BUSINESS ENTERPRISE

THE ENTERPRISER –
Business Operations
Chapter 1 Lesson 3
OBJECTIVE
By the end of this lesson, you should be able to

1. have a clear understanding of what the roles of

an enterpriser in a business enterprise are.
2. explain how business operations are managed
and how business start - ups are managed.
From our previous lessons, we have been talking about the roles of an enterpriser, you might
not have came across the term entrepreneur. Do not panic, the term enterpriser and
entrepreneur have the same meaning and can be used inter-changeably.
In today’s lesson we will look at managing business operations and managing business start
ups as roles of an enterpriser/entrepreneur.

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Managing Business Operations
This can be defined into several ways as follows:
1. Business operations are the activities involved in the day-to-day
functions of the business for purposes of generating profit and for
it to survive.
2. Everything that happens within a company to keep it running and
earning money is referred to collectively as business operations. It
entails the efficient production and delivery of goods and services
to customers. The enterpriser must check on every aspect of their
business. Businesses do not look after themselves but they are
managed. You should know what to do to make your business run
efficiently. Successfully managing the ups and downs of daily
operations is the backbone of business operations. In order to
successfully run the business, the enterpriser should know his or
her strengths and weaknesses. Enterprisers eliminate their
weaknesses by employing people with strength in areas where
they are weak.
The enterpriser must have a thorough understanding of the business
operations in order to run the business efficiently. When the
enterpriser plans, he/she should set clear standards of performance at
all critical stages of the business as it allows the business to stay on
course. 4
The running of businesses comes with challenges
unique to the size, and function of the business.
These challenges differ at all stages of the business
life cycle. The management of operations in a well-
established business and new start-up presents
different challenges.
While operations are generally well understood and
structured in most large organizations, business
operations in many small to medium sized
companies tend to be less clear. The primary purpose
of a business is to generate sufficient income from its
activities to pay its expenses. The costs of producing,
developing, and delivering these goods and services
are the business' expenses.
A business whose revenues are sufficiently greater
than its expenses makes profit or income.
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Although all businesses face financial constraints, the situation is often more critical in a new business starting to
operate as there are a lot of set up costs as well as recurrent costs. The cost of introducing a new product into the
market with a new brand name is very high. Unlike established companies, start-up businesses do not have a
recurring source of revenue upon which to support its developmental efforts. It uses money raised from the owner
or from investors. When an enterpriser is managing a new business, he/she should produce products or services at
a minimal cost in order to save the little cash available. This may mean buying products from outside and by this,
the enterpriser will be keeping costs variable rather than being fixed.
The enterpriser is required to perform many roles in a start-up business as the business cannot afford to hire more
as it does not have money to pay the workers.

As the firm grows, more control of the company must be delegated. The enterpriser must find ways to streamline
business operations in order to give it a competitive advantage over others in the market. They must continuously
identify areas requiring improvement as efficient operations keep expenses down which will result in an increase in
profit. This is achieved by ensuring efficient use of resources at all times.
Working closely with clients at all levels in an organization is the only way to lay the foundation for continuous
improvement. Business operation activities should be documented department by department so that managers can
study them to find areas of improvement, consolidation, or cost-savings.
It also enables the business to trace, identify, and rectify problems.
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Key Departments In A Business

a. Marketing - It is responsible for determining customer needs and wants, finding ways of meeting them at a
profit. Even if you are producing very good products and services, if you fail to deploy capable marketing
personnel, you cannot achieve sales. You need to monitor the activities of your competitors and compare
the prices to avoid falling out of the market or you set too low prices which will affect your profit.
The owner should ensure that potential clients and customers are able to get in touch with the business
whenever they need to.

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b. Finance - It is one of the greatest challenges in managing a business. This is one of the reasons why businesses
fail. All businesses are very sensitive to cash flows hence the enterpriser should know how money flows through
their business. Businesses fail to operate if there is poor management of its finances.
A start up business needs greater financial management skills as the business runs in most cases with low capital. If
the enterpriser has challenges with financial aspects of the business, he/she should consider hiring a financial
professional who can control the financial affairs of the business. The enterpriser can hire a part-time or a full time
accountant depending on the volume of work to be done .The accountant also helps the business to comply with tax
laws of the country.
When employees see that management is serious about saving money, they will look for ways to help the business.

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c. Operations Management - Is the business function responsible for managing the production of goods
and services. It is concerned with converting materials and labour into goods and services as efficiently
as possible to maximize the profit of an organization. As an operations person, the enterpriser has to
identify the problems. If you have an understanding of your operations, you will be able to direct it to
achieve the overall business objectives and this will enable the business to be focused on the day-to-
day events that are necessary to keep the business going.
Businesses competing in the same industry face similar cost structures. The business with the lowest unit
costs is in a better position to be able to compete by being able to offer the lowest price in the industry
thereby outpacing its competitors.

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Another area needed is the human resource skill as many entrepreneurs face
many human resource challenges especially on hiring and termination of
employment. Some enterprisers fail to realize that for the job at hand to be
successfully done, they need to hire qualified and experienced personnel.
Several times employee contracts are not terminated according to the law
resulting in the business losing money when the employee takes up the case
with the courts. Once a business is established, it is important to periodically
assess and analyze business operations to identify inefficiencies in all areas of
the business. Comparisons with industry benchmarks and best practices can
help a company make sure its business operations are optimum. The business
environment is ever-changing and this brings change to the business on a
continual basis which requires effective strategies for managing change as this
helps in building a sustainable business. Business operations in both
manufacturing and service industries must make their operations flexible in
order to respond to changing market conditions quickly.
The businesses should put in place systems that give early warning signals on
threats and take advantage of the evolving opportunities. This will help the
business to survive and thrive.

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As the business grows, the enterpriser should delegate the different jobs and responsibilities to
qualified employees. After delegating, the enterpriser should remain involved to ensure that all
employees are following through with the tasks that they have been assigned to do.
The enterpriser must ensure that the business is capable of running without him or her. This can
be achieved by getting operational and financial reports that will give the enterpriser relevant
information to make important decisions for the business. There should be reporting procedures.
The reports should be submitted timely to allow correction of problems before serious damage to
the business.
As the company grows, there is need to look at customer service. In service industries, the
management of queues is important because nobody enjoys waiting in long queues.

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 Exercise

1. What are business operations? [2]

2. Explain the 3 main operations of the business. [10]
3. Discuss how business operations are managed. [4]

Total: 16 marks

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