When people talk about business plans, we often focus on the ideas behind their enterprise. However, investors need to understand the reality of your business – specifically, how you will logistically generate demand, serve customers and provide your products and services.
This is where the operating strategies section of your business plan comes in. In this part, you will explain how the vision you have set out will come into fruition, using commercial and financial sense.
You will also want to ensure your operational strategies enable you to realise your ambitions, such as the turnover projections detailed in your financial section. In short, your operations need to allow the rest of your business to succeed – and you need to convince investors of this ability.
Below, we have outlined what you should include in your operating strategies and how to optimise it to win over potential shareholders.
What to include in your operating strategies section
There are several things you should have in the operating strategies section.
Firstly, you need to discuss where you will be operating from, naming any facilities and premises. Depending on your business model, you may sell from physical spaces, such as shops, or you may utilise factories or offices to conduct business. You will also need to detail how you will obtain these premises (whether rental agreement or acquisition) and if you intend to obtain more as you grow.
Next, you will outline your operational structure. This covers the various departments that might make up your company. Explain the role of each department and, if possible, who will be leading them. You might also want to indicate the size of the workforce in each area as the business grows.
When discussing departments, remember to consider how they fit into one another. This will highlight the bigger picture of your operations and show that you have thought about how processes will flow together. For example, you may have a research team that comes up with new concepts, a production team that turns them into viable good and a marketing team that promotes to potential customers.
You’ll want to disclose any assets you need to operate in this section. This could include company vehicles, equipment, machinery, uniforms and so on. The costs to procure these should align with the expenses outlined in your financial section. Again, you might also want to consider how you will access more assets as you grow and how this will affect operational costs.
You will also need to provide information regarding the operational processes you are choosing to undertake, such as how you will create products/services and offer them to customers. When discussing this, focus on how each process will work, how they connect and why you have selected them rather than alternatives. As part of this, you need to outline the timeframes for each process, which should consider your daily operating hours or how often specific tasks will occur.
Includes your customer service processes here, such as how you will deal with any complaints and keep your buyers satisfied.
Finally, you will need to tie in the suppliers you will use to enable your operations. State any partners you are already committed to or any gaps you will need to fill. You’ll also want to predict the cost of these supplies in line with your projected expenses. Be prepared to justify why you have chosen those suppliers to investors, which means showcasing why they offer the best price or quality.
Our top tips
Now that you know what to include in the operating strategies section, it’s time to focus on finding the best way to translate it to your investors. We’ve put together our top tips to help you.
Ensure it matches the rest of your plan
As we have already mentioned, your operational plans will turn your ideas into reality. So, you need to make sure that everything you express in the business plan aligns with your operations, with rational processes that allow you to succeed. Keep the customer you are targeting in mind at all times, as this will empower you to refine your operations to best serve them.
Most importantly, the costs outlined to make your operations work – such as supplies, labour, equipment – need to tie up with the expenses forecast in your financial section. You also need to ensure your operations enable you to operate at a profit, which means finding cost-effective solutions and scaling up only when your revenue allows you to do so.
Emphasise unity
Your operations will likely be comprised of several different parts, including departments dedicated to sales, marketing, finance, admin, customer service, HR, research and development, to name just a few. You might even have teams based at different locations.
Although each department will have its own function, with set tasks to complete, they all need to contribute to the overall running of the company. You need to showcase how the departments will work in unison and feed into one another. This will help you determine each area’s individual role while showcasing how it will work as one well-oiled machine.
Utilise competitor analysis
When planning your operations, it is fundamental to utilise competitor research to help you find the best ways of doing things in your industry. Investors will naturally gravitate towards processes that have been proven to work, as it improves your chances of success.
However, while analysing your competitors’ actions, don’t be afraid to look for room for improvement. If you can find ways to do things better for the benefit of costs or your customers, it could give you an edge above others in the industry. In some cases, it could prove your unique selling point, giving your business added value.
If you are going against the grain, make it clear why you know it will be effective, utilising any data or insight you can. This will bring investors on board, even if there isn’t real-world proof it will work.
Be open to new ideas
Depending on who you’re pitching to, you may have investors in front of you that have valuable industry expertise. As such, they can make suggestions about the best way to operate. You need to be open to these ideas, as it highlights your flexibility, and be prepared to adapt your strategy if a better solution is presented.
If you can take suggestions on board, it will also be a welcome sign of collaboration that could encourage a long-term relationship if that investor were to back your business. For investors who want to offer their time as well as their money, this will be very appealing.
Conclusion
Every part of your business plan should play a significant purpose in convincing investors that your entrepreneurial ideas are worthy of their funding. The operational strategies are no exception and highlight how your company will work profitably. It is also essential in showing how you will serve the customers you have defined for your business and turn them into revenue.
If you need support in crafting your business plan, including the operational strategies section, we can help. Our team of advisors will work alongside you to create a watertight plan that boosts your chances of securing investment.
We can also put you in touch with the right contact to move you along your financial journey.