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How To Write the Operations Plan Section of the Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Stage of Development Section

Production process section, the bottom line, frequently asked questions (faqs).

The operations plan is the section of your business plan that gives an overview of your workflow, supply chains, and similar aspects of your business. Any key details of how your business physically produces goods or services will be included in this section.

You need an operations plan to help others understand how you'll deliver on your promise to turn a profit. Keep reading to learn what to include in your operations plan.

Key Takeaways

• The operations plan section should include general operational details that help investors understand the physical details of your vision.
• Details in the operations plan include information about any physical plants, equipment, assets, and more.
• The operations plan can also serve as a checklist for startups; it includes a list of everything that must be done to start turning a profit.

In your business plan , the operations plan section describes the physical necessities of your business's operation, such as your physical location, facilities, and equipment. Depending on what kind of business you'll be operating, it may also include information about inventory requirements, suppliers, and a description of the manufacturing process.

Keeping focused on the bottom line will help you organize this part of the business plan.

Think of the operating plan as an outline of the capital and expense requirements your business will need to operate from day to day.

You need to do two things for the reader of your business plan in the operations section: show what you've done so far to get your business off the ground and demonstrate that you understand the manufacturing or delivery process of producing your product or service.

When you're writing this section of the operations plan, start by explaining what you've done to date to get the business operational, then follow up with an explanation of what still needs to be done. The following should be included:

Production Workflow

A high-level, step-by-step description of how your product or service will be made, identifying the problems that may occur in the production process. Follow this with a subsection titled "Risks," which outlines the potential problems that may interfere with the production process and what you're going to do to negate these risks. If any part of the production process can expose employees to hazards, describe how employees will be trained in dealing with safety issues. If hazardous materials will be used, describe how these will be safely stored, handled, and disposed.

Industry Association Memberships

Show your awareness of your industry's local, regional, or national standards and regulations by telling which industry organizations you are already a member of and which ones you plan to join. This is also an opportunity to outline what steps you've taken to comply with the laws and regulations that apply to your industry. 

Supply Chains

An explanation of who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.

Quality Control

An explanation of the quality control measures that you've set up or are going to establish. For example, if you intend to pursue some form of quality control certification such as ISO 9000, describe how you will accomplish this.

While you can think of the stage of the development part of the operations plan as an overview, the production process section lays out the details of your business's day-to-day operations. Remember, your goal for writing this business plan section is to demonstrate your understanding of your product or service's manufacturing or delivery process.

When writing this section, you can use the headings below as subheadings and then provide the details in paragraph format. Leave out any topic that does not apply to your particular business.

Do an outline of your business's day-to-day operations, including your hours of operation and the days the business will be open. If the business is seasonal, be sure to say so.

The Physical Plant

Describe the type, site, and location of premises for your business. If applicable, include drawings of the building, copies of lease agreements, and recent real estate appraisals. You need to show how much the land or buildings required for your business operations are worth and tell why they're important to your proposed business.

The same goes for equipment. Besides describing the equipment necessary and how much of it you need, you also need to include its worth and cost and explain any financing arrangements.

Make a list of your assets , such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.

Special Requirements

If your business has any special requirements, such as water or power needs, ventilation, drainage, etc., provide the details in your operating plan, as well as what you've done to secure the necessary permissions.

State where you're going to get the materials you need to produce your product or service and explain what terms you've negotiated with suppliers.

Explain how long it takes to produce a unit and when you'll be able to start producing your product or service. Include factors that may affect the time frame of production and describe how you'll deal with potential challenges such as rush orders.

Explain how you'll keep  track of inventory .

Feasibility

Describe any product testing, price testing, or prototype testing that you've done on your product or service.

Give details of product cost estimates.

Once you've worked through this business plan section, you'll not only have a detailed operations plan to show your readers, but you'll also have a convenient list of what needs to be done next to make your business a reality. Writing this document gives you a chance to crystalize your business ideas into a clear checklist that you can reference. As you check items off the list, use it to explain your vision to investors, partners, and others within your organization.

What is an operations plan?

An operations plan is one section of a company's business plan. This section conveys the physical requirements for your business's operations, including supply chains, workflow , and quality control processes.

What is the main difference between the operations plan and the financial plan?

The operations plan and financial plan tackle similar issues, in that they seek to explain how the business will turn a profit. The operations plan approaches this issue from a physical perspective, such as property, routes, and locations. The financial plan explains how revenue and expenses will ultimately lead to the business's success.

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Operational Planning: How to Make an Operations Plan

The operations of your business can be defined as the sum of all the daily activities that you and your team execute to create products or services and engage with your customers, among other critical business functions. While organizing these moving parts might sound difficult, it can be easily done by writing a business operational plan. But before we learn how to make one, let’s first understand what’s the relationship between strategic and operational planning.

Operational Planning vs. Strategic Planning

Operational planning and strategic planning are complementary to each other. This is because strategic plans define the business strategy and the long-term goals for your organization, while operational plans define the steps required to achieve them.

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Operational Plan Template

Use this free Operational Plan Template for Word to manage your projects better.

What Is a Strategic Plan?

A strategic plan is a business document that describes the business goals of a company as well as the high-level actions that will be taken to achieve them over a time period of 1-3 years.

What Is an Operational Plan?

Operational plans map the daily, weekly or monthly business operations that’ll be executed by the department to complete the goals you’ve previously defined in your strategic plan. Operational plans go deeper into explaining your business operations as they explain roles and responsibilities, timelines and the scope of work.

Operational plans work best when an entire department buys in, assigning due dates for tasks, measuring goals for success, reporting on issues and collaborating effectively. They work even better when there’s a platform like ProjectManager , which facilitates communication across departments to ensure that the machine is running smoothly as each team reaches its benchmark. Get started with ProjectManager for free today.

What Is Operational Planning?

Operational planning is the process of turning strategic plans into action plans, which simply means breaking down high-level strategic goals and activities into smaller, actionable steps. The main goal of operational planning is to coordinate different departments and layers of management to ensure the whole organization works towards the same objective, which is achieving the goals set forth in the strategic plan .

How to Make an Operational Plan

There’s no single approach to follow when making an operation plan for your business. However, there’s one golden rule in operations management : your strategic and operational plans must be aligned. Based on that principle, here are seven steps to make an operational plan.

• Map business processes and workflows: What steps need to be taken at the operations level to accomplish long-term strategic goals?
• Set operational-level goals: Describe what operational-level goals contribute to the achievement of larger strategic goals.
• Determine the operational timeline: Is there any time frame for the achievement of the operational plan?
• Define your resource requirements: Estimate what resources are needed for the execution of the operational plan.
• Estimate the operational budget: Based on your resource requirements, estimate costs and define an operational budget.
• Set a hiring plan: Are there any skills gaps that need to be filled in your organization?
• Set key performance indicators: Define metrics and performance tracking procedures to measure your team’s performance.

Free Operational Plan Template

Leverage everything you’ve learned today with our template. This free operational plan template for Word will help you define your budget, timeline, KPIs and more. It’s the perfect first step in organizing and improving your operations. Download it today.

What Should be Included in an Operational Plan?

Your operational plan should describe your business operations as accurately as possible so that internal teams know how the company works and how they can help achieve the larger strategic objectives. Here’s a list of some of the key elements that you’ll need to consider when writing an operational plan.

Executive Summary

An executive summary is a brief document that summarizes the content of larger documents like business plans, strategic plans or operation plans. Their main purpose is to provide a quick overview for busy stakeholders.

Operational Budget

An operational budget is an estimation of the expected operating costs and revenues for a given time period. As with other types of budget, the operational budget defines the amount of money that’s available to acquire raw materials, equipment or anything else that’s needed for business operations.

It’s important to limit your spending to stay below your operational budget, otherwise, your company could run out of resources to execute its normal activities. You can use our free operating budget template for Excel to track your operating costs.

Operational Objectives

It’s essential to align your operational objectives with your strategic objectives. For example, if one of your strategic objectives is to increase sales by 25 percent over the next three years, one possible operational objective would be to hire new sales employees. You should always grab your strategic plan objectives and turn them into one or multiple action items .

Processes & Workflows

Explain the various business processes, workflows and tasks that need to be executed to achieve your operational objectives. Make sure to explain what resources are needed, such as raw materials, equipment or human resources.

Operational Timeline

It’s important to establish a timeline for your operational plan. In most cases, your operational plan will have the same length as your strategic plan, but in some scenarios, you might create multiple operational plans for specific purposes. Not all operational plans are equal, so the length of your operational timeline will depend on the duration of your projects , workflows and processes.

Hiring Plan

Find any skills gap there might be in your team. You might need to hire a couple of individuals or even create new departments in order to execute your business processes .

Quality Assurance and Control

Most companies implement quality assurance and control procedures for a variety of reasons such as customer safety and regulatory compliance. In addition, quality assurance issues can cost your business millions, so establishing quality management protocols is a key step in operational planning.

Key Performance Indicators

It’s important to establish key performance indicators (KPIs) to measure the productivity of your business operations. You can define as many KPIs as needed for all your business processes. For example, you can define KPIs for marketing, sales, product development and other key departments in your company. This can include product launch deadlines, number of manufactured goods, number of customer service cases closed, number of 5-star reviews received, number of customers acquired, revenue increased by a certain percentage and so on.

Risks, Assumptions and Constraints

Note any potential risks, assumptions and time or resource constraints that might affect your business operations.

What Are the Benefits of Operational Planning?

Every plan has a massive effect on all team members involved, and those can be to your company’s benefit or to their detriment. If it’s to their detriment, it’s best to find out as soon as possible so you can modify your operational plan and pivot with ease.

But that’s the whole point of operational planning: you get to see the effect of your operations on the business’s bottom line in real time, or at every benchmark, so you know exactly when to pivot. And with a plan that’s as custom to each department as an operational plan, you know exactly where things go wrong and why.

How ProjectManager Can Help with Operational Planning

Creating and implementing a high-quality operational plan is the best way to ensure that your organization starts out a project on the right foot. ProjectManager has award-winning project management tools to help you craft and execute such a plan.

Gantt charts are essential to create and monitor operational plans effectively. ProjectManager helps you access your Gantt chart online so you can add benchmarks for operational performance reviews. You can also create tasks along with dependencies to make the operation a surefire success.

Whether you’re a team of IT system administrators, marketing experts, or engineers, ProjectManager includes robust planning and reporting tools. Plan in sprints, assign due dates, collaborate with team members and track everything with just the click of a button. Plus, we have numerous ready-made project reports that can be generated instantly, including status reports, variance reports, timesheet reports and more.

Related Operations Management Content

• Operational Strategy: A Quick Guide
• Operations Management: Key Functions, Roles and Skills
• Operational Efficiency: A Quick Guide
• Using Operational Excellence to Be More Productive

Operational planning isn’t done in a silo, and it doesn’t work without the full weight of the team backing it up. Ensure that your department is successful at each benchmark. ProjectManager is an award-winning pm software dedicated to helping businesses smooth out their operational plans for a better year ahead. Sign up for our free 30-day trial today.

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Business Plan Operational Plan - Everything You Need to Know

Welcome to our comprehensive guide on the business plan operational plan. A fundamental component of any effective business plan and a key component of growth  As a business owner, executive, or manager, you understand that a well-articulated strategy is crucial for the success and growth of your venture. But have you ever stopped to ponder how this strategy is executed on a day-to-day basis? How do we transform those lofty goals into tangible, everyday actions? This is where an operational plan comes into play. An operational plan outlines the practical details of how your business will operate and deliver on its strategic goals. It describes the inner workings of your business, detailing everything from your daily operations and production processes to your team's roles and responsibilities.  In this guide we will delve into the purpose and scope of an operational plan, its essential elements, and how to develop one effectively. We'll also share valuable tips, best practices, and common pitfalls to avoid. 

Table of Contents

• Operational Plan - The Purpose
• The Essential Elements
• Description of Operations
• Steps for Creating Operational Plan
• Tips & Best Practices

Real-Life Case Study

• Common Pitfalls
• Final Thoughts

Business Plan Operational Plan - The Purpose

The role of an operational plan in a business cannot be overstated. This fundamental document is a strategic guide that outlines the direction, timelines, and resources necessary to achieve specific objectives within an organisation. An operational plan is the driving force behind the execution of your business strategy. It allows you to map out clear and attainable operational goals that align with your overall strategic objectives, breaking them down into manageable, actionable steps.  Whilst acting as a map for your business you can also use to track performance via measurable objectives.

Scope of an Operational Plan in Day-to-Day Operations

The business plan operational plan should detail key elements such as the operational processes, resource allocation, tasks, and timelines. From personnel and location to inventory, suppliers, and operating hours - the operational plan touches every aspect of your business. It's a living document, evolving and changing as your business grows and adapts to market dynamics and industry trends.

Remember, the opening of your Executive Summary sets the tone for the entire document. Make it memorable and compelling to encourage the reader to continue exploring.

Business Plan Operational Plan - The Essential Elements

Creating an operational plan requires thoughtful consideration of several vital components that collectively represent the full breadth of your company's operations. Each one plays a crucial role in defining the day-to-day activities that will lead to the fulfilment of your strategic objectives.

Description of the Business Operations

Every operational plan starts with a comprehensive description of the business operations. This includes outlining your production process, operations workflow, and supply chain management. Defining these processes in clear terms provides a concrete vision of how products or services will be created and delivered, identifying the necessary resources and potential bottlenecks along the way.

People are the lifeblood of your business, and it's essential to define their roles and responsibilities within the operational plan. This involves outlining the team's structure, detailing who is responsible for what, and defining key performance indicators (KPIs) for each role. By assigning clear responsibilities, you ensure the efficient use of human resources and promote accountability.

Your business location and the physical resources at your disposal play a crucial role in your operational plan. Detail the premises your business will operate from, the equipment required, and any associated costs. Whether you're operating from a single office, managing multiple retail outlets, or running a home-based online business, defining your operational space is crucial.

Effective inventory management is crucial for maintaining smooth operations, particularly for businesses dealing with physical products. Your operational plan should outline how you will manage your supplies, including how often you'll restock, which vendors you'll use, and how you'll handle storage and distribution. Remember, balancing supply with demand is key to avoiding unnecessary costs or stockouts.

Your operational plan needs to address your suppliers - who they are, what terms and agreements you have with them, and how you will manage these relationships. The reliability and quality of your suppliers can greatly affect your operations, making this a critical consideration in your planning process.

When constructed effectively, these elements come together to form an operational plan that is clear, comprehensive, and actionable. In the next section, we'll explore the steps to develop such a plan, and later, we'll offer some tips and best practices for bringing your operational plan to life. Stay tuned! Looking an industry specific guide to business plans, then check out our business plan guides homepage .

Steps for Developing an Operational Plan

Creating a comprehensive and effective operational plan involves careful planning, clear communication, and continuous monitoring and evaluation. Let's explore these steps in detail:

• 1. Setting Clear Operational Goals and Objectives: The first step towards developing an operational plan is defining what you want to achieve operationally within a given period. These goals should align with your strategic business objectives and be specific, measurable, attainable, relevant, and time-bound (SMART).For instance, if your strategic goal is to increase market share, your operational objective might be to ramp up production by a certain percentage within the next quarter. Or, if you aim to improve customer satisfaction, you might focus on improving the quality and durability of the product.
• Regular Monitoring and Evaluation: With your operational goals in place, the next step is to monitor progress and evaluate performance regularly. Key Performance Indicators (KPIs) and metrics should be set for each operational goal. These could range from production volumes and delivery times to quality measures and cost efficiency.Consistently monitoring these metrics allows you to measure progress, identify any potential issues or bottlenecks early on, and adjust your operational plan as necessary.
• Communication: This is a crucial when implementing your operational plan. Ensure all stakeholders, including team members, suppliers, and partners, are aware of the plan and understand their roles within it.Hold regular meetings to update everyone on progress and address any challenges or changes in the plan. Remember, your operational plan should be a living document, flexible enough to adapt to changes and updates as required.

Business Plan Operational Plan - Tips and Best Practices

Creating an operational plan that works requires more than just defining goals and setting performance metrics. There are nuances and best practices that can significantly enhance the effectiveness of your operational plan. Here are a few tips to guide you:

• Involve Your Team : The people responsible for executing the operational plan should also contribute to its creation. Encourage your team to share their ideas, challenges, and insights. Their first-hand experience can lead to more practical, achievable operational plans. Besides, team involvement promotes ownership and commitment to the plan's execution.
• Keep It Flexible : Operational plans need to be adaptable to accommodate changes in the business environment, such as market dynamics, customer preferences, or new regulations. Regularly review and update your plan to ensure it remains relevant and effective. Remember, the operational plan is a guide, not a set-in-stone document.
• Be Specific : Avoid ambiguity in your operational plan. Use clear, concise language and provide detailed action plans, including what needs to be done, by whom, when, and with what resources. This clarity reduces misunderstanding and keeps everyone on the same page.
• Use Technology : Leverage the power of technology to enhance your operational efficiency. There are numerous tools and software available that can help with project management, process automation, data analysis, and more. Use these tools to streamline your operations, track performance, and improve communication.
• Consistency with the Business Plan : Ensure your operational plan aligns with your broader business strategy. This alignment ensures that your day-to-day operations contribute effectively to achieving your long-term business objectives.

By applying these tips and best practices, you can create an operational plan that's not only effective but also fosters a culture of continuous improvement and strategic alignment in your organisation.

To further illustrate the importance of a well-executed operational plan, let's look at a real-life case study - the global tech giant, Apple Inc. Apple's operational plan is a testament to the company's relentless focus on precision, quality, and groundbreaking innovation. One key operational strategy that Apple uses is its tight control over its supply chain.

• Description of Business Operations: Apple's business operations are highly integrated and efficient. They manufacture and market a variety of products, including iPhones, iPads, Macs, and services like iCloud and Apple Music. Their production process is complex, involving design, prototyping, manufacturing, and distribution, often happening across different continents.
• Personnel: Apple's workforce is highly specialised. Each team and department has clearly defined roles and responsibilities, whether it's designing new products, managing supplier relationships, or ensuring quality control. Employees at Apple are encouraged to think differently, fostering a culture of innovation.
•  Location: Apple operates in multiple locations worldwide, including its iconic headquarters, Apple Park, in Cupertino, California. The company also has a network of retail stores across the globe and contracts with manufacturing facilities, primarily in Asia.
•  Inventory: Apple's inventory management is legendary for its efficiency. Through just-in-time inventory practices, Apple reduces storage costs and minimises the risk of stock obsolescence, contributing to its streamlined operations and impressive profit margins.
• Suppliers: Apple has a vast network of suppliers from around the world. It maintains strong relationships with these suppliers and holds them to strict standards of quality and ethical business practices, ensuring the integrity and excellence of its products.

Apple's operational plan aligns seamlessly with its business strategy, focusing on innovation, quality, and customer experience. This has allowed the company to maintain its status as a market leader and pioneer in the tech industry. This case study illustrates how an effective operational plan can turn a strategic vision into a successful reality. In the next section, we'll delve into common pitfalls to avoid when creating your operational plan.

Common Pitfalls to Avoid

As you embark on developing an operational plan for your business, it's crucial to be aware of some common pitfalls that can hinder your plan's effectiveness. Here, we outline these potential obstacles and provide advice on how to avoid them.

• Lack of Alignment with Strategic Goals: One of the most common mistakes is a disconnect between the operational plan and the company's strategic goals. Your operational plan should directly support and drive towards achieving these objectives. Ensure all operational goals, processes, and tasks align with your overarching business vision.
• Overly Complex or Unrealistic Plans: While an operational plan needs to be comprehensive, it also needs to be practical and achievable. Avoid creating overly complex plans that your team cannot implement or that require resources beyond your means. Strike a balance between thoroughness and simplicity for a more manageable plan.
• Neglecting to Involve the Team: Your team members are the ones who will execute the operational plan, and neglecting to involve them in its creation can lead to resistance or confusion. Make sure your team is part of the planning process, understands the plan, and is committed to its implementation.
• Ignoring Market Changes: A business doesn't operate in a vacuum. Failing to consider external factors such as market trends, customer behaviour, and economic conditions can derail your operational plan. Ensure your plan is flexible and adaptable to respond to changing circumstances.
• Insufficient Monitoring and Evaluation: An operational plan is not a set-and-forget document. Regular monitoring and evaluation are critical to assess progress, identify bottlenecks, and make necessary adjustments. Make sure you set measurable KPIs and allocate resources to track and review them.Avoiding these common pitfalls will significantly enhance the effectiveness of your business plan operational plan. With a solid operational plan in place, your business is well-positioned to achieve its strategic objectives, driving growth, and success.

Wrapping It All Up

Operational planning plays a vital role in any business, acting as a roadmap to direct daily operations and align them with the strategic goals of the company. As we have seen in this blog post, creating an operational plan involves several important components and steps, from defining clear goals to continuous monitoring and evaluation. Remember, the key to an effective operational plan is to keep it flexible, involve your team and maintain alignment with your business plan. If you implement those principles and regularly review and update you will have set a solid foundation for future business growth. We wish you all the best on your operational planning journey, and remember - every step you take towards detailed and thoughtful planning is a step towards long-term success and growth for your business. If you require any further help on other sections of your business plan, visit our Learning Zone for several in-depth guides.

Business Plan Operational Plan - Frequently Asked Questions (FAQs)

To wrap up this guide, let's address some frequently asked questions about operational plans in business.

• What is the difference between a strategic plan and an operational plan? A strategic plan outlines a company's long-term vision, objectives, and strategies for achieving those objectives. It's a high-level roadmap for the direction the company intends to go. On the other hand, an operational plan details the day-to-day activities and resources necessary to achieve the strategic goals. It's the 'action plan' that brings the strategic plan to life.
• How often should an operational plan be reviewed? The frequency of review may vary depending on your business size, type, and industry, but generally, it is a good idea to review your operational plan at least quarterly. The regular review ensures that the plan is still relevant and effective, allowing for adjustments as business conditions change.
• How long should an operational plan be? There is no set length for an operational plan, as it will depend on the complexity of the operations. It needs to be comprehensive enough to cover all operational aspects of the business but concise enough to be understandable and manageable.
• Who is responsible for creating an operational plan? While the business owner or top management usually leads the creation of an operational plan, it should involve input from all levels of the organisation. Each department or team can provide valuable insights into their operations, challenges, and opportunities, leading to a more realistic and effective plan.
• How can I measure the success of my operational plan? The success of an operational plan is measured by how effectively it helps achieve the strategic objectives. Regular monitoring of Key Performance Indicators (KPIs) related to your operational goals will provide a clear indication of your plan's success. If these KPIs are consistently met, your operational plan is likely successful. If not, adjustments may be needed.

Operational Plan: Everything You Need To Know (2024 Guide)

The old way of planning no longer works in complex and unpredictable business environments, and companies are struggling to find their feet on shaky ground. As we’ve seen with many of our customers and strategies in Cascade, organizations can no longer count on executing three or even five-year strategic plans.

The new reality forces companies and their operations teams to adapt their operational plans more frequently and within shorter time frames if they want to reap benefits faster than their competitors. Organizations need to work on their strategic instinct and fast adaptability to enhance their operational efficiency .  

And that requires big changes—including building a flexible operational plan, supported by the right tools and systems that help you achieve real-time centralized observability and empower a strategic response to external disruptions.

Read this article to build a bulletproof operational plan that includes all the key elements necessary to overcome unpredictable business chaos. You’ll also get free templates that will help you rapidly adapt and align your teams.

✨Bonus: We’ve included pro tips from business leaders in our network to help you identify gaps in your strategy execution and build resilient business operations.

What Is An Operational Plan?

An operational plan is action and detail-oriented; it needs to focus on short-term strategy execution and outline an organization's day-to-day operations. If your operations strategy is a promise, your operational plan is the action plan for how you will deliver on it every day, week, and month.

