Business Operation

What is Business Operation?

Business operation refers to the day-to-day activities of any business, where it could be anything that generates revenue for the business. The purpose of business operations is to perform activities that create revenue and make the business profitable. (E.g.) Manufacturing, services, etc.

Business Operations are revenue-generating activities that are aligned with the business goals and objectives. The activities lead to covering up the expenses incurred and leading to profits. It can increase business assets, secure the income to be generated from any asset, or increase the value of the business. The business operations constantly evolve as the business grows and expands. Considering the nature and size of the business, the operational activities keep varying.

Examples of Business Operation

Business operations vary according to the nature of the business. For Example, in the case of a retail business, the following would be the key business operations.

ABC Corp is a retail clothing store; the company’s operational activities start from procuring the apparel from different manufacturers considering multiples brands, size, quality, customer choices, etc. Once they procure the apparel next step comes to the physical outlet and the staff operations. The goods will be stored in a warehouse or within the store/outlet, and requisite staff will be appointed to manage the store, and the customers then comes the part of advertising/market promotion where they need to attract the customers to their stores.

Types of Business Operation

The business operations can be classified based on the nature of the business and industry. The following are the major types of business operations.

1. Manufacturing Business

Manufacturing business operations majorly involve converting the raw materials into physical products, and the same is sold to customers. Major operational activities involve the production process, achieving efficiency in it, and procuring the right quality of raw materials from vendors. Stocking raw materials also play a major role as inputs should be readily available to produce the goods. Post-production logistics part also is a key activity to send the goods to the customers.

(E.g.) A toy manufacturer would need raw materials like plastic, casts, etc., to produce the toys and sell the finished product as toys.

2. Retail Business

The major operation of retail business is to procure products from the manufacturers that have more customer demand and sell the products at the price at which customer is willing to pay and make profit out of it. As the major activity of the business model is external procurement, inventory management is one of the important functions in the retail business. (e.g.) Clothing stores, grocery stores, hardware stores, etc., comes under the retail category.

For a better operation of retail business, goods should be procured based on the customer needs and expectations, and also there should be right demand in the market. The next comes to the payment terms offered, which could attract more customers if it is better than competitors. (E.g.) For bulk purchase, 5% discount or 30 days credit.

3. Service Business

A service business refers to providing services to the customers, and they are intangible in nature. There are many services offered by the business to the customers, like Professional advice from experts like lawyers, accountants, etc. Providing cleaning service, training centers, banks, maintenance or repair service, movie theatres, banks, etc.

Service usually deals with manpower support, and the business operations predominantly involve recruiting the right staff based on the nature of the business. They are usually the core employees of the business as they provide the services, so they should be trained well. There will also be another set of activities which will be customer-facing employees and activities where market promotion, the customer connects and improving the satisfaction of customers.

Pillers of Business Operation

How to Enhance Business Operation?

1. Performance Metrics: Business operations should be carried out with the goals and objectives of the business. There should be constant evaluation of the performance against the goals, and any gaps should be mitigated by coming up with alternative plans and additional measures. Right performance metric evaluation on constant intervals is much needed to make sure the business is traveling on the right track. E.g. Growth in Revenue for the year by 20%. This goal should be constantly evaluated with the M-o-M performance.

2. Stay updated with the Market: For a business to run better, they should stay updated with the latest trends in the market. The New laws and regulations with respect to their business, new technology, new trends in operational model, etc., should be understood. The business operations should be updated accordingly to sustain in the market for the long run.

3. Process Improvements: To improve the business performance and operation, the process should be improved like adopting new technology, new tools and machinery, advanced techniques, etc. Process improvements are much needed to stay competitive and to improve the operations and profitability of the business.

Business Operation Analysis

Business operations analysis is a strategy formed to make sure the business operations are running smoothly and in the direction in which it has to. Through this analysis, the bottlenecks and challenges in the system can be figured out and rectified so that nothing stops the business from reaching its goal. It is more of evaluation and analysis of the process and operational structure to ensure everything is set in place, and also it helps to highlight the areas of improvement, adopting new techniques, etc.

Conclusion

Business operations are daily business affairs, and it involves many activities and processes, and it significantly varies from industry to industry. For any business to scale up and perform better, business operations play a prime role, and entrepreneurs should always work towards improving the efficiency of the process. A better operational process could always save costs and bring more profits. On top of everything, business operations should always be aligned with the business goals.

Recommended Articles

This is a guide to Business Operation. Here we also discuss the definitions and how to enhance Business operations along with the types and examples. You may also have a look at the following articles to learn more –

1. Operational Risks
2. Business Risk
3. Operational Data Stores
4. Operational Database