Business Operations in Early Days
Taking the first vacation as a founder is a great milestone. To get there you need predictable processes for everything related to customer. Essentially, the founder has to delegate responsibilities for manufacturing, distribution, support, and business operations.
Recruit operations leader, identify her responsibilities. Establish operations KPIs. Control them for couple of months. Avoid micromanagement. Make a test, disappear for a couple of days. Is business still works well? If so, you are ready for your first time off.
Action steps
- Split operations and development responsibilities in your company.
- Write down key processes.
- Establish key performance indicators for your business.
Operations and Development Split
Classify all company activities in the two big groups. Operations includes everything related to day-to-day functioning. Manufacturing, distribution, revenue collection, customer service, sales and advertising, legal issues, bookkeeping and taxes. Corporate development includes future-focused activities like research and product development.
Have two different people to manage operations and development. Operations leader is responsible for reliability, quality, and standards of service. All errors should be fixed in a timely way. Development leader is responsible for creating better, more competitive product within planned time and budget.
Every business takes a “crazy professor” and a “cold-blooded manager”. — Anton Epifanov, CEO of Levenhuk
Establish key performance indicators (KPIs) to control operations. Focus on things like weekly revenue, customer satisfaction, and quality standards.
Have open and honest communication between operations and development. Operations is a great source of ideas for future development. Product development is responsible for company survival. Without market-winning products, the business dies and operations people lose their jobs. The critical task of development team is to control time and money. There should be enough runway for two-three iterations to get the product right. For best morale the current status of product development should be transparent for the whole company.
KPIs
Measure customer acquisition. New contacts and activations, conversion rates, customer acquisition costs.
Measure customer activity. Repeat transactions, retention and churn. Customer activity and time spent.
Measure happiness. Likes, shares, complaints, support requests.
Measure quality. Uptime, website load time, queue time, waiting time in a restaurant.
Measure money. Daily and monthly revenue, average check.
Create a standard reporting process. Monthly report is a great disciplined way to keep control over the company. Online dashboard with current KPIs is another great tool.
Early in Amazon history, there was a bell in the office that rings every time there was an order on the site. As the company grew, it was switched off to stop constant ringing.
Standards of service
Create an ideal customer experience story. Write a comic strip or just a text story. How does customer discovers your service. What is the onboarding experience? How is the service delivered? What are the support options? How a happy customer can recommend your service to her friends?
Establish customer service expectations. E.g. customer emails are answered on average in 4 hours, the orders are shipped within 24 hours.
Tie employee compensation to working up to these standards. Reward great service and address underperforming immediately.
Operations innovation
With time operations team becomes as innovative as product team.
Find ideas for more sales. How marketing and sales processes can be improved? What can be automated? What new tools and channels should be used? Is there any inefficiency to eliminate?
Improve service. What can be done for happier customers? What are the bottlenecks and complaints? How can you address them?
Discover new business opportunities. What new products and services can be added to your product line? What partnerships make sense?
This article is a part of Earlydays, an open guide for first-time entrepreneurs.
Written by Yury Lifshits — yury@yury.name — @yurylifshits
