Why Your Small Business Needs an Operations Manual

Look around your office. Your computer, printer, and copier—maybe even your adjustable chair—all came with operating manuals.

But do you have an operating manual for your business? If not, creating one can save you serious time and money.

Operating (or operations) manuals teach you, your employees, and future employees how to run your business successfully. When I suggest manuals to my startup and small business clients, I’m often greeted with skepticism. “I don’t have time to write anything,” they’ll say. “Besides, I already know what I’m supposed to do.”

Even if your business runs smoothly now, writing an operations manual today can help you identify tomorrow’s challenges.

After all, U.S. Census data shows us that only 69% of small businesses survive two years. Other studies suggest that 30-50% of small businesses fail due to operations and management deficiencies. An operations manual won’t solve your specific issues, but it will help you anticipate them much sooner.

An operations framework becomes especially crucial as your company expands.

Hiring new employees is an exciting step for the entrepreneur, but recruiting, training, and managing your team can take up a lot of time—precious time you’d rather spend generating new ideas. An operations manual will make this process faster and more cost effective.

As the economy improves and job opportunities increase, an operations manual will help you retain your top employees.

When people leave a job, it’s not usually due to salary. Rather, they leave because they don’t see a future for the company or don’t feel recognized for their individual efforts. An operations manual addresses both of these issues. Seeing your operations strategy in black and white will give your employees confidence in your management, organization, and stability. Plus, a manual gives you clear benchmarks for measuring and rewarding employee performance.

Since your manual will help you train and retain your best employees, you’ll see increased productivity and a reduced margin of error.

Avoiding errors matters even more to the small business than it does to a large organization. After all, you’re paying your employees for every moment they are with you, whether they’re doing a good, bad or mediocre job. Even small mistakes can lead to wasted time and lost clients, something fledgling businesses can ill afford.

A written operations handbook will also dramatically improve your customer satisfaction.

Your customers want consistency and reliability. Consider the successful businesses in your neighborhood. At a restaurant a dish is made exactly the same on a Saturday night as it is on a Tuesday, whether or not the executive chef is actually in the kitchen. Even small details matter. For example, a man who likes to pamper himself with a straight razor shave at the Art of Shaving will be disappointed if the treatment ritual changes by the day. Let your team (and yourself) get creative with new offerings and products, but not by changing the process from day to day, or between different employees. Consistency creates trust, and operations manuals ensure consistency.

What should actually be in your operations manual?

While larger organizations can have manuals as thick as the phone book, a good starter document could be less than 30 pages. Think of it as a “how-to” guide to your day-to-day operations and most repeated tasks. Include a business overview, office policies, emergency procedures, and contact lists for employees and vendors. Most importantly, draft a guide for each of your business systems: marketing, sales, order fulfillment, client management, recruitment, training, administrative, and so on. Each guide should include processes, checklists, and any templates or documents necessary to complete tasks.

I know what you might be thinking: “Employees do not want to read long and boring operating manuals.” I agree, and the solution is simple (if not easy): don’t make your manuals long and boring!

Try these tips to make your manuals useful and concise:

  • Include pictures, pictograms and colors. Think IKEA for your business processes. (Don’t forget the nuts and bolts!)
  • Require new team members to read only the most important sections.
  • Segment training into “bite-size” pieces.
  • Incorporate hands-on training and exercises. (For example, have team members work together on practice challenges.)
  • Explain why the rules matter. Show how your operations plans support your overall vision for the company.

You don’t have to write your operations manual by yourself.

In fact, it’s better not to. Make it a collaborative process with your startup team. You’ll get their buy-in and give them ownership of your key decisions. A joint effort yields more cohesive results and saves everyone time.

Does a formal operations manual hinder innovation? In my experience, it’s quite the opposite. When you and your team become consumed with everyday tasks, you simply cannot generate new ideas. Manufacturers have long known the value of automation. Automation may sound like a dirty word to a small business committed to unique, customized solutions and products. But by automating your routine tasks, you’ll actually be free to innovate and create new opportunities for your business—while saving money and improving customer service.

As seen on NYER