BSBSMB405 Monitor and Manage Small Business Operations by Precision Group (Australia)

Trainer Manual & Assessment Monitor and Manage Small Business Operations

BSBSMB405

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BSBSMB405 Monitor and Manage Small Business Operations BSB Version

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Release 3

Current

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History

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BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Table of Contents 3

About BSB

5 Introduction 7

BSBSMB405/01 Develop Operational Strategies and Procedures 1.1 Develop an action plan to provide a clear and coherent direction, in accordance with business goals and objectives 1.2 Identify Work Health and Safety (WHS) and environmental issues, and implement strategies to minimise risk factors 1.3 Develop a quality system for the business in line with industry standards, compliance requirements and cultural criteria 1.4 Develop performance measures and operational targets to conform with the business plan 1.5 Develop strategies for innovation, including utilisation of existing, new or emerging technologies, where practicable, to optimise business performance

28 29

Key Points ‘True’ or ‘False’ Quiz

BSBSMB405/02 Implement Operational Strategies and Procedures 2.1 Implement systems and key performance indicators or targets to monitor business performance and customer satisfaction 2.2 Implement systems to control stock, expenditure or cost, wastage or shrinkage and risks to health and safety in accordance with the business plan 2.3 Maintain staffing requirements, where applicable, within budget, to maximise productivity 2.4 Carry out provision of goods or services in accordance with established legal, ethical cultural and technical standards 2.5 Provide goods or services in accordance with time, cost and quality specifications, and customer requirements 2.6 Apply quality procedures to address product or service and customer requirements

56 57

Key Points ‘True’ or ‘False’ Quiz

59 BSBSMB405/03 Monitor Business Performance 3.1 Regularly monitor and review achievement of operational targets to ensure optimum business performance, in accordance with business plan goals and objectives 3.2 Review systems and structures, with a view to more effectively supporting business performance

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Table of Contents (continued)

3.3 Investigate and analyse operating problems to establish causes and implement changes as required, as part of the business quality system 3.4 Amend operational policies and procedures to incorporate corrective action

66 67

Key Points ‘True’ or ‘False’ Quiz

69 BSBSMB405/04 Review Business Operations 4.1 Review and adjust business plan, as required, to maintain business viability, in accordance with business goals and objectives 4.2 Clearly record proposed changes to aid future planning and evaluation 4.3 Undertake ongoing research into new business opportunities and adjust business goals and objectives as new business opportunities arise

72 73

Key Points ‘True’ or ‘False’ Quiz

74 Summary 75 Bibliography 77

Assessment Pack

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

About BSB Business Services Training Package

“The purpose of education is to replace an empty mind with an open one.” Malcolm Forbes

About the Business Services Industry The BSB Business Services Training Package covers a diverse range of industries and occupations. Business Services covers a range of cross-industry functions and services supporting the commercial activities of all industries.

Defining Qualifications When units of competency are grouped into combinations that meet workplace roles, they are called qualifications. These qualifications are aligned to the Australian Qualifications Framework (AQF). Each qualification will have ’packaging rules’ which establish the number of core units, number and source of elective units and overall requirements for delivering the qualification.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

About BSB Business Services Training Package (continued)

Delivery and Assessment of Qualifications RTOs must have the qualifications (or specific units of competency) on their scope to deliver nationally recognised training and assessment. RTOs are governed by and must comply with the requirements established by applicable national frameworks and standards. RTOs must ensure that training and assessment complies with the relevant standards.

Qualification Training Pathways A pathway is the route or course of action taken to get to a destination. A training pathway is the learning required to attain the competencies to achieve career goals. Everyone has different needs and goals, and therefore requires a personalised and individual training pathway.

Foundation Skills Foundation Skills are the non-technical skills that support the individual’s participation in the workplace, in the community and in education and training.

Australian Core Skills Framework (ACSF) This Assessment meets the five ACSF core skills as described in the Foundation Skills mapping.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Introduction

“Knowledge is of no value unless you put it into practice.” Anton Chekhov

This unit standard, BSBSMB405 Monitor and Manage Small Business Operations, describes the performance outcomes, skills and knowledge required to operate a small business and to implement a business plan. The strategies involve monitoring, managing and reviewing operational procedures. There are specific legal requirements that apply to the management of a small business. This unit is undertaken by individuals who operate a small business. The unit is suitable for existing micro and small businesses or a department in a larger organisation. This manual is broken up into four Elements. They are:

1. Develop Operational Strategies and Procedures 2. Implement Operational Strategies and Procedures 3. Monitor Business Performance 4. Review Business Operations BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Introduction (continued)