Put simply, an operational plan helps you bridge the gap between business strategy and on-the-ground execution and ensures that the organization is on track to achieve its long-term goals.

Benefits of operational planning

• Clear definition of relationships between cross-functional teams in different departments and responsibilities for each to eliminate duplicated efforts.
• Tighter alignment between corporate or business unit strategic plans and on-the-ground execution, helping the organization meet its business targets.
• Strong operating system that enables the company to quickly adapt, deliver operations goals, and monitor performance.

Operational planning vs. strategic planning

Operational planning deals with the day-to-day details and short-term goals, while strategic planning focuses on the big picture and long-term direction of an organization.

To put it in simpler terms, operational planning is about the "how" of daily tasks, while strategic planning defines the "what" and "why" for future success.

📚Recommended reading: Strategic vs. Operational Planning

Kickstart Your Operational Planning Process: Lay The Foundation

The quality of your operational plan will depend on your input. A successful operational planning initiative will consider these aspects:

• Who will be involved? Identify and include employees, customers, and the management team in the planning process to gain valuable insights from the front lines, ensuring better strategy and execution buy-in.
• What are your internal capabilities? Assess internal capabilities by conducting an internal analysis , including resource requirements, operating budget, and talent skills. Talent management and employee engagement are just a few of the many challenges that COOs will have on their operations agenda.
• What environment are you operating in? Conduct an external analysis (e.g., PESTLE or Porter’s 5 Forces ) to inform your approach and identify optimization opportunities and risks, keeping you agile in a changing market.
• Is it aligned with your organization’s strategy? Ensure alignment of your operational plan with your organization’s strategic plan to actively support the company's long-term vision and contribute to key business metrics.

👉🏻 Once you’ve gathered this information, you can develop an operational plan to help you execute business strategies.

Key Elements Of Your Operational Plan

Enough chit-chat; it’s time to put your operational plan together. We've built this based on our proven and tested approach, used by over +45,000 Cascade users.

See how Cascade Strategy Execution Platform enhances operational efficiency by reducing duplication and aligning teams toward common goals. It effectively eliminates waste resulting from misalignment, fostering smoother operations and improved performance.

Here’s a recap of the five key elements your plan must consider:

Choose key metrics aligned with the company goals

Selecting your operational plan's key metrics isn't a mere exercise in tracking numbers; it's about laser-focused alignment with your business needs and objectives. These metrics are the tangible indicators of your organization's efficiency and performance. They serve as the compass, guiding your daily decisions and actions toward achieving concrete results.

By precisely aligning these metrics with your company's core objectives, you ensure that every initiative and action within your operational plan directly contributes to achieving tangible results.

An aligned operational plan makes it easier to:

• Communicate roles and responsibilities to all employees so they know how their efforts contribute to overall business success.
• Identify and address operational bottlenecks and inefficiencies that could derail strategy execution.
• Motivate and engage employees to work toward strategic objectives and deliver on business outcomes.

Remember that the role of operations is to close the gap between your organization's strategic goals and what is being done on a daily basis to make them happen.

👉🏻 How Cascade can help:

With Cascade’s Metrics Library , you can bring your operating and financial business-level goals together with your strategy under one single roof. This makes reporting & governance easy, accurate, and less time-consuming by connecting your business data to your key business initiatives.

Through Cascade’s integrations , you can consolidate your metrics in one place, importing your data directly from business systems, data lakes, BI tools, or even spreadsheets.

Define the focus areas of your operational plan

The focus areas of your operational plan are the key areas of the business that the plan will address.

This will depend on your business plan. Think about how the business operates and how it succeeds. Do you need to pursue short-term cost reductions while simultaneously pursuing longer-term growth and transformation initiatives? Your operational plans must be built on these strategic priorities.

For example, you can prioritize your focus areas based on the most relevant business strategies or by specific departments. Some examples of focus areas could be:

• Administration
• Human Resources

💡Tips to help define the focus areas of your operational plan:

• Identify the business's key challenges and opportunities.
• Consider the business's overall long-term strategy and key metrics and how the operational plan's focus areas can support these objectives.
• Bring other people on board to help you identify what needs to be addressed by the operations plan.

Create strategic objectives for your operational plan

Strategic objectives are specific goals aligned with the operation’s strategy and focus areas. They represent what you want to achieve in each focus area and will serve as the building blocks of your plan, ensuring that it’s focused and actionable.

Some examples of strategic objectives:

• Reduce costs by 10% within the next year by implementing more efficient processes and streamlining the supply chain over the next year.
• Launch three new products in the next fiscal year to expand your product lines and increase revenue.
• Increase customer satisfaction scores by 5% within the next six months.

💡Tips for defining strategic objectives include:

• Ensure your objectives are specific, measurable, achievable, relevant, and time-bound (SMART).
• Consistently align objectives with your operational plan's focus areas and the company's goals.
• Don’t be afraid to get input from other people about your objectives.

Identify and prioritize projects

It’s time to identify and prioritize the projects that need to be executed. Remember, projects are action plans to help you achieve your strategic objectives.

Project planning should include thinking about time frames, task assignments, and deliverables (and prioritizing).

Here are some examples of project ideas:

• Localize sourcing for critical semi-finished materials.
• Streamline the supply chain to reduce costs and improve efficiency.
• Find and develop an alternative logistics channel.
• Implement a new customer service training program to improve customer satisfaction scores.
• Implement a new technology that will enable end-to-end supply chain visibility.

💡Tips for defining and prioritizing projects:

• Identify the specific actions and activities needed to achieve each strategic objective.
• Prioritize the projects based on their importance, feasibility, and potential impact on the business.
• Involve stakeholders in defining and prioritizing the projects to ensure their needs and concerns are heard.

Identify and track key performance indicators (KPIs)

Finally, you’ll need to know if your operational plan and day-to-day activities result in outcomes.

Set KPIs for key initiatives and strategic objectives to measure success, ensure alignment, and identify performance gaps in your operational plan.

Some examples of operations KPIs are:

• Inventory costs
• Costs of goods sold
• Revenue growth
• Employee retention rate
• Customer satisfaction score

💡Tips for defining and tracking KPIs:

• Align KPIs with your strategic objectives and focus areas so that you can track the plan's progress against these specific goals.
• Add both lagging and leading indicators .
• Instead of using multiple disconnected spreadsheets and project management tools, consider live dashboards or reporting systems to track the KPIs and monitor progress over time.

👉🏻 How Cascade can help build your plan:

Cascade’s planner feature enables you to build your operational plan with structure and ease by breaking down the complexity from high-level initiatives to executable outcomes. Define your key elements (focus areas, objectives, projects, and KPIs), and share the plan with your teams. You’ll get full visibility of the plan’s progress in real-time, allowing you to identify gaps, quickly update the plan, and communicate the change with your team with a single click.

👉🏻 If you don’t want to start building the plan from scratch, use our free Operational Plan Template pre-filled with examples of focus areas, objectives, projects, and KPIs that you can customize to meet your organization’s needs.

Operational Plan Examples & Templates

Here are five operational plan examples to help you create plans for your teams. You can use one master operational plan or set up an operational plan for each department.

Master Operational Plan Example

This Operational Plan Template will help you close the gap between business goals and day-to-day operations. You'll be able to set goals and KPIs for your top priorities and work with the operations team to deliver operational excellence and business results.

HR Plan Example

This HR Operational Plan Template can be used to meet staffing requirements, manage human capital and align human resources activities with your strategy. HR managers in any industry can create a clear operational plan that can be constantly monitored, adapted, and improved.

IT Plan Example

If you’re in the IT team, try out this IT Plan Template to get your IT operational planning up and running fast. It comes prefilled with focus areas and KPIs relevant to IT operations; you can easily customize workflows and deliverables to your needs.

Marketing Plan Example

This Marketing Plan Template can help you efficiently understand and plan your digital marketing operations using best practices. Use it to quickly set up priorities and get your social media and marketing teams moving on tasks that will make an impact.

Finance Plan Example

This finance-focused template is ideal if you want to get on top of your finance operations plan. Use it to allocate and distribute financial resources across your organization and get real-time updates through your dashboard and reports—which are great tools to create a visually compelling financial summary that clearly shows your key metrics.

💡Pro Tip: To ensure successful execution, it's crucial to align not just your master operational plan with your overarching strategic plan, but also all the operational department plans.

With the Alignment Maps feature, you’ll be able to visualize how your top-level business strategy breaks down into functional and operational plans. This empowers COOs and CFOs to consolidate their operational plans in one place, creating tighter alignment between the finance and operations teams and improving cross-collaboration to build more resilient operations.

Want to dig deeper? Use the Relationships feature to see the relationships between connected objectives from your plans and understand how your different department goals contribute to the core business metrics and goals. This view will allow you to clearly map dependencies, blockers, and risks that may lie along your journey.

5 Tips For An Effective Operational Plan And Its Execution

1. don’t underestimate the power of transparent communication.

Regularly communicate the operational plan and progress to all relevant stakeholders to build the necessary buy-in and support. Your employees must know your goals and the roadmap, and team members should understand their role in its execution. This business transparency will help everyone row in the same direction.

“Clarity regarding strategy is one of the key drivers of autonomous execution. If people understand what you’re working toward and have guardrails in place, they can be empowered to make their own decisions and don’t need everything to be ‘run up the chain’ to get approved. This allows you to move fast and at scale.” — Sam Sterling , Chief Strategy Officer, Akqa

2. Keep moving forward and adopt a growth mindset

Keep the momentum going and ensure that the plan is executed effectively. Regular monitoring and reviews can help identify and address any challenges or obstacles that may arise.

Schedule regular reviews and check-ins and provide the necessary support to ensure projects are on track and moving forward.

“I think adopting a growth mindset is super important. This means having the confidence to fail fast, try something new and empower people to do that.” — Ken Miller , General Manager, Azure Intelligent Cloud at Microsoft

With the Team Updates functionality, every team member can post updates on key measures, actions, and objectives. This will give you real-time visibility into performance and help you identify possible risks before it’s too late—without having to schedule extra meetings or nag your team members for updates.

3. Make strategic moves and change fast when you need to

Your operational plan should be flexible, adaptable, and open to adjustments. This means keeping an eye on progress, making corrections if needed, and being willing to adapt the plan to changing circumstances or new opportunities. As McKinsey suggests, you can consider creating a team that will be able to collect data, link analysis with action, and offer quick responses to rapid changes.

“Traditionally, companies would have taken that piece of paper and gone out and said: we're going to execute it, start to finish. Then get into the formulation of the strategy, what we need to hit, and what the end product result will be like. But what we do know is that’s never the case. Along the way, you're going to have bumps, and inevitably, you’ll need to change from that original picture.” — Annie Lucchitti , Marketing Manager, Unilever

4. Empower your operations team and boost efficiency

Effective operational planning requires the engagement and empowerment of your team. Involve stakeholders in the planning process and provide them with the necessary resources. Give them context and an opportunity to set goals and prioritize initiatives. This will help you boost engagement and hold them accountable for progress.

“I think it just works at every single level. Are people allowed to be themselves at work? Personally, are they at peace? Are they happy? Productivity happens when people have the right skills, but also when they are engaged and happy. If one of those fails a bit, productivity will start decreasing.” — Joan Torrents , Global Sourcing Manager, TESCO.

5. If it isn’t measured, it isn’t managed

Don’t underestimate the importance of tracking and measuring progress against the operational plan's goals and objectives. Set milestones, enforce KPIs, and stay on top of progress. Doing this will help you stay on course, empower you to act quickly, and provide valuable insights into what is going wrong.

“Data is a foundational element in the strategy definition phase as well as in the strategy execution phase as it helps create a baseline, identify key priorities, set goals, and measure progress.” — Erica Santoni , Principal, Diversity Equity & Inclusion, Intuit

Use Cascade’s Dashboards to monitor your day-to-day progress on key metrics and critical business and strategic information in real-time.

Compile the information in powerful reports and executive summaries in seconds with pre-built templates. Share them with your key stakeholders —internal and external— and invite them to collaborate on your strategy together.

Execute Your Operational Plan With Cascade 🚀

What good is an operational plan if no one executes it? If your organization wants to operate at a higher level, static tools like Excel spreadsheets, PowerPoints, Google Docs, and/or project management tools aren’t the solution.

❌They aren’t designed for adaptive strategy and planning.

❌They often lead to siloing and hinder effective cross-collaboration.

❌They make it challenging to measure progress and slow down decision-making.

With Cascade as your central operating system, you can stop running business operations blindfolded and embrace rapid, coordinated, and data-driven decision-making.

Get your Operational Plan Template to get started with a dynamic plan that will lead to actual outcomes for your business and see faster results from your strategy.

Or take Cascade for a spin! Start today for free or book a 1:1 product tour with Cascade’s in-house strategy expert.

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How to Write the Operations Plan Section of Your Business Plan

• Written By Dave Lavinsky

The Operations Plan is a component of your business plan that is like the engine of your car. The operations plan holds the key parts of your business and it shows how those parts work together to keep the business running. If you are starting a business or your business is growing, the operations plan also shows that your business is more than just a good concept. It shows why the business is running smoothly and how key milestones ahead will be met as the business grows. The operations plan is the powerhouse engine in your business plan . Let’s start that engine together.

What is the Operations Plan in a Business Plan?

The key to putting your operations plan together is choosing which processes show how your business works and what the expected outcomes will be as a result. Include the processes that you believe are most important even if they are basic or simple. And, if you think your business is too new to create an operations plan, think again. Every business has processes, no matter how large or small they may be. Your operations plan may be considered by potential investors or lenders; make it the best it can be.

Components of a Comprehensive Operations Plan

The best operations plan includes a list of key processes with short explanations that detail each process. Some explanations will also include a brief sentence explaining how the key process will help the business meet the expected key milestones. For example, “Our Marketing team will post on social media each time our product sales reach one of our sales goals. This will drive new customers to our product offering.”

Main components of an operations plan:

Product Development

Describe how the product is being developed and if it is currently offered or is on target for launch. Include the production process for testing, improvements or revisions.

Key milestone : Note the forecast for new product development to expand the product line.

Manufacturing

Describe the process of manufacturing, from the first step to the delivery of products. This may include several bullet points. Add facilities maintenance in this section. Also, include the management processes of the staff.

Key milestone : Include a brief forecast with plans to increase manufacturing capabilities.

Administration/Human Resources

Include a description of day-to-day activities that are overseen by staff members, including facilities management, safety, reports and compliance, hiring staff and training.

Key milestone : Add a sentence regarding staff training for leadership as the business grows.

List the process of purchasing parts, services, products, and raw materials. Include a sentence about financial oversight of expenditures to control costs.

Key milestone : Indicate how the staff is preparing for purchasing increases to meet higher manufacturing demands.

Customer Service

List the processes that comprise customer service, including any customer relationship management software (CRM) or other processes that interact with customers. Provide details on processes for customer retention.

Key milestone : Add a sentence describing staff training to build customer relationships.

Describe how your business conducts sales, whether through online channels, via wholesale or retail sales, or by other means. Explain why the process works for your business and how it is positioned to be successful because of the sales process.

Key milestone : Indicate how planned sales strategies will expand to meet key milestones.

Note the process of current marketing campaigns and the response of the target audience. Note how responses are scored on social media.

Key milestone : Include operational plans for building brand awareness, key selling points, and entry positions.

At this stage of business, the finance process should be clearly outlined, with current and any expected funding included. Also, include a sentence about how the business has structured a repayment plan for any loans and is making on-time payments.

Key milestone : Describe any anticipated funding options that have already been put into place.

Accounting/Payroll:

Describe in a few sentences how timely accounting is completed on a regular basis. Add a sentence about the payroll system and the software that runs it.

Key milestone : Add a note about increasing software programs in accounting to increase performance during growth.

Include a sentence about the process of oversight for the business. Add the process of documentation, filings, and oversight of any copyrights, patents, or trademarks. Include any licensing payments that add revenue to the business.

Key milestone : Include a description of the legal process already in place to accommodate expansion and long-term growth.

How to Write the Operations Plan For Your Business

Now that you’ve read about the main components in a business operations plan, it’s time to connect them in writing your own operations plan. To do this, you can follow the easy steps ahead as you construct each process.

Remember, you may not need all of the processes listed here. You will want to choose those that make sense for your business and, if needed, add some others. When completed, your operations plan will flow smoothly from start to finish.

• Consider your Business Goals . Write out each goal. Read them as you decide which processes to include in your operations plan and think about how soon you will want to meet the company goals.
• Create a Process List . Look at the list of components and decide how to make them into a list for your own business. Don’t write out full descriptions yet. We’re building the list first. How do processes start in your business?
• Finance (get funding)
• Product Development (buy a truck, provide services, equipment, tools)
• Manufacturing (maintain the garage and tow truck)
• Sales (make sales calls)
• Customer Service (answering texts, and emails)
• Marketing (getting referrals from friends)
• Accounting/Payroll (paying yourself and the bookkeeper)
• Legal (risk management assistance)
• Start filling in the Process Descriptions . Use the examples above to describe the processes of your business. A few sentences that explain each process are all you need in the operations plan.
• For example, key milestones for your tow truck business might be:
• Tow at least five vehicles daily during each week (sales/marketing)
• Buy a second tow truck within 6 months (finance)
• Add a second tow truck driver within 6 months (human resources)
• Buy a commercial truck within 12 months (finance/product development)
• Finish your Operations Plan . Re-read each Process Description and complete the Key Milestones for each operations section.

Sample Operations Plan for Badger Drains & Plumbing

Badger Drains & Plumbing, based in Milwaukee, WI, is dedicated to providing top-notch residential and commercial plumbing services. Our operations plan outlines the key processes that make our business run smoothly and how we plan to meet our key milestones as we grow.

Our services, instead of physical products, are continuously refined based on customer feedback and technological advancements in plumbing. This includes adopting newer, more efficient ways to conduct pipe repairs, installations, and maintenance services.

Key milestone : To introduce environmentally friendly and cost-effective plumbing solutions within the next year.

Our staff handle day-to-day operational tasks, prioritizing safety, efficiency, and regulatory compliance. This includes everything from scheduling service calls to conducting routine safety checks and equipment maintenance.

Key milestone : Implement a leadership development program for senior technicians to prepare them for managerial roles as the company expands.

We procure high-quality plumbing materials, tools, and technologies from reputable suppliers, ensuring we have the necessary inventory to meet customer demand without excessive expenditure.

Key milestone : Strengthen relationships with key suppliers to negotiate better prices and ensure priority fulfillment as service demand increases.

Customer service is a pillar of our operations, involving not just resolving issues but proactively enhancing customer satisfaction through follow-ups and feedback collection using CRM software.

Key milestone : Introduce a loyalty program by the end of the next quarter to increase customer retention rates.

Sales efforts are directed through personal client interactions and digital marketing to generate leads, with a strong focus on the benefits of choosing Badger Drains & Plumbing for reliability and professionalism.

Key milestone : Achieve a 20% increase in annual contracts by targeting commercial entities in the Milwaukee area.

Our marketing is focused on local SEO, targeted ads, and social media engagement to connect with the Milwaukee community, emphasizing our quick response times and quality service.

Key milestone : Launch a community-oriented campaign to increase brand visibility and customer engagement by participating in local events and sponsorships.

Our current financing includes business revenue and a small business loan, with a diligent approach to budgeting and a clear plan for loan repayment and future investments.

Key milestone : Secure a line of credit to fund an expansion of services within the next two years.

Accounting/Payroll

We use modern software solutions to ensure accurate and timely financial and payroll management, allowing us to focus more on serving our customers and less on back-office tasks.

Key milestone : Transition to a more comprehensive software suite that integrates CRM and finance for better overall management efficiency.

Our legal framework encompasses regular reviews of compliance, documentations, and the management of any intellectual property, ensuring all operations are above board.

Key milestone : Establish a retainer partnership with a legal firm specializing in small businesses to prepare for interstate licensing and expansion.

By following this operations plan, Badger Drains & Plumbing aims to enhance its service offerings, optimize operational efficiency, increase productivity, and achieve sustainable growth, maintaining its commitment to being Milwaukee’s trusted plumbing service provider.

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Why do we offer PlanBuildr? We are business owners. We know your time is valuable. And, we know a comprehensive business plan is vital when it’s time to obtain funding or secure investors. Not all of us are writers, but we all know good value when we see it. Try PlanBuildr for free !

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Expertly Writing the Operations Plan Section of Your Business Plan

Written by Dave Lavinsky

Operational plans are important for any effective business plan . They provide a roadmap for how the company will operate on a day-to-day basis. The operational strategic plan should outline the company’s goals and objectives, as well as the strategies and actions that will be taken to achieve them.

Business Operations Section of a Business Plan

The operational plan or operations section of a business plan is where you describe how your business will function on a day-to-day basis. This includes everything from the resources you’ll need to run your business, to the people who will be responsible for carrying out various tasks, to the processes and procedures you’ll use to get work done.

Purpose of the Operational Plan Section of a Business Plan

An operational plan is essential for any business because it provides a roadmap for how it will function. It ensures that everyone involved in the business is on the same page and knows what their roles and responsibilities are. Having an operational plan also makes it easier to track and accomplish goals, while driving cost reduction and improving overall results. Finally, your operations plan section helps show readers that you can turn your vision and goals into reality.

Benefits of an Operations Plan Include:

• Identifying the key processes your company must perform to achieve its goals
• Mapping out short-term and long-term milestones so you have specific goals and a roadmap for achieving them
• Understanding the human and other resources required to execute your vision

Writing an Operations Section of a Business Plan

When writing the operations section of a business plan, there are a few things you’ll want to keep in mind. First, be sure to describe the resources that will be required to run your business. This includes everything from office space and equipment to human resources. Next, detail the processes and procedures that will be used to get work done. Be as specific as possible so that there is no confusion about how things should be done. Finally, identify the people who will be responsible for carrying out various tasks. This includes both employees and contractors.

Tracking Key Performance Indicators with Operational Planning

As a business owner, it’s important to track your progress against your company goals. This is where KPIs come in. KPIs are performance indicators and an important part of creating a strategic plan that can help you track your progress and identify areas of improvement. You should document your KPIs in the operation plan of your business plan

There are a few things to keep in mind when choosing KPIs for your business:

• Make sure that the KPIs you choose are relevant to your company’s goals.
• Choose KPIs that can be easily measured.
• Avoid choosing too many KPIs, as this can be overwhelming. Stick to a few key ones that will give you the most insights into your business’s progress.
• Set realistic targets for each KPI. This will help you track your progress and identify areas of improvement.
• Review your KPIs on a regular basis to ensure that they are still relevant and accurate, while also being in line with strategic plans.

Some Examples of KPIs that You Could Track with an Operational Plan

When creating an operations plan, it’s important to track key performance indicators (KPIs) to measure your progress against your company goals. Some examples of KPIs that you could track are:

• Sales growth
• Delivery times
• Customer satisfaction ratings
• Product Quality
• Production Process
• Employee retention
• Operational costs

Creating an operational plan with KPIs will help you track your progress, identify areas of improvement, improve strategic planning and make necessary changes to reach your company’s strategic objective.

Example of an Operations Section of a Business Plan

Here is what an operations plan example might look like:

The XYZ Company will require the following resources to operate:

• 1,000 square feet of office space
• $10,000 for office furniture and equipment
• 3 full-time employees
• 2 part-time employees
• 1 contractor

The XYZ Company will use the following processes and procedures to get work done:

• All new clients will be contacted within 24 hours of the initial inquiry
• Initial consultations will be scheduled within 48 hours of contact
• Proposals will be presented within 10 days of the initial consultation
• Work will begin within 2 weeks of proposal acceptance

The following people will be responsible for carrying out these tasks:

• John Smith, full-time employee, will contact new clients
• Jane Doe, full-time employee, will schedule initial consultations
• John Smith and Jane Doe will conduct initial consultations
• John Smith and Jane Doe will prepare proposals
• John Smith and Jane Doe will manage projects
• Joe Johnson, contractor, will provide support as needed

An operations plan is a critical part of any business planning work. It provides a roadmap for how the business will function on a day-to-day basis. This includes everything from the resources you’ll need to run your business, to the people who will be responsible for carrying out various tasks, to the processes and procedures you’ll use to get work done. Having operational plans in place will ensure that everyone involved in the business is on the same page and knows what their roles and responsibilities are. It will also make it easier to track and accomplish goals.

