Tag Archives: tiny business

Enough already with the lectures! Where is this heading?

I hear you, this stuff can be a bit dry.  Here’s my plan for the next bunch bundle of posts:

  • Overview of the operations (this post)
  • Overview of the Critical Operations
  • Overview of the Profit Creating Operations
  • Overview of the Business Sustaining Operations
  • Introduction of the case studies

At my current pace that means 5 more weeks … it might actually have stopped snowing in Maryland by then.  If you’d like to read ahead then everything except the case studies are available from Amazon in Kindle format (SOHO Operations Planning) for $1.99.

A chance for literary immortality

If you’d like to volunteer to be one of the case studies then I would help you set up your tiny business using this approach for no charge.  In return you would grant my permission to use our experience as a case study.  I’m willing to write up the case study replacing all names, etc. with fictional names or with the actual name of your business – your choice and you don’t have to decide up front, you can wait until after I’ve written the case study and you get a chance to read it.  You can volunteer by leaving a comment on this post or if you want to be a bit more discrete then send me an email at stuart.l.lesley@gmail.com.

And now back to our regularly scheduled programming…..

Overview of the operations[i]

An operations plan provides a high level description of how your business works, that it is the actual things you do to provide your service or product to your customers. It should contain enough detail to accurately and comprehensively describe your business operations yet not contain anything that is not absolutely necessary. Beware of including things solely because you can or think they might be useful.  Anything you add to the operations plan will cost you time and money and those are two of your most scarce resources so chose those things carefully.

The recommended operations are based on a minimum set of widely accepted practices for services[ii] and should be fairly straightforward.  I’ve grouped these operations to help demonstrate the value of thinking through each of these operations as they apply to your business.  The 3 groups are:

Table 1: Critical Operations

Critical

Things you must get right immediately or your business is dead before it even gets started.

Requirements Management

“Is what you delivered what the customer ordered?”

If you don’t know what your customer wants you’re dead in the water from the very start.

Work Planning

“What are the major steps required to do the work?”

Once you have a good understanding of what the customer wants then it’s critical that you plan your work well.  As an expert this is probably the area you’re most comfortable with.

Service Delivery

“Did you keep your commitments to your partners, suppliers, etc.?”

Having performed the work you need to make sure that you’re delivering everything the contract (verbal or written) requires. This may include things that may not be explicitly included in the customers’ requirements like delivery location, packaging, etc.

Table 2 Profit Creating Operations

Profit Creating

Things you have to get right in order to make a profit.  These operations are not included in the critical group since not all tiny business ventures are designed to create a profit.  They are in the second group because they are important in keeping control of your costs (money and time).

Work Monitoring and Control

“Are you spending too much and as a result will you take a loss on this contract?”

These are things that will help you do your work efficiently, i.e. at the lowest cost and in the least amount of time.  If your business is a hobby or avocation this may not be that important but it’s always good to make sure you’re spending your time well.

Supplier Agreement Management

“How will you work with your partners, prime and/or sub-contractors?”

These are things that can quickly consume huge amounts of time and resources if you’re not careful.

Table 3 Business Sustaining Operations

Business Sustaining

Things that will help you stay in business and help create the conditions in which you can grow your business. 

Process and Product Quality Assurance

“Are you doing the right things AND are you doing things right?”

 These are things that help you stay on the right track and get better over time.

Measurement and Analysis

“How will you know you are making a profit?

These are things that help you see how your business is doing and what it can do better. 

Configuration Management

“Are you’re delivering the right version?”

 These are things that help you keep track of your stuff and make sure you’re delivering the right stuff to your customer.

That’s it!

8 operations of which there are only 3 (4 if you include visioning) that you really have to focus on.

Next up: Overview of the Critical Operations


[i] For the purposes of this plan the terms “operations” and “processes” mean the same thing.

[ii] Software Engineering Institute’s (SEI) Capability Maturity Model Integration for Services (CMMI-SVC), NOTE: Don’t let the fact that the source of this information has the work “software” in its title.  The practices described have been used in many other service areas, e.g. landscaping, etc.

How to save $1.99

At the end of my last post I promised to provide more detail on the specific operations identified in the Tiny Business Mentor.  This material is going to undercut my sales of SOHO Operations Planning in the Kindle section of Amazon.com available at the amazing price of $1.99.  So if you keep reading this blog long enough you’ll have all the material provided in that treatise (its 12 pages long) plus a whole lot more.  Who said reading blogs doesn’t pay?

In addition to the Vision or Overall approach I discussed in the last post you’ll also need a business plan.  There are many excellent resources for writing a business plan but your first stop should be the Small Business Administration (SBA).  Many parts of the Vision/Approach document will be reused in the early parts of any business plan and parts of the business plan will be used in the operations plan … “write once, use many times!!”