There are activities throughout this workbook. These require the Learners to think about their experience or reactions, or to try and complete some research through reading or accessing the Internet. The activities will also help prepare Learners for their Assessment Tasks as they think through the issues raised. Learners will then be asked to complete an Assessment Pack for this unit of competency. The information contained in this workbook will assist them. These tasks can be completed as they work through the workbook, rather than leaving it all to be completed at the end of their study. Finally, at the end of this workbook you will find a list of useful resources that you may use for further information. You will need to have access to an Internet terminal. Throughout the text, there are references to websites for further information and for some activities. This unit contributes towards the attainment of nationally recognised qualifications. Running your own business can be one of the most exciting, and challenging, adventures you will embark upon. It can offer many rewards: not only can it be profitable, it can also be emotionally satisfying. However many issues challenge the small business owner from factors such as recessions, changing styles and new technologies. A high percentage of new businesses fail in their first three years of operation due to poor planning and management. In order to be successful, a business owner must: • Develop a way of consistently reaching customers in order to survive • Keep a close and competitive eye on the competition • Keep accurate and up-to-date financial records and carefully manage work flow. Running your business effectively is the topic of this competency.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

ELEMENT 1:

Develop Operational Strategies and Procedures

Performance Criteria Element 1 1.1

Develop an action plan to provide a clear and coherent direction, in accordance with business goals and objectives

1.2 Identify Work Health and Safety (WHS) and environmental issues, and implement strategies to minimise risk factors

1.3 Develop a quality system for the business in line with industry standards, compliance requirements and cultural criteria

1.4 Develop performance measures and operational targets to conform with the business plan

1.5 Develop strategies for innovation, including utilisation of existing, new or emerging technologies, where practicable, to optimise business performance.

BSBSMB405â&#x20AC;&#x201A; Monitor and Manage Small Business Operations Trainer Manualâ&#x20AC;&#x201A; ÂŠ Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

Develop Operational Procedures

Strategies

and

“Operations strategy is the total pattern of decisions which shape the long-term capabilities of any type of operations and their contribution to the overall strategy, through the reconciliation of market requirements with operations resources.” Slack and Lewis Operational strategy is a plan of action implemented by a business that describes how they will employ their resources in the production of a product or service. An operational strategy is a necessary element for a business and supports the firm’s business strategy. Businesses that make and deliver products, whether for profit or not-for-profit, require a handful of processes to get their products manufactured properly and delivered on time. Each of the processes acts as an operation for the business. To the business this is essential. Operations strategy provides an overall direction that serves the framework for carrying out all the business’s functions. Operational strategies and procedures may be determined by: • Business premises (size, location, layout) • Financial control systems and procedures • Management and administrative systems and procedures • Methods/techniques/technology • Physical and natural resources • Plant and equipment , including workplace health and safety requirements • Premises, plant and equipment, which may be new or previously owned • Purchase (sole or shared ownership) or leasing • Raw materials • Requirements, which may be one-off or recurrent requirements (such as equipment maintenance) specific to the nature of the business • Technology • Environmentally sustainable principles of business operation • Use of existing, new and emerging technologies including e-commerce.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

The overall strategic goals and objectives of the business establish the focus of the operational strategy. Look at the Mission of the simulated business Bounce Fitness: “The Centres will serve the community with quality, comprehensive, unique and distinctive health programs and services. The employee team will expand upon the preventive services while improving the quality of life among participants through health and fitness services utilising state-of-the-art equipment and practices. These programs will reflect members’ needs to be financially viable for all stakeholders.” The strategy for this case will include: • Client convenience (location, parking, timetables, access) • Facilities (modern, encompassing whole body and mind, cleanliness etc.) • Staff (well-trained, friendly, helpful, caring, supportive, well presented appearance and uniform) • Concept delivery (opportunities to improve body and mind, diet and overall wellbeing). The operational strategies will plan for the implementation and delivery of areaspecific plans in each of these areas. Each strategic area or target will require a plan to achieve the related goals.

Develop an Action Plan to Provide a Clear and Coherent Direction, in Accordance with the Business Goals and Objectives Any action within a business needs to support a corporate direction. This direction is shown in the form of a broad statement of intent or objective, which everybody in the organisation can follow. An objective also helps those outside the organisation to understand the beliefs and principles of that business. Operational strategies may be one-off or recurrent requirements (such as equipment maintenance) specific to the nature of the business. Business goals and objectives may include: • Customer Needs/Marketing Projections Knowing and understanding customer needs is at the centre of every successful business, whether it sells directly to individuals or other businesses. Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests. Creating good projections is conceptually easy but takes thought and legwork to get right. Projections are backed by your assumptions about sales, channels and markets. Base your sales numbers on how you’ll acquire customers. Use numbers that reflect your business assumptions: you will sell your product through ads; customers will pay $500 for your product; and a 3% response rate is reasonable

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

to expect. Magazines can give you circulation and demographic figures. You can run your own small test to get response rates or check out market research firms.

