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'Business operations' are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes.
The 'outcome' of business operations is the ''harvesting'' of 'value' from 'assets' owned by a business. Assets can be either ''physical'' or ''intangible''. An example of value derived from a physical asset like a 'building' is 'rent'. An example of value derived from an intangible asset like an 'idea' is a 'royalty'. The effort involved in "harvesting" this value ''is'' what constitutes 'business operations'.
Business operations encompasses three fundamental 'management imperatives' that collectively aim to maximize value harvested from business assets (this has often been referred to as "sweating the assets"):
#'Generate' recurring income.
#'Increase' the value of the business.
#'Secure' the income and value of the business.
All three imperatives are mutually dependent. The following basic tenets illustrate this interdependency:

★ ''The more recurring income an asset generates, the more valuable it becomes''. For example, the products that sell at the highest volumes and prices are usually considered to be the most valuable products in a business's ''product portfolio''.

★ ''The more valuable a product becomes the more recurring income it generates''. For example, a Mercedes Benz can be leased out at a higher rate than a Toyota Corolla.

★ ''The intrinsic value and income-generating potential of an asset cannot be realized without a way to secure it''. For example, petroleum deposits are worthless unless processes and equipment are developed and employed to extract, refine, and distribute it ''profitably''.
The 'business model' of a business describes the 'means' by which the three management imperatives are achieved. In this sense, business operations is the 'execution' of the business model.

Contents

Generating recurring income

Securing the income and value of the business

See also

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Generating recurring income

This is the most straightforward and well-understood management imperative of business operations. The primary goal of this imperative is to implement a ''sustained'' delivery of goods and services to the business's customers at a cost that is less than the funds acquired in exchange for said goods and services -- in short, making a profit.
The funds directly acquired by the business in exchange for the goods and services it delivers is the business's revenue.
The cost of developing, producing, and delivering these goods and services is the business's expenses.
A business whose revenues are greater than its expenses makes a profit. Such a business is 'profitable'.

Securing the income and value of the business

Businesses 'stability' rests on how successfully a business ensures its 'on-going ability' to harvest value from its assets (i.e. 'protect' its income generating capability and 'retain' its value as a business). This on-going ability may depend on a number of or all of the following factors:

★ Desirability or 'demand' 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 activities

★ Public regard for the business as a member of the 'community'
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.

See also

★ Business process reengineering

★ Operational risk

★ Operational risk management

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