Guest Post: Operational Information to Include in Your Business Plan

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Benjamin Franklin said that failing to prepare is preparing to fail. This is especially true when business planning. A business plan will be the road map that you follow as you create and grow your business. Central to the plan is the operational information that will link all of the parts together and transform your idea into a viable business.

Components of a Business Plan

Before focusing on one part of the business plan, it is important to understand all of the pieces that make up a good plan because they are all interrelated. According to the U.S. Small Business Administration, a typical business plan will have an executive summary, company description, market analysis and marketing methodology, management, services or product, and a financial projection. Each of these parts is dependent on information from other parts. For example, financial projections will influence the speed of manufacturing and vice versa. If you can only make 10 items a day, you either need to have a high price point or a low financial projection.

Start With the Market

There are several theories for developing a price structure, but the easiest is to set your price comparable to that of the industry average. Once you have your unit prices for products or services, you will multiply this by the number that you can make in a month to get your monthly revenue. Conversely, if you know how much you want to make per month, you can divide this by your unit cost to get the number for production in the month. Since all of your financial analysis comes from revenue and revenue comes from service or product delivery, this is the first important piece of operational information that you will need.

Know the Competition

Your competition will be one of your primary operational drivers. Do not look at them as an enemy. Instead, see competitors as businesses that have already achieved a market share and use them as a model of success. Most successful manufacturing companies have their pertinent information online. For example, Apple Rubber has material guides for its o-rings posted on its site. Assimilate this data into your operational plans instead of trying to reinvent the wheel.

Develop Flowcharts

There are a lot of moving parts to any business. It is one of the reasons that you want to plan it out. To truly understand the minutia of your operations, use a flowchart and plan out every element of the process from concept to delivery of products. Since one of the reasons for a business plan is to prove competency to an investor, the operations flowchart should be done with extreme detail. The ordering of supplies, quality assurance and distribution all need to make an appearance. If this is for a sole employee business, then the flowchart needs to show all of your activities, including marketing, accounting and service delivery.

The Cost of Space

The space needed to run your operation is directly influenced by the business structure, type of business and number of employees. This information also flows into your financial analysis as the purchase of a building will change the structure of your assets. Decide whether to purchase or lease and do not forget to include various fees associated with real estate. Weave all of this information throughout your plan so that it gives the most guidance possible for you and your business.

 

About the Author:

Paul Reyes-Fournier has served as the chief financial officer for social service organizations, churches and schools. He created his ownmarketing firm, RF Media. Paul holds a BS in physics and an MBA.

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