of your business.
The commitment to institute and continually develop an operations management system in place can be a significant game-changer and launch your venture into a new stratosphere, but it isn’t easy!
Implementation and compliance to the Operations Management System must be ingrained in your company culture and driven from the top. Consistency and compliance with all aspects of your operational management will be vital in achieving the success you desire.
Few and far between are businesses that thrive without a long-term business operating system, and even fewer businesses even survive beyond three years without implementing superior operations management systems.
Not putting such a system in place truly isn’t an option. It’s an absolute must that will change the trajectory of your business as it affords you a roadmap to alleviate mistakes and rectify confusion.
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