How to Define Operations in Your Business Plan

In the lineup of key business capabilities in your business plan, the term operations describes the processes and resources that you use to produce the highest quality products or services as efficiently as possible.

Business operations typically include four key areas:

  • Location: Where you do business — physically and online

  • Equipment: The tools you need to get the job done

  • Labor: The human side of business operations

  • Process: The way you get business done, including your systems for quality control and improvement

The importance of each of these areas depends on the nature of your company. For example, physical location is critical to a retail outlet that lives or dies by walk-in customers, while physical location may not matter a bit to an Internet-based company — unless the business depends on highly skilled talent or the kinds of resources that cluster in places like the Silicon Valley or other cyber centers.

If your plan is for a start-up company, include a description of how you plan for each of the four key operational areas. For established companies, detail what operational changes are necessary to achieve the new goals and objectives detailed in your business plan and how you plan to implement and fund an expansion of your operation.

Even for a small company, operations can be critical to success. Take the example of a talented San Francisco florist who watched his small business blossom almost beyond his control. At the beginning, he managed all the designs and arrangements himself. He bought new inventory at the flower market early in the morning and finished the bookkeeping late at night.

But as business expanded, the florist found that he could no longer do everything himself, so he scrambled to hire and train employees. In the rush to meet growing demand, he failed to establish a clear set of operational procedures. The result: a business breakdown.

Suddenly, his company had no mechanism for quality control. Flower arrangements were delivered to customers before receiving approval, and no single person was put in charge of going to the flower market.

For a brief, rocky period, a number of influential and unhappy clients threatened to find other suppliers. Just in the nick of time, the florist sat down with a consultant and worked out a new way of doing business based on the larger staff size. The new operational procedures spelled out each person’s duties and responsibilities. They described the process of filling customer orders from the initial telephone call to final bill.

To his surprise, the florist discovered that, thanks to the new procedures, he could devote more time to do what he did best — the creative end of the business — and still meet the growing demand.

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