If your product requires direct sales, you might start with a budget for salespeople and make assumptions about how many sales per year each salesperson could bring in during a specific time frame.

Creating your projections is often one of the hardest parts of writing your plan, but the discipline and understanding you’ll develop will lay the foundations for a thriving, healthy business. • Family or Community Benefits A family-friendly workplace or employer is one whose policies make it possible for employees to more easily balance family and work, and fulfil both their family and work obligations. Family-friendly can mean many things ranging from flexible hours and work locations to on-site child care, assistance with further education expenses and so on. There is also the concept of family rates, children included for the price of two adults or similar. Community contributions and involvement engenders customer loyalty. A business could offer sponsorships of sporting teams, contribute to a specific area of learning in schools, offer work experience to interested students, encourage employee involvement in community programs and even donate goods and equipment no longer needed. • Financial Projections Different businesses aim for different financial objectives depending on their needs, their available resources and the opportunities that exist in the marketplace. Objectives may relate to gross profit, margins, return on invested capital or increasing market share. Financial control systems and procedures may require installation or review. • Goals, Objectives, Plans, Systems and Processes

Businesses often look for improvements by introducing process changes to achieve organisational objectives. These are usually focused on quality improvement, cost reduction and schedule acceleration. This reflects the increasing attention paid by industry and consumers to quality. These changes will require changes in the related areas.

A small business may want to improve or establish the management of its administrative systems and procedures, the methods or techniques that are used in production or even the technology. • Lifestyle Issues More than ever before people want a lifestyle in which the food they eat and the activities they take part in contribute equally to keeping them healthy.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

• Proposed Size and Scale Of The Business; Market Focus of the Business Obviously the size of the business will influence the action planning. In a large business, action plans would be developed for many different processes, goals etc. Likewise the layout and location will all be influencing factors. Therefore, you must scale-up or down appropriately to cover the major areas of your business. • Short , Medium or Long Term Goals It is very helpful, to develop goals for different periods. These must be able to be compared with each other, but may take advantage of measuring differences too, such as seasonal trading trends. • Social Responsibility Consumers are becoming more aware of how socially or environmentally responsible an employer is. If you are attentive and utilise useful strategies in these areas, you may attract a higher calibre of employee and a more loyal consumer.

Action Plans An action plan integrates all of the operational strategies and business goals you have developed in your business plan into a highly organised and prioritised plan of action designed to achieve your stated business mission and goals. It is a detailed planning tool which specifically outlines actions needed to reach one or more goals. An action plan is also a way to make sure the mission of your business is made concrete. It describes the way your business will use its strategies to meet its objectives. Regardless of your objectives, the details of your business’s objective must be put into an action plan if there are to be measurable results. Action plans are useful: • To lend credibility to your business. An action plan shows that your business is well ordered and dedicated to getting things done • To be sure you don’t overlook any of the details • To understand what is and isn’t possible for your business to achieve • For efficiency: to save time, energy, and resources in the long run • For accountability: to increase the chances that people will do what needs to be done. Ideally, action plans should be developed within the first six months to one year of the start of a business. They are developed after you have determined the vision, mission, objectives, and strategies for your business. If you develop an action plan when you are ready to start getting things done, it will give you a blueprint for running your business.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

Remember, though, that an action plan is always a work in progress. It is not something you can write, lock in your file drawers, and forget about. Keep it visible. Display it prominently. As your business changes and grows, you will want to continually (usually monthly) revise your action plan to fit the changing needs of your business and consumers. Each action step or change should include the following information: • What actions will occur • Who will carry out these changes • When they will take place, be completed by, and how long they will take • Resources (e.g. money, staff) needed to carry out these changes • Communication – who should know what and when. The action plan should meet several criteria. It must be: • Complete (Does it list all the action steps in all relevant parts of the business? (e.g. despatch, order-taking, production) • Clear (Is it apparent who will do what and by when) • Current (Does the action plan reflect the current work? Does it anticipate newly emerging opportunities and barriers?)

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

“People don’t plan to fail. Instead they fail to plan.”

John J. Beckley

You will find an Action Plan Fillable Template on the simulated Business website of Bounce Fitness http://bounce.precisiongroup.com.au under Documents/Small Business.

