Business Tip - Plan & Streamline Your Operations

One of my favorite serial entrepreneurs is an ace at working out all his operational plan. He and his wife and business partner always spend an inordinate amount of time working out all the details of how they will get their business up and running. They have amazed me with how thorough they are in learning about the spaces they could occupy, the government licenses and approvals they would need, and the technology and employees they would need to make the business as productive as possible. I often wish my other clients were as thorough as this couple.

Nevertheless, they still discover things not turning out exactly as planned. When that happens, they figure out a way around the challenge.

When you're planning a start-up or are running a growing business, operations can be an after-thought or can be overwhelming. But having a detailed operating plan can make the difference between success and failure. Understanding the key components that drive your business's productivity can help you free up cash flow and use scare resources more wisely.

Planning and flexibility can help you roll with the economic punches. Another one of my clients during the downturn realized that shutting down his warehouse and business offices could help him cut costs. He and his wife and partner (a different entrepreneurial couple) now work out of their home and outsource all their warehousing, design and manufacturing, allowing them to focus on building sales and managing the outsourcing.

10 Tips for Starting a Business - Tip #5 - Basic Operations

You're really starting a business. Where is that business going to be? Now is the time to start planning your operations.

Is your headquarters in the basement of your house? Your garage? An empty bedroom? Or are you going to go out and rent a building or a space in a business incubator? This is one of the basic questions you need to answer. How much will it cost to rent space? Do you really need to do this?

One of my clients, a fashion designer, designed all of her creations in her basement. She had her patterns, her computers and her samples all in the basement. To manufacture her clothes, she ordered fabric from France and had it shipped to the manufacturers in New York. There, the pattern makers, cutters and sewers mass produced the clothes. Then, they shipped the clothes (the inventory) to a warehouse. The warehouse shipped everything to the boutiques. It was quite a process. Brigitte, the designer, found that she would need far more volume if she wanted to contract with overseas producers in places like China or Turkey. That's why she manufactured in New York.

Another client, Teroforma has their headquarters in the same building as their warehouse. They do their own shipping to consumers and to retailers. Their inventory is manufactured by artisans overseas. But while the management was finding designers and artisans, they worked out of their house.

Another client, MyBroadway.com, has its production studios for producing proprietary videos in the same building as its offices in New York City. This gives the company a distinct advantage.

What do you need to provide your service or manufacture and sell your product? If you're an inventor, will you license your design or actually manufacture and sell your product?

You need to think all this through and price the alternatives. What will computers cost? Furniture? Overhead? Personnel? Security? Should you lease or buy?

Start doing your homework.