Business Operations Manual
A manual is a technical communication/instructional document. A Business Operations Manual therefore is a valuable organization document that offers guidance to employees on how to perform their duties. It contains agreed-upon standard procedures to carry out organizational functions effectively. A Business Operations Manual also documents all necessary processes, how to carry them out, and who is responsible for them. You can compare a Business Operations Manual to an organization encyclopedia.
In the past, Business Operations Manuals were in the form of a physical booklet or book. These days many organizations have shareable online folders/resources or an organization wiki that makes up a Business Operations Manual.
Why is a Business Operations Manual Important?
1. It is an important tool during training.
A Business Operations Manual is a key component during training. It should not entirely substitute the whole training process but should be used to improve training efficiency. This is through having trainees read through the Business Operations Manual beforehand to familiarize themselves with the organization hence making the training process faster and better. Also once training is over, a Business Operations Manual provides a good reference guide to enhance their training.
2. It helps improve the efficiency of an organization.
Through documenting an organization’s processes, policies and procedures, everyone in the organization is able to understand and follow through on the same. This can significantly help to avoid mistakes and also save time that would have been used disrupting others to consult when carrying out duties. Tasks are also delegated or assigned to the appropriate people seamlessly since it has been documented who does what and when.
3. Maintains consistency in customer experience.
When starting a business, the goal is to ensure that only the best of services are offered to customers. This can be watered down when the initial founders of the business move away or when the business grows and their positions shift to managerial roles. To prevent this, once all processes are properly documented, it creates a uniformity in the delivery of service hence maintaining a consistent customer experience regardless of who is handling them.
4. Preserves expert knowledge.
Through documenting approved procedures and best practices in getting the work in an organization, this knowledge is preserved to ensure continuity. The initial employees and organization founder need not be present for work to go on smoothly since all the processes and policies are well outlined in the Business Operations Manual.
5. Used in the sale of a business.
In the event there is a need to sell the business, potential buyers are keen to check on available documentation. If you recall from this guide one of the documents required in the sale of a business is the Business Operations Manual. Buyers want to know how to operate the business once they take it over. A well-maintained Business Operations Manual therefore makes a business marketable.
6. Improves scalability.
If a business needs to expand its operations, for example in new locations or to have a subsidiary, a Business Operations Manual makes this scale-up so easy since it already provides a basis to either replicate a similar manual in the new business or a foundation to adapt from without the challenge of starting anew. Scalability can also be in the form of increasing the number of employees. As mentioned earlier, a Business Operations Manual is very crucial when onboarding new personnel.
7. Improves on accountability.
A Business Operations Manual helps in improving accountability since it clearly outlines what tasks are to be done, how to do them, and who is to do them.
8. Records important information.
Crucial organization information can be found in the Business Operations Manual. This includes but is not limited to process maps, employee information e.g their roles, contact information, location (if the business operates in more than one region), etc.
9. Compliance with regulation.
A Business Operations Manual also helps an organization ensure compliance with certain regulations by contributing to the safety of the workforce as well as its products. This comes about from e.g. following through approved standards and processes that could prevent avoidable work-related injuries, complying with quality controls, having an emergency response plan and disaster recovery, etc.
What to include in a Business Operations Manual
The contents of a Business Operations Manual may vary from one organization to another depending on various factors such as size, nature of business, etc. However, there are basic components that are generic to almost all Operations Manuals. These are:
- Processes and procedures
- Organization structure
- Job roles and descriptions
- Emergency response plan
Policies are an intentional set of principles or guidelines that influence decision-making. They ensure that an organization is able to achieve its goals and objectives.
Policies are followed through procedures. They are the bridge between the long-term goals of an organization and the everyday tasks.
It is the responsibility of top-level managers or the founders of an organization to formulate policies. This may normally happen at the initial stages of the establishment of an organization and may be added on/updated as the organization grows. The rest of the employees are tasked with the mandate of implementing the laid-out policies through routine business activities. In that sense, it is safe to consider policies as the framework of business activities.
One should be keen to differentiate between an organization’s business policies from social policies. Social policies will mainly be featured in the employee handbook. While the social policies can be mentioned in the Business Operations Manual, we expect the bulk of the details to be left out of the handbook. Examples of social policies are employee health welfare, leave, bonuses, etc.
Policies set the standards to be used when carrying out various business tasks and duties as well as ensure there are set limits within which business decisions are to be made. Usually, these will be accompanied by certain rules or resolutions on what should happen in the event the guidelines are not met. For example, an organization can have a policy to only allow credit for 45 days. Should a customer exceed this credit limit, then they can start accruing penalties/interest. This makes it very easy to follow through to a person working in the accounts department. It is clear to them where the organization stands with regard to credit and the course of action to take in case of an anomaly.
