The Essentials of Operations Management for Small Businesses

Compared to corporations and other large businesses, small businesses have a unique set of challenges and considerations when it comes to the smooth operation of their company. Not only are they working with fewer resources, but they also typically have less management experience and expertise.

This can make it difficult to know where to focus when it comes to streamlining operations. However, with the right tools and strategies in place, small businesses can run like well-oiled machines — and it all comes down to good operations management.

In this article, we’ll take a look at the basics of operations management for small businesses. We’ll discuss what it is, why it’s important, and how you can apply it in your own company. Let’s get started!

What is operations management?

Before we delve into the essentials of operations management for small businesses, it’s important to have a clear understanding of what operations management actually is.

Simply put, operations management (OM) is the process of planning, organizing, directing and controlling the resources and activities of a company in order to achieve its goals. In other words, it’s the backbone of any business, big or small.

In larger businesses, there are entire departments dedicated to operations management. There is often an OM head of department and a team of specialists who work together to ensure that the company is running as smoothly and efficiently as possible.

But what about small businesses? And how can operations management be essential when there’s a limited budget and only a handful of employees to manage?

employees working on operations management

In small businesses, OM looks a little different. You may only have one person who wears the OM hat, and that person is responsible for all aspects of OM within the company (along with many other hats).

This doesn’t mean that OM is any less important. In fact, it’s even more essential in a small business, as there are fewer resources and personnel to draw on.

So, what are the essentials of operations management for small businesses? Let’s take a look.

Define roles and responsibilities

This is one of the most crucial aspects of setting up and managing a small business — even if there are only a handful of employees! You need to define who is responsible for what and make sure everyone understands their role, or else chaos will ensue.

The following responsibilities will all need to be considered:

  • Operations management. Who is responsible for overseeing the smooth-sailing of day-to-day operations?
  • Sales and marketing. Who is in charge of generating leads and closing sales?
  • Customer service. How will customers be taken care of and who is responsible for this?
  • Finance and accounting. Does someone have the responsibility of tracking expenses and ensuring the books are balanced?
  • Human resources. Do you have someone who is responsible for overseeing the hiring and firing of employees, as well as their onboarding/offboarding processes?

Defining these roles and responsibilities is one of the most important steps in setting up a small business. By doing so, you will ensure that everyone is aware of their responsibilities and knows who to go to with questions or problems.

Assess tasks before commencing

In small businesses, there’s far less room for error than in their larger counterparts. Before operations commence, it’s important to take a step back and assess the tasks at hand. Are they achievable? What resources will be needed to complete them successfully?

This preliminary review is key to avoiding common pitfalls in small businesses, such as inadequate planning or unrealistic expectations. If you do not have the necessary skills to carry out a task, don’t be afraid to outsource it.

operations management paperwork

Here’s an example: You’ve decided to start a small business producing and selling custom-made jewelry. A couple of weeks into your new venture, you receive an order for a necklace that requires 10 different types of beads, which you don’t have in stock.

Rather than turning the customer away and losing the sale, you could outsource the beading to a professional bead supplier. This will ensure that your customer is happy and that your small business remains profitable.

If you can’t outsource a task, it’s important to factor in the time and resources that will be needed to complete it. For example, if you’re starting a small business that requires producing and shipping products, you’ll need to calculate the lead time required for production and shipping.

This information will help you to manage customer expectations and avoid disappointing them by overestimating your turnaround time.

Constantly reflect and revise

In large companies, errors and inefficiencies can go unnoticed for quite a while before the bottom line is affected. But in small businesses, even the slightest misstep can mean the difference between success and failure.

This is why it’s essential for small business owners to have a clear understanding of operations management and be constantly reflecting on and revising their systems.

This element of operations management is called ‘controlling’, and it involves the continual assessment and adjustment of your current systems and processes to ensure that they are as effective and efficient as possible.

revising operations management systems

There are a number of techniques you can use to control your operations, such as:

  • Performance measurement: tracking key performance indicators (KPIs) to see how your business is performing overall. You can then use this information to make changes and improvements where necessary.
  • Process mapping: creating a diagram of your business processes, and then identifying and addressing any inefficiencies.
  • Flowcharting: a similar technique to process mapping, but instead of focusing on the entire process, you focus on specific tasks or steps. This can help you to identify and fix any problems that may be causing delays or inefficiencies.
  • Statistical analysis: using data to identify trends and patterns, and then using this information to make decisions about how to improve your operations.

By integrating one or more of these techniques into your operations management strategy, you can ensure that your business is running as efficiently as possible — no matter how small it may be.

Find solutions, not band-aids

When problems come up in small businesses, it can be tempting to sweep them under the rug or put temporary measures in place instead of addressing the root cause. However, issues when allowed to stagnate can quickly become bigger problems and can even threaten the existence of the business.

Operations management is all about finding solutions to problems so that they don’t become bigger issues down the road. This means taking a systematic and analytical approach to identifying issues and coming up with practical solutions.

Here’s how you can get started:

1. Take a step back and assess the business as a whole. This includes looking at what is working and what isn’t, as well as how different areas of the business are interconnected.

2. Make a list of the issues that need to be addressed. Even if some of these seem like they are unrelated, it’s important to address them all systematically.

3. Develop solutions for each concern. This may involve changes to processes, policies, or procedures.

4. Implement the solutions and track progress. It’s important to be vigilant in monitoring how the solutions are working and make changes as needed.

Operations management is an essential part of any business, no matter how small. By taking a systematic and analytical approach to identifying and solving problems, you can help ensure the survival of your business.

small business owner handling operations management

Stay flexible

Small businesses need to be nimble and adaptable. The world is constantly changing, and small businesses need to be able to change with it. This means being willing to experiment and taking risks. It also means being able to pivot when necessary.

One of the advantages of being small is that you can move quickly and take advantage of opportunities as they arise. This agility can be a major asset in today’s competitive marketplace — especially in industries where technology is constantly evolving.

To stay flexible, small businesses need to keep the following in mind:

  • Flexibility is key, but a clear mission statement is a non-negotiable
  • Keep your team small and nimble so that everyone can be responsive to changes
  • Be willing to experiment and take risks; that’s how you’ll find new opportunities
  • Be prepared to pivot when necessary in order to stay ahead of the competition

A common theme you’ll find across the majority of successful businesses, regardless of size, is that they are always evolving. They’re never content with the status quo and are always looking for ways to improve and expand.

If you follow in their footsteps, you’ll be well on your way to success.

handling decisions for operations management

Final thoughts on operations management

Operations management looks different for every business, but small businesses typically face a lot of the same challenges: How can I get the most out of my limited resources? How can I keep up with demand? How can I improve efficiency and productivity?

If you’re a small business owner, it’s important to have a basic understanding of operations management principles. That way, you can make informed decisions about how to run your business most effectively.

We hope this article has given you a good introduction to operations management. Keep in mind that there is always more to learn, and the best way to improve your skills is to keep learning and experimenting. Good luck!