Business Planning Start-Up Guide
Operations is the management and set-up of the company. Customers interact with operations, but for the most part this is a management and logistical function that supports production or service implementation. In this section we account for the operational matters of setting up shop. We hit in the macro points, but it is up to you take the initiative to make the micro elements a reality.
We conclude this section by addressing the eMyth and its proven management model.
In Phase II we addressed business many of the operational items. However, Phase II was more theoretical. In this phases you must take action make the plans a realty.
Depending on your business model, you’ll be setting up your shop online or at a physical location. For some, your store will be your garage, warehouse, or store front. For any start up, this is a big decision and (likely) a large expense. You have a lot to learn about web design or contracting for it for it if you are an online store. You have a lot to learn about renting, buying, and some construction if you are opening a physical location (zoning, taxes, and licensing too).
This topic is greatly involved. Frankly, it’s too expansive for this section, but a little research on your part will get you familiar with the fundamentals.
Web Site Location
If you are setting up a web site, you can do it but it will take a lot of time to learn. You can use WordPress or a packaged online store, such as Shopify , Squarespace, or your web hosting company – but don’t be limited to these three options. There are a lot of them. If you setup a WordPress store, you may want to consider Woo Commerce or iThemes Exchange; but again, there are many software plugins consider. So, do your homework.
Leasing a Store
If you are leasing, you’ll have to get familiar with terms like triple net and escape clauses. Unlike home rentals, commercial or business property is priced by the square foot. Warehouses are leased by volume, height, width, and depth. Location is a big element in price. If you want good foot-traffic volume you’ll pay more. If you want a rail-side warehouse, you’ll pay more.
There is a lot of information out there, so take 30 minutes to a few days to lean something about it before you pick up the phone or look for a store. If you use a real estate broker or agent, be sure to find one who does commercial real estate full time. A residential agent may be licensed to do any real estate transaction, but commercial real estate is a different animal.
Setup Your Base of Operations
If you are selling a product you have to find suppliers. If you have a business that uses professional equipment, you have a lot to decide upon. For example, a restaurant has a lot of equipment that’s required by code and the health department. Of course, if you have a rental company you a lot of items to buy and maintain.
From furnishing, to decor, to signs, you will be branding your company. A dingy warehouse will work for storing inventory, but it will kill a personal service company or a cafe. People want ambiance, flare, and design. Don’t scrimp on design, feel, flow, and comfort if your research says this is important to your customer or client.
In a later step, we’ll touched on hiring employees and related taxes. There is a lot to consider when hiring. For any operations, you get what you pay for but you can also overpay if you’re not careful. Again, I have to punt on this because it is so expansive.
A word of advice: New business often regret the short time they spent picking employees or team members. So, take that as good advise. You may want to consider freelancers or contractors before you make a hiring decision. But, it all depends on your business and its needs.
Some projects are suited for virtual contractors. Many prefer the Philippines for virtual assistants, though you can find them throughout the world. The Philppines used to be a U.S. territory, so they speak English, respect property rights, are well educated, and have a great work ethic. You may be able to find a full-time administrative assistant for $500 (USD) or a full-time technical assistant, such as web designer, for $900 to $1,000 per month.
If you want to learn more about virtual assistants, I suggest reading Virtual Freedom by Chris C. Ducker, published by BenBella Books (2014). You can find it on Amazon for about $10.00.
Shipping and Distribution
If you use an online store, you’ll want a system in place to ship efficiently. The same goes if you are an importer.
I suggest shipping in blocks of time. You’ll be more efficient and it won’t become such a nuisance. For example, imagine shipping every order when you receive it. You stop what you’re doing and get the order together. The packing, the boxes, and shipping labels. Then you get in your car and take to FedEx. It disrupts the flow of your day.
Depending on your volume, it may be more effective and efficient to ship once or twice per week. Set aside a day and time for this and do it on schedule. If for some reason you don’t have a sale to ship, then you have free time to do something else. Maybe you can take the dog for a walk.
Part of distribution is identifying the most cost efficient method. As volume increases, the shipping companies will give you volume discounts. For example, if you skip a dozen packages per week, you probably qualify for a discount and priority service. Many companies will come to you.
For some a fulfillment service may be time and cost effective. It’s may be less expensive than hiring employees and renting warehouses. If you are interested in this, do a web search for “Fulfillment Services” and find one that fits your budget and requirements.
There is a fantastic book which I recommend highly. It’s called The E-Myth Revisited by Michael E. Gerber, published by Harper Collins (1995). You can pick it up at Amazon for about $11.00. One essential component to a successful entrepreneur is identifying which hats to wear; and every business should have executives that run their particular directorates. If you’re small, you’re the Chief Executive Officer and wear all the other hats. Here are four key positions you need to “fill:”
- Chief Operations Officer
- Chief Financial Officer
- Chief Marketing Officer
- Chief Information Officer
Notice I didn’t necessarily say hire? As you grow, you’ll find people to perform these functions. But, as a start-up, you may be a one-person company. In any case, you need to have at least four hats to fill. I suggest systematize these functions so that they are being accomplished the same each time (adapt of course, but essentially the same).
The eMyth author illustrated systematization with case studies of various successful companies, from McDonalds to the local store. The key is delivering predictable products and services. Those entrepreneurs that base their functions on individual hires (people) are not creating systems, unless you require your employee to create systems, periodically revise them, and the train to and use those systems.. By relying on personalities your services and products will likely fall short of your customer’s expectations when key people leave.
For example, if an employee quits and takes their unique method with them, you are immediately set back. In fact, in time this condemns entrepreneurs to little or no growth. If you hear yourself say something like, “I decided to just keep it small. It’s just too much work. I have to do everything anyway” then you did not develop and use systems and processes to execute your business’s services or production.
Those companies that wear “the hats,” create repeatable systems, and train and operate under these systems are more likely to grow and prosper. Those that don’t, generally remain small and fail to reach their potential.
What kind of company will you lead?