Planning For Success

Operations And Management Plan



According to the Business Plan Guide, "A production facility will probably require significant attention to operational issues. In contrast, most retail businesses and some service businesses will probably have less operational complexity."

The operations and management plan should provide a blueprint for the ongoing operations of the business once it becomes active, including its organizational structure and the expense and capital requirements associated with its operation.

The organizational structure (sole proprietorship, S-corporation, corporation, limited liability company, etc.) must be outlined to provide a basis from which to project operating expenses. This is critical to the formation of financial statements, which are heavily scrutinized by investors.

The expenses associated with the operation of the business (overhead) should be calculated and outlined in a table. Fixed expenses, such as rent and insurance, remain constant, while variable expenses like utilities, supplies and shipping fluctuate according to the volume of business you conduct. In addition to an operating expense table, include any other relevant costs and a schedule for depreciation and reinvestment into capital equipment.

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This article was originally published in the March 1996 print edition of Entrepreneur with the headline: Planning For Success.

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