Operations
Business operations are all the tasks required to produce value to the customer. Business operations is the way we execute our business model. A business model is how a business captures, creates and delivers value.
The 3 main goals of business operations are as follows:
- Acquire assets and increase the value of business assets
- Increase customer satisfaction by improving processes
- Generating recurring revenue from existing assets: businesses with high level of recurring revenue are more valuable than those that do not have recurring revenue.
Acquire assets and increase the value of business assets:
The number one function of a business is to acquire assets and increase the value of that asset. Even though the freelance model is the easiest to start with, overtime you want to acquire assets in your business for your eventual financial freedom. For instance, a customer list is one of the top assets for an online business.
A business that can create large amount of short term income from assets but cannot sustain the income over the long run cannot be considered a viable business.
Organizational capital
Is the value added to the business as a result of all the hard work put in by the owner(s). This is built over time and includes:
- Long term relationships among employees and contractors
- Long term relationships with customers and vendors
- The growth opportunities available to management
For instance Pat Flynn from smart passive income increases assets by increasing the value of:
- Customer list
- Portfolio of websites: Pat maintains a portfolio of websites which generates 17% of his total income. These websites are mostly automated and require approximately 2 hours a month to maintain.
- Expanding his market: Due to his large following, he has been able to secure sponsorship income. Also, he is in the app business.
Increase customer satisfaction by improving processes
As a business owner, you have to strive to improve your processes. Your processes are the parts of your business that directly or indirectly interact with your potential customers. Let us take a look at 2 processes that exist in online business:
Process 1: Selling a product Operational workflow
- People visit website (has product or service)
- They engage with your content
- Click link to buy
- The payment processor processes the payment and emails you
- The money is directly deposited into your account without you having to do anything. This is what makes the process so sweet. In the brick and mortar, payments cannot be processed unless there was someone there to help you.
Process 2: Affiliate earnings within niche sites”
- Write an original article
- Spin articles– most time
- Submit to Article directories
- Create new blogs & Web 2.0 properties
- Indirectly link to anchor sites
- Repeat the process
The details of the system can be found here http://www.smartpassiveincome.com/the-backlinking-strategy-that-works/
Your processes have to be repeatable and standardized and they should also be documented. The better these processes are in place, the higher the value placed on your business.
Generating recurring revenue from existing assets
Once you have your assets in place, you have to device a way to generate a regular source of revenue. For instance to turn a blog into a money making machine, there are 3 components that are necessary:
- Fresh content to keep existing customers and attract new ones
- Creating new products or services
- Replicating efficient systems into new projects
This article is part 2 in the building financial freedom from your lifestyle business series