Operational strategies constitute the functional anatomy of a business. When preparing a business plan, including a section on operational strategies is indispensable. They describe how the business will be run and how each process will be executed to achieve the overall commercial objective. This definition may seem too simplistic for experienced industrialists. However, perhaps it is essential to perceive a business not as a complex entity, but a logical organisation that works well if the right basic equation of input and output is applied. From this fundamental staging ground, it would be more effective to work outwards to identify process variables and how they can be connected to the underlying infrastructure. So, simply speaking, having an operational strategy is akin to laying down an action or to-do plan that clearly outlines the procedures and systems to implement for the delivery goods or services of a certain standard in order to achieve set business goals, for example, profitability, customer satisfaction, business growth or investor interests.
A convincing layout of operational strategies provides a powerful substantiation and accords credibility to the financial and commercial targets established in a business plan. Here are the 8 points to include in the operational section:
1. Operations Strategy
Describe how you will fulfil your marketing strategy using operations, for example, in adding value for customers in your target market or winning in the marketplace based on cost, quality, timeliness, customer service and flexibility. It is important to stress which of these dimensions are more important and which ones are less significant.
2. Scope of Operations
Describe the scope of your operations with procedural details of what your company will do in-house and which functions will be outsourced. Provide reasons for this and describe your relationship with vendors, suppliers, partners and associates.
3. Ongoing Operations
Describe how your company will operate on an ongoing basis specifically focusing on the organisational structure with details of the persons or departments in-charge of the day-to-day running of the company as well as the unified processes that ensure they will work together.
The location of your business can play a decisive role in its success or failure. Your location should be built around your customers, is accessible and has the required security. State where your primary office will be located as well as any other facility where your business will operate and then explain the reasons for those locations. Give the actual size of each office and/or facility and describe areas for production, sales and storage, as well as the type of space, fittings and renovations required for your business. A drawing or layout of your facility, including equipment, is usually necessary if you are applying for expansion opportunities.
The right mix of personnel will be the most valuable asset in any business. Employees and staff will play an important role in the overall equation of your business. It is very important to outline what skills you possess and the ones you lack that needs to be supplemented by hiring additional personnel. Describe your human resource and personnel performance management strategies that cite how you treat and manage employees to make them feel as part of the team. State your change management policies and how to keep personnel fully informed of modifications. Employees are a valuable source of excellent ideas, innovations and inspiration to new products lines and markets to enter. So, be sure to set human resource policies that enable their suggestions to be heard as they may provide your business with the new competitive edge you have been looking for.
Explain your methods of production or how you deliver a service, for example, how and where your products or services are produced. Where applicable, describe manufacturing processes, quality control procedures and customer service.
7. Operating Expenses
Include a description of operating costs and assumptions that appear in your financial statements. Most expenses are referred to as overheads. Overhead expenses are all the non-labour costs required to operate a business, including expenses associated with maintaining an employee. These expenses can be divided into:
- Fixed expenses that have to be paid regardless the volume of business
- Variable or semi-variable expenses which change according to the amount of business.
Take note of all cost control and waste management measures you will implement in order run a lean operation.
8. Legal Environment
It is vital to be aware of any all the regulatory controls governing your products, services, intellectual property protection, safety and efficacy. This includes understanding laws that enforce the requirements for licensing and permits, building codes, insurance coverage, health, workplace or environmental rules and other special regulations covering your industry or profession.
About Nealda Yusof
Dr. Nealda Yusof is a business and technology writer who has expertise in developing business plans, evaluating technology, establishing business processes and performing market literature research. She owns a small business BeegBee Technology Alliances. For more information about BeegBee Technology Alliances and its solutions, visit www.BeegBee.com.