Identify Work Health and Safety and Environmental Issues and Implement Strategies to Minimise Risk Factors Workplace Health and Safety is a key issue for all Australian employers and workers. Good WHS practice not only provides a safer working environment but improves worker morale and productivity. Businesses that strive to improve their WHS performance create safer workplaces. This benefits not only employers and employees but also their families, their communities and the Australian economy. To improve WHS, a focus on performance outcomes is necessary as these can be reported and monitored. This kind of continual measurement demonstrates a commitment to WHS and can be extended to environmental issues as well. Consideration

work

health

and

safety

and

environmental

issues

must

include: • Controls. This may include instructions to workplace personnel concerning site hazards and controls, material safety data sheets, use of personal protective equipment, vehicle access, signs and barricades, traffic control, outside contractors • Establishment and maintenance of procedures for assessing and controlling risks • Establishment and maintenance of procedures for identifying risks to health and safety • Environmentally sustainable use and supply of goods and services • Waste and by-products. Work Health and Safety is governed by the Work Health and Safety Act (WHS Act). Safe Work Australia http://www.safeworkaustralia.gov.au produces user-friendly information to assist employers and employees in making workplaces safer.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

In their Guide to the Work Health and Safety Act – October 2012, Safe Work Australia provides specific details relating to many of these areas and their website provides more. It is important to remember that there is a requirement to weigh up all relevant matters including: • The likelihood of a hazard or risk occurring (in essence the probability of a person being exposed to harm) • The degree of harm that might result if the hazard or risk occurred (in essence the potential seriousness of injury or harm) • What the person concerned knows, or ought to reasonably know, about the hazard or risk and ways of eliminating or minimising it • The availability of suitable ways to eliminate or minimise the hazard or risk, and • The cost of eliminating or minimising the hazard or risk.

Policies and Procedures Policies and procedures are a set of principles, rules, and guidelines formulated or adopted by a business to reach its long-term goals and typically published in a folder or other form that is easily accessible. The policies and procedures should provide personnel with all the information needed to perform any business task. This may include applicable sample forms with instructions, organisational policy, and, where appropriate, procedures. A program for assessing existing key business process policies and procedures relating to laws regulations, and industry best practices to identify gaps must be developed and implemented. Policies and procedures are designed to influence and determine all major decisions and actions, and all activities take place within the boundaries set by them. Procedures are the specific methods employed to express policies in action in day-to-day operations of the business. Together, policies and procedures ensure that a point of view held by the governing body of a business is translated into steps that result in an outcome compatible with that view. Workplace health and safety issues must include: • Identification of Specific Hazard Issues such as Occupational Violence, Security, Manual Handling, Equipment and Hazardous Substances You should describe and discuss your policies demonstrating the intentions of the business in terms of how the business feels and the degree of tolerance in relation to WHS.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

• Management of the Organisation and Operation of WHS as Part of the Business Plan Your preparation to effectively manage WHS and the development of policies should be included in your business plan. Describe your intentions and how they will be implemented, with what frequency and how you will manage risks at all levels of seriousness. • Procedures for Managing Hazards in the Workplace (Identify, Assess and Control) There should also be a procedure describing specific actions that someone experiencing or becoming aware of a hazard should follow. • Provisions for Ensuring Safety of Members of the Public and Contractors Visiting the Premises/Worksite What conditions will you put in place to ensure the safety of visitors and others visiting the workplace? There are examples of these documents on the simulated business Bounce Fitness website in the Documents folder under the Emergency and Incident tab. Whatever you describe and say that you do, you must act on. If there are a number of potential hazards, policies or procedures, you may find it more expedient to develop and write a Workplace Health and Safety Plan. This document demonstrates the commitment of your business to workplace health and safety. To address these areas, hazard identification is essential, as is the reporting of all things relating to WHS, including hazard identification. There are various templates for model WHS Manuals, Audit tools, Codes of Practice and more for WHS reporting available at http://www.workplace-safety.com.au/diy-templates.html

Develop a Quality System for the Business in Line with Industry Standards, Compliance Requirements and Cultural Criteria To understand the various components of this performance criterion, we need to define the terms. Quality Systems are defined by ISO 9001 on this webpage http://www.iso9001consultant. com.au/FAQs-quality-systems-management.html On their website they state: The official definition of a quality system from ISO (the International Organization for Standardization) is ‘the management system used to direct and control an organization with regard to quality’. But that’s a bit of a mouthful, and not overly clear (as with many of their definitions).

