Operations Management

Annual Operation Plan

Written by Richard San Juan for Gaebler Ventures

Startups and small business owners should consider having an annual operation plan and all of the benefits of having one.

There are two important plans that are usually considered during the formation stage of the startup or small business.

One is the strategic plan and the other is the operating plan.

Surprisingly, while there is much attention placed on the strategic plan, the annual operations plan in startups and small businesses often receives very little attention.

For startups and small business owners, sometimes it has been falsely believed that having a detailed annually operations plan is only an option and was not required.

It was assumed by many entrepreneurs that that kind of planning was reserved for larger companies where there are more personnel.

That is not the case any longer.

An annual operations plan is just as relevant to small startups as it is to large corporations.

An annual operation plan is basically a detailed list of events and responsibilities that need to be done correctly in order to achieve the goals and objectives formulated in the strategic plan. It is important for any company, be it large or small, to have an annual operations plan that corresponds to a fiscal year for each major organizational unit.

Having an operation plan ensures that all employees know their responsibilities and are able to coordinate their own efforts with other employees to accomplish a task. In addition, it allows managers to track the progress of the plan and whether or not it will finish on time. This is important, because if they do need funding ahead of time, they are able to request it ahead of time.

One way to think of the importance of an operation plan is to think of this scenario: you are going on a long road trip to get to a certain destination for a business conference. It is a trip that will require more than a day's travel. Therefore, planning is definitely needed to determine which roads are the best to take, when to take rests for food and relaxation, and when to refuel.

Moreover, you are on this trip with your colleagues who have their own needs and their own responsibilities. Thus, there are several scenarios to consider. Is there a need to rotate drivers? Maybe if they can switch drivers, there is a possibility to just drive straight through without staying one night at hotel. Which person is responsible for food and the pocket money for the trip? As you can see, having an operations plan would be very helpful in detailing how to get the entire group to work cohesively as a unit in the same direction.

To craft an effective operation plan, there are three vital attributes that are usually evident.

First, an operation plan should be constructed in a way that it works synergistically with the overall strategic plan. While the immediate objectives will differ, the end goals for both plans should be the same.

Second, operations planning should more or less serve as guidelines with the right amount of detail. The details, however, should not be so intricate that it becomes too overwhelming and constricts innovative ways to achieve goals.

The third important characteristic of an operation plan is to have periodic reports on progress that shows how much progress has been made in achieving benchmarks and objectives.

With a good operational plan in place for your business, you'll find it's much easier to achieve your strategic goals.

Richard San Juan is currently pursuing an MBA degree with an emphasis in Finance from DePaul University in Chicago. He is particularly interested in writing about business news and strategies.

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