Business Planning

5 Tips for a Killer Operational Strategy

Operational strategy is probably the last thing on your mind when starting a business. From marketing, sales, human resources, and supply chains, there are many aspects that occupy your mind as a business owner. Truth be told, creating an operations plan is probably not one of the glamorous activities on this list. But whether you’re running a small retail shop or a multimillion-dollar eCommerce business, having operational efficiency is important.

An operational strategy will position your business to compete and attract customers. Developing these strategies can be difficult if you have not created them in the past. We’ll break down tips on how to set these objectives to help bolster your business’s growth.

What is Operational Strategy?

The process that a business uses to reach its objectives is its operational strategy. These strategies can be reviewed to identify the most effective and efficient means of utilizing their resources, people, and more.

A business’s operations involve all the activities that produce and deliver a product or service. It’s not just about the tasks and tactics that happen every day that impacts a business’s products and services. Operations strategy is about going that extra mile to shape the approach and goals to match the operations. The seven main functions of operations are:

  • Product management
  • Facilities (planning and management)
  • Supply chain
  • Inventory
  • Forecasting
  • Quality
  • Scheduling
operational strategy on a whiteboard

Amazon is a great example of an organization that is continually improving its operations. They have been working on a program called Hands off the Wheel that automates office work tasks. This strategy to enhance its operational efficiency enabled them to free up their employee’s time so they could focus on building new products.

One operational strategy that an eCommerce business may undertake is improving the checkout experience. Shopping cart abandonment makes up 88.05 percent of online shopping orders worldwide. Choosing a payment processor that offers a seamless experience and allows your customers to use credit card payments will increase sales.

Tips to Maximize Operational Efficiency

To execute an operational strategy effectively, a business must create a framework that establishes what is intended to be accomplished. Read these tips on how you can elevate your business’s operational efficiency as explained below.

1. Set Clear Goals

Effective goal setting is an important practice in virtually every facade of a person’s life. For a business, setting clear goals will determine whether you meet the mark. A great way to understand what operational strategies that your goals should address is a SWOT analysis. Using this method, you can identify your business’s strengths, weaknesses, opportunities, and threats. This will set your priorities on what goals should be set.

To establish the goals to your operational strategies, follow these steps:

  1. Create quantifiable goals. To determine whether or not you’ve accomplished your goals, they must be measurable. This establishes where you are and allows you to check on any progress. It also enables you to make adjustments or changes if you find that your tactics aren’t helping you reach your goal.
  2. Ensure the goals are specific. Having your end goal defined will enable you to create a road map on what activities will be included in the action plan. Include specifics about what you want your business to accomplish at each checkpoint.
  3. Set a deadline. Without a deadline, it’s challenging to reach your goal. That timeline reinforces the commitment to reach the goal and puts it into context. Therefore, when determining the date, make sure that it is reasonable, yet aggressive.

To measure whether you’re on track to achieve your business goal, set up KPIs. Key performance indicators (KPI) are numbers that will track the progress that is being made on your goals.

2. Establish a Cohesive Management Hierarchy

Before you can determine the structure of your management, you’ll need to pinpoint what type of business you’re running. Will you register your business as a corporation or a partnership? Or is it a sole proprietorship? While each type of business structure has its advantages and disadvantages, your chain of command could look very different depending on who’s involved. You’ll need to determine this before proceeding with power dynamics.

It doesn’t matter if your business has five or five hundred employees. The lifeblood of a business is its people. To create an effective operational strategy, each area of your business must work with each other to be successful. The management team should be aligned to reflect this support system. The cross-functional interactions must be encouraged and work with a “one team, one goal” mentality. You’ll need to have everyone on board to make this work. Create your management hierarchy in the early stages of your business to eliminate any confusion or hard feelings amongst employees. Each individual should know who their direct correspondent is and the subsequent chain of command, even if that’s only you.

3. Break Down the Supply Chain

An area that many businesses can improve upon is within their supply chain. The supply chain is made up of the entire network of activities and companies that are involved in product sourcing, or service development, manufacturing, sale, and distribution. A supply chain typically includes:

  • Suppliers of the materials that the manufacturer receives
  • The warehouse(s) that stores the product
  • Distribution channels (i.e. the finished product is sent to a wholesaler or retailer to sell)

Improving the process that products follow to reach their customers can enable a business to gain a sustainable competitive advantage. There are internal and external sources within this supply chain.

Internallyemployees enforcing operational strategies

Businesses often focus heavily on external supply chain processes, leaving behind the internal process. Looking within the chain of activities within your business can have a significant impact on the goals created for its operational strategies. Review areas like purchasing, production, sales, and distribution to identify problem areas. For example, big technological changes have occurred in the past decade that has enabled work to become more efficient.


The external factors of the supply chain include all the activities that occur outside the company including transportation and environmental concerns. Regulations, customer preferences, and competition are other examples of external supply chain processes. While many of these factors exist outside a business’s control, there are processes and protocols that can help minimize the potential negative effects.

4. Update Existing Programs and Software

As mentioned, technology has changed drastically which has allowed businesses of all sizes to become more efficient.  To capitalize on this operational efficiency, consider upgrading your existing programs and software. This investment could save time, money, increase sales, or other positive effects on the operation of your business.

For example, if you’re looking to update your accounting software, make sure you pick the best accounting software for your needs. Take the time to explore options and identify the tools you need. Remember, your software and programs should help your efforts rather than complicate them.

5. Implement Strategies to Monitor Progress

Being able to track what areas to focus your operational strategies on comes down to having the right measures in place. For example, if you completed a SWOT analysis on your business using anecdotal information, it’s likely that your operational strategies and goals won’t address the right factors. Implement tracking capabilities to collect information in the areas of your operations that appear to be inefficient. This information is then used to create the right operational strategy for your business.

Don’t forget about tracking and budgeting your spending! Small business financial planning is a major component when monitoring your progress. Create a goal and stick with it. Your budget should reflect where you are and where you want to be. Don’t forget, your operational strategy extends farther than you might initially imagine for your business.

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