What Is a Business Process? | Definition, Importance and Examples

Last Updated April 22, 2022

A business process is a standardized method a company uses to accomplish routine activities. Business processes are critical to keeping your business on track and organized. In this article, you will learn the definition of a business process, how business processes differ from business functions, and why business processes are essential to every type of company.

What Is a Business Process?

At its core, a business process is a repeatable collection of steps a company uses to accomplish a goal. Good processes are crucial to making progress toward your goals and improving your business’s operations.

The purpose of a business process is to help your company reach a specific target. If you want to accomplish things as a business, processes allow you to take repeatable, consistent steps forward. 

A good process meets three essential criteria:

• Repeatability: All processes must be designed to be repeated. A process that you don’t intend to repeat is an action plan instead of a true process. It’s the difference between routine purchases and buying a new facility.
• Transparency: Processes also need to be trackable, allowing you to monitor them for success. A good process has built-in data-tracking steps, allowing you to compare performance and efficacy over time.
• Agility: Processes that are set in stone don’t hold up in the real world. A process should be adaptable to multiple situations so small changes to the work environment don’t cause delays. Furthermore, a good process should be easy to update in case of more significant or permanent adjustments. 

When your processes meet all three of these criteria, they are more likely to support your business’s goals. 

Business Process vs. Business Function

Business processes are often confused with business functions. These concepts are similar but should not be confused with each other. 

A business function is a collection of related activities performed by a particular department in your business. The activities that make up a business function are interconnected and difficult to separate. For instance, a critical business function is human resources, the management and organization of your staff, and hiring policies. 

Meanwhile, a business process is a collection of activities designed to achieve a specific outcome. Unlike a function, the activities aren’t necessarily directly connected to one another. Instead, they come together to support a single end result. For instance, your company may have a staff retention process that includes work done by HR, maintenance, and management with the intention of reducing turnover.

At its core, a business function consists of tightly related activities with a general goal, and a business process is a collection of loosely related tasks with a specific target. A well-run company involves both business processes and functions. In fact, many functions will be involved in multiple processes. The HR function will be involved in hiring processes, retention processes, and disciplinary processes, as well as many others.

The Importance of Business Processes

Business processes help keep your company on task, prevent errors, and increase the speed with which your staff can accomplish their work. Without defined processes, there’s no way to guarantee that anyone does a task the same way twice. Your products or services may not have consistent quality, data may not be collected consistently, and legal documentation may fail to meet regulatory standards. 

On the other hand, implementing processes provides consistency, which then allows you to offer higher-quality products, services, and customer service. Well-designed business processes also make your company more efficient. When your staff members understand how they’re supposed to perform tasks, they accomplish them faster and make fewer mistakes. 

Efficiency and quality are only two of the benefits of building better business processes. Other advantages of implementing business processes include:

• Locating opportunities for improvement: When developing methods and procedures, you must examine your current tactics. In the process, you will both identify existing problems and have the opportunity to fix them. For instance, if your current processes rely on out-of-date technology, you can revise them to include modern alternatives.
• Reducing costs: By developing faster and more efficient processes, you can also reduce your company’s expenses. You will both save on direct material costs if you discover ways to minimize waste and indirectly save on payroll as your employees waste less time on inefficient methods.
• Working toward long-term goals: A critical step in rewriting your current methods is identifying the tasks your staff must accomplish during their daily routine. You can develop new processes that include actions that progress toward your company’s long-term goals. Taking daily steps toward your targets increases the likelihood that you will achieve those goals in a timely fashion.

Examples of Business Processes

Once you understand what a business process is, you can break it down into different “types.” There are four types of business processes that every company needs to develop. Below, the four types are broken down with examples of what they can look like in practice. 

Operational Processes

Operational processes are the most fundamental parts of a business because they’re directly responsible for creating and delivering products and services. 

Product Development

The product development process involves creating and improving your offerings over time. This process looks different at every business, but the basic structure is the same:

• A market opportunity is identified that the company can address.
• The development team brainstorms solutions to the problem.
• A few promising solutions are chosen for development.
• The demos are tested to see how they work.
• One version is chosen for release.
• The released version’s success is monitored.

This process repeats whenever the company wants to improve or update its current products or release something entirely new.

Manufacturing

Once your offerings have been developed, it’s time to produce them. The manufacturing process is usually one of the most obvious and well-designed business processes. It typically involves steps such as:

• Sourcing materials
• Transporting materials to the manufacturing location
• Following a predetermined order of steps to transform the materials into a product 
• Packing the product for delivery
• Bringing the packed product to the pickup location

If you have any experience with Lean methodology (a management mentality focusing on low waste and high efficiency), you’ve seen how a specific focus on manufacturing processes can improve a company’s operations. 

