The Operations Plan section of the One-Page Business Plan presents how you are going to organize your business.
It answers the questions:
- What is the legal structure of my business?
- What personnel do I need?
- What facilities do I need?
- What equipment do I need?
- What are my production processes?
Let’s look at each of these in more detail.
To give you a feel for this section, let’s run through what’s included in a the Operations Plan. However,
- Setting your business structure: legal entity such as Sole Proprietorship, Corporation, Partnership, GST status, etc. To make a decision regarding what entity suits your specific circumstances, speak to an accountant. Validate any legal agreements with your lawyer.
- Liabilities and protections: licenses, Business Name registration, permits, and insurance. Requirements will vary according to your geographical location and the services/products you are providing. Check with your local municipality about a business license, local zoning controls for permits, and professional or membership organisations to learn about permit/insurance requirements for your particular business. At minimum, you should have insurance in place for business equipment, facilities, and any liability responsibilities if you are providing services to others. Remember to note down any costs related to these things either in start up (for one off charges to establish the business) or maintenance for regular month to month, year to year costs.
- Personnel, roles, responsibilities.
- Facilities: size, zoning, location, parking, deliveries, security, landscaping.
- Equipment: Industrial, manufacturing, IT, vehicles, shelving, furniture, etc.
- Production Process: Including all production steps and materials.
- Customer Fulfillment: Workflow from order to delivery. Including software, payment, quality assurance, aftercare, etc.
- Maintenance: What does it take to keep the lights on? Bills, replacement of wear and tear, regular administration materials eg printing supplies, coffee, memberships, etc.
For some businesses the Operations section of the Business Plan will be substantial, and for other – say solopreneurs working from home – it will be lightweight. But it’s still important not to skimp on it.
Here are a few areas where new business owners might make mistakes when creating their Operations Plan:
- Thinking “I’m not a big manufacturing plant so I don’t need an Operations Plan.” Even as a small home based start up, there are still plenty of things every business owner needed to consider. From setting up the legalities of their business properly, to calculating the costs of the day to day running of their business. All of these need time and attention up front.
- Not thinking at the process or workflow level. Costs will always fall out of doing a little process or workflow analysis. If you don’t know where to start, think of each step of the production and fulfillment process starting with product creation and ending at the delivery to the customer. At the very least, put a time and cost against each step and create a list of materials or equipment you’ll need to create and deliver that item.
- Not planning personnel appropriately. If you are planning to engage human resources straight away, get absolutely clear on what skills they will need, what responsibilities they will have, and how much you can offer them. Do your research and check with market rates. Assuming you’ll get help for minimum wage does not necessarily get you the support you need or who will stay with you. Then you might find yourself stuck for help when you need it most.
- Leasing a business premises too early. Paying for a brick and mortar store or office space makes sense for some businesses, for others it will be too much too soon. Often landlords want you to pay expensive rents and sign lengthy contracts. They also want significant deposits. If you are bootstrapping your start up, testing your premise, or looking for financing, these commitments may be push too far at the beginning of your business journey.
- Buying EVERYTHING! Similar to the last one, try not to fill every shelf of your retail space or purchase every piece of technology you’d like at start up. Not only will a finance company think twice, the CRA may raise and eyebrow (if you want to expense them), and you may end up with a lot of items on sale to at least get a little return. The first year of a start up is a testing phase to a large extent, you don’t want to be paying off debts for years to come if you need to adjust your plan after year 1.
- Forgetting about maintenance services (and costs). It costs money to keep your lights on and the doors open. Don’t forget to add all of these things up when creating your budgets and forecasts.
If you haven’t already, take a moment to look at the Operations Plan section of the 1-Page Business Plan template.
Think about what you already know in terms of how your business will operate on a day-to-day basis, and bullet point your responses in the space provided.
If you have any gaps in your knowledge make yourself a note to fill it when you’ve done some more research or thought it through.
Now, to the final section of the One-Page Business Plan – the Financials. See you in the next video.