In my mind the terms “Tiny Business” and “Small Office / Home Office” are synonymous.  They both refer to a business that consists of no more than 5 or so people who are offering a service of some kind.  An operations plan is something that describes how you operate your business, i.e. the things you do that are directly related to providing your service to your customer.  This is different than the business plan which focuses on marketing, structure and financing and it is definitely different from the financial and legal planning that is often involved in running a business.

There are multitude of books and other resources on these subjects so I’m not going to repeat that material here.  I encourage readers of this blog to post your recommendations, experiences, etc. concerning these areas.

Tiny Business or Small Office / Home Office (SOHO) Operations Planning

So what is an operations plan and why should a tiny business spend precious resources, especially time, working on it?  An operations plan focuses on the planning of all aspects of the delivery of your service, from determining the need, through workforce activities to service delivery.  Your Operations Plan should enable you to answer the following questions:

  • Is what you delivered what the customer ordered? (Requirements Management)
  • What are the major steps required to do the work? (Work Planning)
  • Did you fulfill all your contractual obligations? (Service Delivery)
  • Are you spending too much and as a result will you take a loss on this contract? (Work Monitoring and Control)
  • How will you work with your partners, prime and/or sub-contractors? (Supplier Agreement Management)
  • Are you doing the right things AND are you doing things right? (Process and Product Quality Assurance)
  • How will you know you are making a profit? (Measurement and Analysis)
  • Are you’re delivering the right stuff? (Configuration Management)

In the earlier part of this post I said “write once, use many times!!” and here is the first area where you can start to reuse previous efforts. The high level answer to many of these questions should be in your Business Plan so copy and paste the appropriate answers from your Business Plan into your Operations Plan and add details as needed.

What Vision and Planning Provides You

With this set of vision and planning documents you should be able to quickly and consistently describe your service to any potential customer or partner, respond to any request for proposals and apply for financing or capital with a minimum amount of additional effort. This is assuming that you have actually thought through each of the parts of each of the planning documents and provided the appropriate answers or the reason(s) why a particular part doesn’t apply to your business.

The documents are not as important as going through the process and thinking it through.  The documents just help you remember what you did and communicate it to others.

That’s it. It may sound like a lot but you should only have to go through this once and then as your business changes you can go back and make modifications to your plan(s) as appropriate.

When it comes time to response to a request for proposal you should be able to find the majority of your material in these plans which means you’ll be able to respond with much less effort and your response should be of high quality. You can also state in your proposal that you have these plans, use them on a regular basis and provide a few examples of how they have helped you and especially your customer in the past. This will definitely give you a competitive edge over other proposals.

When you begin negotiations with potential partners, prime contractors and/or sub-contractors you can use these plans to establish credibility and the appropriate level of visibility into your business. This could give you a stronger negotiating position helping you ensure that you establish an agreement that is good for your customer, your business and you.

Up next: The first set of operations

What is a vision and what if mine isn’t 20/20?

I think of the vision as the 2-minute elevator speech that you’ll need when people ask you “so what is it you do again?”  Having this at the tip of your tongue will come in handy in so many ways:

  • chance encounters with potential customers,
  • explanations to family members,
  • reminding you why you’re doing this when it’s midnight and you’re facing a 9 am deadline, etc.

Don’t be fooled, creating this can be very difficult and more than a little frustrating.  You can see it in your head perfectly but every time you try to tell someone or write it down it gets all scrambled. Trust me when I say that if you can’t do this then life is going to be lot more difficult and possibly much less successful than it could be.

There is no specific format for the Vision/Approach but it should be short and well-focused. Anyone should be able to read it and understand what your business is about.  Here are some things that could help:

  • Don’t worry about perfection or completeness at first.  Write down whatever comes to mind and when there’s no more do something else.
  • Keep a notebook with you and jot down thoughts when they occur to you.  You’ll be surprised at the randomness of this. NOTE: Be safe! If driving repeat the thought out loud over and over until you can pull over safely and write it down.  Ignore the strange looks from your passenger or even better ask your passenger to write it down for you!
  • Focus on how your business can help your potential customer. Your capabilities, certifications, etc. are important but don’t assume your potential customer will know how they benefit them. Explain how each one helps your customer but keep it short.
  • This is your business’ resume and like a resume its sole purpose is to get you the “interview”, i.e. a contact (email, letter, phone call, meeting, etc.) with your potential customer

Next: More detail on the specific operations identified in the Tiny Business Mentor

A side note before continuing

What I’ve done in creating Tiny Business Mentor is take the latest industry best practices in the area of service delivery, distill them down to their bare essentials and then translate them into real people language. These are the things that once done can be used to keep you on track and freeing you to focus on what you started this business for in the first place whatever that may be.  For those interested in the source of the best practices you can go to http://www.sei.cmu.edu/reports/10tr034.pdf to get a copy of CMMI® for Services, Version 1.3. Be careful though, it’s over 500 pages long!

