A Case for Small Business Outsourced Operations Management
How Jan is now doing more work with less effort.
Jan has a small business that she has operated for a number of years. Like many entrepreneurs, she works from home, has a partner and some strategic alliances to provide services to her clients. Her primary marketing vehicle is the internet, through her website, social media and search engine marketing. Her company has grown to the point where it is getting regular revenue, but most of her clients are people that she knows, or friend of friends and families.
While she is pleased with the work that she does, she finds running the day-to-day operations in the company to be overwhelming. When she started out, she spent a fair amount of time putting her products and services together, networking with people, building relationships and trying to find customers. She kept records of her sales in QuickBooks, but certainly didn’t feel confident in using it. When she sent the file to her bookkeeper, quarterly, to prepare for taxes, he made some minor adjustments and filed the taxes. He could never really answer the questions Jan had about how to grow the company or what decisions she should make.
Jan was becoming dissatisfied with her company. It seems like the company has a lot of opportunity to grow. However, there are some things that she has done, but she feels like she could do them better. Most importantly, she has lost sight of the goals that she originally had for the company and doesn’t know how to get back on track. She was tired of working day in and day out, typically 10 to 15 hours per day, five or six days per week. She was missing out on vacations, weekends and even some of the hobbies she had over the years. She simply did not have the quality of life she was looking for when she started the business.
Jan decided that she wasn’t going to simply sit in her situation, and decided to be proactive. She went to some classes, read some books, joined a professional group and even hired a coach. While all of these were valuable, she found that she still needed someone who would hit the ground running with her to actually do some of the work while advising her on what she should do and providing a second perspective on the decisions she had to make day in and day out in her business. She needed a partner
After doing some research, Jan discovered that
a) Although her company had some success, it wasn’t attractive enough for investors or even a partner to join. At least, not yet.
b) A full-time operations manager could cost her company anywhere from $65,000 to over $100,000. She couldn’t afford that right now.
c) If she doesn’t create a plan for growth, it won’t happen. Focusing just on the people in her network is limited and yield limited result
d) She could hire an outsourced COO to help with the company at less than a third of the cost
Looking further into how an outsourced COO could help her company, she learned the following:
The goal of Operations Management or an outsourced Chief Operations Management Team provides assistance for small businesses in six distinct areas:
Business Development – encompassing sales and marketing activities including
Marketing strategy. A marketing strategy is based on understanding why people will purchase and why they would purchase the product or service from your company versus a similar or different product or service from another company. The components of a marketing strategy including the pricing, the product or service itself, why people would want to buy it and how it is delivered to the person or company. By taking a strategic approach to this, we can measure what is working versus what isn’t working and make appropriate changes to make meet company goals.
Sales strategy. A sales strategy is the method we use to get people or companies to purchase the product or service that is being sold. Like the marketing strategy, by having a sales strategy and the appropriate tracking tools, we can evaluate what is working versus what is not making and make appropriate changes.
Product and/or Service Development
This is management of a product or service lifecycle – from the time it is conceived, through development, enhancement to meet customer needs, customer service, monitoring the customer value through the purchase process, through its evolution into complimentary products or service and finally end of life, when the product is shelved to make way for new innovations. Product and service innovations are what keep customers coming back. Managing the product lifecycle well is one of the factors that separates ordinary companies from those that are extraordinary.
Finances are the lifeblood of the company. This includes bookkeeping, tax planning, investing, financing and growth planning. Many companies tend to operate hand-to-mouth without developing plans for growth. Without planning for growth, a company will not grow. By taking a strategic approach to defining and pursing growth goals, companies can realize the company vision.
Traditionally, companies simply hired people to do certain tasks within the company. These individuals may or may not have the ability and resources to do the job they are assigned to appropriately. Additionally, in recent generations, more emphasis has been placed on job satisfaction. As a result of the change, companies are becoming “skinnier,” or “leaner,” meaning they are saving money by hiring only the employees who are essential to the company’s core deliverables and establishing partnerships or outsourcing services to other companies. Sourcing and managing these resources, replacing these resources with qualified individuals or firms that fit within the financial structure ensures that a company is making the best use of its financial resources.
Determining where the company is going to go and how it will get there is one of the areas that a lot of businesses fall short in. While most business leaders have an idea of what growth in their company should look like, they have no idea of how to get the company there. Furthermore, they don’t know how, don’t want to or don’t see the point of making changes to daily operations that could make operations run more efficiently or effectively, typically allowing them to save money while increasing their ability to serve more clients.
Having great ideas is one thing. Making them happen is quite another. A good operations manager is fully capable of managing the projects that he or she recommends. Furthermore, that manager should be able to oversee and communicate issues of budget, timing and quality to ensure the company is achieving the goals it initially set. Finally, the project must be reviewed to make sure that the direction the company is going in still makes sense for the company. You see, the business landscape changes constantly. By monitoring the landscape, an operations manager can identify opportunities and avoid threats to the business, while leveraging strengths and managing risks that present themselves.
Jan felt that this was exactly what she and her company needed. This would give her life some of the margin that she needed to be able to enjoy living again, while pursuing and reaching the goals she would set for her company. This wasn’t “ideating” or talking theory; this was bringing an expert and support staff to partner in her company to bring it through the various phases of growth.