What are business operations?

If you’re not sure what business operations are or what they involve, this guide will clear things up.

Find out:

●        What business operations are and how they work

●        The main types of business operations

●        How you can improve your business operations for each industry

●        How Countingup can help you improve your business

Business operations refer to all the activities you do on a daily basis to drive your company forward. Examples of activities included in your business operations include inventory management, marketing, manufacturing, accounting, and bookkeeping.

As the company grows and evolves, you need to review and update your business operation to support changes and prevent any issues in the system. For example, as your business grows, you may need to expand your product line, hire employees, or start working with an accountant.

In the coming section, we will describe the three main types of business operations.

Service businesses provide intangible (non-physical) goods—such as graphic design, personal training, accounting, or consulting services—to customers and clients

If you run a service-based business and only deal with intangible products, your business operations generally won’t involve aspects such as inventory or manufacturing. These companies might have more flexibility regarding their expenses since they don’t need to pay for a warehouse or stock.

Some service companies also sell products to aid their business, for example, hairdressers selling shampoo and other hair care products. In this case, they must also include inventory and stock management in their business operations.

Unlike service companies, a merchandising business is all about selling physical, tangible products to consumers. The most common merchandising models include clothes, food, toiletries, or electronics.

The main difference between a service and merchandising business is that stock and inventory are crucial parts of merchandising business operations. These companies have to consistently track their stock levels to ensure they have enough of the products that customers want.

As a result, merchandising companies also have more items they need to include when managing their expense accounts, tracking profits and losses, and calculating how much they took home from selling their products (their net revenue).

Despite these differences, service and merchandise companies both need to service customers, a task which requires specific skills and equipment.

For example, a graphic designer (service provider) needs creative skills and a laptop to create their designs, whereas a corner shop owner needs customer service skills and a point of sale system (card machine, till, etc.).

Manufacturing businesses use raw materials, machinery, and labour to create finished products. Then, the companies either sell the products directly to consumers, or customers buy the products to sell to their consumers.

A large manufacturing business will generally use advanced technology and assembly lines to make its products. Meanwhile, a small manufacturing business may utilise more basic equipment.

While manufacturing businesses are similar to merchandising because they both sell goods to consumers, manufacturers make their products from scratch. Merchandisers buy ready-to-sell products, meaning they don’t have to assemble or recreate them in any way.

For example, a jewellery manufacturer would purchase gemstones, metals, glue, and other raw materials to create (and sell) a pair of earrings. A merchandiser would buy the earrings and simply sell them as they are.

Each sector has its own priorities when it comes to business operations. We’ve collected some tips for how you can improve your operations to succeed in your sector.

As a service company, your main priority is to give your clients a service they keep coming back for. Service companies can divide their operations into client-facing and business-related activities (or front-end and back-end activities).

A good way to improve your business operations is to take a look at how you interact with your clients. Is your communication efficient enough, or can you be more proactive?

You’ll also want to look at how you manage your projects and how that might affect your service offering. For example, if your projects constantly end up going over budget, you may need to recalculate your estimates for new jobs. Perhaps you might need to increase your prices?

Merchandising businesses need to stock the products that customers want to buy. Therefore, the best way to improve your business operations is to perfect your inventory.

The best way to do this is to look over your records from previous months to identify what sold quickly, what sat on the shelves for a while, and what customers didn’t buy. If you notice customers never purchase a specific product, it might be time to stop buying it. You could try selling it off at a discounted price to retrieve some revenue from it.

Also, look at what you’re paying your supplier. Could you negotiate a better deal? If you have a good relationship with your supplier, they may be willing to give you a discount to retain your custom.

One of the things a manufacturing company can do to improve its business operations is to purchase high quality raw materials from reliable suppliers.

Look into how your suppliers store, process, and ship raw materials. You want materials that are durable, cruelty-free, and that you can receive within a reasonable time frame. If your supplies are often late or arrive damaged, you may want to order them from somewhere else.

You can also eliminate bottlenecks by looking at your own production and shipping logistics. Can you do something to create your products more efficiently and get the finished goods out to customers faster?

For example, you might need to invest in a new sewing machine and hire someone to deliver the products for you.

A major part of optimising your business operations is to keep track of all of your financial records, since it is impossible to know how well your business performs financially without understanding how money enters and leaves the company.

Using accounting software that can help you manage invoices, capture receipts, and stay informed about your cash flow, profits, and losses will allow you to make informed decisions about your daily operations.

Countingup is the business current account and accounting software in one app. It helps thousands of small business owners keep organised when it comes to their finances, saving them hours of painful admin. 

Instant invoicing, digital receipt capture and more automated bookkeeping features will help you save yourself unnecessary accounting and financial admin stress so that you can focus on improving your operations and running a successful business.

Find out more here.