What Are The Business Operations of a Company?

Matt Goldman — February 18, 2017 Follow @TheOriginalBull

All businesses share a measure of complexity. The activities of a company can never be said to be a simple and smooth ride from point A to point B; activities should rather be regarded as an intricate web of processes. These processes fall under the collective term ‘business operations, ‘ and as such, these can differ from company to company.

What Exactly is Business Operations?

Operations start as words on a piece of paper. They are—for all intents and purposes—essential to any business endeavor. At first, they are inserted into the business plan to function as a rough roadmap. Both investors and founders can easily access them and gain a better grasp on all the moving parts of a company, such as personnel, equipment and the processes needed to increase the organization’s value.

While the broad definition of the term is set in stone, the operations themselves are not. They are meant to allow an overview and provide oversight in regards to the organization’s activity. They help with assigning clear-cut roles and responsibilities, with the management of risk, resources, and allocation as well as with revealing the best course of action at all times. They are both a guide and a failsafe, ensuring that a company stays within its budget and that departments cooperate effectively. Here is where theory ends and practice starts; a point where variables must be taken into consideration.

Perhaps the business in question is a product manufacturer. Depending on what it produces, the supply chain can be longer or shorter. Depending on how many processes are automated, the number of employees can differ. If the company sells its products through brick-and-mortar stores, it’ll need the proper location—to maximize sales but also respect regulations—while if involved in eCommerce, the business will require suitable software. These are only a few factors that can influence business operations within a company.

Operations are also subjected to change as the business grows. While it’s common practice in a small company for a single person to have more responsibilities, the same is hardly ideal in a larger one. Business operations should evolve alongside the organization, or glitches in the system will soon make their presence felt. If there’s too much pressure or too many responsibilities resting on the shoulders of one individual, here will be errors and omissions almost inevitably. This, in turn, tends to become cumulative and will lead to more of the same, creating a destructive domino effect. It’s up to all departments to continually adapt and tweak business operations to keep up with the company’s growth.

What Are Business Operations Within a Company?

While strategies and processes can always change, certain guidelines remain true for almost any business that wishes to grow. Here are some guidelines that all companies should consider adhering to:

• Building the right foundation from the start. A close-knit team that shares the same goals and is dedicated to achieving those goals can make a huge difference down the line;
  
• Aiming for transparency within and between departments. The more information travels from one team to another, the lower the risk of errors and mishaps;
  
• Choosing the right person for the job. Different individuals have different qualities. It’s important to delegate with this in mind;
  
• Making use of data for decision-making. Caution is advised when planning for the future. Data collection and interpreting can eliminate a number of variables and increase the chances of smooth-sailing;
  
• Receiving team feedback. Founders and stakeholders can easily lose track of core operations, which impedes their decision-making capabilities. Having constant communication with employees can eliminate this;
  
• Focusing on customer service. Whether a manufacturer or a service provider, a business relies on its customers. They should never be ignored or even underestimated;
  
• Having a long-term plan. Constant change in external factors can topple companies lacking foresight. Good adaptability and planning can ensure both the survival and growth of an organization.

Business Operations: Meaning and Purpose

A company’s success or failure relies heavily on the efficiency of operations. But what are these processes for? What can stakeholders expect from the right plan and the proper steps? For one, they can expect to increase their company’s value. This is done by making a profit. The value increase is affected by just how well a business performs financially, i.e. through dividends, interest and all income that comes back to it. If this return is larger than the investment, profit is registered. If a company manages to turn its profit into a constant over an extended period, its value increases exponentially.

To register a profit, a company has to assess the market properly. Often, the business with the superior product or service will be the one that outshines its competitors. The company’s investment in its product or service must also be taken into consideration. If the demand is high, if it can afford the investment, if the productivity is on par with the demand, then a business can be truly successful.

Business Operations Functions

Operational functions, much like the operations themselves, are often subjected to change. Company founders and stakeholders have a decisive hand in how these functions will be performed. There are also other factors for change, like human capital inventory, departmental responsibilities, level of streamlining and effectiveness of leaders in charge of overseeing and adapting business operations. Still, some of these functions remain common across the board, such as:

• Maintaining effective communications and striving for consensus;
  
• Providing senior level management with the right amount of coaching, tutoring and mentoring;
  
• Auditing and re-engineering business processes;
  
• Maximising performance by establishing a balance between departments and groups;
  
• Managing both the budget and planning processes, at a strategic and departmental level;
  
• Monitoring and guiding third party cooperations with due diligence;
  
• Performing contract reviews to ensure compliance.

There are many other functions to take into account but these are some of the most common. They are found in all companies that prioritise business operations, proper planning, and execution.

In the final analysis, the human factor is as decisive as the business operations themselves. The proper assessment of personnel, the company’s goals and object of activity, the size and subsequent growth of the business, the external factors—like supply and demand and competitors—all shape the operational functions. Still, the efficiency of processes is brought by the right people for the job. A competent operational team with the right leader can make the difference between what works on paper and what gives great results.

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