Business Operating Systems: What You Need To Know

Chris Ronzio

January 08, 2021

Plainly put, a business operating system is the way you run your company. It’s how you do what you do, your end-all goal, and what you expect from your team so you can get there.

And once your business operating system is clearly documented and shared, it makes sure your business runs predictably and efficiently. So you can focus on scaling your small business – not what’s happening in the day-to-day.

So, what exactly makes up a small business operating system? How do you know if your business needs one? And more importantly, how the heck do you build one?

Straight from the team who geeks out about systems and processes, here is everything you need to know about business operating systems:

🔥 Tip: Trusted by thousands of growing small businesses, Trainual is the #1 business operating system for scaling people quickly and easily – without wasting any time. Try for free.

What is a business operating system?

A business operating system (or BOS for short) is a tool for collecting and sharing your tribal knowledge. Similar to a business playbook, it houses all your processes, policies, and procedures in one place, so your business can run like a well-oiled machine. 

This includes what you do, how you do it, and – we believe most importantly – why you do it. That way, everyone on your team has the information they need to own their role.

According to Reed Deshler, Principal at AlignOrg Solutions, a BOS also “[enables] the organization to operate predictably and intentionally to meet its objectives and achieve its strategy.”

Reed calls it your organization’s “common language.” And it ensures a cultural foundation for your company by:

In other words, your business operating system is like having an instruction manual for every role. It explains in great detail what is expected of each employee – and how exactly they can meet those expectations. That way, all the parts of your business run efficiently and effectively.

Plus, with it, your entire team can see the business and its operations from a shared lens – instead of siloed to their role. And anyone (even your newest hire) can step into any position. Because it explains why the work matters to the company, each step of the process, and the desired results. AKA leaving little to no room for error. 

This makes a BOS critical for business owners who want to scale. Because it helps your business operate without your efforts. So, you can focus on growing the top line!

Why your small business needs one

If you’re wondering whether or not you need a business operating system, the answer is yes! Just yes. 

You see, when a business operates without a BOS, they heavily depend on the owner’s efforts. He or she must ensure every piece is moving and moving correctly. And a lot of the time, they have to repeat themselves over and over again to ensure this happens. 

That’s because there’s no documentation. Or at least, there is no centralized place for the documentation. So the business owner is the one who holds most – if not all – the tribal knowledge. And that’s the best-case scenario. 

The worst-case is when they’re not around to communicate what needs to be done. So employees are left guessing the right way to do things. This inevitably spells trouble (Murphy’s Law, anyone?) because when your business lacks clarity, then you’re more prone to waste time, money, and opportunity. But it doesn’t have to be this way! 

With a small business operating system, your business can run independently of its owner. The knowledge is available and accessible to everyone on the team, so success doesn’t only depend on you.

But in case you’re still not sold (or need clear benefits to rally your team with), a business operating system also:

Benefits of a BOS

Highlights important functions 

Every organization can boil down their success to one key business function (or, at least, just a few of them) that they repeat over and over again. AKA the daily operations that your company is known for. 

And whether it’s selling hamburgers or scheduling house cleaners, a business operating system clearly identifies these functions. Plus, it breaks down exactly how you do this function at your company. That way, everyone on your team delivers top quality results every time.  

Ensures consistency

Chances are good you already went through the hassle of finding the cheapest, fastest way to do those most important business functions. 

With a business operating system, you outline step-by-step the one way your business does things (AKA the right way) for your team. And you eliminate best guesses. That way, everyone does things the exact same way. 

Improves efficiency

When everyone does things the same way (AKA that faster, cheaper way you found), operations get, well, faster and cheaper. It really is that simple. 

So why would you let your new team members waste time doing things any other way?

Eliminates fruitless efforts

When you align your team on what to do (and how to do it), there’s no guessing how employees should use company time. 

Meaning, employees aren’t left doing busywork that wastes time or unnecessary assignments that don’t really accomplish anything. Such as sitting on their phones or redoing a task that someone else just completed. 