Examples of common organization policies include:
1. Recruitment policy
This policy outlines the recruitment process. For example, an organization can state that it does not tolerate discrimination on the basis of race, religion, or gender while hiring, outline if there is a probation period before confirming a hire, or if during this period there will be background checks being carried out on the new hire, etc.
2. Code of conduct
This policy outlines acceptable employee behavior. Common clauses under this policy are anti-discrimination and harassment intolerance, dress code, punctuality, work attendance, etc.
3. Internet policy
In modern times most organizations rely on the use of gadgets that are connected to the internet for an efficient workflow. An organization can have rules on the use of the internet while at work, for example, restricting surfing on sites that are not related to the job, prohibiting the access or use of obscenities e.g. via email.
4. Health and safety policy while at the workplace
Under this policy are guidelines such as the safety measures to be adhered to while at the workplace e.g. having safe work gear. These are crucial to avoid work-related injuries. There can be a clause to forbid reporting to work while intoxicated or under the influence of drugs, or a non-smoking policy.
5. Termination policy
Just as the name suggests, this policy documents what grounds warrant work termination, what steps are to be followed to effect an employee termination, etc.
6. Refund policy
This kind of policy is common with businesses that majorly deal with the sale of goods. For example, it can outline which goods are returnable, if a cash refund is available, what condition the goods must be in when being returned, how long it should take for a refund to take place, if there is any authorization that should take place before a refund, who is responsible to authorize the refund, etc.
7. Bookkeeping Guidelines
This policy sets forth the rules and protocols for keeping financial records within the organization. It covers the frequency of record maintenance, the process for documenting financial transactions, and the procedures for preparing financial reports.
The policy also details the regulations that must be followed for compliance purposes. Finally, it outlines the process for conducting financial audits to ensure the accuracy and consistency of the organization's financial information. The bookkeeping policy is essential for promoting financial stability and meeting regulatory measures you need to meet..
Accounting Practices & Procedures
A comprehensive business operations manual should include a section on accounting practices and procedures. This will determine how your bookkeeping practice is developed, but also serve as the compass to meet compliance measures as well. The following information should be included:
1. Chart of Accounts
The chart of accounts is a list of all the account categories used in the organization's accounting system. The manual should detail the purpose of each account and how they are used in the organization's financial reporting. This way full transparency can be met and clearly defined guidelines will ensure all accounting staff use the correct procedures.
2. Record Keeping
The manual should explain the record-keeping procedures and how transactions are recorded in the accounting system. This may include information on how invoices, bills, and other financial transactions are processed and entered into the system. This might also cover topics like staff expenses during business trips and the redemption policy you’ll put in place.
3. Financial Statements
You should provide an overview of the different financial statements that the organization produces and how they are used to measure financial performance. This may include balance sheets, income statements, cash flow statements, and others. This can ensure all vital documentation is clearly listed and what forms correspond to which records.
4. Budgeting & Forecasting
The manual should explain the budgeting and forecasting process, including how budgets are developed, approved, and monitored from the top down. You can use this information to draft financial reports at the end of each year in the interest of transparency.
The manual should also include information on the organization's tax obligations and the procedures for preparing and filing tax returns. This may include information on sales tax, payroll tax, and other taxes that the organization is responsible for. It will also be defined by your status of your organization, be that a charity, public or private limited enterprise.
You will explain the internal and external auditing processes, including who is responsible for conducting audits and how audits are conducted each year. This will grant you an opportunity to summarize your approach to transparency and/or any stipulations within the economic zone you’re a part of, or how your reporting may adjust based on government contracts held.
7. Financial Policies and Procedures
The guide should include a section on the organization's financial policies and procedures. This may include information on how expenses are approved, how payments are processed, and how the organization handles conflicts of interest - for instance, how staff are to offer a personal disclaimer relating to any companies they may or may not have shares in at the time.
8. Accounting Software
It’s important to provide an overview of the accounting software used by the organization and how it is used to support the accounting processes. This is the backbone of your bookkeeping processes, and so it’s important to clearly note your approach.
In the interest of clarity, it’s important for the manual to explain the reporting procedures, including how financial information is reported to management and stakeholders. Such a clearly-defined protocol can be used in situations large or small, in the interest of transparency or organizational common-sense.
10. Continuous Improvement
Finally, the manual should outline the organization's commitment to continuous improvement in its accounting processes and procedures. This may include information on how the organization evaluates its accounting practices, identifies areas for improvement, and implements changes.
Having a well-documented operations manual that covers accounting practices and procedures can help ensure that financial information is accurate and up-to-date, and that the organization has the information it needs to make informed decisions.
