Chapter 6: The Operating Plan

Tour 128 Entrepreneurship and Business Planning

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Operating Plan
Describes the physical necessities of your business operation, such as your business location, facilities and equipment.
It may also include information about inventory requirements and suppliers, and a description of the manufacturing process.

Chapter 6: The Operating Plan

It also describes how you will structure your company and how you will actually carry out everything you present elsewhere in your business plan.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Location provide the complete address where your business is located. Describe the surrounding area and explain how this location can be effective.

Chapter 6: The Operating Plan

If there are any disadvantages or possible problems presented by your location note it right away. Indicate what you have done to counteract these negatives. State whether you own or will lease the property. Provide the terms of mortgage or lease. Present your monthly payment, length of term.

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Provide details of the square footage of the property, If you have more than one location be sure to describe each one. Note whether you will outgrow the space and how will you plan to handle a move/expansion.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Facilities defined as the workspace needed to carry out the operations of the organization. It is a space in which a business's activities take place Lay-out and Design - after choosing a location for your business the next stage in operations planning is to design the best physical lay-out for the facility.

Chapter 6: The Operating Plan

The available space needs to be assessed with workstations, equipment, storage and other amenities needs to be arranged.

The aim is to allow for the most efficient workflow without disruption. A business that has carefully arranged its layout will allow for a more effective and efficient workflow and produce its good or services to a high standard.

Chapter 6: The Operating Plan

The Physical Plant
What type of premises are they and what is the size and location? If it's applicable, include drawings of the building, copies of lease agreements, and/or recent real estate appraisals. You need to show how much the land or buildings required for your business operations are worth, and tell why they're important to your proposed business.

Chapter 6: The Operating Plan

Describe your principal location. What are the main uses of each site (training, conference, administration, storage, etc). Are you using all available space productively? Do you have room to expand your operations if needed?

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Chapter 6: The Operating Plan

CRITERIA IN DETERMINING LAY-OUT AND DESIGN: A. Ease of Expansion or Change - Facilities should be designed so that they can be easily expanded or adjusted to meet changing production needs. Any design should be flexible.

Chapter 6: The Operating Plan

B. Flow of Movement - The facility design should reflect a recognition of the importance of smooth process flow. C. Space Utilization - This aspect of facility design includes everything from making sure that every possible space has an important use.

Chapter 6: The Operating Plan

D. Ease of Communication and Support - Facilities should be laid out so that communication within various areas of the business and interactions with vendors and customers can be done in an easy and effective manner. E. Impact on Employee Morale and Job Satisfaction Some ways layout design can increase morale are obvious, such as providing for light-colored walls, windows, space.

Chapter 6: The Operating Plan

F. Promotional value - If the business commonly receives visitors in the form of customers, vendors, investors, etc., you may want to make sure that the facility layout is an attractive one that improves the company's reputation. G. Safety - The facility layout should enable the business to effectively operate in accordance with Occupational Safety and Health Administration guidelines and other legal restrictions.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Equipment What kind of equipment will I need? (this will depend on the nature of your business) Example: Office Equipment will include: Computers, Printers, Fax Machine, Telephones, Internet Connection, Photocopier, etc.

Chapter 6: The Operating Plan

Besides describing the equipment necessary and how much of it you need, you also need to include its worth and cost, and explain any financing arrangements. List your current plant and equipment purchases. These can include vehicles, computer equipment, phones and fax machines.

Chapter 6: The Operating Plan

For each item include a description of the plant or equipment (make and model if applicable), purchase date, purchase price and running costs.

If you have not purchased all of your equipment yet, you can include a separate table and include an expected purchase date.

Chapter 6: The Operating Plan

Suppliers - Explain who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down. List your main suppliers and detail what they supply to your business. Also explain how you will maintain a good relationship with them.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

How will your production process work? This section lays out the details of your business day to day operations. Create an outline which includes hours of operation, days that the business will be open, will it be seasonal?

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Flow Chart a step by step map of your operations process. They help identify inefficiencies and determine operating and production costs, skills and labor required for each stage of the process.

Chapter 6: The Operating Plan

Map the process make a flow diagram depicting each stage of operations. The flow chart must answer the following questions:
What are the different stages? Who is responsible for each stage of operations? How does work get transferred from one stage to another? Is any part of your operations outsourced?

Chapter 6: The Operating Plan

Map the productions steps, it must respond to the same questions above. If your processes vary dramatically among products, draw a map for each product.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Standard Operating Procedures describe how a company conducts business. Your SOP should document how quality management systems and technical activities function.

Chapter 6: The Operating Plan

It typically define the procedures necessary to maintain and use production systems so that product output conforms to industry standards. Using these procedures, your staff can complete job tasks reliably, consistently and safely.

Chapter 6: The Operating Plan

Standard operating procedures document routine procedures for a business. Standard operating procedures must be written in a simple, step-by-step manner, with flowcharts to demonstrate relationships between activities and departments or interdepartmental relationships

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STEP 1
Identify the SOPs needed by your organization. For example, create a list of SOPs required to provide instructions on, operation, archiving and support. Identify who needs to contribute to generating the SOPs and who needs to approve the documents. Set up a review process, and document when and how revisions occur. SOPs should be evaluated on a regular basis, such as every two years.

