Understanding Operations Financials

Understanding the numbers for operations becomes crucial,especially in the growing stage. In the beginning you might get away with not managing the numbers for operations, but during the process, you will burn cash and people as you grow.

Here are the things you need to look at to understand what your day-to-day operations cost:

  • How long does it take to finish a task, from beginning to end, and how many people does it take to finish a task? Many entrepreneurs under-estimate these two factors, assuming everyone works at the speed or capacity. A new person, or even an experienced person, might be good at one thing, even better than you, but you can’t expect them to work like you.
  • What is the time in terms of process, to get something ready and the space needed to accomplish that task? Does it matter if it’s an office, coffee shop or manufacturing space or in a 10x10 office? Some sophisticated entrepreneurs tell me what it costs per square foot to run day-to-day operations.
  • What other activities need to happen to ensure that your company is running, such as any bookkeeping or filing? While some tasks are not generating revenue, they can kill the operation if not done.

BEFORE YOU GO:

We see our blogs as opportunities for dialogue. Please share your thoughts as comments.

  1. What are all the processes in your daily operations?
  2. What have you done to document them?
  3. What advice do you have for others looking to understand the financial side of operations?

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Faris Alami is Founder and CEO of International Strategic Management, Inc. (ISM). He works internationally, presenting Exploring Entrepreneurship Workshops and other entrepreneurial ecosystem — related ventures.