Measures success

Without clear measurables, it’s difficult to track performance. So, with each step-by-step process, your business operating system should include individual, team, and organization-wide goals. For example, your sales team might be expected to sell $3k in services per week, but each individual player is only aiming for $800 in sales per week. 

By adding a number (even if it’s not always hit), you hold people accountable. And you’ll start to see what’s working great, how each individual is performing, and where you can improve your processes. 

Boosts employee retention

Most people don’t want to stick with a job where they’re always wondering how they’re doing. 

So, by breaking down the bigger picture and how each individual’s work contributes to it, your team members will naturally feel more inclined to do a good job. They’ll fully understand their key responsibilities and expectations. And, as a result, be more productive and feel more fulfilled at work. 

Plus, a BOS acts as a reference for checking performance. And that means everyone can keep themselves accountable – rather than leadership needing to do that for them.

How to tell if your business needs a BOS

Admittedly, building and implementing a business operating system takes some heavy lifting. So you might be tempted to put it on the back burner for now – I get it – but that ends up costing you more long term. 

That’s because you’ll only have more to document as your business matures. And it’s way easier to keep your BOS up to date than to build it from scratch. 

But more importantly, every day without a business operating system is a day where your team is doing things their own way. Meaning, more mistakes, more time wasted, and more burnt cash. 

So, if you really want to back-burner building your BOS and you’re experiencing any of the following obstacles, all we can say is: don’t!

Missing a BOS Checklist

1. Feels chaotic 

From time to time, every business feels like a dumpster fire. But every day (or even most days) shouldn’t feel that way. 

So if things are constantly coming up and getting in the way of you accomplishing what you set out to do, something is seriously wrong. This could be anything from unexpected problems to unhappy employees to inefficient processes.  

Here at Trainual, we like to use the meeting test. Basically, think of your last meeting. What productive things came out of it? If it was one of those “could have been an email” meetings, a vent fest, or even just a lot of talking in circles, that’s chaos – even if it’s not total chaos. And chances are that’s how most of your business operates. 

When this is the case, a business operating system can help you find some calm among the chaos. As well as help you address what’s going wrong at the source. That way, recurring obstacles get removed, and your team can actually accomplish what you set out to do.

2. Has high turnover 

Like I mentioned, most of the time, turnover happens when people don’t know what’s expected of them. Because they feel unproductive and, ultimately, unfulfilled by their work. 

But this can also just be disastrous for employees who stick around. Even though they’re filling a desk doesn’t mean they’re engaged or want to be there. 

In fact, only 33% of U.S. employees are engaged in their jobs – and a measly 13% worldwide – per Gallup. But by just clarifying expectations at the individual, team, and organization, you can get people to feel like they’re part of something bigger.  

And the easiest way to do this is with a BOS. That way, they can visit these expectations again and again. And check how they’re actually doing – rather than just assuming. 

As a result, your employees will be more loyal, contribute even more, and stay with your company longer.

3. Lacks accountability

Let’s be real – when your team doesn’t follow through, it’s frustrating. But a lot of the time, employees might not even know that something is on their plate. 

So, you need a sort of job scorecard. One that says Joe is responsible for X, Y, and Z; and Abby does A, B, and C. Otherwise, Joe and Abby might both be doing X, while A is falling through the cracks. 

So, you need to clarify not just how to do things, but who does which thing. That way, everyone can really own their part. And if something goes wrong, it can be followed back to the source and addressed. 

Enter your business operating system. Your BOS should outline everyone on your roster, their positions, their plays, and their stats. Meaning, they know where they fit into the company, how their role contributes, and everything about the parts they’re responsible for. 

4. Struggles to be profitable

Sales increasing but revenue decreasing should be a huge red flag. Because without positive cash flow, you can’t be profitable. 

But even when the numbers aren’t working out, a lot of business owners resist change. Or they don’t even bother doing the math. And this ends up costing them big (sometimes even their entire business). 

