Writing the Operations Plan of your Business Plan

Writing the Operations Section of your Business Plan

Operations are concerned with how you will run your business and deliver value to your customers.

Operations are defined as the processes used to produce your products/services and deliver them to the marketplace.

This can include manufacturing, sourcing raw materials, transportation, logistics, hiring labor, travel, printing, consulting, after-sales service, and so on.

It’s different depending on whether you’re a manufacturer, a retailer or a service firm.

In all likelihood, about 80% of your expenses will be for operations, 80% of your employees will be working in operations, and 80% of your time will be spent worrying about operating problems and opportunities.

Be sure that you carefully link the design of your operations to your marketing plan.

For example, if high quality will be one of your comparative advantages in the marketplace, then design your operations to deliver high quality, not low costs.

Remember that you will probably have to make trade-offs with your operations.

It is impossible to have the lowest costs, highest quality, and best on-time performance in your industry all at the same time.

Often, high quality means higher costs, low costs means less variety and less flexibility.

Be careful how you make these trade-offs so that you can deliver products to the market in accordance with your marketing plan.

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It is advisable just to cover only the major areas when writing your operations section of your business plan.

This includes; labor, materials, facilities, equipment, and processes and provides the major details of pertinent things that are critical to operations or that give you the competitive advantage.

Completing this will give answers to your operations questions without making it overwhelming.

Operations checklist include:

  • How will you produce and deliver your product/service?
  • What will you do in-house, and what will you purchase (make vs. buy)?
  • How will you use your operations to compete? Cost? Quality? Timeliness? Flexibility?
  • What comparative advantages do you have with your operational design?
  • What will be your relationship with vendors, suppliers, partners, and associates?

The simplest way to treat operations is to think of it as a linear process that can be broken down into a sequence of tasks.

Once the initial task listing is complete, turn your attention to who’s needed to do which tasks. Keep this very simple and concentrate on major tasks such as producing a product or delivering a service.

Major sections to look at for when writing your operation section include;

Operations Strategy

In this subsection, describe how you will fulfill your marketing strategy using operations:

  • How will you use operations to add value for customers in your target market?
  • How will you win in the marketplace on the dimensions of cost, quality, timeliness, customer service, and flexibility?
  • Which dimensions will you stress and which ones will be less significant?

Scope of Operations

Describe the scope of your operations. Include details in an appendix, as necessary.

  • What will you do in-house and what will we buy (make vs. buy)? Why does this make sense for your business?
  • What will be your relationship with vendors, suppliers, partners, and associates?
  • What kind of people will you need to hire?

Personnel

The right mix of staff will be the most valuable asset any business has. Employees and staff will play an important role in the overall operation of your business.

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It is very important to know what skills you have and the ones you lack since you will have to hire staff to supply the skills you lack.

Furthermore, it is essential that you know how to manage and treat your employees.

Make them feel as part of the team. Keep them informed of changes and be sure to get their opinion.

Employees can often be a great source of excellent ideas, of innovations to existing products/services, and inspiration for new product lines and markets to enter.

So be sure to take the time to listen to your employees as they may offer you the new competitive edge you have looked for.

Production Plan (Manufacturing Businesses)

  • The production plan demonstrates your ability to produce products. This section may not apply to service businesses.

Production Flow Chart (Manufacturing businesses)

  • Provide a flow chart/process diagram showing the entire production process from start to finish.
  • List and budget production equipment required for the business. Procurement (Businesses that manufacture or sell products)
  • Sources of supply and order lead time.
  • Terms and conditions of sale.
  • Alternate sources of supply (this addresses procurement risk).
  • Inventory control systems.
  • Physical space requirements (unless covered in location sections).

Sub-Contractors (both goods and services)

  • Provide a list of sub-contractors.
  • Show exactly what these sub-contractors do and where they fit into the production of the business.
  • Show alternative sub-contractors (this addresses sub-contract risk).

Other things include to consider in writing your operations section include;

  • Operations Expenses
  • Legal Environment
  • Inventory
  • Suppliers
  • Credit Policies
  • Managing your Accounts Receivable
  • Managing your Accounts Payable

 

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About Ini Patrick

Hello, I'm a freelance writer, Business analyst, and Online Business Strategist. The founder of Think Possible Community where I share hybrid information on Success and Entrepreneurship. My goal is to elicit greatness in you and inspire you to Think Beyond the Possible. Stay glue for your business tips, inspiring success stories and Healthy inspirational tips.

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