Behind the Scenes: Taking the Pulse of Your Business with an Operational Assessment

I recently had lunch with a longtime friend who is looking to streamline operations in order to prepare for growth. My friend has (single handed) built a successful, sustainable business but he has not reached his financial goal. He needs to grow but being a one-man show leaves him little to no time for developing the business infrastructure for the next phase. That was his pain point, he had built this business, "all by himself" and now had no one to assist him with operations while he advances to the next level. His lone dedication to his business may be a hinderance to growth. My friend knew his business well enough to determine that an operational checkup was required in order to achieve his overall business goals.

Like my friend, many owners have similar challenges, but they will not invest in performing an operational assessment and continue to double down on an operation plagued with inefficiencies. I consistently promote that a business' sustainability will depend on their ability to identify and navigate the curves of business. All businesses face challenges, which can lead to issues within operations, performing an operational assessment will identify current and/or potential future issues, and to assist the owner with developing well-informed decisions. Many business owners assume that since they manage their business on a daily basis and know how to put out fires, they have (in fact) performed an operational assessment. This is far from it; they only understand day to day operations and have not developed a pathway for the future.

What Is an Operational Assessment?

An operational assessment is a detailed evaluation of how efficiently your business operates based on current factors. Operational assessments directly focus on processes, structures, and systems, to identify areas that have inefficiencies that will potentially lead to financial difficulties. As you read on, think about whether your current procedures allow for growth and are adaptable for operational changes. 

Most business owners implement manual, burdensome tasks at the start of the business and don't upgrade to streamline processes via automation and procedural enhancements in order to reduce time and errors. They continue to hire staff without standardizing procedures and use inadequate and/or untimely financial and operational data to make future decisions. These are operational "red flags" which will negatively affect the sustainability of a business.

Identifying Operational Pain Points

How does a business identify pain points? If an owner is proactive the pain points are clear as they will hinder the smooth continuance operations. However, if the owner is continuously putting out fires you with no changes to procedures and processes, the pain points may not be obvious, and operations may be near a critical state.

These are common business operation areas that require periodic operational assessment:

1. Workflow Inefficiencies: Streamlining processes can enhance productivity by up to 30%. There is an abundance of automated tools to assist a business operation, at a reasonable price. No matter what type of business you operate, automating administrative processes will reduce time, inefficiencies and errors. By the way, the sole use of excel spreadsheet may be considered as inefficient.

   
   

   Inefficiencies are (also) often associated due to the lack of an accurate workflow of current operations and the lack of standard operation procedures. Time is wasted by duplication of tasks, lack of timely communications within the business and inconsistent performance of processes. Understanding the flow of information, development and sales of a product and documenting results is key to identifying when something is wrong. There is an increased risk that timely identification of bottlenecks, inefficiencies and inconsistencies may not occur. Workflows and standard operating procedures can be automated and should be considered a "living document" to be updated (as needed) and reflect current operations.

   
   

2. Resource Allocation: Based on the results of the workflow assessment, the next step is to evaluate whether your team and financial resources are being utilized efficiently. Is the work being performed and managed by the correct team member? Are some employees overwhelmed while others have less to do? Are processes set-up to provide timely feedback and allow for quick operational adjustments? If the responses to these questions, are I don't know, maybe or no, you may be hindering the growth of your business, staff and missing out on profits. A study by Deloitte found that organizations that effectively manage their workforce typically see a 20% increase in operational efficiency.

   
   

3. Financial Metrics: Last, but not least, assess how current workflows, procedures and resources affect financial performance. Financial data should be available in a timely manner and presented in a format that allows the owner to analyze results that have a direct relationship to current operations? Are there unusually high expenses, this may be attributed to inefficiencies which you can easily identify and address by reviewing timely financial data.

   
   

Addressing Pain Points, Inspiring Changes

After identifying your pain points, it's time to take action. Here are some best practices for implementing changes:

• Leverage Technology: Invest and embrace technological tools that streamline operations, standardize procedures and provide timely reporting of results.

• Invest in Training: Develop your staff’s skills through training and creating standard operation procedures. This will not only boost their confidence and improve performance but provides consistent performance of operational tasks. Encourage your team to request training topics and provide insight into operations. Listen to their pain points about your business, you may discover issues you didn't know existed.

  
  

• Establish Key Performance Indicators (KPIs): Set clear and measurable goals to determine if pain points are being addressed. Track successes as well as challenges, be aware of how your business is impacted by changes (positive and negative).

  
  
  
  

An open notebook with various graphs for operational assessment analysis.

Operational Assessment is Not a One-Time Event

Continuously monitor of operations by regularly examining the wellness of current operations. Are processes running more smoothly? Are employees reporting higher job satisfaction? Are you noticing improvements in financial outcomes? By frequently evaluating your operations, you can create a cycle of ongoing improvement, making it easier to tackle new challenges as they come up.

An operational assessment is a crucial resource for any business owner wanting to enhance their organization's efficiency. Identifying pain points and implementing strategic changes. will aide in increasing performance and sustainable growth. Being proactive through regular operational assessments should keep your operations at peak performance. Embrace risk assessments as an ongoing business practice, you will discover that efficient business operations manifest significant rewards.