Written By: June Bachman ~
1/22/2021 9:00:00 AM
Updating Your Business Plan for 2021 Part 1 - Getting Started
Updating Your Business Plan for 2021 Part 2 - Executive Summary
Updating Your Business Plan for 2021 Part 3 - Company Description
Updating Your Business Plan for 2021 Part 4 - Products and Services
Updating Your Business Plan for 2021 Part 5 - Marketing Plan
Explain the day to day operations of your business. Include elements such as equipment, employees, location and processes. Reading the Operational Plan section should explain in detail how your business operates on a day-to-day basis.
Include the following sections:
- Production – Explain how you produce the products or services that you deliver. Describe the production methods and equipment used, as well as the costs associated with producing products and services.
- Quality Control – Describe the quality control processes your use. How do you ensure and maintain consistency?
- Location – Where is the business located? Include the following:
- The size of your location
- The type of building (retail, industrial, commercial, etc.)
- Zoning restrictions
- Accessibility for customers, employees, suppliers and transportation if necessary
- Costs including rent, maintenance, utilities, insurance
- Whether you own or lease
- If you’re seeking financing to expand your location, include building plans for the new facility.
- Legal – What is the legal environment for your business? How do you address legal requirements? Include the following:
- Required licenses or permits
- Trademarks, copyrights or patents (pending, existing or purchased)
- The necessary insurance coverage for your business
- Environmental, health or workplace regulations affecting your business
- Special regulations affecting your industry
- Bonding requirements, if applicable
- Personnel – What types of employees does your business require? Include the following:
- How many employees do you have?
- What types of employees? Are there any licensing or educational requirements?
- Do you hire freelancers or independent contractors?
- Include job descriptions.
- What is the pay structure (hourly, salaried, base plus commission, etc.)?
- Do you plan to hire new employees, freelancers or independent contractors in the coming year?
- How do you train employees?
- What schedules and procedures are in place?
- Inventory - Describe the inventory your business maintains. Include the following:
- What kind of inventory do you keep on hand (raw materials, supplies, finished products)?
- What is the average value of inventory in stock (in other words, how much are you investing in inventory)?
- What is your rate of inventory turnover? How does this compare to industry averages?
- Do you need more inventory than normal during certain seasons? (For example, a retailer might need additional inventory for the holiday shopping season.)
- What is your lead time for ordering inventory?
- Suppliers - List the key suppliers. Include the following:
- Names, addresses, websites
- Type and amount of inventory furnished
- Their credit and delivery policies
- History and reliability
- Do you expect any supply shortages or short-term delivery problems in the coming year? If so, how will you handle them?
- Do you have more than one supplier for critical items (as a backup)?
- Do you expect the cost of supplies to hold steady or fluctuate? If the latter, how will you deal with changing costs?
- What are your suppliers’ payment terms?
- Are your current suppliers satisfactory or do you plan to look for new suppliers in the coming year?
- Credit policies – If you sell to customers on credit, include the following:
- Whether this is typical in your industry (do customers expect it)?
- How much credit do you extend? What are your criteria for extending credit?
- How do you check new customers’ creditworthiness?
- What credit terms do you offer?
- Do you offer discounts for prompt payment or early payment?
- Detail how much it costs you to offer credit, including the cost of capital tied up in receivables and the cost of bad debt. Show that you’ve built these costs into your pricing structure.
- Do you age your accounts receivable every month to monitor late payments?
- How do you handle delinquent customers? Explain your policies, such as when and how you follow up on late payments, and when you get an attorney or collections agency involved.
- Also explain how you manage your business’s credit and accounts payable.
- How do you monitor your business’s credit rating?
- Do you age your accounts payable every month to track and manage what you owe?
- Do your vendors offer prompt or early payment discounts? Do you take advantage of them?