Introduction
Running a business can sometimes be like a ship in the ocean with no navigation capabilities, including landmarks. There are just the stars in the sky…but let’s face it, we do not exactly learn that in school today.
Every business, regardless of size, can get lost in the day-to-day grind or stuck on the treadmill of growth, causing the business and its people to lose focus and direction. This is why it is important to take a second, step back, and assess where things are. Comprehensive operations audits can help you make data-driven strategic decisions instead of sailing blind into the night.
It is important that leaders are curious about where they are, where they can go, and how to get there! Operations Audits can jump-start this process.
Why Businesses Get Stuck in Habits
The Nature of Habit in Business
Businesses are run by people. People are creatures of habit. Therefore, it’s easy to understand why businesses and organizations fall into patterns and habits, whether they are productive or not. Sure, there are times when routine and habits can create a well-oiled machine that ensures accuracy and efficiency. However, it is important to constantly assess these and all processes and strategies to ensure they are still the best ways to achieve ultimate results. We must fight against complacency. Any tool that can keep your business on its toes and thus allow it to react to changing market conditions is a win-win.
Identifying Unproductive Habits
Unproductive habits can slowly sneak their way into your company processes. Are your meetings always going on too long? Are teams working with outdated technologies? Are there managers that are micromanaging staff instead of allowing for curiosity, innovation, and change? Conducting an operations audit offers a way to pinpoint some of these inefficiencies and then develop informed solutions to boost productivity.
Breaking the Cycle
It takes effort to break those habits, but if you constantly evaluate how you do things, you foster a culture of ongoing improvement that keeps your business competitive and growth-ready. Bringing a fresh and analytical mind to your business and its operations is important. Suppose you and your leadership team are too engrained in the business operations to create the separation needed. In that case, it is paramount that you engage an outside team to come in to bring a fresh look and conduct an objective analysis.
Beyond Sales and Marketing
The Overemphasis on Sales and Marketing
Most businesses (and particularly those looking to grow) tend to concentrate heavily on sales and marketing. Of course, these are crucial focus areas – but they’re only one part of the equation. If your operational systems can’t support growth, even your best efforts in sales and marketing will come up short.
The Role of Solid Systems and Processes
In order to scale, your business needs a backbone of robust systems and processes on which to run your sales and marketing activities to their full potential. These systems and processes should support your overall growth plans while making it easy to ramp up capacity without missing a beat.
One key component in Fisker’s downfall, the EV car manufacturer, highlights this point. Although they are facing a myriad of problems there is one such issue that highlights their breakdown in operations. They were shipping out cars prior to accepting payments or maybe just losing the payments. This is estimated to be in the millions of dollars, which is not helpful when you are facing bankruptcy.
Long-Term Sustainability
Growth has to become sustainable over the long term, not just a short flurry of big numbers. An audited operation means taking the pressure off at the backend so that your business can continue to scale without disaster. That means having the right staff in the right positions, ensuring your contracting and invoice procedures are locked down, ensuring proper compliance and risk management, and many other areas that a business must analyze regularly.
The Importance of Investing in Operations
The Common Overlook
Let’s face it! Operations is not the sexy part of most businesses. Sure, there are some exceptions, like the state-of-the-art technology and equipment of an Amazon warehouse. Let’s be honest, I still amazed any time I see videos of their operations and being able to get supplies quicker than it takes me to make it to the department store.
But most businesses are not Amazon. Most businesses in the U.S. are small businesses that ensure that each resource is used wisely. Unfortunately, too many businesses do not invest enough in their operations, partly due to not knowing where to start or what would create the most impact. Thus, a business’s overall level of support to its value-creation activities may soon decrease, resulting in inefficient processes, higher costs, and reduced growth and innovation.
Strategic Investment
Performing an operations audit will enable you to invest more strategically. Identifying weaknesses where you can improve your operations will allow you to channel your resources in a direction that will maximize your ROI, bring meaningful growth into your business, and enable your company to reach its full potential.
Building a Strong Foundation
A robust operational base should underpin every company. At the scale we’re talking about, it’s also critical to any company because it’s a powerful tool for future growth. An audit will provide a comprehensive analysis of the strength of your operating systems so that you can fix the weak links and move your company into a thriving future.
We all know the phrase ‘knowledge is power.’ Operations audits provide the knowledge needed to know where you are, what needs improvement, and a strategic roadmap of how to maximize growth.
Conducting an Operations Audit
Getting Started
First, it is important to know WHAT needs to be audited and analyzed. This is where most business leaders begin looking like a deer and headlights and just freeze where they are. All areas of your business should be on the list of what to analyze.
If you are conducting the audit yourself, you can start by mapping out your processes and procedures. It is important to ensure that each element is analyzed for efficiency and results.
