Your Operations Plan: A Start-up Blueprint for Running Your Business
Operations management is a key component of almost every business plan. It’s a start-up blueprint for running your business, and help you anticipate and plan for contingencies.
Consider the “4 M’s” in Your Start-up Blueprint
Operations management can be broken doen into the 4 M’s, each with its own sub-components:
- Money: budget, cash flow, financial systems, point-of-sale systems, banking, taxes, and audit
- Methods: policies and procedures
- Machines: equipment, property, leases, insurance, repair and maintenance, and capital replacement
- Manpower: human resources, whether employees or contractors
Your start-up blueprint affects all aspects of planning and running your business, from time management to budgeting. The following components should be considered when developing your operations plan.
- Budget. The budget for your policies and procedures in your operations plan should be written and revised as you consider each aspect of your business operations. Try to be as accurate as possible in your budget, even though most of your numbers will initially be estimates.
- Day-to-day operations. Describe how you will run your business. In general, what will your business do from day-to-day? How will these activities be done? Who will do them? It’s vital to consider these questions when crafting your start-up blueprint.
- Industry standards and regulations. Are there any that affect your day-to-day operations? Would it benefit your organization to be certified in any way (Organic, ISO 2000, industry association certification)?
- Quality of service standards. Are you setting any? If so, how will you monitor and maintain these standards?
- Environmental standards/social responsibility guidelines. Are you setting these types of standards for your business? Are they part of your marketing efforts?
- Facility. How does your facility fit into your operations plan? Everything from the access and size of your storage area(s) to the hours of operation, to the location of fire exits, needs to be considered. Ensure you are compliant with business licences, your lease, and zoning bylaws.
- Equipment/vehicles. Do you or your staff require training or certification to operate any required equipment and/or vehicles? Do you have the space required to store your equipment and/or vehicles? What power consumption do they require? Do you have or need to create safety policies and procedures?
- Telecommunications. Some small businesses start with a single cell phone, while others need an automated phone tree system.
- Inventory/supplies/procurement. Do you have space to store and stock your inventory? Do you require fixtures, display racks, or shelving? Do you have insurance to cover any potential loss or damage to your inventory? Does your inventory require any specific environmental conditions, such as temperature or humidity?
- Information management and technology. Are you able to assess, procure, configure, and operate the computers, software programs, point-of-sale systems, or other information technology required in the operation of your business? Do you need outside expertise to assist you? Do you have a plan for what to do if and when something doesn’t function properly?
- Utilities. How are your utilities integrated into your lease? How often do you pay these? Do you have a contingency plan if prices increase suddenly?
- Insurance. Ensure you are covered in the event of loss of property, breakdown of equipment, liability (directors/key personnel), or interruption of business.
- Security. How will you protect your staff and money? Is security included in your lease agreement?
- Suppliers. Who are they, who deals with them, and what are their fulfillment timelines? Do you have alternative suppliers or backup plans if your regular suppliers are not able to provide the materials you need to produce your products and/or services?
- Customers. Who are they? What is your relationship with them? How will you communicate with them? How will you deliver your products and/or services to them?
- Staff/management. Explain how you will recruit, retain, and motivate employees, if and when required. How will you manage their schedules, and will you have a contingency plan in the event that employees are unable to work? How will you monitor and conduct performance planning? How will you plan for vacations? Are there any union issues that you need to be aware of and accountable to? Refer to our Human Resources–Starting section for more information.
Buying a Business
You wouldn’t buy a complex machine without an instruction manual; you wouldn’t buy a business without an operations plan.
If you’re considering buying a business, reading the operations plan and understanding the commitment required to run the business should be a key part of your purchase decision.
Business development experts will tell you that the success of a business that has been sold is, in large part, due to the ability of the new owner to understand how the business has operated successfully in the past.