As a business plan reviewer and analyst, I find it amazing how many entrepreneurs give this section the least weight or skip it altogether. The operational plan is an essential component to your business plan and it tells the reviewer how your going to get your product/service out to market. That is, how are you going to get your product out of the production stage to the doorstep of you target customer. I know, the operational plan may seem mundane but it will outline some very important answers to such fundamental questions such as: • Who is doing what?
• What are the day to day activities?
• How will the suppliers and vendors be used?
• Who are the suppliers?
• What are the labour requirements?
• What are the sources of raw materials?
Why is this section so important? First off, it will outline to the reader how you are going to carry out the delivery of your product or service. What's the use of having a product or service if you don't have a way to get it from the development stage to the consumers home? Believe me, a business plan reviewer gives this section a lot of weight because she wants to know what you and your employees are doing to get your product/service out to market. How you keep track of inventory or what type of equipment you need may seem obvious to you, but remember, the reader doesn't know this.
These activities may seem like the kind of details that take care of themselves but these are fundamental and critical for your business success. Why? This is where you translate theory into the... “Real World”
It is important that you understand why this section is important. It's because you are now dealing with practice and not theory. You see, there's a far greater chance that a business will fail because fundamentals aren't handled properly than because the basic business concept is faulty. The fundamentals being the core of your business such as the operations. If your assuming that the operations are going to take care of themselves, you'd better think again. Business plan reviewers know the importance of a well thought out operational plan and place considerable weight on this section since it can mean the success or failure of a business. As an internal planning document, the plan should be a detailed, in-depth operational plan. This will give the entrepreneur an opportunity to work out many potential problems on paper prior to commencing operations. However, if you are using your plan to potentially leverage additional funds, remember not to get too complicated. Understand that the reader wants to know that you have worked out your operations and how your product or service fits into the “big picture”. Don't leave your reader sitting there scratching their heads trying to figure out every detail. Keep it simple and remember, you want to convey to your reviewer that you have everything under control. If you are planning to present your plan to a third party reviewer, ask yourself these two questions: 1. Will the reviewer understand the content?
2. How important is the content to the overall understanding and appreciation of the business plan? The relative importance of an operational plan will depend on the nature of the business. A production facility will probably require significant attention to operational issues.
On the other hand, most retail businesses and some service businesses will probably have less operational complexity. However, don't get the impression that an operational plan is not needed because it is. “What Should An Operations Plan Cover?”
I'd like to point out that an operational plan should be specific to your business. Not all businesses require the same level of complexity when it comes to the operational plan. The topics that I cover here will not all apply to your particular business. In your own plan, you do not necessarily need to address each topic. Rather, limit your operations section to those issues that are needed and...