How To Manage Your Small Biz’s Operations

BY POLLY SCHNEIDER TRAYLOR

On my first day as a small-town newspaper editor, the publisher handed me a book of procedures. It explained my deadlines, the stories he liked and the ones he didn’t want to see, how to deal with the columnists, how to operate the fax machine, how to answer the telephone, how to lay out the copy and how to get the storyboards to the printer every Tuesday by midnight.

I scanned it quickly, but never consulted the book again because I was too busy just trying to get the paper done every week. I made a lot of mistakes early in that job because I didn’t pay attention to these carefully crafted processes in the first place. Sound familiar?

Many small businesses are running at the speed of light, grappling with prospecting, helping customers, tweaking product mixes and pricing, updating the website, managing employees and paying their bills. With social media, there are even more tasks to handle on a daily basis. But wait: What about the big picture?

Writing the book on operations
Most growing companies will benefit from developing an actionable operations plan. This is a document, updated frequently, that details the company’s goals, strategies and processes. Another way to think about an operations plan: It’s the how-to book for fulfilling company objectives. Most smaller companies don’t have one and that’s a mistake, says Jud Barr, owner of JTB Sales and Operations Consulting, in San Francisco.

“There are a lot of great companies with great ideas, but as they go out into the market and gain traction and sales start accelerating, operations don’t keep up,” says Barr, whose firm works with small and midsize specialty consumer products companies. “Then the company has cash flow issues, customer satisfaction issues, the product delivery is late or the quality is bad.”

An operations plan may cover strategy and processes for technology, people, capital/finance, sales and marketing, and, if applicable, supply chains, logistics and R&D. At a minimum, a company should document all support processes, such as human resources, payroll and accounting, to protect a business in case of a leadership change or acquisition, says John Wilkerson, vice president at Bellwether Services, an Atlanta-based management consulting firm. “Someone needs to know how to run everything.”

When you need a plan, and how to get started
“Once you cross $5 million in sales, you need to start thinking about what the business looks like when it’s $20 million,” says Barr, whose company helps clients fine-tune sales, implement customer relationship management (CRM) and enterprise resource planning (ERP) systems, and optimize manufacturing and logistics processes.

JTB Consulting begins an engagement with a detailed assessment of the client’s processes, from development to marketing to customer relationships. This exercise helps highlight any breakdowns in the chain, and produces an action plan. Part of this work involves using Microsoft Visio to develop visual maps, which piece together the different activities in an organization and show how they contribute (or don’t) to the overall “value stream” of the business, Barr says.

Barr describes the experiences of one client, a small bag company based in San Francisco. JTB Consulting developed a sales operations planning process where managers sit down every month to review sales, at the same time creating a forward-looking 12-month rolling plan to help guide the manufacturing process, which previously was disconnected from sales. The sales and marketing team now spends time every week stretching with manufacturing co-workers — a bonding activity that also helps office workers see what’s happening in product development. These changes are helping the company operate toward common goals, instead of in silos.

Bellwether Services approaches its own operations planning using a three-step process that analyzes the company’s current state, future state and the initiatives it will tackle next, says Wilkerson. For each initiative, such as launching a new practice area, the company will examine the related financials, talent and operations needs, as well as target customers. Finally, executives map out the cost of development and then calculate return on investment and revenue predictions.

Continue reading this article at Entrepreneur.com after the break!