Key Takeaways

A few key things to remember when writing your operations plan:

• Describe the resources that will be required to run your business
• Detail the processes and procedures that will be used to get work done
• Identify the people who will be responsible for carrying out various tasks

Following these tips will help you create a comprehensive and effective operations plan for your business.

A strategic plan is one of the critical components of any successful company. The operations plan outlines the roadmap for your business, outlining the steps you need to take to achieve your goals. If you’re not sure where to start, we can help. Our team of experts has created a comprehensive business plan template that will guide you through the process of creating an operational plan tailored to your specific business needs. Ready to get started? Download our template today and get access to all the tools and information you need to create a thriving business.

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Operations Plan

• Lesson Materials Operations Plan Worksheet
• Completion time About 40 minutes

The operations section of your business plan is where you explain – in detail – you company's objectives, goals, procedures, and timeline. An operations plan is helpful for investors, but it's also helpful for you and employees because it pushes you to think about tactics and deadlines.

In the previous course, you outlined your company's strategic plan, which answers questions about your business mission. An operational plan outlines the steps you'll take to complete your business mission.

Your operations plan should be able to answer the following:

• Who – The personnel or departments who are in charge of completing specific tasks.
• What – A description of what each department is responsible for.
• Where – The information on where daily operations will be taking place.
• When –The deadlines for when the tasks and goals are to be completed.
• How much – The cost amount each department needs to complete their tasks.

In this session, we explain each item to include in your operations plan.

Goals and Objectives

The key to an operations plan is having a clear objective and goal everyone is focused on completing. In this section of your plan, you'll clearly state what your company's operational objective is.

Your operational objective is different than your company's overall objective. In Course One , you fleshed out what your strategic objective was. Your operational objective explains how you intend to complete your strategic objective.

In order to create an efficient operational objective, think SMART:

• Specific – Be clear on what you want employees to achieve.
• Measurable – Be able to quantify the goal in order to track progress.
• Attainable & Realistic – It's great to be ambitious but make sure you aren't setting your team up for failure. Create a goal that everyone is motivated to complete with the resources available.
• Timely – Provide a deadline so everyone has a date they are working towards.

Different departments will have different operational objectives. However, each department objective should help the company reach the main objective. In addition, operational objectives change; the objectives aren't intended to be permanents or long term. The timeline should be scheduled with your company's long-term goals in mind.

Let's look at the following example for a local pizza business objective:

• Strategic objective : To deliver pizza all over Eastern Massachusetts.
• Technology department operational objective : To create a mobile app by January 2017 to offer a better user experience.
• Marketing department operational objective : To increase website visitors by 50% by January 2017 by advertising on radio, top local food websites, and print ads.
• Sales department operational objective : To increase delivery sales by 30%, by targeting 3 of Massachusetts's largest counties.

Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of Massachusetts's largest counties.

Production Process

After you create your objectives, you have to think strategically on how you're going to meet them. In order to do this, each department (or team) needs to have all the necessary resources for the production process.

Resources you should think about include the following:

• Suppliers – do you have a supplier (or more) to help you produce your product?
• Technology team: app developing software
• Marketing team: software licenses for website analytical tools
• Sales team: headsets, phone systems or virtual phone system technology
• Cost – what is the budget for each department?

In addition to the production process, you'll also need to describe in detail your operating process. This will demonstrate to investors that you know exactly how you want your business to run on a day-to-day basis.

Items to address include:

• Location – where are employees working? Will you need additional facilities?
• Work hours – will employees have a set schedule or flexible work schedule?
• Personnel – who is in charge of making sure department tasks are completed?

Creating a timeline with milestones is important for your new business. It keeps everyone focused and is a good tracking method for efficiency. For instance, if milestones aren’t being met, you'll know that it's time to re-evaluate your production process or consider new hires.

Below are common milestones new businesses should plan for.

When you completed your Management Plan Worksheet in the previous course, you jotted down which key hires you needed right away and which could wait. Make sure you have a good idea on when you would like those key hires to happen; whether it’s after your company hits a certain revenue amount or once a certain project takes off.

Production Milestones

Production milestones keep business on track. These milestones act as "checkpoints" for your overall department objectives. For instance, if you want to create a new app by the end of the year, product milestones you outline might include a beta roll out, testing, and various version releases.

Other product milestones to keep in mind:

• Design phase
• Product prototype phase
• Product launch
• Version release

Market Milestones

Market milestones are important for tracking efficiency and understanding whether your operations plan is working. For instance, a possible market milestone could be reaching a certain amount of clients or customers after a new product or service is released.

A few other market milestones to consider:

• Gain a certain amount of users/clients by a certain time
• Signing partnerships
• Running a competitive analysis
• Performing a price change evaluation

Financial Milestones

Financial milestones are important for tracking business performance. It's likely that a board of directors or investors will work with you on creating financial milestones. In addition, in startups, it's common that financial milestones are calculated for 12 months.

Typical financial milestones include:

• Funding events
• Revenue and profit goals
• Transaction goals

In summary, your operations plan gives you the chance to show investors you know how you want your business to run. You know who you want to hire, where you want to work, and when you expect projects to be completed.

Download the attached worksheet and start putting your timelines and milestones together on paper.

Talk about this lesson

How to write an operational plan for your business

Table of Contents

What is an operational plan? 

What should your business’s operational plan include , objectives , production , finances , simplify your operational finances and more with countingup.

If you plan to start a small business, you’ll need to prepare for success. A business plan will help you organise your services and structure to set up and earn funding. But an operational plan is essential to managing your day-to-day. 

This guide will cover how to write an operational plan for your business, including: 

• What is an operational plan?
• How can an operational plan help your business? 
• What should your operations plan include?

An operational plan outlines the physical requirements of running your business and how you’ll function daily. It can be its own document or a section of your business plan. Either way, the operational plan answers essential questions about how you’ll make your business earn a profit. 

This plan covers your business’s who, what, where, when, and how much, similar to a company description . But your operational plan dives into the nitty-gritty details and outlines exactly how you’ll achieve them. 

Writing an operational plan for your business will help you determine the essential materials to set up. The more detailed it is, the easier it will be to organise your business and increase productivity. As your operations grow, you can update the plan to fit your needs, so check in with it regularly. 

If you wonder how to write an operational plan for your business, you’ll need to know some key components. We’ll outline the essentials. 

The first step to outlining your operations is considering your objectives . Objectives are the specific things you want to achieve for your business in a particular time frame. For example, you may want to achieve profitability within the first six months. Or you might aim to use paid advertising to double your client base in a year. 

Create different objectives based on the departments or sectors of your business. For example, you can form financial, marketing, sales, and development objectives. To develop effective plans, use the SMART method, short for specific, measurable, achievable, relevant, and time-based. 

Next, you’ll have to consider the logistics of where you’ll run your business. Are your operations home-based or will you need an office or shop? If you need to find a space, outline where it will be and how you plan to do it. You may need to use a real estate or letting agency to purchase or let a space. 

So, discuss that process, when you plan to have a location, and how much you’ll spend. Costs will include things like rent, electricity, water, and any other elements you’ll need to include. For example, you might need to fit a cafe with kitchen equipment or decorate the space. 

If you already have an office or shop, provide the address. For a customer-facing shop or office, outline the working hours. 

Once you decide where you’ll run your business, you’ll need to consider the how. In this part, outline daily operating procedures. Which products or services will you provide? How will you offer them? Outline your structure and how you’ll achieve your objectives day-to-day.  

But your business procedures won’t be effective without a reliable production plan. If you need to develop a supply chain or keep an inventory , you’ll discuss that here. First, list which supplies, equipment, and technology you’ll need to run your business. Then, include which suppliers you’ll use to keep a stock of your products. 

Finally, detail what your production will cost by breaking it into sections. How much will you spend on your inventory each month as you start your business? What other regular expenses will you have?  

For example, if you run a coffee shop, you would outline which coffee supplier you’ll use and how much you’ll order at what cost. Then, you might include the cost of ordering baked goods for your shop and other things necessary for your business. Additional production costs might consist of shop rent, disposable cups, stirrers, milk etc. 

As you outline each aspect of your operations, consider the cost of running that aspect. Then, in the finances sections, bring each cost together. This section will help you get a broader picture of how much you’ll need to spend to run your business. 

This section also outlines where you’ll get the money to keep up these operations. Similarly, list prices for your products or services, plus the profit margin and sales goals. Then, touch on how you’ll accept payments and organise your finances. 

You might discuss what business current account you’ll use and how you’ll maintain your financial accounting . For example, you could explain how you’ll use Countingup , the business current account with built-in accounting software. 

The Countingup app offers valuable features that simplify your finances, automate processes, and help track your performance. Using a unique tool like this will make your operations more efficient and allow you to maintain accurate records. 

When writing your operational plan, it’s also important to consider your timeline. Consider outlining a daily working schedule and attaching times to different functional tasks. For example, how often will you reorder inventory? When do you plan to achieve your short-term, medium-term, and long-term objectives?

By organising your calendar, you can stay on top of what you need to do and when you need to do it. Plus, consider how you’ll manage your time well , which will help you run your business smoothly.  

Once you know how to write an operational plan for your business, you can earn money. But, financial management can be stressful and time-consuming when you run a business. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup offers features that help you stay on top of your operations. With automatic expense categorisation and receipt capture, you can stay on top of your business spending and maintain accurate records. Plus, the app lets you create and send invoices on the go, helping you receive the money you earn. The app will even notify you when the invoices are received and match them to payments. 

Start your three-month free trial today. 

Find out more here .

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• Learn how to do operational planning th ...

Learn how to do operational planning the right way

Some of this planning will be developed yearly—things like your yearly objectives and key results, for example, will naturally grow as time goes on. But to make sure you’re staying on track and executing against your long-term goals, you need an operational plan. 

What is operational planning?

Operational planning is the process of turning your strategic plan into a detailed map that outlines exactly what action your team will take on a weekly, or sometimes even daily, basis. An operational plan will include action items and milestones that each team or department needs to complete in order to execute your strategic plan. 

During the operational planning process, outline each team or person’s responsibilities for the next quarter, six months, or fiscal year. The level of detail and timeline you select for your operational plan should depend on how quickly your organization typically moves—if you’re a fast-paced team with an accelerated roadmap, consider creating an operational plan for the next quarter or half year. But if your organization tends to think more long-term, create an operational plan for the entire fiscal year.

Operational planning vs. strategic planning

A strategic plan is a business-level plan of your long-term strategy for the next three to five years. An operational plan is smaller in both scope and timeline. The goal of operational planning is to outline the daily actions you need to take to hit your strategic goals. 

Unlike a strategic plan, an operational plan should also focus on implementation . What daily and weekly actions does your team need to take in order to accomplish your longer-term strategic plan? What specific Key Performance Indicators (KPIs) do you need to track on a regular basis in order to ensure that your team is progressing towards your objectives? These details should be captured in your operational plan.

Who should create an operational plan?

To capture exactly who is doing what by when, an operational plan needs to be very detailed. For this reason, create an operational plan at a smaller scale than your strategic plan—both in terms of timeline and scope. Instead of trying to create an operational plan for your entire company, create one at the department or team level. At a larger company, you could even create an operational plan for a specific initiative—similar to a detailed work plan .

For example, create an operational plan to explain the daily tasks your IT department needs to do in order to support the company. Your IT department’s operational plan might include how frequently IT team members will check the IT requests project inbox , budgeting details for the program, how the IT team will onboard and equip new employees, and how frequently the team will meet. 

There are three levels to who should create an operational plan:

Scope: Your operational plan will capture the who, what, and when of each activity. It should be laser-focused on a team or initiative.

Timeline: Depending on how fast your organization moves, your operational plan should span a quarter, six months, or a fiscal year. 

Stakeholders: Make sure the people involved in operational planning are close to the work, so they can accurately project and predict what work should be included in the plan.

The benefits of operational planning

A strategic plan is a great way to proactively align your team around a shared purpose. By defining long-term goals, you can outline exactly where you want to go.

An operational plan helps you hit your strategic goals. According to our research, only 26% of knowledge workers have a very clear understanding of how their individual work relates to company goals. By creating a detail-oriented operational plan, you can define exactly what short-term goals you need to achieve in order to be on track towards your long-term objectives. It can help you think through the actions you’re currently taking or need to take in order to execute against your goals. 

In particular, an operational plan:

Clarifies exactly what your team will be doing on a weekly and daily basis.

Provides a comprehensive guide of the day-to-day operations your team members need to take in order to accomplish your long-term goals.

Sets a benchmark for daily expectations, so you can avoid getting off track.

5 steps to making an operational plan

During the operational planning process, you're not creating new plans or developing new goals. Rather, to create an operational plan, assess everything your team is currently working on and everything you need to do on a daily or weekly basis to hit your strategic goals. Here’s how:

1. Start with a strategic plan

If you haven’t already, create a strategic plan first. You need a long-term vision and goals before you can break down the day-to-day details. There are four steps to creating a strategic plan:

Determine your position

Develop your strategy

Build your strategic plan

Share, monitor, and manage your strategic plan

To learn more, read our article on strategic planning .

2. Narrow down your scope

In order to create a detail-oriented operational plan, you need to narrow the scope to a team, department, or focus area. The scope of your operational plan will depend on the size of your company.

For example, imagine you’re breaking down your strategic plan into action plans for various company departments. Your marketing team spans multiple functions—for example, design , product marketing, social media, content creation, and web promotion. To capture specific, daily functions within each team, you should create an operational action plan for each smaller team. 

3. Identify key stakeholders

Before creating an operational plan, decide who will be involved in the operational planning process. The team members creating the operational plan should be relatively close to the actions the plan describes. 

To continue our example, the design team’s operational plan should be created by the head of the design team and the team leads (depending on the size of the team). Once they’ve created their operational plan, the team should share the plan with the head of marketing for final approval.

4. Create the plan

Your operational plan explains the actions your team will take to achieve your goals within a set time frame. To create an operational plan, outline:

Your team’s objectives

The deliverables that will be achieved by the operational plan

Any desired outcomes or quality standards

Staffing and resource requirements , including your operating budget

How you will monitor and report on progress

If you’re struggling to figure out all the details that should be included in your operational plan, ask yourself the following questions: 

What do we need to accomplish? This information should come from your strategic plan or yearly goals.

What daily tasks do we need to complete in order to hit our goals? These can be daily tasks you’re currently doing or new work that needs to be kicked off.

Who are the people responsible for those tasks? Make sure each task has one owner so there’s no confusion about who to go to for questions or updates.

What are our metrics for success? If you haven’t already, make sure your goals follow the SMART framework . 

To continue our example, here’s the framework the design team might use to create their operational plan:

Part of the strategic plan for the marketing team is to increase share of voice in the market—which means more eyes on marketing materials and increased engagement with potential customers. To support these goals, the design team will: 

Create additional promotional materials for the social team

Revamp the website home page to attract more potential customers

To accomplish these two goals in the next year, the design team will:

Hire two new team members to focus on social media engagement

Partner with the web development team within the marketing department to create an interactive home page

To track and report on their progress, the design team will use Asana as their central source of truth for key performance metrics, including:

What designs they are creating

The level of engagement they’re getting on social media

The progress of the website update

This is just the framework the design team would use to create their operational plan. Bring this plan to life within a work management tool like Asana to share clarity on all of the work the team needs to do to hit their goals. With work management, every task can be tracked in real-time from inception to completion.

5. Share and update your operational plan

Once you’ve created the plan, share it with key stakeholders so they understand your team’s most important goals and the daily tasks it will take to get there. Manage your plan and updates in a shared tool that captures real-time progress, like Asana .

Like any element of project planning, things will inevitably change. Actively monitor your operational plan and report on progress so key stakeholders and team members can stay updated on how you’re tracking against your goals. Report on progress monthly through written status updates . 

Get started with operational planning

An operational plan can help you ensure you’re making progress on long-term goals. But in order for this plan to be effective, make sure you’re tracking your work in a centrally-accessible tool. Siloed information and goals don’t help anyone—instead, track your action items and goals in a work management tool.

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How to Write an Operations Plan Section of your Business Plan

Free Operations Plan Template

Ayush Jalan

• December 14, 2023

Your business plan is an elaborate set of instructions stating how to run your business to achieve objectives and goals. Each section describes a part of the process of reaching your desired goal. Similarly, the operations plan section of your business plan explains the production and supply of your product.

An operations plan is formed to turn plans into actions. It uses the information you gathered from the analysis of the market , customers, and competitors mentioned in the previous parts of your business plan and allows for the execution of relevant strategies to achieve desired results.

What Is an Operations Plan?

An operations plan is an in-depth description of your daily business activities centered on achieving the goals and objectives described in the previous sections of your business plan. It outlines the processes, activities, responsibilities of various departments and the timeframe of the execution.

The operations section of your business plan explains in detail the role of a team or department in the collective accomplishment of your goals. In other words, it’s a strategic allocation of physical, financial, and human resources toward reaching milestones within a specific timeframe.

A well-defined operational plan section of your business plan should be able to answer the following questions:

• Who is responsible for a specific task or department?
• What are the tasks that need to be completed?
• Where will these operations take place?
• When should the tasks be completed? What are the deadlines?
• How will the tasks be performed? Is there a standard procedure?
• How much is it going to cost to complete these tasks?

How to Write an Operations Plan Section?

Creating an operational plan has two major stages, both addressing different aspects of your company. The first stage includes the work that has been done so far, whereas the second stage describes it in detail.

1. Development Phase

In this stage, you mention what you’ve done to get your business operations up and running. Explain what you aim to change and improvise in the processes. These are the elements your development section will contain:

Production workflow

: Explain all the steps involved in creating your product. This should be a highly informative, elaborate description of the steps. Here, you also mention any inefficiencies that exist and talk about the actions that need to be taken to tackle them.

Supply chains

Quality control, 2. manufacturing phase.

The development stage acquaints the reader with the functioning of your business, while the manufacturing stage describes the day-to-day operation.

This includes the following elements:

Outline of daily activities:

Tools and equipment:, special requirements:, raw materials:, productions:, feasibility:, why do you need an operations plan.

An operations plan is essentially an instruction manual about the workings of your business. It offers insight into your business operations. It helps investors assess your credibility and understand the structure of your operations and predict your financial requirements.

An operations plan reflects the real-time application of a business plan.

Internally, an operations plan works as a guide, which helps your employees and managers to know their responsibilities. It also helps them understand how to execute their tasks in the desired manner—all whilst keeping account of deadlines.

The operations plan helps identify and cut the variances between planned and actual performance and makes necessary changes. It helps you visualize how your operations affect revenue and gives you an idea of how and when you need to implement new strategies to maximize profits.

Advantages of Preparing an Operations Plan:

• Offers Clarity: Operational planning, among other things, makes sure that everyone in the audience and team are aware of the daily, weekly, and monthly work. It improves concentration and productivity.
• Contains A Roadmap: Operational planning makes it much easier to reach long-term objectives. When members have a clear strategy to follow: productivity rises, and accountability is maintained.
• Sets A Benchmark: It sets a clear goal for everyone about what is the destination of the company and how to reach there.

Operations Plan Essentials

Now that you have understood the contents of an operations plan and how it should be written, you can continue drafting one for your business plan. But before doing so, take a look at these key components you need to remember while creating your operational plan.

• Your operations plan is fundamentally a medium for implementing your strategic plan. Hence, it’s crucial to have a solid strategic plan to write an effective operations plan.
• Focus on setting SMART goals and prioritizing the most important ones. This helps you create a clear and crisp operations plan. Focusing on multiple goals will make your plan complicated and hard to implement.
• To measure your goals, use leading indicators instead of lagging indicators. Leading indicators is a metric that helps you track your progress and predict when you will reach a goal. On the other hand, lagging indicators can only confirm a trend by taking the past as input but cannot predict the accomplishment of a goal.
• It is essential to choose the right Key Performance Indicators (KPIs) . It is a good practice to involve all your teams while you decide your KPIs.
• An operations plan should effectively communicate your goals, metrics, deadlines, and all the processes.

Now you’re all set to write an operations plan section for your business plan. To give you a headstart, we have created an operations plan example.

Operations Plan Example

Operations plan by a book publishing house

Track and Accomplish Goals With an Operations Plan

Drafting the operations plan section of your business plan can be tricky due to the uncertainties of the business environment and the risks associated with it. Depending on variables like your market analysis, product development, supply chain, etc., the complexity of writing an operations plan will vary.

The core purpose here is to put all the pieces together to create a synergy effect and get the engine of your business running. Create an effective operations plan to convey competence to investors and clarity to employees.

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Frequently Asked Questions

What role does the operations plan play in securing funding for a business.

The operations plan defines the clear goals of your business and what actions will be taken on a daily basis to reach them. So, investors need to know where your business stands, and it will prove the viability of the goals helping you in getting funded.

What are the factors affecting the operations plan?

• The mission of the company
• Goals to be achieved
• Finance and resources your company will need

Can an operations plan be created for both start-up and established businesses?

Yes, both a startup and a small business needs an operations plan to get a better idea of the roadmap they want for their business.

About the Author

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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Operational Planning: How to Make an Operational Plan

June 6, 2022 - 10 min read

Having a strategic plan is essential to any company, but it’s not enough. To ensure that the broader organizational goals are within reach, you need an operational plan for day-to-day work. 

Using templates to manage your operation plan can help simplify your complex processes and save you time. You know how a shopping list helps you remember what to buy at the store? Templates are like that for your work. And Wrike has many templates ready to go for different kinds of jobs. 

For example, you can use the retail trade template to see what step comes next when adding something new for customers to buy. Then there’s the business operations template , which helps you and your team keep track of your business plan without getting wires crossed. And when you need to manage bills, you can use the invoice tracking template . All these templates are great tools for keeping an operational plan ticking over.

In this blog post, we’ll explain what an operational plan is, show you how to create one without feeling overwhelmed, and provide you with an example of an operational plan. We’ll also share our prebuilt templates to get you up and running quickly.

What is an operational plan?

An operational plan is a document that outlines the key objectives and goals of an organization and how to reach them.

The document includes short-term or long-term goals in a clear way so that team members know their responsibilities and have a clear understanding of what needs to be done.

Crafting an operational plan keeps teams on track while guiding them in making crucial decisions about the company's long-term strategy.

Operational planning vs strategic planning

Though related to each other, these two planning strategies differ in their focus.

Operational planning is the process of the day-to-day work to execute your strategy. It ensures you have all the resources and staff necessary to get work done efficiently.

On the other hand, strategic planning is about looking ahead into the future, identifying the upcoming pipeline, and figuring out how you can prepare for it.

According to the U.S. Bureau of Labor, nearly 7 million Americans are self-employed, with an additional 10 million employed by small businesses. 

If you're working at a large corporation, chances are your company will have some form of strategic goals in place. However, if you're one of the millions who work remotely and independently, your success will rely on operational planning instead.

What are the key elements of an operational plan?

The success of operational planning largely depends on setting realistic expectations for all teams.

Here are the key elements of a functional operational plan:

• Clearly define the ultimate vision or objective for the plan
• Review and break down the smaller goals for the operating budget, team, and resources required to put the plan into action
• Assign budgets, team members, key stakeholders, and resources
• Monitor progress with consistent reports
• Refine the operational plan and be ready to pivot if needed

Ensure all teams understand the parameters of success. Doing this shows how their work contributes to wider company goals and ensures better decision-making for the business operation.

How to create an operational planning process

Think of an operational plan as a key component in a team puzzle. It provides employees with a manual on how to operate the company.

