CHAPTER 4 Q Vi/RiTiNG A BUSINESS PLAN 155
Q g:_si.3ei...;..c_?. L. .. The operations plan section of the business plan out~
lines how your business will be run and how your product or service will be
produced, You have to strike a careful balance between adequately describ-
ing this topic and providing too much detail. Your readers vrill Want an over-
all sense of how the business will be run, but they generally will not be
looking for detailed explanations. As a result, it is best to keep diis section
short and crisp.
A useful Way to illustrate how your business will be run is to iirst articulate
your general approach to operations in terms of What’s most important and
what the make-or-breali issues are. You can then franie the discussion in terms
of "back stage," or behind the scenes activities, and "front stage." or what the
customer sees and experiences. For example. if you”re opening a new fitness
center, the back stage and the front stage issues might be broken down as
follows:
Back Stage (Behind the Scenes Activities) Front Stage (What the Fi/iembers See)
? Staff selection ? Member tours
== Operations manual 9 Operating hours
0 Relationships with suppliers ? Staff assistance
= Relationships with city government ?> Fitness classes and programs .
ef Development oi marimateri3ls Q Fitness machines '*~i 1 ' - -V-'- _ ""”`
E Employee orientation and training 0 Workshops TT `%m%W
S Emergency plans ?f i/lontnly newsletter
Obviously you can’t comment on each issue in the three to four pages you
have for your operations plan, but you can lay out the key back stage and front
stage activities and address the most critical ones.
The next section of the operations plan should describe the geographic
location of your business, ln some instances, location is an extremely impor-
tant issue and in other instances it isn’t. For example, one of the reasons why
J eff Bezos located Ainazoncom in Seattle is that Seattle is a major distribution
hub for several large book publishers. By locating near these distribution
facilities, Amazoncom has enjoyed a cost advantage that it wouldnt have had
otherwise. On a more fine-grained level, for restaurants and retail businesses,
the specific location Within a mall or shopping center, or a certain side of a
busy street, may make a dramatic difference.
This section should also describe a fir1n`s facilities and equipment. You
should list your most important facilities and equipment and briefly describe
how they will be [or have been) acquired, in terms of Whether they will be
purchased, leased, or acquired through some other means. lf you will be
producing a product and will contract or outsource your production, you
should comment on how that will be accomplished. lf your facilities are non-
descript, such as a generic Workspace for computer programmers, a lot of
explanation is not needed,
3 fi:;..,;~.p is Test..- cn.; f. ...;;_;;; ~ ;z:? i.;.'.'3.‘.LJ'f Many investors and
others who read business plans look first at the executive summary and then go
directly to the =ma_nagement team section to assess the strength of the people
starting the fum. Investors read more business plans with interesting ideas and
exciting markets than they are able to finance. As a result, it’s often not the idea
or market that Wins funding among competing plans, but the perception that
one management tearn is better prepared to execute their idea than the others.
Explain why the
‘Wlanagement Team and
Company Structure"
section oi a business plan
is paiticulariy important,