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

Think of it as the system that your company uses to plan, create, develop, make and/or deliver your services or products. For a service business, it’s the system you use to provide those services. If you sell or distribute products that other people build/make/create, then it’s the system you use to get, store, sell and deliver or install them. And if you make or manufacture “widgets”, it’s whatever system you use to make them or have them made for you. A quality management system consists of various elements. ISO 9001 groups them into these 4 categories: • Management – planning, goals & objectives, reviewing progress • Resources – people, tools, equipment etc. • Services or Products ‘Realisation’ – whatever is involved in creating or delivering them, and lastly the • Monitor, Measurement & Checking – the all-important feedback loop. So you see that the scope of a quality management system extends beyond just what you do to make the service or product itself. It includes how you: • Manage your organisation: planning, setting goals, reviewing progress and results • Make sure people are competent for their work and the right resources are available: plant, equipment, IT, tools, etc. • Check and analyse results, to see what happened and why • Identify failures or problems systematically and fix them • Improve. All these elements work together in the system with two main overall aims: • Producing services or goods of consistent quality which meet all applicable requirements • Increasing customer satisfaction. You probably already have a quality system Do you run a business now? Have you been doing it for a year or more? Still in business and/or growing? If you answer yes to these questions, then you do already have a quality system. It won’t be an ‘ISO 9001 quality system’ yet, but you have some kind of quality management system in place.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

And probably already have some kind of Quality Control in place, perhaps also some Quality Assurance http://www.iso9001consultant.com.au/QA.html But to reach ISO 9001 level, you’ll need to meet all their mandatory requirements http://www.iso9001consultant.com.au/9001_nutshell.html Industry standards are a set of criteria within an industry relating to the standard functioning and carrying out of operations in their respective fields of production. In other words it is the generally accepted requirements followed by the members of an industry. It provides an orderly and systematic formulation, adoption, or application of standards used in a particular industry or sector of the economy. Industry standards vary from one industry to another. Industry standards facilitate global as well as domestic competitiveness. It is a crucial tool for developing and meeting industry goals. For example, in the automotive industry, tyre sizes and durability must fall within a standardised range. Standardisation serves as a quality check for any industry. So this performance criterion discusses how to ensure your business operates with in or product meets the quality standards required by your industry. Compliance requirements are the actions or processes of doing what you must do or are ordered to do to meet the needs of an entity. Usually this is required to remain in business. Paying the Goods and Services Tax (GST) is an example. You are compliant when you complete, file and pay your GST within a timeframe nominated by the Australian Taxation Office (ATO). Quality systems may include: • Manual or Computer Quality Control Systems Quality control systems ensure products or services meet or exceed consumer requirements. A proper and comprehensive quality control system is a key success factor in today’s demanding market place. Quality control is not an isolated function. It spans multiple departments in an organisation as well as external groups such as vendors, distributors and most importantly, consumers. Quality control covers all phases of the product life cycle (PLC) including design, development, production, distribution, servicing and documentation. It covers such things as raw material quality, production plant procedures, inspection, management and service processes. • Quality Assurance/Management Approaches

Quality Assurance (QA) is a way of preventing mistakes or defects in manufactured products and avoiding problems when delivering solutions or services to consumers. QA is applied to physical products in pre-production to ensure what will be made meets specifications and requirements, and during manufacturing production it validates lot samples to ensure they meet specified quality controls.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

QA is also applied to software to verify that features and functionality meet business objectives, and that it is relatively bug free prior to shipping or releasing new software products and versions. Quality Assurance refers to administrative and procedural activities implemented in a quality system so that requirements and goals for a product, service or activity will be fulfilled. It is the systematic measurement, comparison with a standard, monitoring of processes and an associated feedback loop that guarantees error prevention. This is different from quality control, which is focused on process output. Two principles involved in Quality Assurance are: ‘Fit for purpose’, the product should be suitable for the intended purpose; and ‘Right first time’, mistakes should be eliminated. QA includes the management of the quality of raw materials, assemblies, products and components, services related to production, and management, production and inspection processes. Suitable quality is determined by product users, clients or consumers, not by society in general. It is not related to cost, and adjectives or descriptors such as ‘high’ and ‘poor’ are not applicable. For example, a low priced product may be viewed as having high quality because it is disposable, where another may be viewed as having poor quality because it is not disposable. An effective quality system will be achieved through consistent: ○ ○ Random inspections and assessments of goods and services against predetermined standards ○ ○ Random inspections and assessments of processes against predetermined standards ○ ○ Random sampling and follow up of consumers. The system you use must be appropriate to the product or service you offer and sufficient to provide consistent quality in line with industry and consumer requirements.