It should be created in tandem with other foundational documents like an organizational mission statement, vision document, or business strategy. Daily, it can help answer questions such as:

• Who should be working on what?
• How can we mitigate those risks?
• How will resources be assigned for different tasks?
• Are there any internal and external risks facing the business?

To create a successful operational plan, it's important to define goals clearly. Here are several steps that will help you develop a functional operating plan:

Start with the strategic plan

Before defining an operational goal, make sure your strategic objectives are in place and relevant.

Prioritize the most critical activities first

Once these goals have been decided on, prioritize the most critical activities required to achieve these aims.

Stop diluting team efforts and let them focus on the most important goals first. Doing this means everyone works on a smaller set of tasks, instead of spreading themselves thin in multiple areas. It also helps in optimizing available resources.

Use predictive indicators

For a robust operational plan, consider using key performance metrics or indicators that can help you determine project progress and lend visibility to team activities. 

While lagging indicators look backward, leading indicators look to the future. Think of the plan as a car — the rear-view mirror would be a lagging indicator, while the windshield would be the leading indicator.

A leading indicator could be a new product, higher customer satisfaction levels, or new markets. Examples of lagging indicators include the number of people who attended an event or the monthly operating expenses for specific departments. 

Instead of lagging indicators, use leading indicators. Lagging metrics will show that your efforts are falling short only after you execute the operations.

Leading KPIs include predictive measures that allow early identification of problems before they become critical and impact business performance negatively.

Get team buy-in

The key to defining appropriate KPIs is involving the whole team in the process. Meet to discuss the business goals and figure out what measurements are right for the team instead of working independently or outsourcing them.

Ensure consistent communication

Communication is key. By understanding your company's metrics and what they mean, you'll be able to work together more effectively with colleagues to reach common goals.

Operational plan example

Let’s say that a company plans to increase production volume by 50% at the end of a fiscal year.

When the company goal is clear, the team will make a strategic plan with three main components: marketing, sales, and operations.

This can be further broken down into an operational plan, which will assign resources, teams, budgets, and timelines for different departments such as manufacturing, sourcing, accounts, finance, and logistics to achieve the increase in production. Such a plan should include a financial summary and financial projections as well.

Operational plan template

Think about the example above. The goals and parties involved are clear as part of the operational plan. At the same time, to remain on track, the plan requires continuous analysis and reviews. An operational plan template can be extremely helpful to achieve that.

An operational template can be a simple document that is reused for different plans by the same organization. However, it is also possible and extremely helpful to make use of project management software tools to create one.

For instance, Gantt charts can serve exactly that purpose. Using a Gantt chart as an operational plan template, it is possible to create and manage plans, track changes and edit project-related activities in real time. The chart allows clear visibility for timelines, tasks, responsibilities, and team members.

Operational planning advantages and disadvantages

Most businesses utilize an operational plan to keep track of their daily tasks. 

The plan outlines the day-to-day activities for running the organization — teams, managers, and employees are then able to visualize their contribution, which is crucial for reaching company goals.

But every process has two sides. Let’s review the operational planning advantages and disadvantages in more detail.

Operational planning advantages

Clarifies organizational goals.

An operational plan helps managers and department heads define their daily tasks, responsibilities, and activities in detail.

It also illustrates how individual team members contribute to the overall company or department goals. Without a clearly defined plan, managers and employees have no way to measure their daily tasks against predefined outcomes.

Boosts team productivity

Business owners are always looking for ways to increase productivity, which in turn translates into higher profits. One of the best and easiest ways to boost efficiency is through an operational plan.

Employees are more productive when they know their daily objectives and responsibilities. Conversely, if they're unsure of what is required of them, chances are their productivity will suffer. 

An operational plan provides this vital information to employees in each department and across the company as a whole.

Enhance organizational profitability

Having a plan helps in keeping projects and teams on track.

When operations are managed properly, teams are able to consistently increase revenue and develop new products.

Innovation pays off. A BCG survey points out that 60% of companies that are committed to innovation report steadily increasing revenues year after year. With an operational plan in place, teams are able to innovate better and faster.

Improves competitive advantages

Competitive advantages are made up of multiple levels and components.

Coordinating the different parts with an operational plan will make your workflows run more smoothly. This allows you to deliver high-quality deliverables on time, creating an outstanding customer experience and keeping you ahead of the competition.

Operational planning disadvantages

Possibility of human error.

Human error is a common problem in manufacturing that can often occur when transitioning from production to sale.

Operations management teams will need to coordinate effectively with diverse cross-functional teams such as finance, accounting, engineering, and human resources. In doing so, each team will have a clear understanding of the end goals of each department.

Interdependency amongst parts

One of the main disadvantages of implementing an operations planning process is that its success depends on coordination across parts.

Plans end up failing due to one part not working, which can have an adverse impact on the subsequent process. Disruptions in one process can end up affecting the entire process, making the entire operational plan useless.

Using Wrike for operational planning

Boost your organization’s efficiency by ensuring every project starts off on the right foot. Wrike’s award-winning project management tools can help you create and execute operational plans with various prebuilt templates . 

Establish your plan, monitor progress, and be prepared to pivot if necessary. With Wrike, you can share real-time data, making all milestones crystal clear for your team and helping them stay updated and on track.

These templates keep processes running smoothly so you can focus on doing your work well. Want to try them out? They’re just a click away.  

Choose the most suitable template and start a free two-week trial of Wrike today!

Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and resume writing.

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Work Skills You Need on Your Resume in 2021

Navigating the highly competitive job market can be brutal. In a recent Jobvite survey, nearly three in four respondents said they believe finding a job has become much harder following the pandemic.  It’s clearer now more than ever how important it is for your resume to stand out. In fact, nearly 24% of hiring managers spend 30 seconds or less reviewing a resume to determine whether a candidate is qualified for a position or not. You quite literally have seconds to catch their attention before your resume ends up in the recycling bin with the rest of the candidates that didn’t make the cut. So, how exactly do you set yourself apart and stand out from the crowd? Highlighting your work skills on your resume is the best place to start. We did some digging and pulled together some work skills examples in various categories to inspire you to revitalize your resume.  Important social work skills for the workplace What are social work skills? Social skills, otherwise known as interpersonal skills, are essential in helping us communicate with one another in the workplace. These skills allow us to build relationships, interact, and communicate with those around us in a meaningful and effective way. This includes verbal and nonverbal cues.  Social work skills are essential in every job. Whether you work on a team, are in a client-facing role, or are an individual contributor reporting to a direct manager, solid social skills will help you succeed in your position.  Let’s take a look at some of the most important social work skills for the workplace:  1. Empathy One of the best ways to interact well with others is to put yourself in their shoes and understand how they feel. Empathetic people can understand how others are feeling and can identify with those feelings in some way.  Having empathy is a vital trait, especially for those who hold leadership positions. Being empathetic isn’t something you can force, and it doesn’t happen overnight if it doesn’t come naturally to you. This skill takes a conscious effort to build and will help you forge and maintain stronger workplace relationships. 2. Active listening Have you ever been in the middle of a conversation with a colleague and felt like they weren’t paying attention to a single word you were saying? Or have you ever been chatting with a coworker and felt like they heard you and gave you their utmost attention? The latter is known as active listening.  Active listening involves giving someone your full, undivided attention and it allows you to build trust and strong relationships with your colleagues and clients. Active listening requires practice, but it is a skill that can be acquired with proper training and effort. 3. Emotional intelligence At a high level, emotional intelligence refers to recognizing and being aware of the emotions of both yourself and other people. Those with high emotional intelligence are known for being self-aware and can practice self-regulation, particularly in stressful and potentially overwhelming situations at work. Emotional intelligence is critical in the workplace because it contributes to strong, long-term relationships and can help you manage and appropriately tailor your reactions.  4. Conflict resolution According to recent research, 65% of workers experienced conflict with another coworker. Conflict is inevitable in the workplace, which means developing a solid set of conflict resolution skills can help you manage and navigate these situations efficiently.  Conflict resolution is the ability to address the root cause of disagreements and devise a solution that works for all parties involved. You can use various techniques to help resolve conflicts, so it’s essential to learn and understand how to address different disputes. 5. Written communication Social skills refer to how we communicate with one another, which means written skills are a must. Some forms of written communication include emails, instant messages, documents, reports, slide decks, and your resume. Using appropriate grammar, proper spelling, and following formatting guidelines will allow you to communicate effectively with others. 6. Nonverbal communication When it comes to communication, it’s easy to think about what we are saying, but we don’t always focus on how we are saying it. Nonverbal skills can dramatically impact the way your message is received.  Your body language, eye contact, facial expressions, and tone can completely change the message you are trying to deliver to your coworkers. It’s important to be aware of these subtle cues so that you can make sure your message isn’t misconstrued or misinterpreted.  Work-related skills for virtual environments You might not be working with your colleagues side-by-side in the same office. In addition to the skills we discussed above, remote work requires some different skills and disciplines.  Below are a few competencies that you’ll definitely want to have when collaborating in virtual work environments:  Self-motivation: There’s a big difference between in-person office environments and virtual workplace settings. At the office, your manager can simply stop by your desk or quickly check in to see how things are going. While your supervisor can technically do the same via email or instant message, you ultimately don’t have anyone looking over your shoulder 24/7 at your home office (unless you have pets, children, or spouses nearby!). That means self-motivation and knowing how to hold yourself accountable to get your work done are vital to helping you thrive in a virtual role. Adaptability: Adaptability is beneficial in any setting, but it’s a particularly beneficial skill in virtual environments. Whether you’re working with a distributed team and constantly trying to navigate time zones or your presentation gets interrupted due to an unreliable internet connection, adaptability is an important skill to help you navigate the unexpected and ever-changing conditions you may find yourself running up against. Digital and technical knowledge: In virtual environments, employees work remotely and generally rely on several tools to collaborate and tackle their to-do lists. Between project management software, instant messaging, video conferencing, document sharing, and email, there are many different technologies to navigate daily. If you’re working in a virtual environment, it’s essential to feel comfortable using these platforms if you want to keep up with the pace of your work. It’s also worth mentioning that, while you still may be able to reach the IT help desk, you may not receive assistance as quickly as you would in an office setting. That means you might have to do some troubleshooting and problem-solving on your own. What teamwork skills are important for 2021? Teamwork makes the dream work, right?  Teamwork skills are a subset of skills that enable us to work well with groups of people (meaning, our teams) to achieve a shared goal or outcome. In 2021 and beyond, as we see a shift toward hybrid work models, honing in on your teamwork skills can help you land your dream gig. Here are the teamwork skills that are important to develop for 2021 and beyond: 1. Reliability Being reliable is arguably the most crucial teamwork skill. Those who are reliable can be depended on and trusted to do their part time and time again. They show a certain level of commitment to their work and colleagues, meet deadlines (or even get work in early), and follow through on any action or task they say they will do.  You want to be a reliable teammate so your colleagues and your employer will have faith in you. And the more trustworthy you are, the more responsibility you will be trusted with over time, which may boost your career growth in the long run. It’s even more important to showcase your reliability in a virtual workplace environment through clear and frequent communication. 2. Accountability Accountability goes hand-in-hand with reliability. But beyond being reliable, accountability is all about taking responsibility for one’s work — even when that includes mistakes or failures.  There’s no room for the blame game or pointing fingers on teams that work well with one another, which means you have to hold yourself accountable and take fault when necessary. Your teammates will likely think more of you if you’re willing to admit you’re wrong, as opposed to constantly shifting blame or pointing fingers when issues arise. 3. Respectfulness A little bit of respect goes a long way, especially at work. According to Indeed, respectfulness in the workplace reduces stress, increases productivity and collaboration, improves employee satisfaction, and creates a fair environment. You need to respect your team members, manager, and clients to do your best work together.  Acts of respect include acknowledging others and calling them by name, encouraging and exchanging opinions and ideas without judgment, giving credit where it’s due, and listening to and understanding your teammates. 4. Collaboration There is no successful teamwork without collaboration. Collaboration is working together with one or more people on a project or toward a shared goal.  When employees can work together and collaborate successfully, they can share ideas and come up with practical solutions to complex problems. Brainstorming, open discussions, workshops, and knowledge sharing sessions are all examples of collaboration that lead to great teamwork.  5. Persuasion Have you ever worked with a teammate who insists on working their way, even if the rest of the team agrees to pursue another route? How do you keep making progress on your project or goal if one team member isn’t on the same page? That’s where your skills of persuasion come in handy.  Sometimes you might have to persuade a team member to see another point of view and change their mind to benefit the rest of the group. But persuasive skills are more than just getting someone to change their mind and see your perspective — it’s about doing so in an empathetic and respectful way in order to maintain a healthy working relationship. 6. Constructive feedback for improvement You should be able to offer your teammate constructive feedback to help them improve and vice versa. Exchanging feedback not only benefits individuals and the team as a whole but also adds value to your organization by creating an opportunity for constant growth.  Giving feedback requires offering suggestions for improvement in a positive way, while receiving feedback requires listening with an open mind and a willingness to change.  Work skills that work on any resume Sure, there are specialized skills for different roles and industries. Engineers add their programming skills to their resume, project managers add project management certifications and relevant skills, and HR professionals add the performance management and HRIS systems they’ve previously used. While there are specialized skills you’ll want to emphasize on your resume based on your industry and role (and trust us, those are important), there are also some work skills that are relevant on any resume. These include:  Creativity: Creativity is an essential component of innovation and complex problem-solving. In its most basic form, creativity requires thinking about a problem or task differently and using your imagination to form and test new ideas. Problem-solving: All employers value problem-solving abilities because they want to hire people who can break down problems and develop effective solutions. To showcase your problem-solving skills, you might possess a range of qualities such as analysis, evaluation, decision-making, and communication. Time management: No employer wants to hire someone who doesn’t make good use of their time and will have a hard time getting their work done. Your future employer wants to know that you’ll be able to meet deadlines, effectively use your workday to get tasks accomplished, and handle your workload without a lot of babysitting. Examples of specific time management responsibilities include goal setting, prioritizing tasks, meeting deadlines, and minimizing or eliminating distractions for optimal focus. Leadership: Showcasing how you’ve demonstrated leadership in your previous roles can demonstrate to your future potential employer what type of employee you are. Being an effective leader can increase your advancement opportunities within your organization. Use specific examples of successful leadership on your resume for the most significant impact.  So how do you showcase these skills on your resume? Now that you know what work skills for resumes employers want to see, you’re bound to have this question: Where do you put them? Keep in mind that the goal of your resume is to prove that you’re a qualified, no-brainer fit for the role you’re applying for. That’s why your smartest move is to tailor your resume to a specific job. Take a fine-tooth comb to the job description and identify words or skills that are repeated or emphasized. Those are traits that you should be incorporating in your own resume (provided you honestly possess them, of course). The most important skills should go as close to the top of your document as possible, because remember, hiring managers are only skimming for a few seconds. As for where you can work these skills in, you have a number of options, including:  Your professional summary at the top of your document A dedicated key skills section where you can bullet out your most relevant abilities Your past positions, where you can demonstrate how you applied your skills in previous jobs Finally, remember that many of your work skills and social work skills — from communication and time management to problem-solving and active listening — will be on display throughout the hiring process and your interviews.  So, it should go without saying, but show up on time, respond to messages promptly and respectfully, and treat everybody respectfully. After all, when it comes to your work skills, employers want you to show — and not just tell.

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What is an Operational Plan? A Complete Playbook (+ Examples, Tips & More)

Introduction.

Without a plan, your business operations are as good as a children’s playground—everyone’s doing their own thing with no care in the world. 

An operational plan brings order to your organization. It defines the functional aspects of your long-term strategy, like goals, milestones, responsibilities and timelines, to build collaboration and make real progress toward your vision. 

Teams often overlook the importance of operational plan management, leading to miscommunication, unnecessary roadblocks and slow growth. 

If you don't want to end up in a chaotic playground with everything going south, read this start-to-finish guide on operational planning. We'll share a 6-step process of making your own operational plan with a few examples to inspire you.

TL;DR: What is an operational plan?

• An operational plan clarifies the details of your strategy, assigns responsibilities, and sets milestones and timelines.
• Use an operational plan to create a roadmap, assign roles, track progress, establish criteria for success, and minimize errors.
• To develop an operational plan, create a fail-proof strategic plan, establish clear goals and budgets, define the project scope, create the operational plan, get stakeholders' buy-in, and publish the plan using the right tool.

What is an operational plan?

An operational plan is a roadmap designed to implement your business strategies. It operationalizes your strategic plan by defining:

• Vision and objectives behind a strategy.
• Budget and resources required for execution.
• Weekly, monthly and quarterly milestones. 
• Relevant metrics to track progress consistently. 

‎An operational plan clarifies all the finer details about your strategy—like what, who, when and how—to help you realize the bigger vision. It’s a work plan for transferring the available inputs into the desired outputs. 

Operational planning vs. strategic planning

While operational and strategic planning might sound the same, they have significantly different meanings. Let's take a quick look at these differences to understand what an operational plan stacks up against a strategic plan.

5 reasons why you need an operational plan

Only setting goals without a solid operational plan to implement them is like making new year’s resolutions that never come true. 

Without a clear direction of what to do and how, you’d end up wasting your resources with little to no progress to show for it. An operational plan helps move the needle for your company by clarifying the steps to success and bringing more accountability. 

Still wondering how an operational plan can keep you on track? These five benefits will clue you in:

1. Creating an airtight roadmap

If a strategic plan defines the destination, an operational plan chalks out the itinerary to reach that destination. This actionable roadmap covers all bases to streamline collaboration within the team and set up the right systems to hit your milestones. 

2. Attributing roles to all stakeholders

Making an operational plan allows you to assign responsibilities to all internal and external stakeholders. It clarifies who’s responsible for what and sets expectations from the start. This is key for bringing everyone on the same page and avoiding roadblocks once the work is underway. 

3. Tracking progress & making strategic changes

Timelines and milestones are two of the most crucial components of an operational plan in business. They empower teams to analyze their performance and review progress objectively. You can use these insights to tweak your game plan for greater success and to improve operational efficiency .

4. Establishing criteria & metrics for success 

An operational plan outlines the parameters for success and metrics to monitor the same. These metrics give you a clear picture of your progress at every stage to ensure you’re moving as per the plan. They also highlight any potential red flags that can potentially derail the plan and need your attention. 

5. Minimizing discrepancies & errors

One of the most important benefits of making an operational plan is the clarity it brings to everyone. Instead of leaving your team clueless about the next steps, this work plan clarifies how and where they can start. It also reduces errors by laying down the ground rules for every task and process.

📌 ‎ Related resource: Operations Teams: How to Assemble and Lead a High-Performing Team

How to develop an operational plan strategy

There’s no standard rulebook for creating an operational plan. It’s a fully customizable document that depends entirely on your company’s goals, resources, timelines and overall approach. 

For example, a fast-paced team can work with shorter timelines and hit more goals than a large-scale organization with more levels of checks and a bigger hierarchy.  

So, instead of replicating other companies’ operational plans, let’s help you create your own plan with this 6-step process:

• Draw out a fail-proof strategic plan.
• Establish clear goals and budgets.
• Dig deeper into the project scope.
• Create your operational plan.
• Get all stakeholders’ buy-in for the plan.
• Publish the plan using the right tool.

1. Draw out a fail-proof strategic plan

A strategic plan is to an operational plan what a storyline is to a movie—it conveys the essence and creates a direction for the operational plan to become a masterpiece. 

So, naturally, the first step to operational planning is creating a strategic plan; here’s how:

• Define what success looks like for the entire organization. 
• Evaluate organizational readiness to implement this strategy. 
• Take inputs from people in the senior leadership. 
• Assign responsibilities to different stakeholders. 
• Prioritize goals against timelines. 

Once done, you can rely on this strategic plan throughout the operational planning process to prepare for what lies ahead. 

💡 ‎Use these 14 free customizable project plan templates to enhance communication, save time and achieve your strategic planning goals.

2. Establish clear goals & budgets

The next step is breaking your high-level goals into shorter, more actionable objectives. For example, you can divide the goal of achieving an X% growth in revenue into smaller targets, like increasing inbound leads, doubling down on cold outreach and rolling out a referral program. Implementing effective referral tracking within the program will allow you to monitor and optimize the success of your referral initiatives, providing valuable insights into the sources and impact of referred business.

Goal-setting makes your operational plan realistic and feasible. You're ideating the means to realize the long-term vision by hitting the right milestones. 

More importantly, once you have a list of goals, it's easier to determine the budget and resources required to achieve them. Before moving ahead, do your homework to set a solid budget that allows you to implement your strategy without splurging too much. 

3. Dig deeper into the project scope

Once you’re clear about your goals and resources, it’s time to define the finer details of your plan—specifying who’ll do what, when and how. 

Create a comprehensive project scope by outlining:

• Department-wise goals and tasks according to the goals.
• Different stakeholders involved within and outside your company. 
• Responsibilities for each stakeholder with primary KPIs for their role.
• SOPs  and  workflows  to perform a task or complete a process. 

This step brings more specificity to your operational plan. It concretely spells out each goal with details about milestones within each goal, roles and teams responsible for fulfilling these milestones and how they will work toward the end goals. 

💡 ‎ Scribe top tip: Creating a project scope document is a breeze when you use Scribe. You can use Scribe's project scope template to get cracking at the earliest. 

4. Create your operational plan

By this point, you've done all the legwork to get to work and start writing your operational plan finally.

Make it as actionable and value-packed as possible by answering these five main questions:

• Who: People involved in different tasks. Include a list of teams and specific roles involved in the business operations and clarify what’s expected of them. 
• What: Plan of action and targets to pursue. Create a milestone-based roadmap of the high-level goals to achieve and the smaller goals involved in the process. 
• Where: Platform(s) where daily operations will happen. Add all the tools and frameworks you'll use to run business operations through this plan seamlessly. 
• When: Deadlines for different tasks and activities. Map out the timelines for each job to ensure your team is on track for timely completion. 
• ‍ How much: Costs involved in hitting the designated goals. Mention your final budget and resource allocation for different tasks.

Use Scribe's free AI Writer for Operations tool to capture and document operational procedures.

‎Additionally, a good operational plan also lists the metrics to track your progress. Pick and explain relevant metrics in your plan to show employees how you'll analyze their efforts.  ‍

5. Get all stakeholders’ buy-in for the plan

No plan is perfect and there's always scope for improving your operational plan to make it perfect. So, once you've drafted the plan, don't forget to run it by a few select stakeholders to identify the gaps you can cover. 

Actively seek feedback from people in different ranks and departments to understand the missing links in your plan. Your plan will go through 2-3 rounds of iterations before it’s finally ready to roll out. 

6. Publish the plan using the right tool

The final step in the process is publishing the plan. The most important thing to remember is that your plan should be:

• Reader-friendly.
• Easily accessible.
• Quickly shareable. 

Clueless about the best way to hit all three points to roll out your operational plan? We have just the solution you need — Scribe . 

‎Scribe is a documentation tool designed to create intuitive documents, like an operational plan, in a few seconds. It significantly reduces the time spent on creating such documents and improves team efficiency in more ways than one.

‎You can create a single Scribe to explain a process or compile instructions with SOPs in a single place with Pages. You can even ask the AI to write your operational plan — just add a simple prompt and your Scribes, and the AI will build a customized document!

‎It's the easiest way to bring your team on the same page and power up your operations! 

✨ ‎See how operations teams use Scribe to tackle even the most daunting operational challenges.

3 operational plan examples (& why they work)

If you’re looking for some inspiration to get cracking with your planning process, looking at a few operations plan examples can help big time! Let’s look at three great examples, see why they work and how you can replicate the results. 

1. Carter Supply’s risk management plan

This detailed risk management plan by Carter Supply covers several aspects of managing risk at the organization. This 10-page document lists the key components of this plan, like a summary, the approval process and the end-to-end risk management process. 