But you can stop guessing if things are working. Instead, figure out what your biggest functions are and the one way that your company does it. Then, calculate the cost per rep. 

For example, to make one hamburger (materials, employee pay, minutes to cook, and whatever else goes into it), it costs $2. And if you sell it at a 50% markup, you’ll get $1 of profit per burger. All of this should be in your business operating system. Even if only your leadership team can see it. 

That way, you and your team aren’t unknowingly wasting costly resources like company time. And how you make money is front and center. Knowing the numbers that matter is the only way you’ll ever be able to grow them and actually scale your business. 

5. Communicates ineffectively

When it comes to your business, you want all of your key stakeholders in the loop at all times. 

Otherwise, you run the risk of things running in place – or even running amuck. Either way, this leads to a lot of time, money, and resources wasted – without anything to show for it. 

So, bare minimum, you want a clear outline for how your company communicates information. (Such as, when do you use email, how often are recurring meetings, and what are appropriate times to host informal syncs.) Plus, you want every team member to be familiar with the process. 

With a business operating system, everyone on your team knows how you communicate what information. And actually uses it. That way, updates don’t get lost, and bit decisions aren’t a game of telephone. 

And, as a result, your team will be more productive, more confident, and, plainly put, happier with where they’re at.

6. Doesn’t have a budget

When cash flow is an issue, it usually means there’s a problem with the budget. Or (and I shudder) you don’t have one at all. Both are huge inhibitors to your business’ success. 

After all, how is your business supposed to successfully operate without a budget? So by investing in a business operating system, you’re also investing in your budget. And vice-versa. 

For starters, your BOS doesn’t mean anything if your current financial state can’t support the initiatives. 

And second, a BOS clarifies how exactly you plan to get your business from point A to point B. And keeps you from burning unnecessary cash along the way. Because you have constant eyes on your goals, where you’re at, and what’s not working.

3 things your BOS needs to do

Your business takes a lot of moving parts to run correctly. And you ultimately want your BOS to offer a high-level snapshot of how the whole machine comes together. As well as the nitty-gritty details of how each part works. 

But this can be super overwhelming. So, there are 3 things that every business operating system needs to do: set expectations, proactively address issues, and set measurables. No exception.

Build the Best BOS Ever

1. Set expectations 

Your business operating system needs to set clear expectations for everyone across your organization. Manager, individual contributors, freelancers, volunteers, whoever helps keep your business running included. 

So break down precisely what each of your roles does. And how exactly they do that. Then, do the same at the team and organization-wide level. 

This will make sure that everyone on your team is aligned and accountable. Meaning all the moving pieces work on their own – and work seamlessly together.

2. Proactively address issues

Unfortunately, things go wrong. And bets are most of your potential issues are recurring. Customers complain, x-factors disrupt your service, or a 3rd-party provider just doesn’t deliver included. 

So, while you never hope for these things to happen, you want a solid response plan, just in case. That way, overcoming obstacles is a formula, not best guesses. 

So your business operating system should go beyond just walking through perfect scenarios. And it should point out potential obstacles – and how to pivot around them quickly. 

By doing so, your BOS empowers your team to autonomously triage the situation. Rather than having your whole team’s priority list hit the floor, at least not repeatedly for the same thing.

3. Provide measurables

Providing expectations is great. But without measurables, how do you know if your team is meeting these expectations?

And while this sounds like a joke, many companies don’t measure success at an individual or team level. If they do, it’s not numbers that directly reflect the given expectations. Meaning, what a “good job” looks like is subjective. 

This can seriously throw off your company culture. Because over time, favoritism will start to carry more weight than hard work. 

So your business operating system needs to include how you’re measuring success at the individual employees, entire teams, and the overall business level. That way, everyone on your team can track their own performance. And there are no surprises come reviews or end-of-quarter. 

🔥 Tip: Use Trainual to share your measurables with stakeholders. That way, the business goals can be accessed in seconds and are always top of time. Try for free.  

