{Photo by M. Fleur-Ange Lamothe. Don't you wish your production line looked as lovely as this?}
We're back again today for another post in the Business Plan Challenge! Today's section of your business plan covers Operations, or the day to day of how your business will run. You'll be writing about your actual Operations, Production and Management and Human Resources. All very important to the success of your business! Lets get started!
Operations:
Legal form of Business: You'll need to identify the business structure your business will take. This can be sole proprietor, partnership or incorporation. Jena has an excellent post explaining the differences.
Seasonality: How do seasonal trends effect your business? If you're selling outdoor plants, your busiest time of the year will be the spring and summer. What will you do in the fall and winter to promote your business? In the summer, when you're very busy, will you hire employees? In the busy holiday craft fair season, will you only do one craft fair a weekend or hire someone to man a table for you? These are things to consider when writing about seasonality.
Regulations: What regulations will effect your business? You might need to register to collect taxes or, you might need a permit to make chocolate in your home. (Proven fact. Chocolate makes business plan writing more enjoyable!) You can research permits you might need through your local government.
Business Records: Describe how you will manage important financial documents and receipts. From what we hear, most accountants do not like receiving a box of papers two days before taxes are due. We might be prone to keeping our receipts in boxes too, but we think you can save yourself and your accountant loads of stress if you set up good practices from the beginning.
Protection of Designs and Ideas: Describe if you hold or intend to hold a patent, copyright or trademark.
Production:
Methods: Give a brief description of your production process. If you make an item, describe how it is made. If you provide a service, describe how you do it. Also include any other employees or outside help involved in the process.
Costs: Describe how much it costs to make your product or provide your service. Include time, materials and labor. For a retail store, we included time as how much we would pay someone else to work in our store. We did not include the rent on our storefront as part of the cost. If you make a product, this one can be tricky. You can have many different costs if you have a number of products. For this section and many of the financial sections, we suggest estimating what the average price of the majority of your products will be, and then from that determine your average cost.
Pricing: How much will you charge for your product or service? Do you have a formula that you use? Explain your pricing here.
Suppliers: List any suppliers you might have, and what they will supply to your business. A supplier can be any business from where you buy flour for your cupcake business, to where you buy gas, to deliver the cupcakes. If you are still looking for a supplier, include that here as well.
Management and Human Resources:
Human Resources: Use your Business Plan Challenge branded crystal ball and look into the future. Do you see your business needing employees, contractors or interns within the next year? Two years? For each person you foresee hiring, describe what roles you would like them to fill, how much you'd like to pay and if they are full time or part time.
External Professional Support: List a few business professionals that will provide outside support to your business. They might be other business owners or even your accountant that will be a mentor to you and your business. Include what skills they have that will help your business.
Risk Assessment: List three to four risks and threats to the success of your business and what you're going to do to avoid them. Our risks included injury to Henry or Lili, theft, new competition and unreliable employees. Your business might face a whole other set of risks and its important to be prepared regardless.
That's it for the Operations section, not so bad right? Next week we'll have my (Lili's) favorite, Financials! Get out your spreadsheets and fire up those calculators! We promise it will be easy.
Lili Nedved and Henry Sinha are opening a brick and mortar retail store
in Vancouver, Canada. With lots experience staying up late and working
on Lili’s handbag business, iglubu,
Henry was recently promoted from an Electrical Engineer to Director of
Fabric Organization. Lili hopes her Finance degree will give her the
edge in the competition for Employee of the Month.