As an operational plan, it gives the entire team clear insights into the risk management plan, highlights why it’s in place and explains how this plan will be used. 

This plan also covers different aspects of the plan and lays down the process of working on each element. For example, for risk quantification, the plan specifies that the risk manager will work with the risk owner to understand the exposure. 

2. Upscope’s go-to-market plan

Upscope ’s go-to-market (GTM) plan is another excellent example of operational planning. The SaaS company created this plan to execute its strategy for breaking into the co-browsing market. 

Pursuing this goal, the team created an airtight plan with a rundown of its target audience, pain points the product solves and the buyer journey. 

The Upscope marketing and sales teams could use this GTM plan to launch targeted campaigns and reach the right people. They were also well aware of the main value propositions to share with the target buyers, nudging them towards a purchase. 

📌 ‎Related resource: How Product Operations Can Help Your Team Build Better Products 📌 ‎

3. SmartNet’s project quality management plan

The quality management plan by SmartNet is a detailed document explaining the company’s entire operations framework, from the management structure to project reporting, risk assessment, deliverable production and more. 

Instead of a single department, this operational plan documents the complete business operations. Despite being so lengthy, the document is easy to read and understand—exactly how the plan should look like.

It also includes all the critical information to guide new employees about the company's operations from scratch.

Make operational planning your road to success 

When done right, operational planning can be a game-changer for streamlining your operations. It’s an in-depth roadmap to work toward your vision and hit all goals. 

Even though making an operational plan isn’t the most exciting task and it can get extremely time-consuming, the right process and tools can do the trick for you. Follow the six steps we’ve highlighted in this guide and when you’re ready to roll, use Scribe to put the plan in place. 

Scribe takes the pain out of documentation to empower teams for seamless operational planning. Try it today to see how it works!

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Operational planning: 5 steps to create a better business operational plan

Learn how to conduct operational planning to enhance collaboration, streamline workflows, and unlock peak productivity in all your company’s teams.

Webflow Enterprise gives your teams the power to build, ship, and manage sites collaboratively at scale.

Operational planning enhances collaboration and streamlines workflows to unlock peak efficiency.

Transforming a strategic vision into business success demands meticulous planning. It requires navigating unexpected obstacles, coordinating team activities with long-term goals, and implementing practical steps to realize organizational objectives.

Organizational planning plays a pivotal role in this context by translating high-level strategies into actionable day-to-day tasks.

But an operational plan is more than a structured to-do list — it’s a comprehensive framework that outlines roles, responsibilities, and timelines. By breaking down grand strategies into executable actions, operational planning ensures cohesive teamwork and transforms ambiguous business strategies into achievable realities.

What’s operational planning?

Operational planning is how companies organize day-to-day tasks to align with broader strategic goals. It’s a road map guiding teams through operational decisions about daily operations, ensuring every task contributes to the company’s long-term and high-level objectives. This typically involves setting short-term objectives, defining key activities, and establishing clear timelines.

In practice, operational planning often blends traditional and innovative methods to maximize efficiency. Conventional strategies like Gantt charts and flowcharts help leaders visualize data , tasks, and timelines to make complex projects more manageable. And digital tools like enterprise project management software introduce automation, real-time collaboration, and data analytics into the mix. These platforms enable agile plan adjustments and offer insights through predictive analytics.

By integrating these mixed methodologies, operational planning helps enterprises build a system that’s efficient and responsive to evolving business needs. It bridges the gap between meticulous organization and the agility needed in a fast-paced business environment.

Benefits of operational planning

Operational planning offers a structured approach to decision-making, but its advantages extend beyond planning. Here’s why it’s a crucial tool for achieving organizational goals.

Clarifies goals

Operational planning turns abstract ideas into concrete objectives. It encourages setting explicit goals with definitive timelines. This clarity benefits leadership and the entire team, ensuring everyone understands what needs doing, who’s doing it, and by when.

Enhances productivity

An operational plan enhances productivity by establishing timelines, outlining objectives, and allocating resources. This structure helps team members prioritize their work and manage their time efficiently because they have clear deadlines to guide them.

By defining precise objectives, the plan ensures every team member understands their specific tasks and expected outcomes, preventing unnecessary work and deviations from the plan. And knowing what resources are available helps team members prepare realistically for their taskwork.

Improves efficiency

A well-crafted operational plan boosts efficiency by optimizing workflows and streamlining organizational processes . By mapping out immediate and long-term objectives, the plan establishes a clear blueprint for task execution. As team members better understand their roles, task sequence, and the rationale behind each, they can execute them more seamlessly. This clarity and structure are also invaluable for onboarding new team members and allow them to integrate and understand the workflow with less friction.

Strategic planning vs. operational planning

Both plan types are distinct yet essential components of an organization’s overall planning process. Let’s break down the primary differences:

• A strategic plan defines your company’s “what,” outlines your business’s direction, and sets broad, long-term objectives. It’s a high-level overview that articulates your mission statement, establishes key business objectives, and outlines strategies for achieving them. This plan typically spans several years into the future and aligns the company’s efforts with its overarching vision.
• An operational plan focuses on the “how” by detailing how to execute the strategies and goals laid out in the strategic plan. This is where you get into the specifics — setting milestones, crafting a detailed road map, and establishing short-term, incremental goals that steer your company toward achieving strategic objectives. And at this point, you’ll focus on more immediate factors, like dealing with daily management and task implementation, that are necessary to achieve strategic organizational goals.

Types of operational plans

Departmental goals and needs vary significantly, and tailored operational plans ensure you optimally manage each area. While a sales department might need a plan focused on customer engagement and retention, an IT department might emphasize technology upgrades and cybersecurity . Combining various plan types — like a couple of those that follow — ensures optimal management and effectiveness in each area, aligning departmental activities with broader objectives.

Project operation plans

Project operation plans are indispensable documents for breaking projects into actionable milestones and assigning teams to relevant tasks. A well-developed project plan organizes tasks and anticipates resource requirements such as personnel, infrastructure, and time. By identifying these requirements early on, project operation plans provide planning foresight that helps avoid resource shortages and last-minute scrambles to ensure projects progress smoothly and stay on track.

Say you’re designing a website . Your project operation plan will outline key steps, such as user research , wireframing , user testing , and launch. Each step would have assigned teams, deadlines, and specific objectives, like establishing focus groups by a certain date and finalizing prototypes. The project manager would monitor progress to ensure resource availability and timeline adherence.

Enterprise operation plans

Enterprise operation plans translate broader strategic goals into smaller, manageable milestones. They involve assigning responsibility for these milestones to department directors to ensure accountability for each plan segment.

When creating an enterprise operational plan, it’s vital to identify resource gaps, dependencies, and other potential obstacles to ensure seamless execution. This lets you set realistic, achievable milestones and achieve smooth interdepartmental coordination. Involving directors from the start is also crucial because their insights can reveal critical aspects you might otherwise overlook.

Consider a web design agency planning to expand their service offerings to include mobile app development over the next year. The enterprise operational plan might include milestones such as hiring app developers, training current staff in responsive mobile design , and marketing these new services to potential leads. You might also ask the development head to oversee recruitment and training and involve the marketing director in developing strategies to promote the new services.

IT operation plans

IT departments confront unique challenges due to rapid cybersecurity threats and their critical role in every business sector. Unlike other departments focusing on sales and marketing, IT departments must ensure the organization’s technological structure is robust, secure, and current.

IT operation plans typically outline how the department will adapt to business changes, like scaling up for new hires, migrating from a legacy system to a new one, and safeguarding the organization against evolving cybersecurity threats.

If you’re preparing for a major server infrastructure upgrade, for instance, an IT operation plan will outline steps like evaluating current server and hosting capacities, selecting new hardware and infrastructure, and scheduling website migration to new servers. The plan would include specific timelines — such as completing server evaluations by the end of the first quarter and starting the migration in the second quarter — to ensure minimal downtime and a smooth transition for all hosted websites.

Discover how the right CMS can allow teams to efficiently scale rich, complex content – all without writing code.

Key elements of an operational plan

No matter the type you’re creating, most operational plans include the following core traits.

Operational plans should be clear and to the point. While comprehensive coverage is important, elaborating too much risks misinterpretation and becoming bogged down in the details. Focus on concise, direct explanations and allow the details to unfold during project execution.

Team buy-in is essential for success. Instead of leaving the executive team to dictate the plan exclusively, involve team members in its creation. A collaborative approach helps garner buy-in and fosters feelings of ownership and responsibility toward the plan’s objectives. This involvement translates to increased motivation and commitment because team members feel more likely to invest effort in a plan they helped shape.

Consistency

Consistency in operational plans is crucial for their effectiveness and for establishing organizational trust. It involves applying the same standards and procedures uniformly across all departments and teams. By consistently applying rules and policies, you ensure every organizational element operates under the same guidelines, enhancing fairness and reducing confusion. Consistent execution of your operational plan also streamlines progress and success tracking because the criteria and methods used for each remain uniform.

Specify the processes and methodologies each department should use. If the design team uses an agile, iterative process , for instance, implement similar practices in other departments like IT. This standardization enables smoother collaboration and operational harmony.

Key performance indicators

Every operational plan needs well-defined key performance indicators (KPIs) from the outset. These should include:

• Leading indicators provide early insights into your strategy’s effectiveness by signaling shifts and trends ahead of their full realization. By monitoring these indicators, you can gauge your strategy’s immediate impact and proactively adjust your approach. Indicator examples include customer satisfaction levels, changes in market share, and fluctuations in sales figures.
• Lagging indicators reflect the outcomes of your operational efforts by providing historical data on your plan’s efficacy after execution. Key lagging indicators include metrics like the time taken to complete projects, support ticket volumes, and total expenses incurred. Analyzing these metrics also helps identify improvement areas, like optimizing resource allocation, enhancing customer support processes, and streamlining operational workflows.

Constraints

Acknowledge any assumptions and constraints within your plan, such as technological limitations, tight deadlines, and regulatory requirements. Being upfront about these factors is essential for setting realistic expectations and guiding effective task execution. And it ensures everyone involved understands the framework they’re operating in.

Say you’re building an agency website in the European Union (EU). A critical constraint would be compliance with data protection regulations like the General Data Protection Regulation (GDPR). You must keep this constraint in mind as you develop your operational plan because it affects the technology and processes used for data handling and shapes your website’s design and functionality. For instance, you’ll likely need to integrate clear consent mechanisms for data collection, prominent user data management tools into the website’s layout, and GDPR-compliant technologies for data processing and storage.

The 5 steps of the operational planning process

Enterprises develop operational plans through five strategic steps, each essential for shaping an actionable and effective strategy. Let’s explore what this planning process looks like.

1. Set goals

Establish specific, immediate business goals that align with your strategic plan. This might include launching a redesigned website, increasing online sales by a specific percentage, or reducing digital marketing expenses.

Make these goals ambitious yet adaptable, allowing for flexible responses to unexpected challenges. This step lays the foundation for your operational strategy and aligns every subsequent action toward these well-defined objectives.

2. Allocate resources

After establishing your goals, evaluate your capacity to achieve them. Analyze your current resources and identify what additional expertise, technology, and budget you require. This step isn’t just about highlighting what’s missing — it’s about strategizing how to scale your business to accommodate these needs.

3. Define KPIs

Select KPIs that align closely with your operational goals and ensure they reflect key aspects of your strategy. These KPIs should include leading indicators, like website traffic and user engagement rates for predictive analytics, and lagging indicators, such as satisfaction scores post-launch, to evaluate past performance. Consistently apply these KPIs throughout your project to monitor progress and keep the team focused on core objectives.

Consider using digital analytic platforms like Google Analytics to track KPIs. These tools offer detailed insights into traffic and user behavior. And you can set up dashboards to visually represent these metrics to help spot trends and patterns without combing through data.

Suppose you notice rising bounce rates on a specific webpage — this might indicate user disinterest or navigational issues. In response, you might pivot to revise the page’s copy, restructure its visual hierarchy , or simplify the navigation structure to make it more engaging and user-friendly.

4. Prescribe processes

Develop clear and detailed plans for how your teams should execute tasks. This clarity guides them through each stage, reducing confusion, ensuring consistency, and enhancing productivity.

To communicate these procedures to your team, use tools like flowcharts. They simplify and clarify each operational plan phase and help ensure everyone understands their responsibilities.

For large-scale projects, consider using project management software like Asana, Trello, or Jira. These platforms offer features like task assignment, deadline tracking, and real-time communication, and they provide a centralized platform for monitoring progress and maintaining team alignment.

5. Determine milestones

Create a road map that outlines clear, measurable goals and specific objectives. This map transforms your operational plan into achievable targets, helping teams visualize where they’re headed and the benchmarks they need to hit. Host regular meetings when outlining your milestones — this consistent evaluation ensures everyone moves forward in sync, maintaining the necessary momentum to achieve the plan’s goals.

In a web development project, for example, these evaluations might reveal if certain phases, like design or development, have too few or surplus resources. Identifying these imbalances lets you efficiently reallocate resources to ensure each department has what it needs to meet its milestones effectively and on schedule.

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Blog Business 10+ Operational Planning Examples to Fulfill your Strategic Goals

10+ Operational Planning Examples to Fulfill your Strategic Goals

Written by: Danesh Ramuthi Oct 25, 2023

An operational plan is a comprehensive, action-driven document that maps out how daily activities within an organization fuel the journey towards achieving strategic objectives.

Essentially acting as the nexus between high-level strategy and practical execution, this plan ensures that every department, from human resources to specific departments, operates in synchrony, aligning their day-to-day activities with the broader strategic goals.

By streamlining processes, it fosters cohesive efforts amongst diverse cross-functional teams, ensuring that both individual team members and entire departments work together harmoniously towards the company goals.

Ready to sculpt your organization’s future? Start your journey with venngage business plan maker and leverage their expertly crafted operational plan templates . 

Click to jump ahead: 

Why is an operational plan important?

10 operational plan examples, what should an operational plan include, how to write an operational plan.

• Strategic plan vs operational plan: What is the difference? 

In summary 

An operational plan is crucial because it serves as a bridge between a company’s high-level strategic planning and its day-to-day activities, ensuring that the business operations align with the strategic goals. 

While a strategic plan provides a long-term vision, outlining the company’s objectives and goals to gain competitive advantages in the business environment, the operational plan outlines the specific actions, key elements and resource allocation required to achieve those objectives. 

For example, while the strategic plan might set a goal for revenue growth over the fiscal year, the operational plan provides a detailed roadmap, breaking down major projects, assigning responsibilities to individual team members or specific departments and setting key performance indicators to monitor progress and ensure the entire organization works together effectively.

Operational planning, in essence, transforms the strategic objectives into actionable plans, ensuring that the entire team, from department heads to diverse cross-functional teams, is aligned and works in tandem to support revenue growth, increase productivity, and achieve the desired outcomes. 

Operational plans, through a well-structured operational planning process, also provide a clear understanding of the day-to-day activities, allowing team members to know their roles, leading to better collaboration and synergy. 

Moreover, by having clear operational plan examples or templates, businesses can ensure realistic expectations, manage their operating budget effectively and track progress through key performance metrics, thus ensuring that the company stays on course to realize its long-term vision.

Operational plans play a pivotal role in the business landscape, bridging the gap between strategic vision and tangible actions. They translate the overarching goals of an organization into detailed procedures, ensuring that daily operations are in line with the desired strategic outcomes. 

In the section below, I will explore a few operational plan examples, shedding light on their structure and importance.

Business operational plan example

A business operational plan is a comprehensive document that elucidates the specific day-to-day activities of a company. It presents a detailed overview of the company’s organizational structure, management team, products or services and the underlying marketing and sales strategies. 

For businesses, irrespective of their size, an operational plan can prove invaluable. By laying down the business goals and objectives, it acts as a blueprint, guiding entrepreneurs through the creation and implementation of strategies and action plans. The planning process also incorporates mechanisms to track progress and performance. 

Additionally, for startups or companies looking to scale, a meticulously crafted operational plan can be pivotal in securing funds from potential investors and lenders.

Layered on this are details about the company’s organizational structure, its products or services and its marketing and sales strategies. 

The document also delineates the roles and responsibilities of each team member, especially the management and key personnel. Given the dynamic nature of the business environment, it is imperative to revisit and update the operational plan regularly.

Related: 15+ Business Plan Templates for Strategic Planning

Simple operational plan example

A simple operational plan, often used by startups or smaller enterprises, emphasizes the basics, ensuring that the fundamental aspects of the business operations are captured succinctly. While it might not delve into the intricacies of every operation, it provides an overview of day-to-day activities, highlighting the goals and objectives the business aims to achieve in the short term.

In essence, this plan revolves around core elements like the company’s main objectives for the fiscal year, key responsibilities assigned to individual team members and basic resource allocation. A straightforward market analysis might also be included, offering insights into customer needs and competitive advantages the business hopes to leverage.

Though simple, this operational plan example remains pivotal for the organization. It provides a roadmap, guiding team members through their daily responsibilities while ensuring that everyone is working together towards shared goals. It becomes especially essential for diverse cross-functional teams, where clarity of roles can lead to increased productivity.

Modern operational plan example

In today’s fast-paced business environment, the emphasis on efficiency and innovative processes is paramount. The modern operational plan example caters precisely to this demand. Ideal for organizations aiming to streamline processes and highlight workflow, this type of operational plan emphasizes a more dynamic approach to planning. 

It not only reflects the evolving nature of business operations but also provides a modern backdrop for content, ensuring that the presentation resonates with the current trends and technological advancements. The use of modern tools and platforms within this plan enables diverse cross-functional teams to work together seamlessly, ensuring that day-to-day activities are synchronized with the company’s long-term vision.

Furthermore, such an operational plan helps the entire organization stay agile, adapting rapidly to changes in the business environment and ensuring alignment with strategic goals.

Minimalist operational plan example

The minimalist operational plan example champions simplicity and clarity. By focusing on clear and concise business strategies, it eliminates any potential ambiguity, ensuring that team members and stakeholders have an unclouded understanding of the company’s objectives and goals. 

The minimalist design not only promotes easy comprehension but also aligns with the modern trend of decluttering, ensuring that only the most vital components of the operational planning process are highlighted. 

This approach leaves no room for confusion, streamlining the planning process and making sure that individual team members and departments are aligned with the business’s key objectives. 

Moreover, the flexibility offered by a minimalist design allows businesses to craft an operational plan template that is not only functional but also accurately reflects their brand image and core values, ensuring cohesion across all aspects of the business strategy.

Clean operational plan example

The clean operational plan example stands as a testament to this principle. Ideal for businesses that prioritize clarity and directness, this format seeks to convey goals and strategies without overwhelming stakeholders. 

While maintaining a neat and organized layout, it ensures that tasks are managed effectively, helping team members grasp their roles and responsibilities without getting lost in excessive details.

One of the primary advantages of a clean operational plan is its ability to eliminate distractions and focus solely on the critical aspects of operational planning. 

Such a design aids in making sure that diverse cross-functional teams can work together harmoniously ensuring that day-to-day activities align seamlessly with the company’s long-term vision. 

The simplicity of the clean operational plan not only supports revenue growth by ensuring efficiency but also reinforces the company’s strategic goals, making it an excellent tool in the arsenal of businesses that believe in clear communication and precise execution.  

An effective operational plan acts as a roadmap, directing how resources should be allocated and tasks should be performed to meet the company’s objectives. Here’s what a comprehensive operational plan should encompass:

• Goals and objectives : Whether short-term or long-term, the operational plan should define clear goals and objectives that align with the company’s strategic plan. This gives direction to the entire organization, ensuring everyone is working towards a common aim.
• Clear responsibilities for team members : It’s essential that team members understand their roles within the operational plan. By outlining who is responsible for what, the plan ensures that there are no overlaps or gaps in duties and that everyone has clarity on their day-to-day activities.
• Assigned tasks: Alongside responsibilities, specific tasks need to be allocated to individual team members or specific departments. This granularity in assignment ensures that every aspect of the operational plan is covered.
• Timeline: This provides a clear schedule for when each task or objective should start and finish. A well-defined timeline assists in monitoring progress and ensures that the plan stays on track.
• Budget and resources : Every operational plan needs to factor in the budget and resources available. This includes everything from the operating budget to human resources, ensuring that the business has everything it needs to execute the plan effectively.

Read Also: 6 Steps to Create a Strategic HR Plan [With Templates]

As businesses evolve, it’s essential to have a comprehensive and adaptive operational plan in place to navigate the complexities of the business environment. Here’s a step-by-step guide to help you craft an effective operational plan:

Step 1: Define your goals and objectives

Begin with a clear understanding of your strategic goals and objectives. This will act as a foundation for your operational plan. Ensure that these goals are in alignment with your company’s strategic plan and provide both short-term and long-term visions for the business.

Step 2: Determine roles and responsibilities

Identify the key stakeholders, department heads and team members who will play pivotal roles in executing the plan. Assign responsibilities to ensure that everyone knows their part in the planning process and day-to-day activities.

Step 3: Develop a timeline and milestones

Establish a clear timeline that breaks down the operational planning process. Include key milestones to track progress and ensure the plan remains on target.

Step 4: Allocate budget and resources

Determine the resources required to achieve your goals and objectives. This includes estimating the operating budget, identifying human resources needs and other resource allocations, ensuring you have everything in place to support revenue growth and other business needs.

Step 5: Outline day-to-day operations

Detail the day activities that are integral to the business operations. This will provide clarity on how different tasks and functions work together, ensuring efficiency across diverse cross-functional teams.

Step 6: Monitor and measure performance

Integrate key performance metrics and indicators to regularly monitor progress. Using both leading and lagging indicators will provide a comprehensive view of how well the operational plan is being executed and where improvements can be made.

Step 7: Review and adjust regularly

The business environment is dynamic and as such, your operational plan should be adaptable. Regularly review the plan, comparing actual outcomes with desired outcomes and adjust as necessary to account for changes in the business environment or company goals.

Step 8: Document and communicate

Create an operational plan document, potentially using operational plan examples or an operational plan template for guidance. Ensure that the entire team, from individual team members to the entire organization, is informed and aligned with the plan.

Related: 7 Best Business Plan Software for 2023

Strategic plan vs operational plan: What is the difference?

When running an organization, both strategic and operational planning play pivotal roles in ensuring success. However, each has a distinct purpose, time horizon and scope. Here’s a breakdown of the differences between these two essential business plans:

• Strategic plan : This plan sets the course for the organization’s future. It embodies the long-term vision and mission, detailing the objectives necessary to achieve it. The essence is how everyone, from C-suite executives to individual team members, collaborates towards realizing this vision.
• Operational plan : This is the roadmap for the day-to-day activities of the organization. While the strategic plan looks at the bigger picture, the operational plan hones in on the tactics and execution. It is crafted to support organizational goals with a focus on short-term activities specific to departments or functions.

Time horizon :

• Strategic plan : Long-term in nature, usually spanning three to five years.
• Operational plan : Concentrates on the short-term, with plans laid out yearly, quarterly, or even monthly.

Modification and updates :

• Strategic plan : This evolves over longer intervals, typically three to five years. There might be minor adjustments year over year based on changing business needs and the external business environment.
• Operational plan : Due to its short-term focus, it requires frequent assessments. Plans might be adjusted yearly, quarterly or even monthly to ensure alignment with the strategic objectives and current business environment.

Created by :

• Strategic plan : Crafted by the upper echelons of management – think CEO, CFO and other C-suite members.
• Operational plan : These plans come to life through mid-level management and department heads, ensuring alignment with the broader strategic vision while catering to specific departmental needs.
• Strategic plan : Broad in its outlook, it takes into account external factors like market trends, competition, customer needs and technological innovations.
• Operational plan : This narrows down the focus to the internal workings of the organization. It revolves around technology in use, key performance indicators, budgeting, projects, tasks and the allocation of responsibilities among team members.