I’ve been involved in many projects large and small and both as a project leader and team member.  It’s been my experience that the projects that were both smaller and shorter needed greater attention to things like budget and schedule because there was less room for error.  If a large project that was scheduled to last 18 months ran over budget for 1 or 2 months there would be time to detect and correct the problem, assuming it wasn’t the last few months.  On the other hand, a small project that is scheduled to last 3 months had the same problem by the time the problem is detected the project is almost over and there’s no time for any kind of recovery action.  I think a tiny business is very much like a small short project, i.e. not a whole lot of room for detection of problems and their recovery.  One of the key features of Tiny Business Mentor is to put some things into place early to keep those problems from happening and when they happen anyway give you the tools to detect them early and correct them quickly.

Should you really be reading this?

Time is valuable and we are all swamped in a tsunami of information so this really an important question you need to ask yourself.  You might consider reading this if you are:

  • operating a tiny business (see the Jan 18th TBM blog post) and it’s not as much fun as you thought it would be or it’s outright painful
  • operating a business successfully and you might be able to add helpful insights to others reading this blog (including the author – me)
  • thinking about starting a tiny business and you want to learn what you need to know to operate a business and are hoping this might be of some help

Of course everyone is welcome regardless of your reasons for reading.

Tiny Business Mentor is assuming that your business is a service oriented business, i.e. you are be using your expertise and experience to provide some service to your customer.  This doesn’t mean the approach won’t work with a manufacturing, i.e. craft business, in fact the first example I developed to help “test out” the approach was just such a business and it worked out pretty well.  Another assumption is that you are highly competent in whatever service you are providing.  So if you know your business inside and out and are an expert in your field why do you need this “extra planning stuff”? Believe it or not, there are some very good reasons:

  • It allows you to be in more than one place at a time

Part of the planning is to write down your vision or approach. This becomes a big part of your “story” and that combined with an explanation of what you do and how you do it (another part of the planning effort) can be given to those who might be interested to read and get a sense of what you do.

  • It helps you keep track of the details

Your business consists of you (and maybe a few others) so you don’t have time to repeatedly go over things to make sure you’ve thought of everything. The “extra planning stuff” can help you do it once and forget it.

  • Improve the visibility of how you do business

You are providing an important service to your customers, a service that if not provided properly could seriously impact they’re plans. Providing a view in how you do your routine business will help them feel more comfortable and more willing to contract with you.

  • Expands your opportunities

Funding for expansion, cash flow management, etc. often requires a business plan as one of the first pieces of the line of credit request. Government contracts often require parts of a business plan to be included in your proposal in order to effectively compete. Competing for partnering and prime/sub-contracting arrangements often are helped by the “extra planning stuff”.

My apologies to Star Wars but what better title could I use on New Year’s day 2014 starting a new business venture – Tiny Business Mentor (TBM)? Later today I will add the link to my opening paper on Amazon.com “A short paper on Small Office/Home Office (SOHO) operations planning”.  Here’s an excerpt: ——————————————————————————————————— SOHO: Small office/home office (or single office/home office; SOHO) refers to the category of business or cottage industry that involves from 1 to 10 workers. Downloaded from Wikipedia on12/29/2013 http://en.wikipedia.org/wiki/Small_office/home_office What are the critical, profit creating and business sustaining operations that a SOHO needs to be aware of?  Based on industry best practices and years of experience this paper provides the key elements that a SOHO owner needs to know.  Following the practices provided here will go a long way towards keeping your SOHO a source of fulfillment and profit rather than frustration and loss. My primary source for industry’s best practices is the Software Engineering Institute’s (SEI) Capability Maturity Model Integration for Services (CMMI-SVC).

Prolog

I’ve been involved in many projects large and small both as a project leader and team member.  It’s been my experience that the projects that were both smaller and shorter needed greater attention to things like budget and schedule because there was less room for error.  If a large project that was scheduled to last 18 months ran over budget for 1 or 2 months there would be time to detect and correct the problem, assuming it wasn’t the last few months.  On the other hand, a small project that is scheduled to last 3 months had the same problem by the time the problem is detected the project is almost over and there’s no time for any kind of recovery action.  I think a SOHO business is very much like a small short project, i.e. not a whole lot of room for detection of problems and their recovery.  One of the key features of operations planning is to put some things into place early to keep those problems from happening and when they happen anyway give you the tools to detect them early and correct them quickly.  I know you know your business inside and out and are an expert in your field but you’re probably still not convinced that you need this “operations planning stuff”.

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