Welcome to the fourth installment of a six-article series on starting your first business (SY1B). In this series, we cover a range of important topics that will help you get your first business up and running:
- How To Choose Your Business Name
- How To Handle Legal Business Formation
- How To Set Up Your Business Finances
- How To Develop Your Business Operations [You are here.]
- How To Build Your Workforce
- How To Market Your Business
With your business finances set up, it’s time to take an operational perspective. Your business operations lay the foundation for your company to function and generate income. They include processes, systems, equipment, and more. Notably, what’s not included in operations are personnel and marketing—these areas are tangential to operations and deserve their own discussion (which we cover in subsequent articles).
Types of business operations can vary greatly from one business to the next. For example, if you look behind the scenes at what it takes to run a retail shoe store, it will look remarkably different from running a car wash or staffing agency. Operational differences can also apply when considering a company’s size, as small business operations often evolve as the company grows.
Even among similar businesses—such as a retail shoe store vs. a grocery store—there are key distinctions. While both enterprises maintain physical inventory, a grocery store must have processes in place to deal with perishable items, whereas a shoe store doesn’t carry such inventory.
It’s clear that starting a business takes some thought in the operational area. You need to determine how you’ll provide the necessary resources to ensure your workforce produces the outcomes you envision. Below, we’ve put together several steps to get you started.
5 Steps To Jumpstart Your Business Operations
1. Create a business plan.
Who are your ideal customers? What makes your business stand out from the competition? What are your financial projections for the first five years of operation? These are all questions you need to answer in your business plan, a foundational document you’ll use to continually guide you while running your business.
A small business plan is your go-to roadmap for managing and growing your business from infancy to whatever stage you desire. The most important benefit of creating a business plan is the planning aspect—the creation process forces you to identify and record important details about your business. Even a simple business plan helps solidify your ideas, so they translate into tangible concepts.
A business plan can also help you in other ways. For example, if you’re looking for funding or business partners, a clear plan can communicate to a bank, investor, or potential partner the practical aspects of your business. Without a plan, you’ll have a tough time convincing them to support you.
Most business plans have several sections in common:
- Executive summary. This briefly describes the key highlights of your whole business plan in one or two pages. If an investor or potential partner reads nothing else but this section, they should know why your business is worth learning more about.
- Company description. Here you describe what your business does, the problems it solves, the audience it caters to, how it differs from competitors, and so on.
- Market analysis. Knowing the market is key to being successful. You need to identify exactly who your target customers are and as many identifying details as possible. You should also perform competitor research to identify their strengths and weaknesses.
- Organization and management. Detail the organizational structure of your company, including who’s in charge of what responsibility and functional areas. You can also include CVs of key company personnel (even if it’s just you), so investors and potential partners can learn how your team’s experience can help drive success.
- Products and services. Describe what you sell, whether it’s a product, service, or some combination of the two. If not completed, be clear on what development stage your product is in currently and when it will be available for sale.
- Sales and marketing. Explain what sales and marketing strategy you use to entice customers to buy from your company. For example, do you employ a large, outbound sales team or focus more on generating inbound leads? Where do you advertise?
- Financial projections. Any funding request will require a close look at your estimated financial performance. Investors want to know how you plan to make money and how quickly so they have a clear idea of when to expect an ROI.
2. Find the right location for your business.
You’ve no doubt heard the saying, Location! Location! Location! That’s because the location is an important aspect in business. It can sometimes even make the difference between failure and success. This is true even if you have a retail ecommerce business, as you still need somewhere to store your inventory.
Location comes in many forms—a storefront on Main Street, an office space uptown, an old warehouse, a new factory, a cart at the mall, or even your own garage. You can also change your location over time. Perhaps you start small with a home-based setup, then move into a storefront once you’ve gained brand awareness and made enough money to fund the upgrade.
The particulars of your business will dictate where is best, but here are a few aspects to consider when looking for the right locale:
- Demographics of your customers (and talent if you plan to hire employees)
- Potential foot traffic
- Accessibility for customers and employees
- Competition in the area
- Proximity to complementary or tangential businesses
- History and perception of the building
- Zoning or ordinance restrictions
- Building infrastructure
- Rent, utilities, and other building costs
3. Research vendors and suppliers.
If you’re accustomed to being an employee, you know nothing gets done alone. Many tasks require help. It’s no different as an entrepreneur. You may not have someone in the cubicle next to you, but you do need to build a network of vendors and suppliers that can assist with tasks you either can’t or don’t want to deal with yourself.
You can get assistance in any area you deem appropriate, whether it’s a lack of skill or resources. For example, you may not want to handle payroll—many third parties handle this function. The same goes for other financial functions, marketing, and more.
Once you identify business areas you want help with, ask for recommendations from friends or business associates. Be sure to research the companies and see which ones would best fit your situation.
4. Purchase equipment and software.
Whether you end up in a storefront or your garage, you’ll need office software and likely different types of office equipment. This may be simple productivity software like Microsoft Office, which can help create documents, keep you organized, deal with financial data, and produce sales presentations.
But if you have a team, you’ll need more support in the form of communication tools, collaboration software, and perhaps even project management software. You want to ensure your team can stay in touch with another and on track for success. Don’t be tempted to forego software—taking an analog approach is a sure way to keep business growth out of reach because today’s modern world requires a digital helping hand.
Just like with vendors and suppliers, you’ll need to research solutions that work best for your business. Many options on the market are software-as-a-service (SaaS) solutions that require a monthly subscription and come with free trials. Once you narrow down your list, try a few out to see if they fit.
As for equipment, your needs will vary based on your business. For example, if you own a small shoe store, typical office equipment and a point of sale (POS) system would probably be sufficient. In contrast, if you operate a large retail outlet with tons of inventory, your equipment needs may be more extensive—bar code scanners, pallets, forklifts, etc.
5. Develop appropriate business processes.
How do you expect to produce your product the right way every time or give customers the same great experience repeatedly? Consistent outcomes require clear, repeatable business processes—series of steps, activities, or tasks that result in the desired goal being met.
Every business has business processes, though some processes may not be as formal or structured. In fact, one of the biggest differences between small and large organizations—besides size—is the amount and quality of their business processes. As your business grows and becomes more complex, consistent outcomes become more challenging unless everyone is clear on how work is performed.
Take a simple example: Say you own a car wash. The goal of your service is for the customer to leave with a clean vehicle. You must determine what all is involved from when the customer arrives to the point of them leaving, ideally with a clean car and a smile on their face. You need to consider what equipment, supplies, systems, and people are required to deal with all the associated actions of the car wash process—taking payment, driving the car, operating machinery, wiping the car down, and so on.
Of course, that’s only one business process of operating a car wash. Payment is its own business process. You also need business processes that address maintaining the drive-through equipment, laundering dirty towels, scheduling employees, training new hires, and a host of other business concerns.
As you develop business processes, it’s a great best practice to write them down. This will not only benefit training but can also help you identify problems and make improvements over time. Ultimately, your customers (and your business) will benefit from this effort.
The above steps aren’t an exhaustive list of business operations. As noted previously, there’s a lot of dependence on the exact nature of your business and how you plan to run it. But the steps offer a useful starting point and give you important considerations before you dive in.
If you want a helping hand with developing your business operations, check out Business Maker. Use it to easily choose a business entity, create your business plan, build your online presence, market your products and services, track your finances, and more. As a would-be business owner, you have a lot of questions. Business Maker gives you the answers you need to get up and running quickly and eventually turn your small business startup into a streamlined organization. Try it today.