As we’ve traversed through the importance of operational planning to various operational plan examples, it becomes evident that having a detailed and efficient operational plan is pivotal. 

From the business-centric to the minimalist approach, every operational plan serves as the backbone, guiding team members and ensuring that day-to-day activities align with the long-term vision and strategic goals.

By knowing what should be included in these plans and how to craft them, businesses can navigate the complexities of their operational environment with greater confidence.

For those looking to refine their planning process or start from scratch, the world of digital tools has made it significantly easier. Venngage offers business plan maker and operational plan templates designed to simplify the process. 

Whether you need to create an operational plan or draft a business strategy, their intuitive platform can guide you every step of the way.

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What Is the Operational Plan Section of the Business Plan?

Learning what an operation plan is and learning how to make it is something critical to any business. 3 min read updated on February 01, 2023

An operation plan section of the business plan is an essential part of any business. Learning what an operation plan is and learning how to make it is something critical to any business. Here are the main things you need to know about an operation plan.

Definition of an Operation Plan

An operation plan is a guiding path for the business to follow in order to achieve all of its goals and objectives described in the general business plan.

The operation plan mainly includes details about the people responsible for completing the required actions, and all the costs and KPIs (key performance indicators) for these actions to be accomplished.

In order for any business to be stable in the long run, the operation plan must be updated regularly in order to ensure the stability of the business.

What Is the Operations Plan Section and How to Properly Make It

The section of the operations plan which is included in the business plan mainly specifies all the physical requirements for the operation of the business. These physical requirements mainly include equipment, facilities, and location.

In order to make a complete business plan , three things need to be clarified to the reader:

• Everything was done for the business from the start to reach its current position
• Acknowledgment that you know exactly what should be done for any business to get off the ground
• Full awareness and understanding of the delivering and manufacturing processes of the service or the product you offer.

Operating Section of the Business Plan: Stage of Development Section

While you're developing the stage of development section, you should begin with the previous procedures that have been taken so far, along with mentioning what is best to be done in the future, it should be as follows:

• Production workflow : In this, you will describe in detail the exact steps of how your service or your product will be made, along with the acknowledgment of any possible problem that could be faced during the process.
• In addition, you will include details about how to train the employees to solve any upcoming problem and avoid any risks as much as possible. Along with mentioning any dangerous equipment that will be used, and the proper ways of using and storing these pieces of equipment.
• Supply chains: In this section you clarify the identity of the suppliers, the prices they offer, and their terms and conditions, In addition to providing the possible alternatives in case it doesn't work out with the current suppliers
• As an example, in case you are willing to have a specific quality control certificate, like the ISO 9000, you should identify and explain the required procedures.

What Are the Key Components to Include in an Operational Plan Regarding the Business Organization?

Here are the main components to be included in the operational plan:

• Most of the tasks in the operation plan are carried out by the company's managers and the employees under them, so it is essential that to clarify their identity, describe their qualifications, and describe the jobs and tasks which they will be responsible for.
• Providing an organizational chart to describe the structural hierarchy of the business.
• The philosophy and tactics of the company, and the role they play in the development and stability of the business.
• A statistical measurement of the performance of the employees and managers, and the ways of reward and punishment.
• Explain the methods that you will use to find the right employees, putting into consideration the required qualifications needed, the job description of each one, and the compensation rates that you will offer.
• In case the business will need any outside consultants it should be noted, along with the specific functions required from any outsider consultant or employee.

In the end, one could conclude that the success or a failure of a business depends heavily on the quality of the business and operation plan put forward.

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Business Plan - Operations Section

Operations Section of the Business Plan

Written by Jason Gordon

Updated at April 21st, 2024

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What goes into developing an operational Plan?

All of the components that allow your business to create value.

The operations portion of the business plan serves two purposes:

• Allow you to take a holistic approach to your business, and
• Provide interested third parties with a description of your business.

The operational plan outlines the particular components that allow your business to create value.Below, we discuss the primary components of the business operations plan, including: a description of the product produced, the business location, personnel, inventory, suppliers, payment processing (credit policies and accounts receivable/payable). You will describe each of these sections in detail to the extent that it is relevant or applicable to your business. You will need to outline where are you in the creation of your business. Specifically, what steps have you taken to put your business in motion? Now, what do you have left to accomplish?  

What is Product or Service Development?

How do you plan to make your product or carry out your service? Start with an outline of the process for delivering value to your customers. You will need to account for the necessary production activity at each stage. Outline the day-to-day activity necessary to carry out your business.

• Production Process/How Services Carried Out:  Here you should outline the process of manufacturing your product. If you provide a service, you should outline all of the moving parts and individuals necessary to carry out the service. Provide a generally checklist or flowchart for delivering value.
• Production Timeline : Explain how long it takes to produce a unit, and when you'll be able to start producing your product or service. Include factors that may affect the time frame of production and how you'll deal with potential problems, such as rush orders.
• Production Feasibility : You will want to give an overview of any research or testing you have done to prove the feasibility of producing your product in accordance with your operational plans. This could include Market Research, Questionnaires, Competitor Process Analysis, Beta Testing, etc.
• Vulnerability : You should identify any potential problems that could arise in the production process. How will you handle any such issues? What would be the effect on the business?
• Quality Control : How will you maintain oversight of the production or service provision process? Develop a plan for supervision of the process.
• Customer Service : What is your plan for customer service? This includes sales communication, return products, and customer follow-up.

Equipment and Other Assets

• Necessary Equipment : What equipment do you need to carry out the basic operations?
• Current Assets : You may already have some of the necessary equipment to carry out operations. Identify these assets and explain what asset requirements they fulfill.
• Equipment Priority : Some equipment is may be desirable but not a necessity. Ascribe a level of priority to obtaining it. The priority should be higher depending upon the likelihood of the equipment to increase production or efficiency.It may also be helpful to outline the equipment output, required maintenance/repair, and expected life.
• Equipment Pricing : Outline a projected cost for purchasing (new or used) and renting the necessary equipment. You need to explain your rationale for your decision.
• Equipment Financing : Explain any financing arrangements. Make a list of your assets, such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.

Special Requirements

Are there any special requirements or situational factors necessary for carrying on your business? In this section, you will list any requirements that are unique to your business and would fall outside general expect ions. This could include special assets, economic conditions, legal conditions, etc.  

What qualities do you need in a location?

• Drawings of the building, copies of lease agreements, and/or recent real estate appraisals.
• What is the expected value of the land or buildings required for your business operations?
• Explain the significance of each physical location to your business.
• Amount of Space : Explain the use of space. Have a plan for space demands with the expected growth.
• Type of Building : Justify your decision to rent vs. buy, and a class of facility.
• Zoning : Make certain the anticipated activity meets the applicable zoning requirements. If not, explain a plan to request a variance or petition the municipality for re-zoning.
• Power and other utilities : What will be your specific power needs. Have estimates for the cost of power and the resources/regulatory approvals necessary to obtain such funding. A strong plan will discuss preliminary data and on-going discussions with the available utility providers.
• Access : What type of access do you need for your location? Detail how customers, employees, logistics personnel, etc., will access your business. Ex. Do you need easy walkin access? Is it convenient for customers and suppliers?
• Construction : Will you build or rent a building? You should explain the benefits of one over the other. This justification should include a cost/benefit analysis of each option.
• Costs : Determine a preliminary figure for costs associated with building/occupying the intended location. Examples of expenses include: rent/mortgage, maintenance, utilities, property taxes, insurance, construction/remodeling, etc. These numbers will become part of your financial plan.
• Hours of Operation : Indicate and give a justification for your intended hours of operation. Does your location support these hours of operation? Does it conflict with other local or resident businesses?

In this section, you provide an overview of the key personnel involved in the business and the types of positions that will be necessary. Basically, you are going to tell who will do what. Describe whether you intend to hire new personnel or contract with independent contractors to carry out business functions. You will need to account for the personnel requirements as the business grows.

• Startup Team : Who is part of your startup team? What will be their primary area of responsibility? Describe what you understand their role and duties to be and explain how they are qualified or competent for these duties.
• Types of Personnel : Give a general description of the main employees or positions that you will need to fill. This includes skilled, unskilled, and professionals. As part of this process, your will outline who performs the specific tasks at each stage of operations. Some of these positions may be filled by independent contractors who render services on a fee basis. If so, document the nature of these anticipated relationships. At first, there will only be a few positions. Try to determine the types of personnel that will be needed as the business grows.
• Number of employees : Construct a timeline depicting the growth in personnel in accordance with the projected business growth.
• Procedural Protocol : Begin by describing the procedures necessary to effectively carry out each position or function of the business. This is necessary to maintain operational stability as well as consistency in operations. This could include procedural steps or written manuals for carrying out individual stages of the operations.
• Methods for Recruiting Employees : This is most important for professional service or high-tech companies. You will need to have a plan for recruiting new service providers and skilled professionals. This will first require establishing job descriptions and desired employee skills. Note: A good place to start is documented any established relationship with local universities with technical programs and professional schools.
• Personnel Training : How will you conduct the training? What will be your plan for preparing new employees? Do you have a continuation plan in the event you lose a key employee? Be careful not to place too much operational importance on any single individual without developing a training plan for replacements.
• Compensation : Along with the description of personnel and timeline for employment, you will want to associate an estimated cost at each period in time. As such, you will need to devise a projected compensation structure for employees. It is important to develop a realistic plan that fits the companies revenue projections and incentivizes the employee to perform and remain with the business. The startup team or key leadership compensation (including benefits and equity options) is often the most difficult to structure.

Inventory & Materials

In this section, you explain where you are going to receive your inventory or the materials necessary to produce your product or carry out your service. You should indicate your suppliers or manufacturers and outline the nature or terms of your agreement.

• Inventory : What type of inventory (finished product, supplies, raw materials, etc.) will you keep on hand and where will you get it?
• Cost/Value of Inventory : You will need to use the projections for the cost of inventory in your financial projections. A key provision in the pre-money valuation (pre-equity funding) of your business will be an accurate assessment of the value of assets, including inventory.
• Inventory Turn-Over : At what rate will you need to restock your inventory? This is an important figure used in assessing the sales strength of the business. You will want to make a special note about how the inventory turn-over compares to industry averages.
• Special Inventory Requirements : You will also want to outline a plan for dealing with inventory requirements seasonally. This includes a plan for lead-time ordering.
• Inventory Control : You will have to establish a plan for monitoring and controlling inventory. This should be incorporated into an employee/personnel description.

Production Costs

All of the above information will be combined as an estimate of production costs to include in your financials. You may want to maintain separate figures regarding the cost of goods and the cost of labor. You may also want to create a third category of production costs for non-recurring, incidental costs associated with operations.  

Now is the place to provide detailed information about the companies/individuals who will supply you with the inventory/materials outlined above.

• Supplier Background : You should include background information on the supplier. This lends credibility to the stability/dependability of their service.
• Inventory Details : Attribute the type, amount, and cost of inventory supplied by each supplier. This should include a description of any anticipated fluctuations in the requirements or costs of the inventory. For example, you will want to outline the spikes in seasonal cost.
• Payment Terms : Outline the terms of performance of the supplier-purchaser relationship. What are the terms of payment? What are the terms of delivery?
• Back-Up Plan :It is important to have a back-up plan in the event you lose a supplier or the supplier is unable to meet for operational needs. This could include options of alternative suppliers. This avoids placing too much operational importance on third parties.

Payment Policies

In this section, you will outline how you will be compensated for the goods you sell or services you provide.

• Issuing Credit : Are you planning on accepting in-house credit? You will want to look at industry standards and the payment policies of your competitors. Don't forget, your payment policies can be a point of differentiation between you and those competitors. What will be the terms of payment for customers who purchase on account?
• Determining Who Can Purchase on Credit : You will have to have some established policies in place to determine who can purchase on credit and under what terms. Remember, you will have to comply with applicable laws prior to carrying out a background check. Also, extending credit could implicate fairness or anti-discrimination in lending laws.
• Terms of Credit : What will be the term of payment? If you extend credit you will need to decide on the terms of repayment and the interest, if any, attributable to giving the credit. What will be the rate of interest charged and penalties for late payment? Will there be a discount for early payment?
• Security Interests : Will you take a security interest in the goods sold? If so, do you have a standard documenting these transactions?
• Slow-Paying or Non-Paying Customers :You will need a policy for dealing with slowpaying customers. What process will you establish for reminding, urging, and possibly threatening customers to render payment? You should outline an escalating plan for requesting payment, such as making a phone call, sending a letter, using a collection agency, and hiring a collection attorney.
• Credit Cards : If you accept commercial credit, doyou have a service provider to process the payment?
• Costs of Extending Credit : Any time that you extend credit there will be a cost involved. The cost could be the risk of the purchaser not paying or it could be the cost of capital over the credit period. Regardless, you will need to build these costs into your financials. For example, there always needs to be some allowance for bad accounts.

Managing Your Accounts Payable

As part of the operations process, you may be in the role of a creditor to a servicer or supplier. You should develop a plan for payment of accounts owed. The key considerations in developing a payment plan include: maintaining positive relations with the supplier/servicer, optimizing the use of available cash. If the supplier/servicer offers a discount for early payment then you should consider whether this option is in your best interest. If your business would greatly benefit from making a payment toward the end of the available period, then it may be worth extending the payment obligation out.  

Legal Environment

Establishing and maintaining operations will require the crossing of numerous legal hurdles. You should describe the anticipated legal issues in advance and outline a plan for addressing them. Below are some sample, but common, legal issues.

• Entity Selection and Formation : Outline your justification for choosing a given entity structure. Explanations should include: taxation, equity funding, and ownership and control.
• Business License, Professional Licenses, Inspections, and Zoning Requirements : Identify all of the licensing requirements for carrying on your business. This includes the licensing of your business, personnel, property, etc.
• Insurance and Bonding Requirements : Outline the requirement for bonding of professional insurance. You should indicate the plan for obtaining coverage, as well as the cost of such coverage.
• Permits : Certain business activities in specific places require special permits. You must conduct the necessary background research on the legal requirements and provide a synopsis of how you will handle those requirements.
• Workplace and Environmental Regulations : Outline a plan for the necessary workplace inspections and standards. These standards can drastically affect your construction plans and applicable costs. Environmental regulations include proper documentation and accountability for waste, waste and environmental surveys of the location, etc.
• Employment Laws : Develop a plan for legal compliance with all employment laws. This includes hiring/firing procedures, employee benefits (Health Insurance, etc.), worker's compensation, affirmative action (if accept federal contracts), etc.
• Taxation : Federal tax registration, state tax registration, estimated tax payments, employee payroll withholdings, sales tax registration and withholding, property tax, etc.
• Protecting Intellectual Property : You will need to develop a plan for protecting and maintaining all applicable forms of intellectual property, including: trade secrets, trademarks, copyrights, and patents. In some cases, protecting your intellectual property can be very costly (such as patent filings). Account for these costs within the financials.

After working through this business plan section you will have a detailed operating plan and a comprehensive outline of what actions need to be taken next in developing the business.

Related Topics

• Business Plan, Part 1 (Outline Overview)
• Business Plan, Part 2 (The Executive Summary)
• What is a Mission Statement?
• What is a Values Statement?
• Setting Company Goals
• Business Plan, Part 4 (Market Analysis)
• Business Plan, Part 5 (Competitive Analysis)
• Business Plan, Part 6 (Marketing Plan)
• Business Plan, Part 7 (Operations)
• Business Plan, Part 8  (Management and Organization)
• Business Plan, Part 9 (Financial Projections)
• Business Plan, Part 10 (Appendices)
• Business Plan , (Final Modifications)

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What is an Operations Plan and Why Your Business Needs One

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Most businesses devote significant time and money to developing strategic plans, doing their best to lay out a roadmap that establishes a strong long-term vision. Although developing a strategic plan is important, a significant number of companies fail to provide a key strategy component: an operations plan.

What Is An Operations Plan, And Why Do You Need One?

The operations section of your business plan is where you outline the priorities, goals, processes, and timetable for your organisation. An operations plan is beneficial to have not only to investors, but also to you and your staff because it allows you to consider strategies and deadlines. It can also provide information about inventory specifications, vendors, and an overview of the manufacturing process, depending on the type of company you operate.

It sets out the day-to-day responsibilities of running a company. When properly developed, an operations plan ensures that each manager and employee are aware of their particular responsibilities as well as how they should be carried out within a set timeframe. It’s important to plan out the day-to-day activities that will insure a consistent path to your company and organisational objectives.

Your operations plan should address the following questions on a regular basis:

• What are the tasks and methods that must be done or accomplished?
• Who are the people in charge of those activities and strategies?
• When do you think each strategy should be finished?
• How far would it set you back?

Your strategic plan is a manual that ensures that your organisation and all of its staff carry out day-to-day activities in a consistent and efficient manner.

The Steps Of A Successful Operations Business Plan

Since operational plans are created with the goal of allocating money, resources, and personnel for each 1-3 year span, all of the measures that an operational plan would include should essentially serve that goal.

Visualise your operations plan and create your strategic plan first

Since an operating plan is a necessary tool for achieving the objectives set out in a strategy, you must first insure that the strategic plan is in place. It’s best to start with the vision, as with every project plan. Tasks to meet specific, clearly established targets, as well as management of the staff to insure they’re performing at their best, are the key features of an operations plan. Once you’ve identified your vision for certain stages, you can move on to the research process.

Set essential goals and objectives

As we mentioned above, the key to a successful operations plan is to have a clear vision and target that everyone is working towards. You’ll explicitly state your company’s organisational goal in this section of your strategy.

All good operating plan examples follow one rule: emphasis on the most critical targets. It’s difficult to execute a complicated strategy with several targets that aren’t clear and simple. In order to create an efficient operational objective, think SMART:

Specific – Be clear on what you want employees to achieve.

Measurable – Be able to quantify the goal in order to track progress.

Attainable & Realistic – It’s great to be ambitious but make sure you aren’t setting your team up for failure. Create a goal that everyone is motivated to complete with the resources available.

Timely – Provide a deadline so everyone has a date they are working towards.

Operational priorities can vary depending on the department. However, each department’s goal should contribute to the company’s overall goal. Furthermore, organisational priorities shift; they aren’t meant to be permanent or long-term. The timetable should be planned around your company’s long-term objectives.

Have a look at the following example for a local pizza delivery business goals:

• The strategic goal is to deliver pizza in Eastern Sydney suburbs.
• To have a better user experience, the technology department’s organisational goal is to build a mobile app by October 2021.
• The marketing department’s organisational target is to raise website visits by 50% by October 2021 by advertising on social media and in the top local food publications.
• The sales department’s operations goal is to raise distribution sales by 30% by concentrating on three of Eastern Sydney’s largest suburbs.

Establish routine processes and resources

Once you’ve created your goals, you’ll need to analyse how you’ll accomplish them strategically. To do so, each department (or team) must have all of the resources available for the production process.

The following are some useful resources to consider:

• Suppliers – Do you have one (or more) suppliers that help you make your product?
• Equipment and Technology – Does each department have the required equipment, technology, and software to achieve their goals? For example, in order to achieve the above-mentioned pizza delivery business target, required resources might include: – App development software is handled by the technology team . – Computer licences for website analytical tools for the marketing team – Headsets, phone devices, or technology for a virtual phone system for the sales team
• Expense – What is the cost of each department’s budget?

You’ll need to explain the operating process in detail in addition to the development process. This will show investors that you know exactly how you want your company to operate on a daily basis.

Among the items to include in your operations plan are:

• Location: where do workers work? Would you need any extra services?
• Work hours: will workers have a fixed schedule or will they be able to work on a flexible basis?
• Staff: who is responsible for ensuring that department activities are completed?

Set timelines

For your new company, developing a timeline with milestones is crucial. It helps to keep everyone centred and is a good way to monitor production. If milestones aren’t being reached, for example, you’ll know it’s time to reconsider the development process or accept new hires.

Report on the operations plan

Create a framework and report on all of it as the plan progresses until you’ve set out the operating plan—which should include specific targets with deliverables, priorities, timetables, and staff required to accomplish the plan. Stakeholders, other department heads, and leadership will want to check in on the progress of the organisational plan at each milestone, whether it’s monthly, quarterly, or project-based.

Your KPIs will have a major impact on the success of your operations plan, so choosing the right ones is crucial. Leading indicators are the most powerful metrics because they forecast what to expect in the future and allow you to change your strategies accordingly. Lagging metrics, on the other hand, just show you how far you’ve come after it’s too late.

Sales meetings or calls per week, for example, may be a good leading indicator if the target is to hit a certain sales level. You may be able to predict how many calls it takes to close a transaction based on your previous experience. This will encourage you to use phone calls to see if you’re on track to meet your sales targets. However, if you only measured revenue, you wouldn’t know where you were in relation to your targets and forecasts unless you were already there.

Adjust the operations plan as needed

You must always be ready to change, as with any well-planned project. Have you ever reached a benchmark that yielded less-than-desirable results? The tasks in an operating plan are so detailed that you can now tell and understand precisely which parts of the plan aren’t working at their best. Adjust as needed, include team members as needed, gain stakeholder buy-in, and move on to the next benchmark with your newly-adjusted operations plan.

If you had the foresight to use business planning software like Planium Pro   to create your plan, such changes are simple to make. If you have to make changes to a static Excel sheet or Word document, it can take hours to update anything.

Business planning software, on the other hand, is a versatile tool that helps you to quickly establish processes, delegate tasks, monitor progress, and make adjustments. To learn more about how business planning software can assist you with your operations plan, get your 14-day free trial  with Planium Pro.

Note, you can visit our blog  for more helpful business advice like this!

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First Steps: Writing the Operations Section of Your Business Plan This quick guide offers tips that will help you create the operations section for your business plan.

By The Staff of Entrepreneur Media, Inc. Jan 4, 2015

In their book Write Your Business Plan , the staff of Entrepreneur Media, Inc. offer an in-depth understanding of what's essential to any business plan, what's appropriate for your venture, and what it takes to ensure success. In this edited excerpt, the authors discuss what type of information you should include in the operations section of your business plan.

Operations is concerned with how you buy, build and prepare your product or service for sale. That covers a lot of ground, including sourcing raw materials, hiring labor, acquiring facilities and equipment, and shipping the finished goods. And it's different depending on whether you're a manufacturer, a retailer or a service firm.

The basic rule for your operations section is to cover just the major areas—labor, materials, facilities, equipment and processes—and provide the major details—things that are critical to operations or that give you competitive advantage. If you do that, you'll answer investors' questions about operations without overwhelming them.

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.

Operations for Retail and Service Firms

Retail and service firms have different operations requirements from manufacturers. 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.

That's not to say operations are any less important for retailers and service firms. But most people already understand the basics of processes such as buying and reselling merchandise or giving haircuts or preparing tax returns. So you don't have to do as much explaining as, say, someone who's manufacturing microprocessors.

For service and retail firms, people are the main engines of production. The cost of providing a service is largely driven by the cost of the labor it entails. A service-firm plan, then, has to devote considerable attention to staffing. You'll want to include background information and, if possible, describe employment contracts for key employees such as designers, marketing experts, buyers, and the like. You'll want to walk the reader through the important tasks of these employees at all levels so they can understand how your business works and what the customer experience is like.

Operations plans for retailers also devote considerable attention to sourcing desirable products. They may describe the background and accomplishments of key buyers. They may detail long-term supply agreements with manufacturers of in-demand branded merchandise.

Operations for Manufacturers

The lead actor in manufacturing is the process of production, and the better your production process, the better a manufacturer you'll be. Business plan readers look for strong systems in place to make sure that personnel and materials are appropriately abundant. In your operations section, don't go into too much detail -- stick to the important processes, those essential to your production or that give you a special competitive advantage and be sure you show that you have adequate, reliable supply sources for the materials you need to build your products. Estimate your needs for materials and describe the agreements with suppliers, including their length and terms that you have arranged to fulfill those needs. You may also give the backgrounds of your major suppliers and show that you have backup sources available should problems develop.

