5.0 Operational Plan
Explain the daily operation of the business, its
location, equipment, people, processes,
and surrounding environment.
and surrounding environment.
Production
How and where are your products or services produced?Explain your methods of:
I. Production techniques and costs
II. Quality control
III. Customer service
IV. Inventory control
V. Product development
Location
What qualities do you need in a location? Describe
the type of location you’ll have.
Physical requirements:
I. Amount of space
II. Type of building
III. Zoning
IV. Power and other utilities
Access:
Is it important that your location be convenient to
transportation or to suppliers?
Do you need easy walk-in access?
What are your requirements for parking and proximity
to freeway, airports, railroads, and shipping centers?
Include a drawing or layout of your proposed
facility if it is important, as it might be for a manufacturer.
Construction? Most new companies should not sink
capital into construction, but if you are planning to build, costs and
specifications will be a big part of your plan.
Cost: Estimate your occupation expenses, including
rent, but also including maintenance, utilities, insurance, and initial
remodeling costs to make the space suit your needs. These numbers will become
part of your financial plan.
What will be your business hours?
Legal Environment
Describe the following :
I.
Licensing and bonding requirementsII. Permits
III. Health, workplace, or environmental regulations
IV. Special regulations covering your industry or profession
V. Zoning or building code requirements
VI. Insurance coverage
VII. Trademarks, copyrights, or patents (pending, existing, or purchased)
Personnel
I. Number of employeesII. Type of labor (skilled, unskilled, and professional)
III. Where and how will you find the right employees?
IV. Quality of existing staff
V. Pay structure
VI. Training methods and requirements
VII. Who does which tasks?
VIII. Do you have schedules and written procedures prepared?
IX. Have you drafted job descriptions for employees? If not, take time to write some.
They really help internal communications with employees.
X. For certain functions, will you use contract workers in addition to employees?
Inventory
I. What kind of inventory will you keep: raw materials, supplies, finished goods?II. Average value in stock (i.e., what is your inventory investment)?
III. Rate of turnover and how this compares to the industry averages?
IV. Seasonal buildups?
V. Lead-time for ordering?
Suppliers
Identify key suppliers:I. Names and addresses
II. Type and amount of inventory furnished
III. Credit and delivery policies
IV. History and reliability
Should you have more than one supplier for critical items (as a backup)?
Do you expect shortages or short-term delivery problems?
Are supply costs steady or fluctuating? If fluctuating, how would you deal with changing costs?
Credit Policies
I. Do you plan to sell on credit?II. Do you really need to sell on credit? Is it customary in your industry
and expected by your clientele?
III. If yes, what policies will you have about who gets credit
and how much?
IV. How will you check the creditworthiness of new applicants?
V. What terms will you offer your customers; that is,
how much credit and when is payment due?
VI. Will you offer prompt payment discounts?
(Hint: Do this only if it is usual and customary in your industry.)
VII. Do you know what it will cost you to extend credit? Have you built the costs into your prices?
Managing Your Accounts Receivable
If you do extend credit, you should do an aging at least monthly to track how much of your money is tied up in credit given to customers and to alert you to slow payment problems.
You will need a policy for dealing with slow-paying
customers:
I. When do you make a phone call?
II. When do you send a letter?
III. When do you get your attorney to threaten?
Managing
Your Accounts Payable
You should also age your accounts payable, what you
owe to your suppliers. This helps you plan whom to pay and when. Paying too
early depletes your cash, but paying late can cost you valuable discounts and can
damage your credit. (Hint: If you know you will be late making a payment, call
the creditor before the due date.) Do your proposed vendors offer prompt payment
discounts?
A payables aging looks like the following table.
Total
|
Current
|
30 Days
|
60 Days
|
90 Days
|
Over 90 Days
|
|
Accounts Payable Aging
|
||||||