In this next section of our business planning series, we will outline the general flow of our businesses’ operational flow. This will include our locations, other facilities, technology to be used, equipment, and business milestones. In essence, operations describe how our business will operate day to day and outline our expectations for business milestones.
You have to work from somewhere. In this section, we will talk about your businesses locations. This will vary depending on the type of business you are operating and its vertical location in the market. Include your offices, storage facilities, retail locations, manufacturing plants, and other types of locations that may be relevant to your type of business. An important thing to consider is how much space you need to start operating your business and if it will fit your future needs. If your current location will not fit expansion, what will you do to migrate to the next level of growth as you expand?
For some businesses like restaurants or car dealerships, location is key to the operations of the business. Describe the level of foot or vehicle traffic. If your location does not receive much traffic, explain how customers will find the location and why the chosen facility is good to start.
There may be economical reasoning for your location choice. Is there government tax incentives or other types of regulation that led your decision. These should be mentioned and included if relevant.
How much of your target market is in the geographical region that you intend to start operations? If you locate your business where a small segment of your market is, elaborate on how that will or will not impact your sales flow.
If you are starting a logistics or warehousing firm, it may be important to mention the highways, railways or airports that are closely located to your facility. There is a lot more to operating a business than picking an arbitrary location. Much strategy and planning is involved to make sure you get the maximum impact and exposure.
For businesses that offer professional services, a home office may be used. Be sure to detail how long the home office will be viable and if an outside office will be considered later.
In the context of location, two things are important for your operations section of this plan. The first is where you are going to start your business and the second is the opportunities for growth, with what your expectations are for expanding. It is crucial to have a plan for growth if you expect your business to grow, which you should.
Technology can be very simple or very intricate depending on your type of business. Detail what technology your business will utilize to enhance operations and what the expense budget is for these solutions.
A good exercise is to take out a piece of paper and list the various needs you have that technology can assist with. After you have completed this list, research various offerings, find the one that best fits your business and add it into a table with the product’s name, description, and cost.
To help you get started, a few good examples of technology to include are the following:
- File Server
- Accounting Software
- Point of Sale System
- eCommerce Software
- CRM (Customer Relationship Management) System
- Lead Generation Software
- Phone System
- Security System
- Support Ticket System
Technology will vary from business to business, but most of these items are likely needed to streamline operational flow.
Tools and equipment relate more to specialty type equipment that you may need. A gym for example will need various weight benches, cardio machines, and other equipment related to fitness. A software development firm may need a variety of different devices to test the software on. This aspect is very industry specific.
For example, a steel plant will likely need welding machines, drill presses, and other types of tools. Similarly, an automobile mechanic will need lifts, drills, balancing equipment, etc.
List all equipment you will need to operate your business successfully. Additionally, list costs associated with the equipment and how much you will need to budget for replacement or repair.
It is important to set goals and milestones for your business. In this milestone section of the business plan, outline your goals and anticipated timeframes for them.
An example for a new car dealership could be the following:
|Setup Facility & Open Location||2 Months|
|Expand to Six Staff Members||12 Months|
|Open a Service Center||18 Months|
|Have Service Center Cover Operations||28 Months|
|Expand Inventory to 350 Vehicles||34 Months|
|Win a Customer Service Award||38 Months|
|Achieve 20% Repeat Sales||42 Months|
Your goals may be project oriented if you are developing a new product or operations related like the above. No matter what type of milestones you want to set, be sure that they are realistic and relatively achievable.
Metrics are important to understand how your business is preforming. Operations professionals are always looking and comparing current numbers to historical data. This type of information or metrics, will allow you to know how you are preforming and if anything needs adjusted.
Some metrics to mention and monitor include the following:
- Direct Costs
- Leads in Pipeline
- Lead Conversion
- Website Traffic
- Cash on Hand
Our objective in this area is to make your business plan a living document and measure actual results. If we can see weak performance, we can correct it early on.
Since we do not yet have historical data to quantify against, the best way to start is by listing in your plan the metrics that are important for you to monitor and set a monitoring frequency.
A good example of this would be monitoring the above-mentioned metrics by comparing them to the previous quarter’s data. As you operate your business, you can compare the second quarter of operational data to the first. This will allow you to see your growth. Some metrics you will want to see increase and others you will want to see drop. Ideally, your cash on hand and lead conversion should increase quarter to quarter, with direct costs decreasing.