TOPIC

BUSINESS OPERATION

and

IMPLEMENTATION
 What is BUSINESS OPERATION?
• It is everything that happens within an
organization to keep it operating and earning
money.

• It varies as to business type, industry, size,

vision, mission, goals and objectives.
 The ELEMENTS of
Business Operations

• Process

• Staffing

• Location

• Equipment or Technology
 Process
• It is important because its impact on
productivity and efficiency.

• Processes done manually can be done quicker

with software and it can cost business time
and money.

• It should be documented so that operation

managers can study them.
 Staffing
• Staffing depends on the processes made.

• a Small Business might need a few people

who are generalists
while Large Company will need many
more people who are specialists.
 Location
• Location is more important to certain types of
businesses and the reason for the location
will vary.

• a soloprenuer consultant might only need

room for a desk at home
• a shop for the mechanic and tutor can use a
garage.
 Equipment &
Technology
• The equipment and technology needed for
optimum business operations will often have
an impact on location.
 Business Operations Analysis
• In business, it is important to conduct periodic
assessment and operations analysis to identify
inefficiencies and improve communication.

• Comparisons with competitors benchmark

and best practices can help a company’s
assurance that the operations are maximized.
Consolidating Recurring Income
• It is to implement a sustained delivery of
goods and services to the customers at a cost
that is less than the funds acquired to make a
profit.

• The fund directly acquired in exchange for the

goods and services it delivers is the business
revenue.
• The cost of developing, producing and
delivering these goods and services is the
business expenses.

• A business whose revenues are greater that its

expenses makes profit or income.
• Generating recurring “revenue” is not the
focus of operations management.

• The important is management of relationship

between the cost of goods sold and the
revenue derived from their sale.
 Types of Recurring Income
• Long term sales contracts – monthly to
yearly based contracts for a service or product.
example: mobile phone contracts/plans

• Multiple revenue streams – different sources

of business income that support each other.
example: sell printers and toners
 Increasing the Value
of the Business
The more profitable a business is, the more
valuable it is.

The business profitability is measured on:

• How much income it generates for the amount of

assets business operations employ? – its business
returns

• How much income it generates for the amount of

 Methods of Increasing Value
• Expand Market – Offer product or service
to a wider group of an existing market.

• Develop Brand – A recognized, respected and

developed brand is highly commendable. It
can be done through research, design and
marketing.
• Show growth potential – Create a business
that has potential to be efficiently and
effectively expanded.

example: Developing an efficient business

system and operating manuals allows the
business to potentially be franchised or
licensed, branch out or dealership.
• Maintain intangible assets – It can protect
elements that add value to the business, do
so through patenting, copyrighting, or trade
marking.
 Securing the Income and Assets
• Desirability for its goods and services.

• Ability of its customers to pay for its goods and

services.

• Uniqueness and competitiveness of its business model.

• Control Exerted over the quality and efficiency of

production processes.

• Public regard for the industry as a member of the

• A business that can harvest a significant
amount of value from its assets
but cannot demonstrate an ability to
sustain this effort cannot be considered a
viable business.
• Business Operations have a three
fundamental management imperatives.
1. The more recurring income an asset
generates the more valuable it becomes.

example: The products that sell at the highest

volumes and prices are usually considered to
be the most valuable products.
2. The more valuable a product becomes the
more recurring income it generates.

example: A luxury car can be leased out at a

higher rate than a normal car.
• Business record is a document that records
business dealing.

• It includes meeting minutes, memoranda,

employment contracts and accounting source
documents.

• It must be retrievable at a later date so that

the business dealing can be accurately
reviewed.
• Business is also depends on confidence and
trust, not only must the record be accurate
and easily retrieved, the processes must also
be perceived by customers and with no gaps or
additions.
 Importance of keeping
good records:
• To monitor the progress of the business
• To prepare the financial statements
• To identify sources of income
• To keep track of the deductible expenses and
basis in property
• To prepare the tax returns
• To support items reported on the tax returns
 Monitor the Progress
of Business
• The good records need to monitor the progress
of a business.

• Records can show whether the business is

improving, which items are selling, or what
changes the need to make.

• Good records can increase the likelihood of

business success.
 Prepare the
Financial Statements
• The good records need to prepare accurate
financial statements. These include income
statements and balance sheets.