You'll also need to include information on how you'll ensure a reliable supply of adequately trained people to run your processes. You'll first need to estimate the number and type of people you'll require to run your plan. Then show that you can reasonably expect to be able to hire what you need. Look at local labor pools, unemployment rates and wage levels using information from chambers of commerce or similar entities.

Manufacturing a product naturally requires equipment. Naturally, investors are very interested in your plans for purchasing equipment. Many plans devote a separate section to describing the ovens, drill presses, forklifts, printing presses and other equipment they'll require. This part of your plan doesn't have to be long, but it does have to be complete. Make a list of every sizable piece of equipment you anticipate needing. Include a description of its features, its functions, and, of course, its cost.

Be ready to defend the need to own the more expensive items. Bankers and other investors are loath to plunk down money for capital equipment that can be resold only for far less than its purchase price. Also consider leasing what you need if you're starting out.

The Facilities Section

Unless you're a globe-trotting consultant whose office is his suitcase, your plan will need to describe the facilities in which your business will be housed. Land and buildings are often the largest capital items on any company's balance sheet, so go into detail about what you have and what you need. Decide how much space you require in square feet. Don't forget to include room for expansion if you anticipate growth. Now consider the location. You may need to be close to a labor force and materials suppliers. Transportation needs, such as proximity to rail, interstate highways, or airports, can also be important. Next determine whether there's any specific layout that you need.

To figure the cost of facilities, first decide whether you'll lease or buy space and what your rent or mortgage payments will be. Don't forget to include brokerage fees, moving costs and the cost of any leasehold improvements you'll need. Finally, take a look at operating costs. Utilities including phone, electric, gas, water, and trash pickup are concerns; also consider such costs as your computer connections, possibly satellite connections, as well as maintenance and general upkeep.

These aren't the only operations concerns of manufacturers. You should also consider your need to acquire or protect such valuable operations assets as proprietary processes and patented technologies. For many businesses, intellectual property is more valuable than their sizable accumulations of plants and equipment.

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How to Make an Operational Plan in a Business Plan

Priyanka Bhadani

An operational plan clarifies how each department within an organization will streamline its business processes to achieve a set of goals for the next year. Successful organizations write operational plans to clarify their required short-term tasks and workflows to maximize workplace accountability. While an operational plan is often written separately from other proposals, startups often include it within a larger business plan. An operating plan is given to investors so they can assess a company's organizational structure, assets, and long term financial needs. Read ahead for the best practices on including an operational plan within a business plan, along with the benefits of doing so.

What to Include in the Operational Plan Section of Your Business Plan

A business plan is written by a startup to outline key objectives and the strategies used to achieve them. Within business plans, there is typically an operational plan section. It describes the physical requirements to maintain operations, including the office building, additional facilities, tools, and other apparatus. Depending on the type of small business, the operational plan portion may also refer to required stock, vendors, and the production process. An operational plan section seeks to explain the assets, costs, and resources needed to maintain day-to-day business activities. These requirements are outlined to investors and involved stakeholders to reaffirm what is needed to start operating. It also demonstrates that the company recognizes the different production and delivery activities needed to produce quality goods and services. Including the following subsections will make sure the operational plan is detailed and organized when it comes time to present it to investors-

1. Development Stage

• Manufacturing System - A detailed, piecemeal guide of how goods and services are manufactured in the organization. Any inefficiencies or risk factors should also be included, along with how the company plans to mitigate them.
• Memberships - Demonstrates the company's awareness of federal and state regulations by telling which industry-related organizations the startup is a part of or wants to join. Also defines how the organization is currently complying with regulations.
• Supply Chains - Explains who the vendors are and outline details of each contractual relationship. Also lists any backup suppliers if the current ones fail to live up to the company's standards.
• Quality Control Measures - The various quality control initiatives put in place, along with any that will be enacted. Also describes how the organization plans to achieve those measures.

2. Manufacturing Process

• Outline of Day-to-Day Activities - Includes the operating hours, working days, and whether there are seasonal hours.
• Location - Describes the physical location, any facilities, and where they are located. It may include lease agreements, real estate information, titles, or other applicable data. Demonstrates how much these properties cost and their worth, along with why they are so essential to maintain operations.
• Tools and Machinery - Describes any equipment or tools and how much they cost, along with their worth to the business.
• Assets - Includes all land, facilities, stock, tools, cars, or any other assets. Defines exactly how much each piece of property is worth in legal language.
• Unique Needs - Lists any unique needs and what has been done to ensure compliance or gain permission.
• Raw Materials - Explains plans to acquire any raw materials needed to manufacture a product/service. Also lists the contracts with suppliers in regards to these materials.
• Manufacturing - Describes the length of time required to manufacture an item and provides a time frame for when this process will begin. Lists any circumstances that may impact the manufacturing timeline and how these will be mitigated.
• Stock - Describes exactly how the startup plans to optimize inventory management to streamline the reordering process and maintain customer satisfaction.
• Testing - Outlines any testing or studies that have been performed on any of the company's products or services to ensure feasibility.
• Expenses - Details how much each product or service costs.

Key Takeaways

• An operational plan should include a development stage to let investors know what has been done in real-time to get the business up and running. It should also include a manufacturing section describing how the business will function and achieve goals in more detail.
• The development section should include a subsection on manufacturing systems, memberships, the supply chain, and quality control measures.
• The manufacturing section should include an outline of day-to-day activities and project management measures, the location of the company, required tools and machinery, any assets, any unique needs, required raw materials and vendors, inventory needs, details of previous testing or studies, and expenses.
• By writing an operation plan, the startup will focus on what is needed to meet key objectives. It will also build trust with investors by outlining all of the details and requirements to achieve long term goals.

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12.3 Designing a Startup Operational Plan

Learning objectives.

By the end of this section, you will be able to:

• Identify the major areas of operations management (money, methods, machines, people, and leadership)
• Develop a checklist of operational needs

From the start, every entrepreneur needs a business plan. Your business plan will keep you focused on the very early stages of the business, when it is easy to be distracted. A written business plan can help redirect you back to your original idea.

Business plans can be divided into four different types: operational, strategic, tactical, and contingency. In this section, the focus will be on the operational plan, the activities that an entrepreneur-owner absolutely needs to do. The core business activities and how those activities interface with customers are key to a business’s long-term success. Business plans are discussed in more detail in Business Model and Plan .

Operational Business Plan

In the early 1900s, the mechanical engineer and management consultant Frederick Taylor introduced scientific management techniques into manufacturing industries. Since then, operational planning has evolved into a major component of successfully managing a business. An operational business plan details the what, when, who, how long, with what, and how much of company activities. This type of plan may list specific functions: What the activities of the business are, when those activities occur, who is responsible for various tasks, how long each activity will occur, what tools or equipment are required, and how much time and funding are needed.

Operational business plans should be flexible enough to allow for challenges that will occur. Some changes must be made on a daily or even an hourly basis. Other changes may be necessary only occasionally throughout the year. However, the purpose of the operational plan is to provide direction and guidance. This way, everyone in the business knows their specific assignments, who is responsible for individual tasks, and when major events occur.

Creating a table or chart in an Excel or other spreadsheet format can help your planning and scheduling. Figure 12.9 illustrates how work station scheduling for a grocery store can be displayed in an Excel spreadsheet. Functional activities, specific job tasks, work shifts, or work stations are listed as column headings. Hours of operations are listed as row headings. Employees’ names are entered into individual cells, showing who is assigned to each specific task or station. The table doesn’t show every position, but enough positions are listed to give you an idea of how to use the same format for your own business.

This type of schedule displays every functional position, the hours that each position has to be covered, and which employee is assigned to that function at what time. The manager can look at this schedule and know that each function has been assigned to an employee during a definite time period. If the work is not being completed, this type of schedule can help a manager make an informed decision about whether to hire more employees. Furthermore, if a problem occurs, the manager knows which employee(s) were working at that station when the problem occurred and can go directly to the employee(s) for information. When an employee is unable to fulfill a shift, the manager can change the schedule quickly to ensure that every task is being completed and every position is attended to.

Individual schedules and assigned work stations can also be displayed in a worksheet ( Figure 12.10 ). This allows the manager to schedule an employee for the proper number of hours per week and helps budget payroll expenses. Employees know where they are expected to be and when they are scheduled to take lunch or dinner breaks, and the manager knows where the employee should be. When operational questions arise, the manager knows who was scheduled to be at the site and can go directly to that employee.

Using tools such as spreadsheets for scheduling and managing day-to-day operations brings organization and stability to daily operations. Managers know that each task has a person assigned to it, and employees know where they should be or what they should be doing throughout the day. Complex businesses with many employees and many functions need more planning and structure. Businesses with very few employees can be less structured. However, a written plan should list most tasks and activities that need to be accomplished, who will do them, and when.

Link to Learning

Many templates and spreadsheets are available online that small employers can use to organize and schedule employees. Using key terms—for example, employee , schedule , work station , template —in popular search engines can produce multiple results.

Entrepreneur In Action

Scheduling sounds simple.

Scheduling materials and parts for a fixed operation can be difficult. However, it can be even more challenging to coordinate your personal schedule with on-demand childcare needs near your workplace. Avni Patel Thompson undertook this massive challenge when she started Poppy , an on-demand childcare service, in 2015.

Recruiting customers and employees for any business can be challenging, but when a company business model is centered around customers who have unscheduled demands and employees who want consistent income, the company needs a high-tech solution. Poppy was an app where parents could submit their request for a caregiver. The app’s algorithm would then scan all available caregivers who were available during the window of time requested and were located reasonably nearby. After the app did its work, a staff member would make the final decision and confirm the caregiver with the family.

Unfortunately, Poppy succumbed to the overall market and economic conditions plaguing the child care profession and closed in December 2018, but the business model is an example of one way to solve complex scheduling issues.

Questions about Poppy and its scheduling procedures:

• How is an app better suited for this type of scheduling requirements than a full-time employee?
• What requirements are mandated for the customer? Employee? Company?
• Will a new application of technology overcome other economic and marketing factors?
• How reliable is the technology? What potential threats to the “established” method of scheduling are possible when technology is updated?

For tasks requiring attention on a monthly, quarterly, or annual basis, a simple organizer/calendar can be an excellent tool to help organize and remind you of what needs to be done and when. Tasks that you must complete on time throughout the year include payroll tax deposits and reports, insurance renewal applications, permits and license renewals, employee training and recertification requirements, and account billing to certain customers. A calendar also can help you schedule advertising and marketing activities. Some events occur regularly each year at the same time or within a known time frame. This can help remind you when to start your advertising and marketing campaigns.

You can plan for major maintenance and repair in advance or keep track of scheduled price increases, pay raises, adding or removing menu items, rearranging shelving for seasonal products, and major cleaning or maintenance activities.

As you start your business, you may need to make some adjustments to your operational plan. An entrepreneur might overlook factors that occur regularly. Or a new entrepreneur may have considered some factors to be minimally influential when in fact they may be significant. Entrepreneurs might give high priority to influences that never materialize. Once the business is open, customers and competitors may not behave as expected. Employees may have skill sets that were omitted from the written plan, or they may lack needed skill sets. Even a well-written operational plan will most likely need to be tweaked shortly after operations start. But if you formulate your plan correctly at the beginning, your functional operational plan should rarely need a complete overhaul.

One element that should be included in every operational plan is control. In an operational plan, a marketing plan, an employee development plan, or any other type of plan used in business, control refers to the measurement of outcomes and an evaluation of the activities that led to those outcomes. The control element of a business plans answers the questions, “Have we accomplished what we wanted to accomplish?” and “Have we met our goals within the time frame that we wanted?” Without measuring performance outcomes, the entrepreneur does not know if the business is operating as expected, worse than expected, or better than expected.

If a business performs better than expected, the entrepreneur must consider if the original expectations were too low or if some other factor contributed to the better-than-expected performance. On the other hand, if the business performed worse than expected, two reviews must be conducted. First, why are outcomes less than expected and what can be changed to improve performance? Second, how do lower outcomes affect the viability of the business?

Comparing actual outcomes with expected outcomes is a form of internal comparison called baselining . Baselining is important because the entrepreneur must conduct a self-evaluation on what the business has done versus what it can or should do. An entrepreneur can decide to adjust a business’s capability after conducting a baseline study. However, internal comparisons should be coupled with an external analysis, called benchmarking. By comparing your business with a close competitor’s or with the industry average, you can get a better idea of how your business fits into the larger market.

Industry Benchmarks

If a basketball team scores sixty-eight points, do they win? If a baseball team scores four runs, do they win? If a soccer team scores five goals, have they lost? The answer to all three questions is simple: We need more information. Without knowing the other team’s score, we don’t know if a team has won or lost. There must be some other score for comparison; otherwise, the points scored are meaningless.

Similarly, businesses need to compare their individual performances with some external performance measurement. The comparison with an industry average, a leader within the industry, or a market segment is called benchmarking . Benchmarking allows a direct comparison of your company with the collective whole of the industry or market, or with an industry leader. By looking at several performance measurements, you can see if your company is performing at a level that will sustain itself over the long term or if your company’s local market is atypical compared with another company’s market. If the performance level of a startup company does not match the industry average or the industry leader, that does not mean that the company is poorly managed or cannot be profitable. Underperforming industry leaders indicates only that your company is not the same as those leaders. Frequently, benchmarking against a local market area is better than benchmarking against national leaders or the industry as a whole.

Operations Management

Operations management can be summed up in three words: Get it done! The foundation of operations management is the theory of scientific management. As we have seen, Frederick Taylor developed scientific management to introduce organization, scheduling, coordination, standardization, and cooperation among workers into the production process. Taylor saw a production plant as a large, multifaceted organization with many interrelated activities that should function as one large machine. The activities of each worker within one group had to be coordinated with other workers’ activities within that same group. Each worker group had to be coordinated with other worker groups. Worker groups were clustered into larger cohorts. To keep materials moving through the manufacturing process, activities had to be planned, scheduled, and monitored.

Whether you are working in a manufacturing environment in which raw materials are converted into finished products or in a service environment in which customers receive experiences, these five components of operations management—organization, scheduling, coordination, standardization, and cooperation—must be the foundation your firm’s activities. To have productive outcomes, the firm must have important inputs: money, methods, machines, people, and leadership ( Figure 12.11 ). If any of these essential management elements are deficient or lacking, the company is probably functioning inefficiently and could be at a higher risk of failure.

Three terms—money, cash, and currency—are often used interchangeably, but each has its own distinct meaning and application. Money is any legal instrument that can be used in the exchange of goods and services. Money includes paper money or coins, but it also includes checks or money orders. In developing countries, money might be any physical item that is considered valuable to people wanting to exchange some goods or services. Most money, though, is in the form of cash.

Cash typically refers to physical money or currency, but it also includes deposits in an account (checking, savings, or certificate of deposit) at a financial institution. For example, customers can pay for their purchases with paper money, coins, checks, debit cards, or credit cards. The paper money and coins are taken to the bank for deposit. The debit card and credit card transactions are debited to the business’s checking account by its bank. The cash balance of the business increases by the amount of the deposits, regardless of the form of the deposit. The cash balance is shown on the company’s balance sheet and is the amount of money the company has available to pay its debts and obligations.

Currency is paper money or coins printed or minted, issued, and backed by a national government. Currency is divided into denominations or units in both paper and coin formats. With the expansion of international trade, along with the expansive movement of people among countries, it is important for an entrepreneur to know how global markets affect the value of money. Each national government decides what denominations of currency to produce. The value of a national currency is determined by the ability to exchange it for another national currency. Raw materials and supplies that originate in another country may increase in price significantly because of a decline in value of the US dollar or an increase in value of the country of origin’s money. Likewise, raw materials and supplies may have a price decrease because of shifts in the value of money.

Knowing and understanding how international monetary policies and activities affect a local entrepreneur can be critical to long-term growth and survivability. You must have a clear understanding of projected costs of materials as well as enough funds available at the right time to meet your financial obligations.

Liquidity is a measure of a company’s ability to meet its immediate and short-term (i.e., due within one year) debts and obligations. It’s a way of describing how well you can cover your current liabilities using your current assets. When a company is liquid, it can meet its financial obligations on time, typically on a very short timeline. If the company pays its bills on time, the risk to lenders is lower, so lenders charge lower interest rates; insurance companies may set lower premiums; and vendors may offer cash discounts for early payments. Maintaining liquidity is vital to the success of a small business, as it may have limited access to other financial options.

Other sources of cash include credit accounts such as a line of credit, a company credit card, accounts payable, loans, or your own reputation and goodwill. A line of credit (LOC) is an agreement between a bank and a depositor in which the bank makes available a maximum amount of money the depositor can borrow at any time during the term of the loan. The borrower pays a fee during the term, whether or not there is an outstanding balance, and also pays interest when there is a balance on the loan. All of these sources of cash are more cumbersome and involve more planning and preparation than liquid accounts. However, these nontraditional money sources are typically necessary for a new business owner in order to pay for business activities before the company begins collecting money from its own paying customers. Mismanaging these short-term debt accounts can easily become a burden on a small business. To better manage the financial obligations of the business, the entrepreneur needs to know which financial tools are available, how to use them, and which tool to use for which purpose. Financing is the use of money to conduct company activities. Payment sources for business activities and resources should match the life expectancy of the resource. Long-term debts —such as for land, buildings, equipment, and machinery—should be paid off through long-term financial instruments that are known as secured debt. Ordinarily, a loan used to purchase long-term assets will have a shorter life than the assets. For example, a machine that is expected to be useful for ten years should be financed with a loan that is paid in full in less than 120 months (ten years × twelve months). The purpose of long-term debt is to create revenue that exceeds the loan payment and interest. In this arrangement, the asset pays for itself by generating more cash than is needed to pay the principal of the loan, interest on the balance, costs to operate the equipment, and any additional insurance required or taxes assessed against the equipment.

Short-term or current liabilities , such as payroll, taxes, insurance, and all other operational activities, should be paid for through short-term cash resources. Most short-term payment obligations occur each week (payroll) or at least each month (insurance, rent). Short-term cash resources include sales, accounts receivables, down payments, and line of credit. Confusing long- and short-term financing strategies jeopardizes the financial stability of the company. Mismanagement of finances could create a situation in which the company is unable to pay its bills on time. When a company cannot pay its short-term obligations, it may not be able to operate much longer.

Managing cash collected and spent is one of the two most important responsibilities of the entrepreneur. A positive cash flow exists when cash received exceeds cash spent. A negative cash flow occurs when cash received is less than cash disbursed. All companies and organizations will experience a negative cash flow at some time. However, good managers will have a savings account or access to other cash in order to meet current financial obligations. What is important, though, is to have a positive cash flow over the long term.

Paying bills is not fun, especially when you have little cash to work with. Three popular methods of paying bills include credit, cash on delivery, and deposits on account. An entrepreneur’s vendors may use all three payment methods. Likewise, the entrepreneur can use all three to collect monies from customers.

When bills are due and the company does not have enough cash to pay the bills or the timing is inconvenient, the company must use credit. Credit is the promise to pay later for something already acquired. Short-term credit may come with no interest charges or fees, such as accounts payable Entrepreneurial Finance and Accounting . Vendors will routinely allow established customers to take possession of inventory or products without paying for them at the time of delivery. Payment for products is due on a specific day or after a defined period of time.

Often, a vendor will offer terms of payment at the end of the billing cycle. For example, if the terms are net thirty, purchases that a small business makes during one month are expected to be paid for in full at the end of the next month. Payments made after the due date are subject to a penalty and interest. Sometimes a vendor will offer an incentive to pay early, such as a 2 percent discount if the payment is made in less than fifteen days.

Many startup businesses must make payments at the time of delivery, a form of transaction known as cash on delivery (COD). When the delivery is made, the delivery driver or the online agent will release the product to the customer once payment has been received. This payment method can burden a startup that does not have liquidity. On the other hand, a startup business can reduce its losses by requiring COD payments from its new customers, as it receives payments and has the funds to pay its own obligations.

For unique or specialized products, some vendors will require a deposit from the customer before the product is made. This deposit reduces the financial risk to the vendor for a custom product that may be difficult to resell if the original customer backs out of the purchase. It also provides cash to the producer, who needs to buy raw materials to make the finished product. For the startup entrepreneur, paying for products beforehand could strain the cash available for ongoing operations. However, if the entrepreneur’s customers provide a down payment before the product is produced, the entrepreneur secures a noninterest loan from the customer.

All three of these payment methods are used in business transactions. Cash generated during each financial cycle must equal to or exceed the expenses paid during each cycle. Otherwise, the company may find itself without any money and be unable to afford to stay in business.

The study of how work is performed is called ergonomics . It involves designing, arranging, and coordinating tools and equipment so that the movement of workers who use them is safe and efficient, and products flow through the appropriate work stations in a timely and efficient manner.

Work methods are perhaps most important when complex machinery and equipment are involved. A progressive movement of products from one stage to the next should reduce the employees’ time and effort, which reduces costs. Raw materials should be delivered to the location nearest where it will be used. Moving and storing large inventories at each point of assembly is easier and more efficient than storing parts at another location and moving them to work stations when they are needed. Timely delivery of inventory is equally important. Delivery of materials at the moment they are needed is called the just-in-time strategy. If component failure is detected, the point at which the part was assembled can be identified, and the deficiency quickly corrected.

The just-in-time inventory system , developed in Japan during the 1960s and 1970s by the Toyota Motor Corporation , significantly changed production management. To develop a new system, Toyota took advantage of three crucial factors affecting post-war Japan: (1) limited resources, including cash; (2) value-added activities; and (3) reliance on business relationships that are mutually beneficial. They were able to avoid wasted investment and to effectively manage workloads. Watch this video on other common factors between startup entrepreneurs and Toyota to learn more.

Service industries also apply the assembly line approach. 16 When workers become proficient at their tasks, they can perform the minimum actions needed to complete a task without sacrificing quality. 17 The assembly line approach has given birth to another ergonomic philosophy, lean project management. 18

Many fast-food restaurants, such as McDonald’s and Subway , use the assembly line approach to prepare food quickly and correctly. For example, in making hamburgers, one employee selects the bun, puts the appropriate meat patty on it, and then pushes it to the next worker, who may add onions, cheese, tomato, and lettuce before passing the order to the next station. Once the hamburger is complete, it is passed along to the last worker, who wraps the food and places it in a bag or on a tray.

When employees’ tasks are limited to very few functions, repetition of movement makes their work quicker. This specialization results in higher quality. Specialization allows each worker to increase productivity, improve efficiency, and reduce mistakes. This division of labor has become a major component in Western economic models. Adam Smith first explained it in his work The Wealth of Nations (1776), using pin makers as his illustration. Smith theorized that reducing the number of tasks required of each pin maker would enable each worker to improve his efficiency of motion, resulting in both uniformity in quality and higher production levels.

This increase in quality and quantity of work increases the productivity and profitability of the worker. Collaboration among workers who work in close proximity occurs naturally. A weakness that materializes with one worker may be canceled out by an increase in another worker’s efforts. However, human labor continues to be replaced by machinery and electronic instruments developed during the Industrial Revolution and the modern technology revolution. Nevertheless, human labor is essential on the production line, whether in creating or assembling products or performing services.

Beginning in the late eighteenth century, the Industrial Revolution shifted work from muscular power to mechanical power. Ever since, humans have used machinery to perform tasks greater than what they could achieve by themselves or using large animals. Machines provide consistency of work and higher volumes than human workers at lower costs per unit made. However, the initial outlay of cash for machinery can be large.

For a startup entrepreneur, purchasing machinery can be a difficult, time-consuming, and complicated task. First, one must look at the total costs of ownership (TCO) , which is the comprehensive cost of owning large capital items, including initial direct costs, operating direct costs, and indirect costs. Maintaining and repairing operational equipment is difficult, especially when production schedules demand the machine to be operational. Poor planning can be very costly, especially for a startup business, because your ability to produce and deliver products on time reflects on your reliability to both your customers and your employees.