Develop Performance Measures and Operational Targets to Conform to the Business Plan Performance measures are quantitative evaluations of the products or services of a process or system. Metrics are standards of measurement (such as length, area, frequency, mass, and so on). Depending on your business, the targets may include: • External targets, which may relate to market share and positioning and may involve exploring new markets, building national or international trade links E.g. Bounce Fitness will increase membership in the senior sector by 10% in 20XX through focused marketing.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

• Internal targets, which may relate to size, quality, quantity and diversity, wages to sales, sales to area/stock levels/stock turnover/average debtor payment periods and levels E.g. Bounce Fitness will increase sales of equipment by 20% in 20XX through face-to-face product promotion during personal training sessions. • Staffing level and skills mix E.g. Bounce Fitness will increase the number of personal trainers by 5% in 20XX through investing in current staff education. • Targets, which may be short, medium or long term E.g. Bounce Fitness will increase market share in all Centres by a minimum of 8% through corporate marketing in the next five years. • Develop strategies for innovation, including the utilisation of existing, new or emerging technologies, where practicable, to optimise business performance E.g. Bounce Fitness will invest at least 2% of profits in the latest equipment to be a forerunner in the market. The development of the performance measures and operational targets is a process and is built using the following steps:

1. Decide the Outcomes Wanted – Why are we doing this work?

The answer is to achieve some outcome or objective (the words are used interchangeably in this process) that will contribute to the achievement of the overall business goals and objectives. Objectives are the warm and somewhat fuzzy expressions that should form the mindset for all who are involved in the system. Examples are: • Supply good lunches with superior delivery service • Be the safest bus service while offering the lowest fares • Produce user-friendly accounting software.

The desired outcome sets the strategic direction of a business. Consequently, a tactical decision about what the business does, how it is done, and what gets measured must relate to this strategic statement. The outcome or objective statement is a driving force for the selection of performance measures. In the end, what is done and measured somehow must connect with the desired outcome.

The choices of outcomes should be limited and selected carefully. A major consideration is focus; avoid the desire to be the best at everything. If you can pick something you are sure you can succeed at, that choice probably should be your number one objective.

BSBSMB405 Monitor and Manage Small Business Operations Trainer Manual © Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

2. Describe the Major Work Processes Involved – What are we doing, and how are we (or should we be) doing it?

Processes and their activities are the means to achieving the outcomes – the end results – identified in Step 1. To improve the chances of meeting objectives, be sure to understand the system, that is, the operational structure that underlies the effort. This task is not so obvious. The work we all do usually is part of a larger assignment which, in turn is, part of a larger job, and so on. Quite often, the work contributes to more than one assignment or, as is the case with workplace Health and Safety (WH&S) initiatives, it is not always clear which work responds to WH&S requirements and which tasks are unique to creating the product or delivering the service. Further, the interconnections between functions are not clearly defined or understood. Such complexities make it even more important to describe carefully the system you want to measure.

Often, the system is already in place, and with luck, is also documented (more or less). This part of the procedure should include interviews with the people doing the work. People often achieve the desired results in spite of, not because of, the process that exists. Thus, examining work processes usually leads to the discovery that some can and should be improved for greater efficiency.

Next, the products (results) of the individual processes have to be identified so that measures can be developed. Note that these steps must be repeated for each process in the business.

3. Identify the Key Results Needed – What is produced?

The ‘products’ are the outputs or results of each process in the system. That is, the purpose of the activities in each process is to produce some result (a product or service) that is needed by other processes. Products of any given process are inputs to other connected processes in the system. Ultimately, the final products of the system are those that meet the strategic results – the objective – desired by the company.

An ‘evaluate & correct’ process needs to be included in all systems if they are to be effective and efficient. This is the process that evaluates the performance data and prescribes changes that might be needed to meet the goals and objectives of the business. This process is unique because it will examine customer satisfaction as well as costs throughout the system. Remember that the activities might very well be performed by the managers, mobilisers, and field crews. It is just the process, not the performer, which is identified here.

At every step, it is critical to obtain active endorsement and approval from all the involved and affected personnel. Otherwise, when goals aren’t being met, finger pointing will commence, and the problems won’t get resolved.

Element 1: Develop Operational Strategies and Procedures

4. Establish Performance Goals For The Results – How will I know when I get there? And an acid test: What will be done if progress isn’t satisfactory?

Setting goals is very important because you can spend a lot of resources trying to meet them. You’re familiar with ‘no pain, no gain’? The PAIN is worth it if the goals are:

Profitable (Is it worthwhile improving this? Favourable benefit/cost?)

Achievable (Can it be improved? How? Who will do it?)

Important (Does it matter to anyone?)