To ensure that these guidelines are followed consistently, it is important to have an effective bookkeeping system in place. This involves establishing clear protocols for recording and tracking financial transactions, maintaining perfect records of financial data, and regularly reviewing these records to identify any potential compliance issues. A good bookkeeping system can also help to ensure that all regulatory reporting requirements are met on time, and that any necessary adjustments are made promptly to ensure ongoing compliance.
In addition to having a robust bookkeeping system, it may also be necessary to engage the services of a professional bookkeeper or accounting firm to help monitor compliance and ensure that all financial records are maintained in accordance with applicable regulations. With the right systems and support in place, organizations can ensure that they are operating within the law and protecting their employees, customers, and stakeholders from potential harm.
Steps to take before formulating policies
When coming up with organizational policies to include in a Business Operations Manual, it is important to consider the following steps:
1. Outline the goals of the organization.
This is the starting point for formulating policies. You should have the goals clearly defined and ensure they are motivating enough to work through achieving them. Goals can be segmented in as many ways as possible. Short-term goals to feed into long-term goals, departmental goals, etc.
2. Consider all imaginable problems and possible solutions.
Most policies are formulated to prevent avoidable problems. While in this step, you should think of all potential issues that could arise in day-to-day activities that may limit achieving the set organizational goals. The solutions to these issues are what form a good basis for policies.
3. List down possible policy categories.
Segmenting the different issues identified in step 2 into different categories such as recruitment, safety, etc., greatly helps in creating an outline that can be later expounded individually to avoid ambiguity.
4. Select an outline.
Once the list of policy categories is complete, come up with an outline design/format that will allow in-depth details on each policy.
5. Include consequences or exceptions to a policy.
At this stage, the policies are almost completely documented. It is important to remember to include any exceptions to the rules set out in the policy. However, this should only be on very limited grounds to minimize misuse. Also, clear consequences on what should happen if the policy is not adhered to should be included. For example, issuing a warning letter, termination of employment, legal suit, etc.
Features of effective policies
Organizational policies should be clearly specified and determined to make their implementation easy.
2. Concise and clear
There should be no gray areas or any room for misinterpretation when formulating policies. This makes it possible for everyone to follow through when implementing them. Policies also make it clear what the individual responsibilities are for each employee as well as the collective responsibilities as a team e.g in a department.
A good policy is comprehensive enough to cater for a wide scope and also create room for expansion. It should also be flexible enough to adapt to changing business practices and times. However, this is not to make it unstable to lose its relevance.
A good policy should be able to encompass different procedures from different organizational functions consistently to ensure uniformity.
When formulating policies, organization management should make sure that they are sensible and practical enough to be implemented. If you recall, we mentioned that policies are there to help an organization achieve its long-term goals through the day-to-day tasks. For this to be achieved, policies then need to be plausible.
This is to ensure they are easily understood and implemented by everyone.
7. Promote stability
Effective policies should foster strength and avoid disruptions even during major business changes. Since an organization’s goals are forward-looking, before they are achieved, it is possible to have shaky moments that could set the organization off its goals. Good policies ensure the organization is grounded to its core and does not change its direction despite the passing turbulences.
Processes and procedures
This section is the bulk of a Business Operations Manual. It documents core business functions and tasks. All day-to-day tasks should be documented here in detail. It therefore means that big organizations with many departments will have many processes and procedures.
Processes are a series of highly detailed tasks that are specific and related. They convert inputs to outputs. Processes can be shared across different organizational functions. On the other hand, procedures are the agreed-upon ways to carry out processes. In most cases, procedures are a step-by-step guide on how to carry out set tasks and will often yield the same consistent results.
In this guide, we will use processes and procedures hand in hand.
When establishing processes and procedures for the first time in an organization, it is advisable to start from one department moving on to the next until the entire organization is covered ratherthan trying to cover the whole organization all at once.
Each process should have an appointed owner whose role is to review the process periodically and communicate to the rest of the team the changes made.
The following steps are important in guiding the documentation of processes and procedures.
1. Naming the process.
This is the first step and should involve identifying which process is to be documented, its purpose/relevance to the organization, and a brief narration of the process.
2. Set out the process scope.
This is the extent to which the process remains relevant. It should be clearly defined to state what is composed in the process and what is not.
The process scope should also outline the boundaries, i.e., from where the process begins, what triggers it to begin, to where it stops.
3. Determine the process outputs and inputs.
We mentioned that processes convert inputs to outputs. All these should be clearly identified. It should be clear that with specified materials/resources a process will achieve specific outcomes.
4. Establish and organize the process steps.
In this step, you should think through the required actions needed to complete a process. After identifying the actions, arrange them sequentially from the beginning of the process to its completion. This will generate a relatable flow, which subsequently forms a procedure.
At this stage, one should also note down any exceptions to process flow as well as include control measures.
