When you go in to do a pitch for your business plan, one area that’s always of interest to investors and bankers is the operations plan. If this section is jumbled or hard to understand, it’ll do your overall plan a disservice.
The operations plan maps out the day-to-day life of your business. While you may have this planned out in your head, the exercise of writing it out will help you get clear on whether or not your plans will be possible.
Think of your operations plan as a guide or instruction manual for running your business. Like any guide, it needs to be well organized and extremely easy to follow. When designing you operations plan:
- Start With an Open Mind
- Know What to Include
- Know What to Avoid
Start With an Open Mind
This is one area of your business plan that you should go into the writing process with an expectation that what’s in your head will likely change. As you map everything out, items that may have seemed feasible may quickly reveal themselves as less than ideal.
When an investor reads this section, they want to see that you have an actionable plan for your business idea. They want to determine if your big ideas can translate into reality. This is one section on which you can expect investors to ask questions and make suggestions for changes. That’s totally fine! They aren’t looking for “right” or “wrong” necessarily. They do want to see how willing you are to change your practical vision for the business.
The operations plan is where you move from idea to action. Take a long hard look at how to optimize your business plan to ensure success.
Know What to Include
When you begin working on this section, you’ll need to start looking at all the nuances and nitty gritty details required to become operational.
The operations plan will usually have several common components that we’re going to look at. Bear in mind that your plan may have other areas you may need to include.
Licenses and Permits
These are a critical part of operationalizing a business. You will need to register your business entity so you can start your accounting process and, of course, deal with taxes. This is one of the less exciting components of running a business, but it’s necessary. The good news is that most required licenses and permits for a business are fairly easy to find, fill out and submit.
What you’ll need varies from state to state, or even city and county. Don’t make assumptions that just because you need one thing for a business in one location that it’ll be the same for the next business. It’s also important to note the timelines will vary. You need to build in time to ensure you have what you need in time for your business opening.
Your Team: Internal and External
Now, you get to create an organizational chart for your business. The chart should include any positions that need to fill in order to execute your daily operations. This includes both employees on your payroll and contractors to which you outsource work.
Each position should have a brief description of the job along with the salary range. You also want to include why you need to fill that particular role. If you already have someone on deck to hire for the role, share a little bit about who they are and why they’d be a great fit.
It’s fairly common for startups to go the route of outsourcing some roles and not having those people on the payroll as employees. Outsourcing is a great way to take some things off your plate as the business owner, and find people who are subject matter experts in areas your team may be lacking. Some common positions that get outsourced include bookkeeping, payroll, website development, IT support, and marketing such as social media and content creation.
Marketing Including Your Online Strategy
Your business needs a marketing plan, as this is one of the most important things you’ll do to attract clients or customers. You should have a marketing strategy that takes into account what the competition is doing, where your target audience is best reached, and what sort of offers will resonate the most with those you want to attract.
Your marketing plan should include considerations for things like:
- Client acquisition
- Content creation
- Live events
- Social media targeting
- Traditional media
It’s no secret that the internet is king. That means your business needs to have an online presence as part of your overall marketing plan. This is one area where if you don’t feel comfortable or have the knowledge to create the strategy, outsourcing is a great idea. An online strategy that addresses Search Engine Optimization (SEO), social media and your website will help you stand out in a competitive market.
Understand that unless you’ve run this exact type of business before, a lot of what you include in your plan will be your best guesses. This section of the operations plan is where you give investors the whole picture of how the business will operate. That includes everything from bigger decisions like what methods of payment you’ll accept and hours of operation, to smaller details such as if your staff will wear name tags.
A good exercise when you’re mapping this out is to consider what both a quiet day and a busy day will look like for your business.
If you aren’t sure where to get started, consider finding a business owner doing something similar to interview. Questions to ask include:
- What challenges did you face with your operations when you first started?
- Were there mistakes you made that cost you money?
- What needs did you think your business had when you started that turned out to not be accurate?
Know What to Avoid
As your operations plan covers a very broad subset of information, it’s easy to go completely overboard. Investors looking at your business plan don’t want to read your entire ops manual or policy and procedure handbook.
Many times, you can slim down the subsections by adding the bulk of the information to your Appendix. If the subsections are more than a page long, that’s a good indicator that you need to start editing.
A strong operations plan can be an important factor when investors and bankers are deciding whether to move ahead. By showing you’ve given plenty of thought to the daily reality of running your business, you’ll instill confidence that you’ve got everything you need to be as successful as possible.