CHAPTER ELEVEN – This section explains how you plan to run the company day-in day-out. In other words, you will describe how you will go about creating and delivering your product or service.
Are you currently writing a business plan? If YES, here’s an in-depth guide and sample template on how to write a workable business plan operations plan section.
What is a Business Operations Plan?
The business plan operations plan presents the company’s action plan for executing its vision. The operational plan details the processes that must be performed in order to serve customers every day. In other words, the short term processes. It also details the overall business milestones that the company must attain in order to be successful. This can also be referred to as the long term processes.
When writing the operations section of a business plan, you should endeavor to cover major areas such as labor, materials, facilities, equipment and processes. You should also provide details on things you feel that are critical to your operation and will give you competitive advantage. If you can do this effectively, you will be able to answer investor’s questions about operations without having to be overwhelmed.
Why Write a Business Operations Plan?
Every company has certain delineated processes to provide its customers with the best products and services. For instance, Walmart has a unique distribution system that will enable it to effectively move products from its warehouses to its shelves and then ultimately to the homes of its customers.
Technology product manufactures have processes to convert raw materials to finished products and service oriented businesses have processes to identify new areas of customer interest and to continually update service features.
The processes that a company makes use of to serve its customers are what transforms a business’s plan from concept to reality. Anyone can have a concept, but investors do not invest in concepts. They invest in reality. Reality is proving that the management team you have can execute the concept you have better than anyone else and your operations plan is what proves this.
Writing a Business Plan Operations Plan Section – Sample Template
While the marketing plan lays out the plan for attracting customers, the operations plan should lay out the key operational processes for serving them. Charts supplemented with texts are usually the best way to explain the key relationships between the parties involved in serving the customer. These parties could include departments within an organization, partners, suppliers, distributors or resellers.
The second part of the operations plan is proving that the team will execute the long term company vision. This is best presented as a chart. On the left side, list the key milestones that the company must reach and on the right, list the target dates for achieving each of the milestones.
These new millstones should include expected dates when new products and services will be introduced into the market place, when revenue milestones will be attained (for instance, when sales will exceed the million dollar mark), key partnerships will be executed, key customer contracts will be secured, key financial events will occur (for instance, future funding and IPO’s) and when key employees will be hired. Additionally, text should be used where necessary to support the projects that are laid out in the chart.
The milestone projections that are projected in the operational plan must be consistent with the projections in the financial plan. In both areas, it is important to be aggressive but credible. Presenting a plan that presents the company as growing too quickly will show how naïve the management team is, while presenting a too conservative growth plan will often fail to excite the potential investor who will require a higher rate of return over a relatively short period of time.
Operation is a broad field and it is covers sourcing of raw materials, hiring employees and staff, acquiring facilities and equipment and shipping the finished goods. These can vary depending on if you are a manufacturer, a retailer or a service firm.
Writing a Business Operations Plan for Service Firms and Retail Stores
The operation requirement of retail and service is remarkably different from those of their manufacturing counterparts. For instance, companies that maintain or repair things, sell consulting or provide health care or other services generally have higher labor content and lower investments in plants and equipment.
This however does not imply that retailers and service firms find operations any less important to them. A lot of people already understand the concept of buying and reselling merchandise or preparing tax returns. Therefore, you will not need to do a lot of explaining as opposed to someone who is into manufacturing microprocessors for computers.
The main engine of production for service and retail firms are the people. The cost of providing any service under this niche will inadvertently be driven by the labor it requires and as such, a service firm plan has to devote a lot of attention to staffing.
You will also need to include other information such as background information and if possible also describe employment contracts for key employees such as designers, marketing experts, buyers et al. You will need to show whoever that is reading the important tasks of these employees at all levels so they can understand how your business works and what the customer experience is like.
The operational plan for retailers also devotes considerable attention to sourcing desirable products. They may describe the background and accomplishment of key buyers. They may also detail long term supply agreements with manufacturers of in demand branded merchandise.
Writing a Business Operations Plan for Manufacturing Companies
The main actor in manufacturing is the process of production, and the better your production process is, the better a manufacturer you will be. People who read your business plan will want to make sure that you have a strong system in place to make sure that personnel and materials are appropriately abundant.
Here, when you are writing your operational section, you should not go into too much details- stick to the important processes that give you a special competitive advantage and be sure that you show that you have adequate, reliable supply sources for the materials you need to build your product.
You will also need to include information on how you will ensure a reliable supply of adequately trained people to run your processes. You will first need to estimate the number and type of people you will need to run your plan, then show that you will be able to hire what you need. Look at local labor pool, unemployment rates and wage levels using information from chambers of commerce or similar entities.
The Production Process
- You will also need to give details of your entire production process, and that means answering the following questions:
- How long it will take you to produce a single unit or a predefined number of units?
- What measures have been put in place to integrate customer feedback into your product or service? As in, have you allotted time to create and test prototypes, pricing, or delivery mechanisms?
- How will you deal with major influxes in demand? That is, what procedures or steps will you have in place when you offer a sale and orders come flying in?
The Supply Chain
Let’s start with the workflow that you will have to deal with to make your ideas a reality. Some of the things you will want to touch on are as follows:
- Suppliers: Who will be providing you with all the materials that you won’t be manufacturing yourself?
- Facilities: Where will you house your inventory (if any), or which office will you use for your operations?
- Personnel: How many staff will you require for your daily operations? What will their duties look like?
- Equipment: What tools and technology do you require to be up and running or to take your company to the next level? (This could include everything from computers to office desks and everything in between).
- Shipping and fulfillment: Here you will have to outline whether you will be handling all the deliveries on your orders or if you will be using a third-party fulfillment partner.
- Inventory: Here you will highlight how much you will keep on hand, where it will be stored, and how you will have it shipped to third-partners if applicable. Also, an important detail to note is how you will keep track of everything going in and out.
- Customer support: How will support requests, refunds, and customer complaints be considered and integrated in your business workflow?
In essence, this section should signal to the reader that you have a good handle of running your business. It also passes the message that you have a contingency plan in place to account for uncertainty in the marketplace. By taking this advice into account you will create a more convincing operational plan.