The best way to understand business operations is to dissect what goes into operational planning.

Let’s take a high-level look at what goes into operational planning.

Planning business operations involves converting strategic goals into tactics and processes for carrying out an activity.

Specifically, the operations plan contains the physical activities that one must undertake (or arrange for others to undertake) in carrying out your business value proposition. It establishes a timeline for the implementation of the business strategy over a stated period of time, generally 1-5 years.

The plan may include expected costs of operation for each element of the plan – at lease in the coming year. These figures may be used to set a budget, to substantiate the need for debt or investor capital, or to otherwise construct financial projections.

The operations plan will vary depending upon the nature of the business. Our explanation below is broken into general service and product-based businesses.

In a hybrid business (offering some combination of products and services) then the operational plan will be a mixture of these elements.

What are the Elements of an Operational Plan?

The Elements of an Operation Plan include:

• Mission
• Value Proposition
• Goals and Objectives
• Value Chain
• Research Evidence
• Timeline and Milestones
• Budget

You might notice that the operational plan looks somewhat similar to a business plan – with a few notable missing sections. This is natural, as the operations plan encompasses the core value proposition and delivery process. As such, it may help you to think of operations as a business within a business.

We review the process of operations planning in detail in our Operations course. For now, it’s important to understand what generally goes into an operational plan.

Below, we provide some high-level steps to consider when developing the operational plan.

Steps in Developing the Operational Plan

Our proposed steps for developing an operational plan are as follows:

1. Develop a concept of business operation.

Developing the concept of operations restates the strategic position of the business. It involves explaining your business model and how you intend to transmit value to the intended customer. Describe your product/service. Identify the key competitive practices and important players: Key personnel, Suppliers, Intermediaries

2. Acquire Necessary Information

Obtain facts from research, field tests, and experts. Be mathematical by articulating in formulas, patterns, rules. Use the methods listed (primary and secondary research) to acquire necessary information about your operations. This can be done by studying competitors or like industries. It especially involves communicating with your prospective suppliers, intermediaries, and buyers.

3. Define the Challenges

From your research, you should be able to identify the key challenges of hurdles for being successful in the industry. Every industry is unique in this way.

For example, your industry may have difficult licensing requirements (professional services), regulations (medical or environmental), competition (established product industries), high barriers to entry (high capital costs to enter), etc. Understanding what barriers exist will allow you to more adequately plan to overcome these hurdles.

Focus on major costs and expenses. Present achievement milestones: (6 months, 12 months, 24 months). Show where you will be and what you hope to achieve at that point.

4. Build Plan

Identify the key activities necessary to deliver on the business or functional objectives.

Organize the required resources required for each activity by logical, functional categories. The resources include people, equipment, and material.

Coming up with an initial budget of operations is important. You will develop your plan in a fact-based format with delineated costs and a time line.

Again, this is a high-level view of what goes into creating an operational plan. To learn more about each part of the planning process, considering taking our Operations Course.