Numerical (Without a number, you won’t know when you get there.)

The GAIN is in reaching the goals, because:

Goals

Are

Improvement

Numbers.

There are various ways to determine goals. One of the best methods is to ask the consumer for each of the product(s) or services you offer. The ‘customer’ is the group or individual receiving the product. Determine the Customer’s Satisfaction Factors (or Critical Success Factors, CSFs) that relate to each product. CSFs are the few key things that must be right for the process to be successful in the consumer’s view.

The goals should be stated in simple terms using numbers, such as ‘Deliver 500 completed widgets with fewer than three faulty widgets by the end of each month,’ or ‘Improve the sale of flowers by 3% within six months.’

It is best to establish realistic goals – those you have a decent chance of reaching – and after reaching them, establish new ones.

Here are some other considerations that might help to set goals: • People involved in the process should be able to evaluate their contributions. • Is there a naturally occurring or essential limit? • Is there a safety limit? • Is there a required level? • Watch out for diminishing returns; at some point, the return will no longer be worth the investment. • Try benchmarking. Find out how well others are doing with similar processes.

Element 1: Develop Operational Strategies and Procedures

5. Define Measures For The Goals – What can you use to track progress?

Measures are descriptions of the items to be monitored. At this stage, measures should be described with relative terms like ‘percentage of the market’ and ‘average prices.’ While there is no specific formula for selecting performance measures, there are some characteristics that are typical of the good ones. They: • Reflect results, not the activities used to produce results • Relate directly to a performance goal • Are based on measurable data • Contain normalised metrics for benchmarking • Are practical and easily understood by all • Provide a continual self-assessment • Provide a benefit that exceeds the cost • Are accepted and have owners.

The first criterion is important because it is very tempting to select measures that are easy, while the right measures can be difficult. For example, the effects of training can be very hard to assess. It can be time consuming to interview employees and managers to find out if the training has improved worker abilities on the job. Rather than spend the time doing the interviews, people often change the measure to something like ‘the number of class hours completed’ (essentially a useless measure unless it is accompanied by some measure of acquired skills).

Find appropriate measures by examining all the goals listed in the previous step. While selecting measures, it is wise to remember that the idea is to be able to track progress and to be able to change processes (or activities, or the system) as needed to improve results. So, it will help to ask if the system measures, that you selected, will be adequate to identify which processes need fixing. Also, consider what practical actions could be taken if any of the products are not progressing toward the goal fast enough. This thought experiment will help you select the right measures to help you make decisions later.

Finally, there must be a balance to the number of measures; after all, you can’t and shouldn’t measure more than you have time to evaluate.

S elect Appropriate Metrics – What specific things do I measure? Metrics or the actual measurements to make should be fairly obvious from the descriptions of the measures composed in the previous step. Examine the measures statements and the goals to identify the units required for each term.

Element 1: Develop Operational Strategies and Procedures

Once you have established your targets, ensure that they are SMART.

You may choose to include these strategies and procedures in your Business Plan or develop an independent Policies and Procedures Manual. A template is available at https://tkodocs.com/templates-and-forms/templates/policy-and-procedure-template/ Now you are ready to communicate them to those involved and undertake training to ensure that the process is accomplished as intended. Just one more thing. These are only guidelines; what you believe that your business needs to be successful. They must be flexible, regularly reviewed and updated and most importantly, dependent on the people you employ to use them. Without the right attitude, your measures may be redundant!

BSBSMB405â&#x20AC;&#x201A; Monitor and Manage Small Business Operations Trainer Manualâ&#x20AC;&#x201A; ÂŠ Precision Group (Australia) Pty Ltd