5. List down all persons involved in the process.
A clear description of all the parties involved in the process is vital. The description should state their role and responsibilities.
6. Represent the process in a visual chart/diagram.
A diagrammatic expression of the process helps to visualize the entire process at a glance as well as enhance clarity. Flowcharts are good tools to visualize processes.
This is the final step. It involves testing and reviewing the process to check if there are any steps omitted. Be sure to involve all the parties involved in the process to help in this step.
An organizational structure outlines how information, reporting, responsibilities, and authority are shared in an organization. The most common type of structure is the organizational hierarchy. It resembles a pyramid, thehe top being the highest position in terms of power, duties, and decision making. The structure widens as it gets to the bottom where there are subordinates with highly structured duties meaning less decision-making abilities as well as power.
Organizational structures tend to be simpler for smaller organizations and get complex as the organization expands.
Having an organizational structure is important in providing a clear direction at all levels, hence improving efficiency. Multiple business functions can be carried out simultaneously and smoothly with minimal time wastage. It removes ambiguity on who reports to whom or who does what. An organizational structure also sets the basis for such things as compensation.
Job roles, descriptions, and contact information
This section should document all the roles available in the organization, a detailed description of the skill set and responsibilities of each role, plus the contact details of the holders of these roles. If the organization operates across different regions it can be good to indicate from which location each role is based.
All this can be fed off an organizational structure or can be listed down separately.
It is also important to include:
- The overall company’s contact information i.e website, telephone, physical address, key email addresses for the various core departments, after-hours contact details if different, etc.
- A list of key vendors, customers, and any other relevant partners complete with their contact details
- Working hours
- Relevant bank accounts e.g. for the sake of customers
Emergency response plan
There are many accidental emergencies that may occur in an organization. It is prudent to be always prepared for what to do in the event of these. Examples of emergencies are: a fire breakout, computer/system malware, urgent medical need, extremely adverse weather, spillage of toxic chemicals, acts of terrorism, active shootout, etc.
Clearly laid out protocols/procedures on what to do in case of an emergency should be a core part of a Business Operation Manual. This can also be summarized and printed out in visual posters that should be made available along exit ways, common places, etc. where they are easily visible to everyone in the organization.
Another component of an emergency response plan is to have floor plans printed out with clearly-marked exit ways. This is to make it easy for flight and evacuation during an emergency.
A good plan should also incorporate periodic training and drills to test the level of preparedness of the employees.
Lastly, an emergency plan is not complete without emergency contact details.
A Business Operations Manual is so vital in an organization. It is what is needed to get things running and also for the growth of the organization. It is not meant to be written and shelved somewhere in a forgotten place.
A best practice when writing a Business Operations Manual is to start with the organization’s goals. This sets out the expectations of the organization to the employees and they too are able to understand what to anticipate from the company. Then, have an ordered way to outline the contents of the operations manual, for example, logically start with the weighty issues and narrow down to small ones.
It is also good to ensure that most of the content is visual e.g. diagrams, flow charts, process flows, and emergency plans/exits to make it easier to follow through at a glance.
A good Business Operations Manual should not be used in place of training but should be good enough especially for newly-trained employees to follow through with the organization's procedures and culture.
You should consider a Business Operations Manual to be an organization’s knowledge base. As mentioned earlier in this guide, a Business Operations Manual helps preserve organizational knowledge that can easily get lost if not documented or when some employees with the expertise leave the organization. This therefore means that it should not be static. It should be updated periodically to accommodate any new knowledge and necessary changes to make it as current as possible for future use.
All of the content in the Business Operations Manual is vital. However, we have highlighted the importance of policies that can be compared to the blueprint of a house. These must be clearly stated and made accessible to everyone for proper implementation. They should also clearly define exceptions to what should be considered the norm.
A good Business Operations Manual should also be comprehensive enough to contain all necessary and useful information. However, one should strive to strike a balance between being concise and being too wordy to the extent of trivializing or boring the users.
The importance of areas like accounting in a business operations manual cannot be overstated. Consistent financial records are essential for any organization, as they provide valuable insights into the financial health and performance of the business. Without a strong accounting system in place, it is difficult for a business to make informed decisions, assess its strengths and weaknesses, and plan for future growth.
A well-designed business operations manual should therefore place a strong emphasis on accounting and financial management, including guidelines for record-keeping, financial reporting, and budgeting. By establishing clear protocols for these critical areas, the manual can help to ensure that financial information is captured and managed in an appropriate manner, and that it is readily available to decision-makers when it is needed.
In addition, a robust accounting system can help organizations stay compliant with various financial regulations, such as tax laws and reporting requirements. For instance, the manual may include instructions for preparing and filing tax returns, as well as guidelines for complying with any relevant accounting standards from there.