Building versus Operating a Business, by Frank Coker

For a lot of business owners, there is no difference between building and operating their business. They view these as the same thing. The truth is, these are very different and require a very different mindset.  I’m sure you have heard about the importance of “working on your business” rather than “working in your business.” This is very similar to build versus operate. They are both important concepts, but no matter how you slice it, too many business owners don’t put enough time into analysis and planning. Long-term building and short-term operations management can have a big overlap, but they require a different approach and a different way of thinking about the business. At a minimum they require a different set of questions. Here are some examples:

Building your business involves questions like:

  • How can I build capacity to handle more volume?
  • How can I grow and continue to be agile and opportunistic?
  • How can I determine which lines of business are most profitable. This is very similar to build versus operate. They are both important concepts, but no matter how you slice it, too many business owners don’t put enough time into analysis and planning.  types of customers or which lines of business are more profitable?
  • How should I adjust pricing to get the best combination of profits and competitive advantage?
  • What skill gaps does my team have? How do we address this?
  • Am I getting my team to fully engage? Am I building leadership capacity?
  • What new products or services should I add? What should be eliminated?

Operating your business involves questions like:

  • What fires are burning now and need immediate attention?
  • Which bottlenecks are slowing me down or taking excessive resources?
  • What parts of my business are customers most frustrated with?
  • What productivity goals are being met and which are not?
  • Do I have customers that are draining resources and which should be terminated?
  • Do I have processes that need formal procedures? How do I reduce the number of “exceptions” and increase the number of “standard procedures?”
  • Am I measuring the work areas that impact profit and lead to greatest customer satisfaction?

As you think about these questions, you might see that both lists of questions can be approached from a “working in the business” and a “working on the business” perspective. You can argue that all these questions can be stretched to include both business building and business operations issues. In reality it is important to do both. At the same time it is important to answer these questions from separate build versus operate viewpoints even if you decide to put the same question on both lists.

You could also replace build versus operate with strategy versus tactics or even long-term versus short-term management. But, any way you cut it, business owners need to do both. In fact, owners need to look at short-term issues from a long-term perspective, and they need to be sure that long-term plans have a meaningful short-term actions in order to get lift-off. It’s all about integrated planning and holistic thinking. That’s a tall order. You have to be schizophrenic to do this job!

PS: Corelytics lives primarily in the "building your business" category and is complemented by a myriad of operations management tools. Even specialized industry tools like Connectwise for IT, for example. Our aim is to automatically connect these concepts within the dashboard in the near future.