Wednesday 27 January 2010

Create a simple Business Operations Manual

Plain English Guide To Creating A Simple 'Operations manual'
How to create simple operations manual?

An operations manual is the key to reducing the dependence on the owner of the business for performing the repetitive tasks involved in the day to day running of the business. It shows procedures and policies so that employees know what to expect and new employees can join in and know what they are to do right from day one. 

The goal of an operations manual is to instruct new people coming in the business on how various tasks associated with the business should be executed. It should also contain the policies and procedures relating to suppliers, employees and customers. The operations manual helps bring consistency in the business because the documented steps are repeated again and again and everyone gets clear visibility into what is expected. 

An operations manual which has been in use for a few years and has gone through a few revisions greatly assists in the sale of a business because the new buyer is assured that the important tasks associated with the business are clearly documented and the learning curve will be significantly quicker with the aid of this manual.
While each operations manual would be tailored to the specific needs of a business there should be a few common elements present in every manual.
  1. Brief overview of company: The manual should briefly talk about how the company evolved, about the roots of the company and its history. This gives a face and a story to the company and helps employees to connect better with the company.
  2. Opening and closing procedures: The opening and closing procedures should be detailed thoroughly. For instance if there is an inventory check at the time of closing or if there is a reporting time at which all employees should report, the responsibility to open the store etc.
  3. Cash handling: For most small businesses leakages are a big issue and this makes the cash handling policies very critical and important. Most businesses require all transactions to be documented and it would be at your peril to do otherwise.
  4. Customer service: The customer is at the heart of any business and the more detailed the procedures about interacting with the customers, the higher customer satisfaction and repeat business will be. The depth at which you want to go depends on your style of management but it is always good to include things like return policies, after sales service and handling of irate customers.
  5. Sales promotions and discounts: It always helps to have the marketing strategy of the business clearly documented. This would involve detailing all the sales promotions that will be carried out in every season and the usual guidelines for marking down goods and the methods to approach target customers.
  6. Supplier management: There needs to be a section on managing suppliers and vendors. Who are the approved suppliers of the business, what are the credit terms when dealing with these suppliers? How to approach a new supplier? These are some of the issues that would be addressed in this section.
  7. Legal and contractual issues: There would be some contractual things that a business would be bound by and employees need to know how to work within the bounds of these issues. Sometimes a business may be dealing with patented technology or using certain trademarks. The operations manual should aim at making the employees well versed with the do’s and don’ts around such things so that no legal or contractual issues arise.

The operations manual should be easy to follow and should be a living document, which is revised frequently so it reflects the current reality of the business and is followed by the people working in the business.

Sometimes, the terms in legal contract can be confusing and complex. What are the Parties? and Consideration according to Business Law are two very insightful articles, explaining some of the basics of business practise, and definitions.