Home » Grow Revenue » Optimize Your Business Operating Procedures

Change Your Business Operations to Maximize Profits,
Retain Employees and Grow Customer Loyalty

All businesses rely on operating procedures to run efficiently and effectively. They are the invisible power behind what your business does. The better the basis of your business, the easier it is to grow revenue, maximize profits, retain employees and keep customers happy.

These procedures are easy to overlook, and enhancing them demands focus and effort — but the rewards can be tremendous. A 10 percent improvement in how your business works can create big, compounding improvements throughout the organization.

In this guide, we’ll explain how to enhance what your business does and give some advice on various areas you might want to explore.

What Are Operating Procedures?

Simply put, operating procedures are how your business “does stuff.” Every time you make a product, respond to a customer inquiry, onboard a new client, price a service, send out an invoice or do just about anything operational, you’re using an operating procedure.

We typically describe this as “Business As Usual.” These are the tasks you and your employees perform every day to keep your business up and running. Compare this with “Project Initiatives,” which are typically one-time events that have a specific beginning, middle and end.

Enhancing your operating procedures is known as “Business Process Improvement (BPI),” which is a large discipline of skills, toolsets and technology designed to help your business run better.

A Quick Primer in Business Process Improvement

As the name suggests, BPI is all about optimizing what your business does every day. There are lots of frameworks and methodologies for BPI, but one of the most reliable and popular is known as “Six Sigma.” When it comes to BPI, Six Sigma breaks things down into five phases:

• Define: You understand exactly what you are trying to improve and the business processes that can impact that.
You need to enhance customer satisfaction and retention, so you start by looking at procedures for handling customer service calls and complaints.

• Measure: Once you know the processes you need to improve, you put measures in place to understand how they are performing right now.
You decide to measure how long it takes to answer the phone and the number of issues that can be resolved the first time a customer calls.

• Analyze: You take your measurements and carry out analysis to find problematic areas and the causes of the problem.
You discover that you have the longest wait times and lowest first-time fix ratings between 11 a.m. and 1 p.m. This is due to experienced staff going on a lunch break.

• Improve: You make improvements, typically one or two at a time to help processes work better. After this, you would measure and analyze again to see if the changes have had the desired outcome.
You provide extra training to junior staff and provide incentives for your more experienced staff to vary their lunch breaks. You see significant improvements in call handling and complaint resolution the first time a customer calls.

• Control: Once you have the right improvements in place, you create operational measures to prevent things failing again and take action if they're in danger of doing so.
You get your customer service supervisor to review call handling times and first-time fix rates on a weekly basis. If you see negative trends, you can dig into the data and take action.

The Aims of Business Process Improvement

BPI is designed to improve your processes and procedures in various ways.

Reduce Waste

If you get too many defects in your products and processes, that creates unnecessary waste, product failure or a need to rework. BPI looks at processes to introduce high-quality outcomes and substantially reduce waste.

Enhance Speed

Time is money, so BPI can be used to speed up slow processes. It aims to remove bottlenecks, reduce handoffs and speed up processing time. Optimizing just one or two sub-processes can reduce the end-to-end time to get something done.

Improve Accuracy

Inaccurate and clumsy processes can result in significant errors and problems. BPI aims to reduce the ways things can go wrong — less “garbage in" leads to less "garbage out.”

Increase Satisfaction

BPI can build customer and employee loyalty by focusing on the “moments of truth” that impact how people feel about your business. It makes those interpersonal moments more satisfying for everyone involved.

Maximize Profits

You might wonder why we haven’t talked about maximizing profits yet — the reason is simple. All the above areas directly or indirectly translate into increased revenue, less customer churn, happier employees and more efficient processes. That all has a big impact on your bottom line. In other words, there are very few business processes that focus purely on maximizing profits to the exclusion of everything else.

Common Business Operating Procedures
That Benefit From Optimization

Although every business is unique, there are several common processes you can explore to see how they can be improved. Try asking questions in these categories:

Customer Service and Satisfaction
  • Do you know how satisfied your customers are right now?
  • Are you handling all calls in a reasonable amount of time?
  • Are you fixing enough issues at the first point of contact?
  • Do you have an effective process for handling complaints?
  • Do your employees proactively communicate with customers?
Cash Flow Management
  • Do you have enough money in the bank to absorb any surprises?
  • Are all your invoices being paid on time?
  • Are you always able to find the money to pay your suppliers?
  • Do you understand how much free cash flow you have in the business?
  • Do you know where you want to expand next?
Inventory Management and Distribution
  • Do you understand the seasonal and other trends that impact product demand?
  • Do you ever run out of stock?
  • Do you have acceptable lead times with suppliers for ordering or manufacturing your products?
  • Is inventory management aligned with sales and marketing initiatives?
  • How quickly do you get products to customers after they’ve been ordered?
Onboarding Clients
  • Do you gather all the information you need at the first point of contact?
  • Are your clients able to understand what they need to do to be onboarded?
  • How happy are your clients with the onboarding process?
  • Are there any issues around handoff between different departments?
  • How quickly do you onboard clients?
  • What is your customer churn rate?
Manufacturing Products
  • How many of your products exhibit defects?
  • Do you always have enough materials on hand for the manufacturing process?
  • Can you easily reconfigure manufacturing for different product types?
  • How much waste does manufacturing create?
  • Do you know how much that waste costs your business?
Profit Margins
  • Do you understand the complete costs of creating a product or service?
  • Do you understand all the operational and miscellaneous costs that impact your bottom line?
  • Have you compared and optimized your prices against your competitors?
  • Have you experimented with different pricing strategies and tiers?

As you can see, there’s a lot to learn when it comes to enhancing your operating procedures. It’s best to start small, so you can practice the skills and discipline needed for BPI. Once you have a couple of successes, you can then look at other parts of your business and tweak until you have a beautifully streamlined profit machine!

Read More About Business Revenue

What Is the Difference Between a Hard and Soft Credit Inquiry?

A credit inquiry happens when a lender (or another authorized party) performs a credit check to analyze your creditworthiness and help them make their lending decision. These types of inquiries are known as “hard,” and others are called “soft.” Because the inquiry is noted on your credit history, the main difference between the two is […]

By grant
2019 Review of Key Bank Business Bank Accounts & Mobile App

Key Bank is an award-winning bank with a history that spans nearly two centuries, and if you’re looking for a reputable bank for your small business, Key Bank might be a good option. It’s one of the country’s largest bank-based financial service companies, and it’s still growing. Headquartered in Cleveland, Ohio, Key Bank is a […]

By revenued