Key Areas to Assess
As mentioned above, all areas should be analyzed. This should include internal functions such as accounting, human resources, and supply chain management. It needs to encompass external processes and procedures such as marketing, sales, and customer relations. Audits and reviews also need to examine risk management and compliance issues to safeguard the business from internal and external liabilities.
Each of these areas needs to be assessed from an efficiency standpoint as well as execution. The analysis should include how each component relates to one another and the people involved in each process and procedure. It is important to ensure that all bottlenecks are identified and addressed to create a rapid and innovative company.
Utilizing Technology
Equip yourself with technology. You can automate a lot of the processes so that you utilize technology efficiently. This, in turn, will help you be more productive. Again, this should include an analysis of everything from your equipment to your human resource platform. New technologies are released daily, and it is important to stay ahead of the competition by using the latest and greatest technology to aid growth.
CAVEAT: However, it is important to mention that investing in technology can deter growth when it becomes chasing every new shiny object. It is important to ensure that new technologies are aligned with the old and are worth the cost. Avoid a spider web of technology that becomes unwieldy.
The Role of Curiosity in Leadership
Being a Curious Leader
Great leaders are curious to find out what is going on in a business and where things can be improved. Being a curious leader requires the leader to be self-aware and break away from their own habits, biases, and traditions. It also requires them to create a culture of curiosity that allows for insight, input, feedback, and questions from the entire team to help drive innovation and change.
Data-Driven Decisions
Curiosity powers data-driven decision-making: what do you want to know? what can you find out to answer that question? what will you do differently next time as a result? Operational audits help by providing the questions and the data you need to be curious and proactive.
Innovation and Growth
Curiosity breeds innovation. Get in the habit of constantly asking questions and exploring different ideas, and you’ll create a space for growth where none existed before. Promote curiosity in your team and watch new ways to improve and innovate come avalanching in.
Benefits of Regular Operations Audits
Increased Efficiency
Performing audits periodically enables us to make things better, expending less effort in the process, leading to greater productivity and lower costs. Consequently, the business is more flexible.
Enhanced Customer Experience
Good operations lead to great customer experience. If you process flows well, you will be able to deliver consistently high-quality products and services that your customers appreciate
Competitive Advantage
It is important to stay ahead of your competitors to facilitate fast-paced business progress. By carrying out operational audits regularly, your business stays abreast of the latest developments in your market and is always ready to adapt to changes and retain its competitiveness.
Better Resource Allocation
Understanding your strengths and weaknesses as a business allows you to allocate your resources in the right way to achieve the best outcomes, maximizing returns on your investments and sustained growth.
Risk Management
A key advantage of regular audits is that you can spot risks before they become serious problems. By then, it can be too late to put the right protections in place. Your business might grind to a halt.
Practical Steps for Conducting an Operations Audit
Step 1: Define Objectives
Define the audit’s objectives. What are you seeking to do? Which areas require assessment? What is your desired outcome? Clear objectives map out the audit process and help you collect meaningful data.
Step 2: Gather Data
Gather your data from as many sources as possible in your organization—employee comments, performance ratings, customer reviews—the more variables you have, the more accurate your insights will be.
Step 3: Analyze Findings
Analyze your data to identify patterns and bottom-line opportunities. Dig into the data to identify bottlenecks, inefficient resource use, and opportunities for optimization. Identify Actionable Opportunities.
Step 4: Strategic Planning
Once the findings are analyzed, it is important to create a strategic plan for the areas that the business would like to tackle to ensure maximum impact as well as ensure alignment and resource management.
Step 5: Implement Changes
Carry out the changes recommended and then monitor how they are working. Revise as necessary to make sure that the improvements stick.
Step 6: Review and Repeat
Operations audits should be performed on an ongoing basis. Those involved in operations should conduct periodic reviews and audits to maximize improvement and enhance operations. This iterative approach is important and can enable the organization to respond to changing conditions.
Lateral Solutions’ Operations Audits
Operations is what we do – day in and day out. Our founder, Jon Bassford, has built a career of launching, managing, and analyzing operations for growth and scale. This includes both internal and external. We know how daunting an operations audit sounds, but our process can complete an audit and provide the strategic roadmap in as little as two weeks. Cut through all the noise and make data-driven decisions on your operations.
Conclusion
In a dynamic business world, your success is a combination of sales and marketing, but operational excellence will make your business successful for the future. Auditing your operations can keep your business efficient, flexible, and ready to grow. What leaders need is to develop an audit curiosity to seek the data-driven decisions and empower their staff to innovate. Take the first step for an operations audit now! Book a consultation with our business consultant, you will find an expert who could help you and your business grow.
An operations audit can reveal where you need to strengthen your support for growth, provide the best experiences for your customers and get ahead of the competition. Don’t take what you have for granted; conduct regular assessments of key processes, and watch your business prosper.
