How to Write an Operations Plan for Retail and Sales Businesses Tips for detailing what has to be done and who does what in service and retail companies.
By Eric Butow •
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This is part 6 / 11 of Write Your Business Plan: Section 5: Organizing Operations and Finances series.
Investors and other plan readers pay careful attention to the part of your plan describing your operations. Most entrepreneurs are highly expert, interested in operations, and love to talk about it. In fact, one risk is that you'll go into too much detail and wind up with what amounts to a technical treatise in which the essential marketing element seems lost.
David Wheeler recognized that risk when seeking investors for his software startup, InfoGlide Inc. One of his first hires was someone to take on the job of CEO, to interface directly with investors and high-profile prospects so Wheeler could get back to the operations he loved. "That's what I like," he says, "working with database code, not doing product demos."
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The basic rule for your operations section is to cover just the major areas—labor, materials, facilities, equipment, and processes—and provide the details that are critical to operations or give you a competitive advantage. If you do that, you'll answer investors' questions about operations without overwhelming them.
How to Break Down Operations
The simplest way to treat operations is to think of it as a linear process that can be broken down into a sequence of tasks. Break down each task into smaller elements.
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A task listing chart might include the task and what has to be done daily, weekly, or monthly.
Once the initial task listing is complete, turn your attention to who is needed to do which tasks. Keep this very simple. You don't have to look at minor tasks (who opens the door? who fetches the mail?), but you do have to concentrate on major tasks such as producing a product or delivering a service. Use your judgment.
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Retail and Service Firms
Service and retail firms have different operations requirements from manufacturers. Companies that maintain or repair things, sell consulting, or provide health care or other services generally have higher labor content and lower investments in plants and equipment.
Related: How to Write an Operations Plan for Manufacturers
Another important difference is that service and retail firms have much simpler operational plans than manufacturers. When turning raw materials into finished goods, manufacturers may employ sophisticated techniques in a complex series of operations. By comparison, it's pretty simple for a retailer to buy something, ship it to his store, and sell it to a customer who walks in.
That's not to say operations are any less important for retailers and service firms. But most people already understand the basics of processes such as buying and reselling merchandise or giving haircuts, or preparing tax returns. So you don't have to do as much explaining as, say, someone who's manufacturing microprocessors.
People Matter
For service and retail firms, people are the main engines of production. The cost of providing a service is primarily driven by the cost of the labor it entails. Retail employees' skills and service attitudes drive their employers' productivity and market acceptance to a great degree.
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A service firm plan has to devote considerable attention to staffing. Regional educational attainment data will help readers understand why you can hire sufficient semi- and high-skilled workers for a service or repair operation. You'll want to include background information and, if possible, describe employment contracts for key employees such as designers, marketing experts, buyers, and the like.
You'll want to walk the reader through the important tasks of these employees at all levels so they can best understand how your business works and the customer experience.
Service operations checklist:
- Staffing completed (or staffing plan completed)
- Organization chart completed
- Marketing implemented
- Sales policies
- Customer relations policies
- Service delivery policies
- Administering monitoring and control policies
- Follow-up procedures
Buying Basics
The ability to obtain reliable, timely, and reasonably priced supplies of easily salable merchandise is perhaps the prime skill of any retailer. Buying is both art and science. Knowing the ideal ordering quantities for a given product is mechanical, but knowing which items to stock requires knowing customer desires and demands. Buying is based on your marketing plan. You cannot make wise purchasing decisions without clear knowledge of the marketing environment.
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If you have what consumers want when few competitors do, you're almost guaranteed to have strong sales. If you run out of a hot item, on the other hand, disappointed consumers may leave your store, never to return.
Operations plans for retailers, therefore, devote considerable attention to sourcing desirable products. They may describe the background and accomplishments of key buyers. They may detail long-term supply agreements with manufacturers of in-demand branded merchandise. They may even discuss techniques for obtaining desirable products from manufacturers on the gray market who try to restrict the flow of goods to their stores.
Retail operations checklist
- Marketing (include sales projections, location, promotional efforts, advertising, and online marketing efforts)
- Staffing
- Training sales staff
- Buying procedures (include delivery times, freight-in, reorder points)
- Inventory control
- In-store sales tools
- Sales policies
- Customer service policies and procedures
- Service delivery policies
- Administering monitoring and control policies
- Follow-up procedures
- Backroom operations staffed
Note the importance of training sales staff and customer service representatives. Many retailers omit this due to their economic loss. But consumers often cite a discourteous or unhelpful sales staff as the reason they don't return. Point out that you will train your sales staff so that they will act as a powerful resource for your company.
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