Business Plan Series: Part 8 – Operations Strategy and Processes

Last time in Part 7, we discussed how to explain your sales and marketing strategy to investors. As investors dive deeper into your business plan they must know how you will handle things on a day to day basis.

The Operations section of a business plan usually comes before the Financial Plan, but after the Management section. The purpose of the Operations Plan is to describe the where’s and how’s of your business, meaning where you will locate the business (along with any physical necessities) and how you will produce products or services for your clients.

To write an operations plan, you’ll need to answer the following questions:

  • How will your product be made (for product-based businesses) or how will you serve your customers? Can you describe the process from start to finish?
  • What regulations and organizations are in place to monitor your industry? How do you plan on staying up to date? Are you a member or plan on becoming one?
  • Who are your suppliers? How do you receive products/services from these organizations? How long will it take? How much will it cost? Do you have backups in place?
  • What quality-control measures will you implement, if any?
  • Getting the Business Operational

Content of the Operations Plan

  • Business location
  • Operating facilities and equipment
  • Production and operating procedures
  • Purchasing procedures
  • Inventory management procedures
  • Quality control procedures
  • Customer service procedures
  • Organization structure
  • Management plan
  • Establishing a Web Presence
  • Web site hosts
  • Web site development
  • Selecting a domain name

Your next step in writing an operations plan is taking the list above, determining what you’ve already done, and what still needs to be done in order to get your business up and running. Write these points out in full, explaining to someone who doesn’t know your industry just what it all entails. Then, take the questions you answered in the first section of your operations plan, and answer them at length as well.

It might take separate sections to list the risks associated with your business, as well as your quality control measures and supply procedures. If you are a service business it might only take several pages to flesh out this section of the operations plan. However, if you are a manufacturers or producer of hard goods you may have dozens of pages along with flow charts and appendixes.

One Last Note: About Day-to-Day Processes
Since this is the most detailed I thought would help you detail the day-to-day operations. To do so, make sure you list the following items (where applicable to your business):

  • General, such as the hours and days your business will be open;
  • Buildings, including layouts, engineering drawings and lease agreements. Essentually, anything to do with the physical space your business will inhabit;
  • Equipment, such as what you’ll need to get, what you already have available, and how much it will all cost;
  • Special requirements specific to your business that are operational in nature, such as ventilation or parking;
  • Any and all materials needed to produce your products or services;
  • Production, including the length of time needed to create each product;
  • A description of your inventory plans; and
  • The costs involved with all aspects of the operational processes.
  • Most business plans take several pages to flesh out this section of the operations plan, but manufacturers and producers may have dozens of pages along with flow charts and appendixes.

That should do it for the Operations and Strategy section. Next time we will cover the thing that all the investors love – Financials. In Part 9 we will discuss various strategies to forecasting, what elements you must have in the financial summary and how pretty charts and graphs can go a long way.

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