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STEP 2
Create a title page for each procedure. List the complete title. Each procedure should have a descriptive title and number. For example, label procedures related to personnel with the letters HR for Human Resources. Write a short summary describing the purpose of the procedure and any other related procedures. List the necessary equipment and general safety instructions.

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STEP 3
Create pages containing detailed instructions. Include the SOP number and specify the category on each page as well. At the bottom of each page, include the current page number and the total number of pages in the document.

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STEP 4
Archive the document once you have verified its accuracy. Make copies for the appropriate personnel and ensure everyone on your staff receives training on how to retrieve, use and provide feedback on the standard operating procedures. For example, create a company intranet website so you can upload, catalog and allow access to your documents.

Chapter 6: The Operating Plan

Accounting Practices may include directives for managing accounting documents, property tax assessments, legal expenses and confidentiality agreements. The handling and documentation of expenses for travel and entertainment may also be included, as well as bank account reconciliations and policies on credit cards and wire transfers.

Chapter 6: The Operating Plan

Financial Procedures includes information about financial reporting. Directives for annual stockholder meetings, board of director meetings and the release of financial documents related to forecasting, reporting and analysis may be included. If the business raises capital through asset acquisition, bank loans, leasing or stock options, the procedures for these activities need to be delineated.

Chapter 6: The Operating Plan

Computer and IT Procedures include information about computer and information technology processes, such as company policy about Internet use, email, software and hardware evaluation, training plans and troubleshooting. SOP may also reflect standards for assessing the risk of technology security breach and a recommendation to conduct technology security audits.

Chapter 6: The Operating Plan

Human Resources Procedures include guidelines for candidate interviews and background checks, as well as job descriptions and policies for application processes. Compensation and benefits may be described, with directives for employee health insurance, retirement security benefits and payroll policies.

Chapter 6: The Operating Plan

Sales and Marketing it is recommended that businesses incorporate sales and marketing guidelines into SOP, including guidelines for market research and procedures for actions such as direct-mail marketing, advertising, Internet marketing and public relations.

Chapter 6: The Operating Plan

Security include measures for maintaining safety and security may be a component of SOP, as well as statements about ethics, guidelines for the employee conduct code and steps to take during emergencies, such as a fire or natural disaster.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

List your current inventory items. For each item include:
a brief description of the inventory item (including make/model, name or reference number) unit price quantity you have in stock total cost or value of the inventory item (Calculate unit price multiplied by quantity).

Chapter 6: The Operating Plan

Explain how you will keep track of your inventory. An Inventory Strategy is a day-to-day methodology to follow for ordering, maintaining and processing items in your business. Inventory is one of the largest investments every business makes. capital

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance

Chapter 6: The Operating Plan

Quality Control is the key to product standardization and repeat patronage. It simply means that you are able to provide consistent products and services to your customers. Consistency is an important product attribute for retaining customers because it gives them comfort of knowing exactly what they will get with every purchase.

Chapter 6: The Operating Plan

A Quality Assurance Plan includes an organizational structure, details on each employees responsibilities and qualifications needed to fulfill those responsibilities. Another requirement is that the materials used for production must meet the specifications for manufacturing a product of a desired quality.

Chapter 6: The Operating Plan

Your quality plan must also specify the standards of the prospective suppliers must meet before a contract (ISO certified, etc). It also implements feedback through investigation of customer complaints and correction of non-compliance issues.

Chapter 6: The Operating Plan

Customer Service is important for every business. Convincing customers that they will receive professional customer service from you is a major challenge. Rendering excellent service can be achieved by having clear policies and procedures, professional staff and solid systems.

Chapter 6: The Operating Plan

Customer following: service revolves around the
Efficient order fulfillment and processing Ability to track and maintain accurate information Politeness and attitude of employees Maintenance and repair policies Ease of payment Reliability of service (do you do what you say you are going to do?)

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On time delivery The sense that complaints are heard and handled (customers feedback) Professional image that tells your customers that you are a reliable business

Chapter 6: The Operating Plan

Customer Service Plan What are your customer service objectives? What is your plan for achieving them?
What type of customer service training and orientation do staff receive? How are customer complaints handled? Is complaint information routed to pertinent departments (marketing, sales, inventory, finance) so changes can be made?

Chapter 6: The Operating Plan

Quality Assurance means developing operational controls to ensure that the results match the desired outcomes. Customer Service Operations are designed to keep customers satisfied while protecting the organization.

Chapter 6: The Operating Plan

A. Location B. Facilities, Lay-out and Design C. Equipment and Supplies D. Sourcing E. Production and Service Procedures
1. Production and Service Flow Chart 2. Standard Operating Procedures

F. Inventory Management and Control G. Quality Control and Customer Service H. Maintenance