How to build your own business operating system

Admittedly, implementing a business operating system can take some heavy lifting up front. But spending 10 hours now to build your BOS saves you 100 hours later. And once you have it in place, you’ll wonder why you didn’t do it sooner!

So, while there are probably countless ways to build your BOS, I’m outlining the proven 5-step process we use here at Trainual. Complete with strategic checkpoints to help you know when you’re ready to move onto the next step. 

Let’s get started…

Step 1: Document the processes

Think about building your business operating system like building a car. First, you need all the nuts and bolts. AKA your processes. 

Start by documenting, in as much detail as possible, all your most important processes and procedures. For example, you’ll want to write an SOP for things like closing your monthly budget, your review cycle, and fielding complaints.

If you’re not sure where to start, try looking at your daily tasks. Then, open it up to your weekly and monthly workload. You probably have to-dos (even if they’re just answering emails or making coffee in the breakroom) that you repeat all the time. 

These are the types of processes you want to document first! Especially ones that someone else also does (like answering email) or can even do for you (like making coffee). 

🔥 As you document your processes, start to calculate how much each process costs and what you get in return. Some processes might not be worth what you’re investing in them!

If you already have some or all of your processes and procedures documented, double-check them for accuracy. Meaning, read through each one to ensure they’re all up-to-date and make any necessary updates along the way. 

Outdated processes and procedures aren’t helpful, not to mention they’re confusing and potentially downright wrong. For your business operating system to be a raving success, you need the meat to be fresh before serving it to your team. 

But here’s where it gets interesting. Unlike your old-school employee handbook that just outlines your processes and procedures, your business operating system also dives into what could possibly go wrong. And presents actionable strategies for your team to autonomously manage these recurring obstacles. 

For example, if a customer complains, you might want your team members to proactively ask what they can do to rectify the situation. Such as offering more time, a discount, or even a refund. And then, if the customer is still upset, they’ll ask a manager to reach out to solve the problem – rather than having every complaint go straight to management. 

Checkpoint: Give each SOP to someone on your team who’s never done it before – and see if they can do it without your help. If they can, you’re ready to move on! If not, try clarifying your SOPs.

👉 Not sure how to document your SOPs or even where to start? We’ve got you covered! Here’s everything you need to know about SOPs.

Step 2: Document your systems

With the nuts and bolts collected, you’re ready to build the moving parts, like the breaks and the engine. AKA the systematize (or group the smaller processes that work together) your business. 

Start by just naming all the systems that your business has. If you’re stuck or not sure how to do this, I would just say that each department is its own system to keep it simple. You can always take away or add another one as you go. 

Then, start sorting each process and procedure into the appropriate system. All of these should be smaller parts that help build your larger systems. 

For example, if you have a procedure for closing your monthly budget, you’ll put that in finance. Then, wash and repeat until you’ve worked your way through all the processes you’ve documented.

Be sure to keep an eye out for a few things: 

  • A process or procedure doesn’t fit into any system neatly. Is this process or procedure necessary to your business’ operations? If no, scrap it. If yes, find where it best fits, or table it for now. 
  • A process or procedure fits into several systems. You might be missing one that several departments use, such as a communication system. Feel free to add more systems as necessary.
  • A system is super overwhelming. Is it really one system? Or is it several systems that you’ve grouped together? If it’s several, separate them into more digestible categories. 
  • A system is super bare. Is this system really its own thing? Or is it part of another one? Feel free to move it if necessary.

Once all your SOPs are sorted into general likes-with-likes, it’s time to really organize them. Meaning, how do these processes plug together to make the system actually run? But don’t worry about figuring out how all the systems come together quite yet – we’ll get to that later!

This will, admittedly, feel like a bit of a puzzle. So here at Trainual, we ask representatives from each team or department to help sort through which processes go where and how they work together. This makes it easy to see how the system actually works. 

You might realize while you’re doing this that you missed a process or procedure, here or there. No worries – just document these as you go and add them in!

Checkpoint: Each system should be airtight. Meaning, you don’t have any holes where your processes and procedures all connect. 

