Top 5 tips for Entrepreneurs to Manage Operations as they Scale up
A lot of entrepreneurs in Nepal tend to get anxious and hesitant when it comes to expanding their business. It may be because of the considerable amount of planning and strategizing required, or the risk of using resources without getting any results. Why work on something if it is not broken is another mindset prevalent here. This is a common issue found among entrepreneurs which, if not addressed on time can lead to long-term stagnation and lack of growth in business activities of the startup.
However, these problems can be tackled by managing the operational activities of the business. A well-functioning operational system is a critical criterion and a huge contributor for business growth.
Biruwa Advisors has been providing operational management support to a number of businesses facing such problems. Based on our experience, we are listing out top 5 tips for operations management during scale up.
Structuring your Business
Most family-run and small-scale businesses lack a formal structure and operations are carried out based on the interest and priorities of parties involved. This results in gaps that can potentially lead to miscommunication, workflow complexity and delegation problems. It is highly probable for the organization to fall apart, if more work load is added into the existing structure during expansion. Successful scaling-up is thus, heavily reliant on the way the organization is structured.
Establishing a formal organizational structure gives a clear picture of the roles and responsibilities to the team members. Similarly, it helps to have a well-structured reporting system which can monitor new additions to operations and also adapt to create new positions as needed. This also allows the managers to shift focus from day to day fire-fighting to strategic level decision making.
Budgeting
Budgeting is something most of us know is a must but very few of us actually end up doing. If you ever wanted to save up to buy something expensive, then you may have planned to control spending and avoid unnecessary costs. Similarly, in a business environment, budgeting assists in operational and financial monitoring and control by providing an estimate and limit for expenses for different activities.
The insight into the expenditures allows a business to target and predict feasible goals. These goals need to be based on your target to scale up your business. It also helps you to compare the goals and expectations with actual performance during execution which is part of the next topic.
Monitoring
Monitoring system helps the management to keep track of all the activities of the business and compare them against the initial plan. For sustainable expansion of business, a clear picture of what is actually occurring at operational level is a prerequisite to avoid problems in the future. Inadequate monitoring of operational activities leads to errors and deviations going unnoticed in the short term and creating huge problems in the long run.
Through regular monitoring of key operational units, anomalies as well as opportunities are identified in the system. The output from these indications can help the business in reviewing their growth strategies.
Streamlining Business Processes
The large volume of activities and processes involved in running a business can get managers to lose track of their priorities which, delays them from streamlining their operations. In a lot of cases, they are busy in firefighting than focusing on growth. This results in redundant and expendable business processes going unnoticed in their organizations leading to stagnant business activity as well inefficient utilization of resources.
Streamlined business operations make the business more compact and simpler to manage. Scaling up strategies become much easier to implement as you can easily replicate the nature of current operations to the new ones.
Cost Benefit Analysis (CBA)
CBA helps managers to take better decisions through quantitative analysis on why a decision is superior to any other alternatives. CBA helps you to take decisions which have better benefit for your business. It is more rational than impulsive decisions which may have tempted the entrepreneur.
Getting a bargain on a property lease at a busy commercial intersection may tempt you to open up a new branch of your business. However, cost of logistics or even the unavailability of backup electricity in the property could raise the cost of opening the new branch over the benefits you intend to gain from it.
While scaling up, you will have to decide between many alternatives. With CBA at your arsenal, this process can be more easily executed.
Operations are core components of every business, so improving its management and control is integral for scaling up any business. We wish you luck for this exciting phase of entrepreneurship.
If you want to share your experience of scaling up or are seeking our assistance in this area, please feel free to get in touch with us.