When making equipment purchase decisions, you should consider all the costs associated with the purchase plus the machine’s ability to produce income or lower costs. Such expenses include not only the purchase price but also delivery, installation and setup, calibration, and operational expenses. You should also consider the interest paid on the loan as part of the cost of acquiring the equipment, a factor that many new business owners overlook, but one that a good accountant should be aware of.

Hidden costs to major purchases periodically involve certain operating costs. Too often, new business owners focus on the purchase price, sometimes referred to as the sticker price, rather than on the total costs associated with equipment. Major equipment may require special delivery methods and other shipping costs. Once it is delivered to the site, it may have to be installed by skilled technicians. In some situations, the site flooring may need reinforcing to carry the new weight load, or the electrical supply may need to be upgraded to handle the necessary current. Local, state, or federal inspections may be required to obtain a permit to operate the equipment. Sometimes, liability insurance policies require inspections and permits in addition to government permits. All of these extra expenses add to the overall costs of acquiring the equipment. Many times, these expenses are considered sunk costs, never to be recovered in resale of the equipment or in producing more units.

Purchasing machinery and other major equipment is classified as a capital purchase or capital expense. A capital expense is a major purchase of a functional asset that is expected to last longer than three years or that still has financial value after being fully depreciated. Capital items, which include buildings, equipment, machines, and furnishings, are best purchased using borrowed funds so that the business can use its cash to pay for operational expenses , which are those associated with daily, ongoing activities of the business, such as inventory, office supplies, wages, insurance, and utilities. When an asset is used as collateral for a debt, the lender places a lien on the asset. The debt then becomes a secured debt, backed by the resale value of the asset. To ease the financial burden of major purchases, depreciation, a reduction in the value of an asset, is calculated as an expense on the income statement, which reduces taxable income and lowers taxable liability.

As a general practice, the payment schedule of a capital expense should be equal to or less than the life expectancy of the equipment. For example, a business may purchase an offset printer that is expected to last twenty years and then finance it through a loan to be paid off before the twenty years are up. Although having the debt paid off before an asset is fully depreciated is ideal, in some instances terms of the loan may extend beyond the depreciation schedule.

Machines have limits to their performance. Absolute capacity is the highest volume of units that a machine can produce within a specified time period. Operational capacity is the number of units you can reasonably expect to be produced within a specified time period. The difference between the two is operational reserve . Because machines may need to be warmed up, materials loaded and unloaded, moving joints lubricated, belts and hoses checked and repaired, or other operational functions performed, machines cannot operate at absolute capacity for an extended length of time.

In calculating production levels, it is easy to overestimate the number of units produced. For an offset printer to work properly, paper has to be loaded, the rollers must be inked, feeder clamps may need adjusting, and one or two test sheets need to be printed to check for ink coverage and crispness of the image. All of these necessary activities take time, but they actually are unproductive. Because each business will have unique requirements and influences upon capacity, the best method is to track your own performance over time and calculate the average. Otherwise, getting input from one of your advisors or a friendly competitor would be sufficient for planning and budgetary purposes.

Machines cost money to operate. Improvement in efficiencies and in production volume is a major motivation in purchasing new equipment. You should consider the increase in units produced, operational costs per unit, decrease in waste, and improvement in quality of products. A grocery store owner who has an old freezer that still keeps food at the required temperature may decide it is worth replacing. Buying a new freezer, with all of the associated costs and improvements in efficiency, has no impact on the number of food items taken out of it and sold. Only the difference in actual cost of electricity between the two units can be considered. However, a die machine that reduces waste and improves the number of molded pieces produced per hour may be worth the investment.

All machines break down, usually at an inconvenient time and place. Trying to repair equipment when it is needed is like a road crew trying to fix potholes without shutting down traffic. Therefore, scheduling production time , the amount of time that a machine is actually producing products that are to be sold (also called up time ), and down time , the time when production is not occurring due to repair, restocking inventory, or unscheduled work, are critical areas for management. A schedule of regularly planned maintenance that includes preventive repairs and inspections will reduce unexpected down time and equipment failures. Scheduling repairs before they are necessary keeps equipment running efficiently and smoothly, helps reduce costs over the long term, and allows for better management of expenses. Unexpected equipment failures not only interrupt operations but can delay delivery of products and services to customers. This can diminish your reliability and negatively affect customers’ confidence in your trustworthiness, potentially affecting future sales.

Every machine will become obsolete at some time and will need to be replaced. Having the latest, greatest piece of equipment may be a temptation that your bank account cannot afford. Replacing equipment, whether major industrial equipment that needs professional installation or office equipment that can be set up by employees, is a critical decision. Too often, the criteria for selecting new equipment are the same criteria used to describe the old equipment’s ability. Using old job requirements for new equipment may be acceptable in an industry that undergoes very few changes over a very long time. However, most industries change drastically and need up-to-date equipment.

Work It Out

Generating interest at home.

Going green is a popular trend today. One way in which power companies are going green is with wind-generated electricity. As of now, almost all wind energy programs are on a large scale, with wind farms consisting of hundreds of towers in rural areas. Stationing wind turbines at individual houses is currently impractical. Zoning restrictions limit the height of structures, costs exceed the benefits for homeowners, and potential sound and sight pollution are a concern for neighbors.

Those concerns apply to the current options for wind turbines. Can you think of other options that would be beneficial, cost effective, and socially acceptable in urban, residential areas? What physical properties would you need to consider? What type of functional capacity is needed? Can a household have more than one type of electrical circuitry for different types of needs? Do we need a product to generate electricity for today’s household purposes? Or should we simply rethink household electrical systems entirely?

Entrepreneurs not only create new products and services, but also redefine the problem. They may need to make adjustments to resolve other environmental factors. For example, there was no need for paved roads before the advent of cars. Businesses that provide gasoline and repair work for automobiles were not necessary before the automobile became popular. The mass-produced automobile changed more than how a product was manufactured—it changed the way people moved.

Consider what happed with Avni Patel Thompson and her childcare business Poppy ( Entrepreneur in Action: Scheduling Sounds Simple ). What lessons can you learn from her experience as you look at home wind turbines? What similarities are there between a service-oriented company and a product-oriented company? What differences are there between the two? Do homeowners really want a new way to power their homes? What are the similarities of purchasing a major piece of equipment for a home and for a business? What differences are there?

Customer demands within an industry also may change significantly over time, just as a company’s specific needs may shift appreciably. To meet external customers’ new wants and the company’s new internal needs, machinery with new technology and more advanced construction may be mandatory. You should plan three to five years into the future for major purchases of equipment, machinery, tools, facilities, and skill levels. The question is not “What do I need today?” but “What will I need five years from today?”

Trading in outdated equipment may have value that is not always recognized in financial documents. When sales representatives of major manufacturers need to meet quotas, they may be willing to offer a very positive financing plan to place their equipment in your business while removing a competitor’s machine. But you should avoid making the mistake of ignoring your current vendor. Your current machine supplier may be very eager to keep customers and may offer to take your old equipment as a trade-in, which lowers the purchasing price of new equipment. Or your current supplier may be able to offer better terms than competitors or provide supplies as a reward for loyalty. All of these choices eventually lower both purchase and operating costs of new equipment.

To upgrade or keep the old machinery, to buy or lease, to sell or trade in, these are just a few of the questions that business owners contend with in making major purchases. Paying for big ticket items through vendor financing might be easier than borrowing from traditional banks. But when making major equipment purchases, always keep the professional sales representatives close. Their industry insight and knowledge could be more beneficial to you than the equipment itself. People are more flexible, more knowledgeable, and especially more valuable than machines.

Searching, recruiting, hiring, and supporting a workforce can be some of the most rewarding and frustrating interactions that a new business owner deals with (see the discussion on human resources in Fundamentals of Resource Planning for more information on hiring the right people for a business). Selecting the right people at the beginning can be the difference between succeeding or failing in the early years of a business. Many experienced business owners will say that waiting to hire the right person is better than hiring the wrong person now.

For the new entrepreneur, hiring people you know is appealing because it is easy, they are typically very amenable in the startup stages, and they share in the excitement of the new business. Nepotism is the hiring of family members and close friends, usually based on their relationship to the entrepreneur rather than on their ability to perform the job. Spousal support and involvement are important in the early stages of a business. Spouses routinely become employees of the new business, and there may be a difference in the outcome based on gender. Many times, a wife is an unpaid employee if her husband starts the new company. 19 Her commitment may vary from a sporadic involvement to a few hours per month or per week. Women entrepreneurs, however, are less likely to have their husbands participate in the business, especially if the husband is unpaid. 20 , 21 , 22

Hiring other family members or friends because of their availability and personal commitment is enticing. Yet hiring family and friends just because they are willing and available can backfire and may produce more long-term harm than good. Sometimes hiring people close to you may discourage qualified candidates from seriously pursuing employment with your new business. Seeing that previous hiring decisions were based upon personal relationships is a discouragement to skilled personnel. Terminating employment of a family member can be truly difficult, especially if that family member is an immediate family member such as parent, spouse, child, or sibling. Difficulties within the family and the business are possible if the situation occurs. Moreover, failing to terminate a family member for cause will predictably destroy morale among nonfamily employees, especially skilled employees.

As a business is getting started, having someone is sometimes better than having no one. At other times, having no one is better than having the wrong one. Eventually, however, the ability to do a job supersedes who the employee is. Furthermore, traditional employees hired from the marketplace eventually will resent seeing more favoritism and leniency granted to family members than to nonfamily members. There is a stark difference between the integration of family and non-family members in a startup environment. The career path is usually short, with favoritism towards family members or longtime friends. 23 A delicate balance between family and nonfamily employees is difficulty to achieve, and new entrepreneurs do not need the additional distractions caused by rifts between family and nonfamily staff members.

Friends from previous employment, college, high school, or the old neighborhood are also popular sources for employees. In the early stages, the entrepreneur has so many issues to tackle and tasks to complete that hiring people they know seems like an easy solution. People build personal relationships through social and personal interactions, outside the needs of the new business. They establish friendships along personal commonalities such as attending the same school or being in the same club or on the same team, not along the subordinate-supervisor spectrum. A sure way to end a good friendship is to hire a friend who is unqualified for the job and place them in a supervisory role. Hiring a friend as a subordinate could lead to a confrontation that could cost the new entrepreneur the support of friends and family.

Every new owner must be willing to move past the startup phase and into the growth stage, where skills become more important than personal relationships. This natural progression in business maturity requires skilled workers to perform their tasks effectively. Those skills come at a price that may be difficult to match in the early stages of the business, but in the long run, skilled workers will produce more revenue than it costs to employ them. Also, customers expect more from established businesses than they do from an initial startup business.

Entrepreneurs must hire employees who complement them, not only in skills but also in personalities. In all of its various phases—from inception through startup, growth, and expansion—every business faces situations and obstacles that require an assortment of skills and talents to resolve. Some situations demand a strong, direct, or even confrontational approach, which can be comfortable for an extrovert. Other situations may need to be handled more softly and indirectly. An introverted employee who naturally is slow to react may take a passive approach that would be more appropriate in some settings.

A small business can strengthen its staff by hiring people with an assortment of backgrounds and experiences. The collective experiences of the whole staff benefit the business in ways that may not always be easily identifiable. Employees who fit together make a nice place to work and an enjoyable experience for customers.

Sales Force

In Building the Entrepreneurial Dream Team , the sales rep was discussed in the context of the value and importance of generating revenue and cash flow for the business. In this section, the discussion will be focused on the sales force as a component of the personnel working in a for-profit business. However, nonprofit organizations that are also dependent upon sales revenue, as discussed earlier, could apply the concepts as described as well.

Decisions involving a sales force may be some of the most critical decisions made, perhaps even more important than organizational structure and tax status. The sales force triggers the activities that generate revenue, which brings the business to life and sustains it. Without the sales spark, the business becomes a lifeless organization doomed to closure.

A sales force must fit within the overall operational and marketing strategy of the business. The product must be fully developed, its benefits to the customers clearly defined, and the primary target market selected before a sales force is needed. Furthermore, company goals of minimum production levels must be established, and a target revenue high enough to cover expenses needs to be calculated. It is imperative that each of these goals is patently understood and achievable for both the sales force and the company before the sales force is assembled.

The first consideration is identifying the stage of the company. Some entrepreneurs have a true startup business beginning from scratch, whereas others enter entrepreneurship through the purchase of an existing business with established customers and cash flow. The organization, structure, and role of the sales force will depend upon whether the business is in the startup, growth, mature, or decline stage). As the business progresses through each stage, requirements and abilities of the company change as does the external environment of the market.

Deciding whether to self-perform sales or outsource the sales function should be done very carefully and should include research into the tax implications and benefits of using employees versus independent contractors. 24 Self-performing involves the employees doing most of the work in a business. Outsourcing is the hiring of an outside company or third party to perform a specific task, job, or process, or to manufacture goods. Each option has benefits and limitations. The entrepreneur must consider many factors, ranging from financial strength to market knowledge to sales support capabilities. Hiring sales personnel as employees means the entrepreneur must use time and money to recruit, hire, train, supply with equipment and office materials, and regularly pay the sales force. Outsourcing the sales function to independent contractors may be a viable option, as the entrepreneur would have minimal upfront investment and they would be paid a commission only when they make a sale. Outsourcing is a preferred selection for businesses that are financially straining under cash flow, while self-performing sales is preferred for established, growing companies. 25 , 26

Pay is always a touchy topic. Determining a person’s compensation and income gives the entrepreneur a great deal of power and control over the sales force. It is a very important responsibility that ought to be handled with great care. Issues regarding pay affect not only the employees’ or contractors’ livelihood, but also the company’s financial health and reputation. Furthermore, there are numerous laws and regulations, at both federal and state levels, that place the burden of doing it right upon the employer.

Sales force personnel who are employees must be paid with regular wages. Sometimes, a commission or bonus is paid if sales quotas are met. Regular wages, along with employer-matching payroll taxes and employee benefits, increase fixed expenses to the business. This arrangement may not be sustainable for a startup business. Yet the entrepreneur-employer can benefit from this arrangement by retaining control over employees’ schedules and routines, earning loyalty from staff, and receiving immediate market feedback from the employee.

Outsourced or independent contractor sales reps are paid on commission. This arrangement adds a variable expense to the business, an expense that should only be recognized after a sale is made. In most situations involving outsourced independent contractors, the employer is not responsible for payroll taxes. A word of caution, though, to all beginning entrepreneurs: Determining whether someone is an employee or an independent contractor can become complicated. The burden of doing it right is on the employer. And not doing it correctly can add significant expenses to the business in the form of fines and penalties.

An important factor to contemplate when deciding what type of sales force to have is knowing your position in the market and your market’s characteristics ( Figure 12.12 ). If you are selling to other businesses, business to business, you will have to understand their decision-making processes and buying criteria if you expect to make any sales. On the other hand, selling direct to the consumer, business to customer, has a wholly different marketing strategy. For the nonmarketing entrepreneur, learning about marketing basics ought to be placed on the “to do” list so that conversations with sales force personnel will be productive.

An additional market consideration is the sales territory . If you define territories by geographic markers, does each territory have the same potential number of customers? What is the variance in size and the distance from the home office? A similar set of questions arises if the sales force is established along product lines. How are the product lines alike? How are they different? When sketching out the sales force organization and responsibilities, it would be highly advantageous to receive input from potential sales reps or more experienced entrepreneurs who already know how to setup this division of your business.

Agreements made with the sales force must be honored, so make any agreement only after very carefully thinking through scenarios and obtaining insight from trusted advisors. The reputation of the business with employees and customers alike is at stake when employers do not honor agreements with employees, especially those employees who are the face and voice of the business to the market. If a sales rep, employee, or independent contractor decides to separate from your business, they could take their customers’ business with them to their next place of employment. Although you could take legal action against a former employee who does this, the bottom line is that you have lost a sales rep and a customer. Avoiding that situation is best for everyone, especially you, the entrepreneur.

Getting the right sales people in place is critical. Having them work in a positive and effective environment is a necessity that cannot be ignored.

Terms commonly associated with a leadership position include owner , manager , supervisor , team lead , leader , and boss . Many of these terms are used interchangeably, even though they have some minor differences in meaning, but normally one person will function as both leader and manager in a small business. Some entrepreneurs may be able to switch between these two roles flawlessly and fluidly, so that their followers and even they themselves are unaware that the roles are being filled simultaneously. Nevertheless, some traits and behaviors are associated more closely with leadership than with management.

A key difference between leaders and managers is their role in initiating action. Management is typically concerned with administering and directing an organization’s activities. This includes planning, scheduling, coordinating, overseeing, and inspecting tasks performed by staff. The manager ensures that employees who have been hired to perform duties perform those duties as expected and at a level of quality and quantity acceptable.

A leader , on the other hand, instills within others a desire to perform. This is more of an internal motivation, a psychological approach, which the leader develops via words and actions. Like the results of the manager’s approach, the results of motivation will be evident in the employees’ performance. The difference lies within the minds and souls of employees.

Employees will work for their manager because they are obligated to on the basis of assigned roles and positions of authority. Employees will work for a leader because they want to achieve the same goals and accomplish tasks to satisfy themselves as well as their leader.

You can find many lists that describe either characteristics or qualities of a good leader. Only a few have been included here. Descriptions of good leadership can be divided into the following categories: personality, competencies, locus of control, and style.

Personality describes the characteristics of a person as shown by their actions and words. Effective leaders typically are easy to get along with, have a positive attitude, engage others, and display self-confidence in their skills. When entrepreneurs begin looking for employees, working very closely together necessitates that they get along and enjoy each other’s company.

Working for someone who does not know what they are doing can be very difficult, if not impossible. Therefore, good leaders know what their competencies are and are very good at what they do. Employees as well as competitors and regulators recognize high job-performance skills. Sometimes, a very skilled leader becomes an industry expert with a reputation throughout the industry and gives training at conventions, conferences, and trade shows. Good leaders are also keenly aware of the skills they lack and readily admit their incompetence in those areas. Hiring a skilled employee who compensates for your shortcomings is a high priority.

Locus of control is the belief that you have or do not have control over events that occur in your life. If you have an internal locus of control , you believe you have significant control and influence over events that occur in your life. An external locus of control —the opposing view—means you believe you have very little control, if any, over events that occur in your daily life. Effective leaders have an internal locus of control and feel certain that they influence and control events, situations, and people in their lives and, specifically, in their business. When crises arise, effective leaders take charge and begin making decisions to get control of events. Employees, customers, and others connected to your business will rally around you if they are confident that you can take control of the situation and directly deal with the challenges.

The three common leadership styles are autocratic, democratic, and laissez-faire. Each of these approaches to leadership is effective but can also be ineffective. The approach that works is best determined by the industry, structure, environment, and requirements of the job.

Autocratic leaders make decisions by themselves and view employees as subordinates who must follow instructions without hesitating or questioning. Autocratic leaders are necessary in situations where decisions are needed quickly, the leader is highly trained and skilled in the work requirements, and the outcomes can be very serious. Democratic leaders engage their staff and seek input before making decisions. This approach works well if the organization or industry is complex, many different departments or employees are affected by the decisions, and a broad range of information is needed to make good decisions. Laissez-faire leadership allows staff to work independently, mostly without supervision or direct input from the leader. This approach works best when the employees are highly educated and skilled, tasks among employees are not closely interrelated, and staff are self-motivated.

Leadership has been studied for many centuries, and the debate continues. You can find examples of good and bad leadership in many organizations including the military, sports, government, and business. Leadership traits are like hands in a poker game—they are all good and bad. The difference is the situation. For an entrepreneur, knowing the industry, the market, the competitive environment, the customer base, and the employee pool are starters for determining which leadership traits and style would be effective. If you decide you are not matched to the environment or situation, then you could engage someone who does possess the traits and skills that better match your current needs.

Operational Needs

When starting your business, the first question you need to ask is whether anyone wants to buy your product or service. Creating a new product or service is easy. In fact, 70 percent to over 95 percent of new products introduced every year are classified as failures. 27 With more than 30,000 new products introduced every year, you could reasonable guess that between 21,000 and 27,000 are failures. 28 On the contrary, only 5 percent to 30 percent of new products are successful. So the question is valid: Will anyone buy my product or service?

With such a low success rate, you will need to conduct careful research and small trial runs to determine the viability of your new products. You need to know not only whether anyone will buy your products but whether customers will pay your price, so that the business can make a profit, or at least break even. You need to ask these two very important questions up front, because if the answer to either one is “No,” you have no need to do anything else.

A second series of questions that you need to address focus on the location of the company’s operations. Where will you locate your business? Will you rent or buy a building or facility? Does your facility need to have easy access in a high-traffic area? Or can it be in a quieter area, where costs are lower? In addition to access and costs, will your business be located within a competitor’s influence? It would be unfortunate if you negated all the positive factors of your great product and viable business plan by selecting the wrong location.

Besides deciding on a proper location, you also need to consider the size of your facility. Selecting a structure that is too small from the very beginning may handicap any growth in the early stages of your business. Having to move to a larger facility soon after beginning operations could be detrimental to your operations. On the other hand, selecting a facility that is too large puts pressure on cash flow, as you will pay rent or a mortgage for an unproductive building space. Finding the balance between “big enough to grow into” and “small enough to afford with low sales” is a predicament faced by many business owners, whether new entrepreneurs or seasoned veterans.

You will need to make similar decisions about furniture, equipment, and furnishings. These items are available for purchase or lease. Sometimes a lease is better, as the initial payments may be lower but over time, buying equipment and furniture can help improve cash flow once the items are paid for. However, deciding on how much, what quality, and what size can be difficult. Good equipment sales representatives can be a big help in making equipment decisions.

To get started, you will need to determine the proper inventory levels. How long is the shelf-life of your inventory? Some products have a long shelf-life, whereas others may perish quickly. Ask yourself “How much do I need?” and “When will I need it?”

Before beginning a business, you may need licenses and permits. Buildings must be inspected and approved prior to occupation for business activities. Building permits may require electrical, plumbing, HVAC, and structural inspections of building systems and physical features. Accounts for water, gas, and trash pickup must be made prior to occupying a facility. Table 12.3 summarizes the operational needs you should consider when launching a venture.

Set the grand opening several days to a few weeks after the actual opening of business. Invited guests may include investors, city officials, family members, special customers, former employers, business neighbors, and competitors.

Forbes magazine has various resources such as this step-by-step guide for entrepreneurs and this list of eight steps for entrepreneurs on starting a new business. The federal SBA list of steps is also available. Review each list. Which one best matches your entrepreneurial situation?

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• 25 P. M. Madhani. “Managing Sales Force Compensation: The Strategic Choice between Direct Sales Force and Independent Reps.” Compensation & Benefits Review 44, no. 2 (2012): 86–99.
• 26 P. M. Madhani. “Managing Sales Compensation: A Sales Force Configuration Approach.” Compensation & Benefits Review 45, no. 2 (2013): 105–114.
• 27 M. Emmer. “95 Percent of New Products Fail. Here Are 6 Steps to Make Sure Yours Don’t.” Inc. July 6, 2018. https://www.inc.com/marc-emmer/95-percent-of-new-products-fail-here-are-6-steps-to-make-sure-yours-dont.html
• 28 J. Schneider and J. Hall. “Why Most Product Launches Fail.” Harvard Business Review . April 1, 2011. https://hbr.org/2011/04/why-most-product-launches-fail

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• Authors: Michael Laverty, Chris Littel
• Publisher/website: OpenStax
• Book title: Entrepreneurship
• Publication date: Jan 16, 2020
• Location: Houston, Texas
• Book URL: https://openstax.org/books/entrepreneurship/pages/1-introduction
• Section URL: https://openstax.org/books/entrepreneurship/pages/12-3-designing-a-startup-operational-plan

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