Element 1: Develop Operational Strategies and Procedures

Develop Strategies for Innovation, Including Utilisation of Existing, New or Emerging Technologies, where Practicable, to Optimise Business Performance A strategy is a commitment to a set of coherent, mutually reinforcing policies or behaviours aimed at achieving a specific competitive goal. Good strategies promote alignment among the groups within an organisation; clarify objectives and priorities, and help focus efforts around them. Organisations define their overall business strategy (their scope and positioning) and specify how various functions such as marketing, operations, finance and Research and Development (R&D) will support it. An innovation strategy is a plan made by an organisation to encourage advancements in technology or services, usually by investing in research and development activities. For example, an innovation strategy developed by a high technology business might entail the use of new management or production procedures and the invention of technology not previously used by competitors. Strategic Innovation is a holistic, systematic approach focused on generating beyond incremental, breakthrough or discontinuous innovations. Innovation becomes ‘strategic’ when it is an intentional, repeatable process that creates a significant difference in the value delivered to consumers, customers, partners and the corporation. A Strategic Innovation initiative generates a portfolio of breakthrough business growth opportunities using a disciplined yet creative process. A Managed Innovation Process lies at the creative core of the approach. This requires taking information from external perspectives and an organisation’s internal capabilities/practices. If the organisation is able to look beyond the obvious it is possible to explore a diverse array of new possibilities. Strategic alignment requires: • The enthusiastic internal support among key stakeholders required to galvanise an organisation around shared visions, goals and actions • Industry experience provides a ‘top-down’ perspective that seeks to understand the complex forces driving change, including emerging and converging trends, new technologies, competitive dynamics, potential dislocations and alternative scenarios • Consumer or customer feedback provides a ‘bottom-up’ perspective, a deep understanding of both the articulated (explicitly stated) and unarticulated (latent or unrecognised) needs of existing and potential consumers/customers • The internal including technologies, intellectual property, brand equity and strategic relationships form the set of core capabilities, organisational competencies and assets that could potentially be leveraged to deliver value to customers • The organisational readiness may drive or inhibit its ability to act upon and implement new ideas and strategies, and to successfully manage the operational, political, cultural and financial demands that will follow.

Element 1: Develop Operational Strategies and Procedures

Success will be enabled or limited by an organisation’s capacity for effective, disciplined implementation. An organisation moves beyond an ad hoc approach to innovation when it begins to develop and institutionalise a cultural mindset and a set of processes that support repeatable, Sustainable Innovation. This then becomes a foundation for ongoing competitive advantage.

Element 1: Develop Operational Strategies and Procedures

Notes

Element 1: Develop Operational Strategies and Procedures

Activity One For this Activity you will begin to work on the development of strategies and procedures to successfully manage the operation of your business. Develop a list of strategies for each of the areas of your business, using the following as a guide: • Customer needs/marketing projections • Family or community benefits • Financial projections • Goals, objectives, plans, systems and processes • Lifestyle issues • Proposed size and scale of the business, market focus of the business • Short, medium or long term goals. • Social responsibility. Then, develop an action plan for each that reflects your expectation. Do not develop the procedures yet. We need to investigate this further before you do. You may need to discuss your strategies with your advisors. The feedback provided by your Assessor on this Activity will also prove beneficial. You can use the Action Plan Fillable Template (PDF) on the Bounce Fitness website http://bounce.precisiongroup.com.au under Documents/Small Business, or a format of your own if you prefer. If required the template can be adapted to suit the needs of your business.

Trainer’s Notes for Activity One As these will form the basis of the Assessment and contribute to the management of their small business, give careful thought to the credibility and usefulness of the submission by the Learner. The action plans need to be complete, practical and encompassing.

Element 1: Develop Operational Strategies and Procedures

Key Points Element 1 • An action plan must be developed to provide a clear and coherent direction, in accordance with the business goals and objectives. • Workplace health and safety and environmental issues must be identified and strategies implemented to minimise risk factors. • A quality system for the business must be developed in line with industry standards, compliance requirements and cultural criteria. • Performance measures and operational targets must be developed to conform with the business plan. • Strategies for innovation, including the utilisation of existing, new or emerging technologies, must be developed where practicable, to optimise business performance.

Element 1: Develop Operational Strategies and Procedures

Element 1 – ‘True’ or ‘False’ Quiz True

Operational strategy is a plan of action implemented by a business that describes how they will employ their resources in the production of a product or service.

Industry standards are the actions or processes of doing what you must do or are ordered to do to meet the needs of an entity.

False

Industry standards are a set of criteria within an industry relating to the standard functioning and carrying out of operations in their respective fields of production.

Knowing and understanding consumer needs is at the centre of every successful business, whether it sells directly to individuals or other businesses.

Workplace Health and Safety (WHS) is a key issue for all Australian employers and workers.

Compliance Requirements are a set of criteria within an industry relating to the standard functioning and carrying out of operations in their respective fields of production. Compliance Requirements are the actions or processes of doing what you must do or are ordered to do to meet the needs of an entity.

An action plan integrates all of the strategies you have developed throughout your business plan into a highly organised and prioritised plan of action designed to achieve your stated business mission and goals.

Good WHS practice not only provides a safer working environment but improves worker morale and productivity.

Businesses that make and deliver products, whether for profit or not-forprofit, require a handful of processes to get their products manufactured properly and delivered on time.

Metrics are quantitative evaluations of the products or services of a process or system. Metrics are standards of measurement (such as length, area, frequency, mass, and so on).

The ‘products’ are the outputs or results of each process in the system.