O, Yes: Operations

O, Yes: Operations

All things considered that involve the structure of your invention’s business

Choosing a distribution method for your product is a key operational setup that determines how it is sold. The choice is based on your end customers; where do they buy what you have to sell?


In a concept I introduced in last month’s Launching Pad debut, every business and product is comprised of three parts: product (P), operations (O) and marketing (M). These are the only requirements needed to turn an invention into a business that makes enough money to pay the mortgage and put your kids through college.

I call it the POM Principle—the three pillars needed to create (and sustain) any business. This is a simplified “go-to-market strategy” for any business or product in any industry. You need only the willingness to follow the recipe’s instructions.

Last month, we talked about “P” (product) and what’s needed to bring a product out of a concept and into form. This month, we’ll talk about operations—the structure that makes a business go.

Main components
Because the operational components are different for every business, we’ll discuss the basic ones that every business needs in order to, well, be a business. Some products are services; others are hard goods; others are apps. This applies to all.

One of the most important operational considerations is money. You may have already found the capital to create your product, but now you need the cash to support the running of your business—and even more dough to find customers to buy your product (more on the “M” of marketing next month).

Choosing a distribution method for your product is next, a key operational setup that determines how it is sold. The choice is based on your end customers; where do they buy what you have to sell?

For example, if you have an app product, will you sell it through the App Store or Google Play? Will you put product on a retail shelf somewhere? Will it be at a grocery or markets such as convenience, discount or luxury retailers, maybe duty free in airports? Is your product an original equipment manufacturer part that must be sold to manufacturers? Will you sell something online? Through wholesalers?

How you set up your distribution will then help you determine who will sell it. You might hire a sales team or add your product to a rep’s catalogue. You may choose to sell it through an online affiliate referral program.

And speaking of “affiliates,” don’t get stuck in jargon. Today, “affiliate marketing” is seen as an online method in which unique links are provided to those who send site traffic, and in return a commission is paid. However, an affiliate is any network of people through which you can sell something.

Japanese ecommerce and online retailing company Rakuten and CJ Affiliate (formerly Commission Junction) have plenty of online affiliate options. You might find a network marketing organization like Amway as a distribution point.

I read recently that an entrepreneur started her business using flight attendants who needed extra cash and could take meetings in their off time in cities throughout the country. How brilliant is that?

Building efficient systems
The next important operational aspect is systems.

As an entrepreneur, you are likely what I call a chef/cook/bottlewasher—which means you’re wearing a lot of hats. As you hatched your product into being, no doubt you discovered there are some things you do repeatedly. Now it’s time to create systems that do those things without you and the same, every time, flawlessly.

With my company, some of our most pivotal systems required an autoresponder/database to capture customers and sell to them. Another system was something old-fashioned; we call it the “Everything You Need to Know Memo.”

This document outlines for our event exhibitors all that’s needed to load in to our venue, where to send their exhibits, what to say to visitors, where to stay, how to park, what’s needed to pitch their product to the influencers they’ll meet at our events—even what to wear. Best yet, this memo is automated in an email every time someone is tagged as a customer.

And don’t waste your precious start-up money on hiring a bookkeeper; get QuickBooks for your accounting. It’s a miraculous and cost-effective accounting system.

Regarding income, here’s an important system. Have you thought about how you will you accept money? Will you need a merchant account to take credit cards? Will you use Paypal or Apple Pay? Will you incorporate or be an LLC?

You will need a branding system for the colors, fonts and style in which you communicate so that customers recognize you. If you are a service business like us, you will need systems for emails, structures for proposals, ways that you onboard a client, as well as routine service and accountability methods.

Other operational considerations include manufacturing, legal and hiring/firing.

The people part
People are a huge part of the operations, so putting together an organizational chart with matching job descriptions will puzzle it all together.

Another operational consideration is how you plan to work your team. Offices are going out of style but sometimes very necessary for certain kinds of businesses. If you are making hard goods, you may need warehousing. You have decisions to make about whether you use shared warehousing or buy your own building.

For teams, inspiring leadership is the driving force whether you’re physically together or not, so you should think about how you’ll handle meetings and manage benchmarks.

Have you thought about the culture you want to create? You could have a culture like Virgin that’s youthful and risk-taking, or you could have a buttoned-down, service-oriented culture like the Ritz Carlton. You may wish to have dogs in the office like Chipotle Mexican Grill does or enforce a “no pantyhose zone,” like we do in our sunny and creative Malibu office.

Operations may seem like a boring subject, but I’m hoping that the above outlines why this is the stuff that separates the top companies from the bottom ones.

The companies that skyrocket are the ones that have been planned out and then execute toward a specific goal. They measure along the way with metrics so that progress is measurable. Think like an MBA (even if you’re not one)!

And if this has opened a can of worms that just brings more questions, I’m happy to help.