• These statements can help in dealing with the

bank or creditors and help manage the
business.
 Income Statement
• It shows the income and expenses of the
business for a given period of time.
 Balance Sheet
• It shows the assets, liabilities and equity in
the business of a given date.
 Keep track of the
Deductible Expenses
• Keep the record, especially the expenses, it
will be greatly needed when preparing the tax
return.
 Types of records for accounting and tax
purposes
• Business expenses
• Credit card statements
• Bank statements
• Annual tax returns
• Quarterly tax filings
• Payroll
• Inventory
• Sales
• Income
• Petty cash
• Vehicle use log
• Travel log
• Cash register tapes
• Credit card sales receipts
• Invoices
• Cancelled checks
• Check stubs
• Purchase orders
• Emails and other business communications
• Employment applications
• Inventory logs
• Personnel records
• Accident reports
• Articles of incorporation
• Permits
• Licenses
Trademark registrations and patents
• Based from the book of Business Planning by
Jorge Cuyugan, he discussed the financial
records usually have set standards of
reporting and differences are very minimal.
• Accounts Receivables – These are valuable
not only to decision on extension of credits
but also to make accurate billing and
maintenance of good relations with customers.
These records will reveal how effective the
firm’s credit and collection policies are.
• Inventory Records – These records will be
used to control the inventory items.
They could also be used to supply
information for the firm’s purchasing
maintenance and computing turn-over ratios.
• Accounting Payable – This liability record
shows what the firm owes, facilitates obtaining
of available cash discounts and informs when
payment are due.
• Sales Records – These could be used in the
analysis of the effectiveness in advertising
and promotions of products, market coverage
and profitability.
They also serve as a basis for computing
salesmen’s compensation.
• Production Records – These records provide
a basis for product costing and detect lost
profits/costs as a result of idle operations.
• Payroll Records – It show the total
payments pay to employees and provide a
basis for computing legal payments.
• Cash Records – It show all receipts and
disbursements made by the firm. They
contain firm’s cash flow and petty cash
balances. These records also enable to know
when to time the loans and they may also be
used an assurances for ready cash when
needed.
 Journals
• Sales Journal (Sales Book) – these are used
to record company’s sales.

• Purchase Journal (Purchase Book) – these

are used to record company’s purchase.

• Cash Receipt Journal(Cash Receipts Book)

– these are used to record company’s cash
receipts.
• Cash payments Journal (Cash Payments
Book or Cash Disbursement Book) – these
are used to record company’s payments in
cash.

• General Journal – these are used to record

company’s transaction mentioned in the
previous types of journals.
 Ledgers
• Accounts Receivable Ledgers – It contain
company’s individual trade with customers.

• Accounts Payable Ledgers – It contain

company’s individual accounts with
creditors.

• Plant Ledgers – It contain company’s list of

all fixed assets.
• Bookkeeping is the recording of financial
transactions, a part of the process of
accounting in business.

• There are several standard methods of

bookkeeping, such as the single-entry
bookkeeping system and the double-entry
bookkeeping system.
• Bookkeeping is usually performed by a
bookkeeper.

• A bookkeeper is a person who records the

day to day financial transactions of a
business.

• He or she is usually responsible for writing the

daybooks, which contain records of purchases,
sales, receipts, and payments.
• The bookkeeper is responsible for ensuring
that all transactions are recorded in the
correct daybook, suppliers ledger, customer
ledger, and general ledger.

• An accountant can then create reports from the

information concerning the financial
transactions recorded by the bookkeeper.
• The bookkeeper brings the books to the trial
balance stage.

• An accountant may prepare the income

statement and balance sheet using the trial
balance and ledgers prepared by the
bookkeeper.
 Origin of Bookkeeping
• The origin of bookkeeping is lost in obscurity,
but recent researches would appear to show
that some method of keeping accounts has
existed from the remotes times.

• Babylonian records have been found dating

back as far as 2600 BC, written with a stylus
on small slabs of clay.
• The term “waste book” was used in colonial
America referring to bookkeeping.

• The purpose was to document daily

transactions including receipts and
expenditures. This was recorded in
chronological order and the purpose was for
temporary use only.
• The daily transactions would then be recorded
in a daybook or account ledger in order to
balance the accounts.

• The name “waste book” comes from the fact

that once the waste book’s data were
transferred to the actual journal, the waste
book could be discarded.
to be continued…