Delivery

The delivery process may or may not be simple, depending on your business’s structure. It may be nothing more than bringing products to an on-site showroom, or it may require navigating international shipping laws. This process will look different for product-based and service-based companies. 

For instance, a product may be shipped to a wholesaler, to a retail store or directly to the consumer, and a service may be performed on your premises or at the customer’s location. Developing a well-thought-out delivery process can reduce wasted time, money, and effort regardless of your specific business model.

Sales Processes

Businesses need to sell their products, or they won’t succeed; the sales processes are the procedures businesses use to make sure they bring in revenue. 

Sales

The sales process is the collection of steps a company takes to discover a lead and convert them into a loyal customer. The overall sales process includes several subprocesses, such as:

• Lead generation
• Lead qualification
• Contacting leads
• Negotiation
• Closing the deal
• Nurturing current customers

Each of these subprocesses should be structured to support your business model. Together, they help you build toward generating more sales overall.

Marketing

Marketing may be considered part of the lead generation sales subprocess, but it’s significant enough to warrant its own department in many businesses. In the marketing business process, your goal is to build trust in your brand and brand loyalty. Marketing may also involve subprocesses focusing on different types of advertising, such as social media, search engines, and physical ads.

Customer Service

The customer service process is part of the nurturing sales subprocess. Providing your current customers with excellent service encourages them to buy from you again in the future. The customer service process may involve learning what problems customers often face, trying the most common solutions, developing new solutions for unusual situations, and following up to make sure everything works. 

Supporting Processes

Supporting processes include the business procedures and departments that are critical to the operation of a business but aren’t directly connected to sales or product delivery. 

Accounting

Managing your organization’s current assets and debts is fundamental to remaining solvent. Furthermore, accounting is essential for maintaining compliance with the Internal Revenue Service and other government regulations. The accounting process looks similar for many businesses, requiring in-depth record keeping, careful monitoring of bank accounts, loans, debts and assets, and staying up to date on legal requirements. 

Maintenance

Your maintenance and janitorial teams are critical to your business despite not directly contributing to sales. Instead, they perform essential upkeep that prevents future expenses. The vital tasks they perform keep your equipment and office from breaking down. Maintenance includes:

• Routine cleaning for your office
• Regular upkeep on manufacturing equipment

Management Processes

Management processes are the actions necessary to keep everything else running smoothly. 

Management

There may be dozens of individual teams and departments in larger businesses. These teams can lose their connection with one another and the company’s ultimate goals if they aren’t being managed carefully. The management process is intended to keep larger groups of people on track. An example of the management process may involve:

• Scheduling regular meetings with individual teams.
• Scheduling regular meetings with department heads.
• Monitoring results from different employees.
• Assigning projects and work to appropriate teams.
• Rewarding strong performers and working with weak employees to improve their results.

The specific order and frequency of these steps can vary depending on your company’s management style. However, building a consistent management process helps your staff know what to expect and enables you to develop a coherent company culture.

Finance

The process of financing is different from that of accounting. Whereas accounting is responsible for tracking the assets and debts a company has, financing is the process of negotiating and managing additional funds and assets. The finance process involves applying for funding, negotiating terms and conditions, and following up with those terms to remain in good standing. This keeps the organization’s finances in check and ensures every department has the funding necessary to do its work.

Onboarding

Onboarding new staff is essential if you want your employees to perform at their best from the start. The onboarding process includes steps such as:

• Training employees on new technology.
• Educating them on safety and security procedures.
• Getting them onto your payroll and into other company systems.

Onboarding can be overlooked in smaller companies and departments, but it’s critical for getting new staff integrated into your business. Building a better onboarding process saves time and money by reducing mistakes and keeping your entire team on the same page. 

Business Process Management

There are dozens of business processes that you may already use in your company. Business process management (BPM) allows you to stay on top of these processes and reinvent them from the ground up. BPM is a collection of tools and techniques that help you focus on your operations and build new ones that aren’t simply minor improvements on past methods. By implementing BPM, your company can determine the most effective way to perform routine tasks and become more adaptable to real-world circumstances. 

Starting Your Business Process Management Journey with Villanova University

Business processes are a critical part of modern management. Understanding how these processes work and how to manage them can help you update your company’s approach to its most essential tasks. 

You can make BPM a part of your management style by earning a Certificate in Business Process Management online through Villanova. This three-course certificate program will teach you everything you need to know about BPM, from the basics of what a business process is to how to implement BPM in your organization. Enroll today or request more information to learn how a Certificate in Business Process Management can help you understand your business processes and identify how to improve them.