So, walk through each part of each system. And ask, where are the holes? If you find any, you need to go back and fill them. But if you don’t, you’re ready to move on to the roles.

👉 Trainual makes documentation clear and easy-to-access with a centralized place for all of your tribal knowledge. Try for free.

Step 3: Differentiate the roles

With your systems built out, it’s time to put the car together. In other words, differentiate the roles you need to make all your systems work. 

When you’re doing this, forget about what each position currently does. And focus on what each one should be doing. 

Depending on the company, the person in the role might be wearing tons of hats. And they might need some of those hats to come off. But you won’t see that if you’re focusing on your players rather than your roster.

So, looking at your systems, think of what positions you need to make it all happen. But don’t just try to remember what each one will do. 

Write a job description for each role. That way, you really understand what each spot of your team should look like. Key responsibilities, expectations, and non-negotiable skills included.

🔥 Tip: When you’re ready to scale your people, use these job descriptions to inform your hiring process and help source candidates.

If one job description has too much work for one “average joe” to do, then split it up. You might just need several people in that same position to split the workload. Or, you might want to make it a handful of different, more specialized roles. Totally up to you! 

Checkpoint: Looking at all the job descriptions, go through each system process by process. Highlight each procedure on the job description to check them off. Those are good to go!

You might find that several positions are all responsible for the same process. In this case, determine which one makes the most sense to take on that task. Take it off all the other ones. 

If you end any unhighlighted responsibilities on the job descriptions, ask if they are critical to your business. If yes, go back and build the processes. Then, add them to the correct system.

Step 4: Assign people to each role

With the roles laid out and the car built, you need a driver. Meaning, it’s time to fill those roles. 

Take everyone on your team and assign one person to one job description. But make sure you don’t fall into the trap of putting someone somewhere just because that’s where they’ve always been. 

Instead, take this opportunity to match your team’s skills to the job descriptions. You might find that one person was doing what is really 3 jobs before and that you don’t actually have enough people to fill all the positions. 

If this is the case, you’re going to need to scale your people to keep pace with your operations. But I know that doesn’t necessarily mean that you’re prepared to do this. 

So, once all your people are assigned a position, prioritize all the remaining job descriptions in order of most to least urgent. This is the order you’re going to hire in – as soon as you can. 

In the meantime, split the remaining responsibilities up evenly. That way, one person doesn’t go back to doing 3 jobs. And nothing falls through the cracks.

Employee Job Scorecard

Make sure you communicate with each team member: 

  • What they’re actually responsible for
  • What success looks like in their role
  • How your company is measuring success

🔥 Tip: We use job scorecards, so there’s no confusion and everyone is on the same page! Use our scorecard template.

Checkpoint: Every role should be assigned a body. But if you have more positions than people, split up the remaining responsibilities even among your team. 

Then, outline a clear hiring plan to get these roles filled (how you’ll allocate resources to do this and a timeline included).

Step 5: Train on your BOS

You’re finally in the home stretch! With a person behind the wheel, all that’s left is the key that makes the car actually drive. AKA get your team fully trained on your BOS. Otherwise, the work you’ve done here will go to waste. 

Simply put, you can’t put your BOS to work if your team doesn’t know about it – or what it means. So they need to be trained on it. But with that being said, not everyone needs to know everything about your business operating system – just their part. 

And we think the best way to do that is Trainual (we’re not biased -Trainual is the #1 training software, per G2)! By keeping your business operating system in a centralized place, Trainual makes it easy to assign everyone the how-tos they need. And nothing they don’t.

Plus, you can even assign due dates to ensure it gets done, track completion rates, and test that the information really sticks. That way, everyone knows the one right way of doing things. And actually does it that way! 

And when you’re ready to fill those remaining positions, Trainual can onboard your new hires, so they click right into your business operating systems. 

It’s time you stopped operating your business blindly! With Trainual, you can ensure there’s one right way of doing things – and everyone on your team knows it!

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