Writing Your Business Plan, Step 7: Operational Plan

May 18, 2009 at 6:30 am 3 comments

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Courtesy of Susanne Stoop

We’ve made it to step 7 in the writing of our business plans.  YAY!  Let me remind you that writing a business plan is a work in progress.  So keep at it – even if you don’t have all the components.  Today, we’ll be writing the Operational Plan.

In the operational section of your business plan, you will be writing about the daily operations of your business.  Think about a typical week in your business and describe everything that you do, where you do it, and with whom you do it.  In the Operational Plan, you’ll want to include the following sub-sections (as recommended by SCORE, SBA small business counselors):

Location

  • Where is your business located?
  • If you work from home, where do you meet clients?
  • If you have an office, do you own the space or rent it?
  • Describe the facility.  Is it solely for meeting with clients?  Do you have a production area?  Do you have a kitchen?  Do you have a warehouse?
  • Is your business open to the public or by appointment only?
  • If you work from home, describe your workspace.
  • You’ll want to include photos and drawings of the location (or proposed location) if you are trying to get financing.

Production

  • If you manufacture goods (eg. wedding invitations) how and where are they produced?
  • Explain the technique of your production and associated costs.
  • How do you ensure quality control?
  • Discuss your customer service policies.
  • How do you develop new products?
  • How do you control inventory?

(If you provide a service, you will be calling this section “Service” and describe how you develop your services and discuss your customer service.  If you own a retail store, you will be calling this section “Resale” and describe your quality control, buying, and service policies.)

Suppliers

  • Who are your suppliers?
  • List your suppliers and include their business name, contact person, address, type of inventory you purchase from them and their payment terms with your business.  You may also want to describe their history and reliability.
  • Do you expect shortages or short-term delivery problems?
  • Are supply costs steady or fluctuating? If fluctuating, how do you deal with changing costs?
  • Should you be searching out new sources of supply, or are you satisfied with present suppliers?
  • What is your buying strategy?
  • What is the lead time between purchase and delivery?

(If you provide a service, such as wedding planning, you’ll want to describe the wedding vendors with whom you do business.)

Inventory

  • What kind of inventory do you have: raw materials, supplies, finished goods?
  • What is the value of your inventory?  How much have you invested in inventory?
  • What is your turnover rate?  How quickly do you sell through your inventory?
  • How do you deal with seasonal buildup of inventory?

Legal Requirements
Describe the following:

  • Licensing and bonding requirements
  • Permits
  • Health, workplace, or environmental regulations
  • Special regulations covering your industry or profession
  • Zoning or building code requirements
  • Insurance coverage
  • Trademarks, copyrights, or patents (pending, existing, or purchased)

Personnel

  • Do you have any people who work for you?  If so, how many employees do you have?
  • What are the employees’ responsibilities?  Who does what?
  • How did you find them?
  • What is their skill set?  Level of education?
  • How do you train employees?
  • What is their pay structure?  Benefits?
  • Do you have plans to hire more people in the next year?  2 years?  5 years?
  • Do you have a handbook of procedures for employees?
  • Do you have written job descriptions?
  • Do you have contract workers in addition to employees?

Payment Terms
(Receiving Payment from Customers)

  • How do you receive payments from customers?  Cash?  Check?  Credit Cards?
  • Do you require deposits with balance payments due at time of delivery?  Full payment upfront?
  • Do you sell on credit terms?  (eg. allow your customer to pay 30 days after your goods are received.  This is not typical in the wedding industry.)  What terms will you offer your customers; that is, how much credit and when is payment due?
  • How do you monitor your payables (the money that is due to you)?
  • What is your policy if a client has not yet paid and you have a delivery or service date to fulfill?  (eg. the client has not paid the balance of her floral centerpieces and her wedding is tomorrow)

Next Step

You may have found that there are some things that your business is missing.  For example, maybe you don’t have written job descriptions or a procedure in place if a client hasn’t paid in time for their wedding.  Just highlight that section and come back to it.  Writing a business plan is a great exercise in uncovering some of these “weak links” in our businesses.  It is a great way to constantly improve what we already have in place.  Tomorrow, we’ll be discussing the management and organization of your business.

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Entry filed under: 13 Step Business Plan, Plan It, Strategy.

Insider to Insider: Heather Kleiner, Owner of Marrylicious Writing Your Business Plan, Step 8: Management and Organization

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