o matter how great your product or how innovative your technology, your business can't survive without a solid operational plan and the management skills to implement it. Careful attention to the information in this section will help you build your business on a firm foundation that can withstand the challenges you're bound to encounter.
Of course, your business plan won't include every detail of how you operate and manage your business—that's what operational manuals are for. What you'll want to focus on as you write your plan are the People, Processes, and Procedures that set you apart from others and allow you to compete effectively and operate profitably in your marketplace.
The Management section is divided into two sub-sections: Operations and The Management Team. The Operations section will help you get a handle on the kind and cost of facilities and equipment you'll need, and help you develop much of the financial information for completing the Money section, which comes next. The Management section will focus on your key personnel, their skills and experience, and your long-term plans for the growth and development of your business.
- Where and how will I produce my product or service?
- How will I price my product to cover the costs of facilities, materials, equipment, labor, production, marketing, distribution, and R&D—and still return a profit to the owners?
- How will I hire, train, supervise, and compensate employees?
- How will I develop future generations of my product?
- How will I ensure consistent quality in my product or service?
- Do key personnel have the skills and experience to be effective members of, a management team?
- Do they have the leadership and human relations skills to motivate others?
Focus on what's important to your operation
As you complete the Worksheets in this section and transfer the key information to the Operations section of your business plan, focus only on the information that is critical to your business. You may find worksheets and questions that just don't apply to your type of business. When that happens, skip over them. Concentrate on the things that are important to you and your business plan.
Your management team: style, structure, substance
Investors and lenders are very interested in the people who will make your company go. Past business experience directly related to their current positions is critical—and both successes and setbacks are important in preparing a manager to deal with the challenges of running a business. This section will help you assess the strengths and'weaknesses of your key personnel in areas important to your business.
Do your key personnel have the overall experience and skills necessary to run your business day to day and guide it into the future? Will you use outside consultants for specific expertise? Will your company have a board of directors or an advisory committee?
You must also show that your organization is structured to make the best use of the talents and expertise of all key managers. A well-organized management team with clearly defined lines of authority and accountability will maximize the contributions of all managers and employees.
Your plans for management compensation and incentives should also be included in this section; this is a cost that will be carried forward to your financial statements in the Money section of your plan.
Outside experts can fill the gaps in your management team
No one can be an expert in everything. After you evaluate your management team, you may find that you're lacking in some specific skills needed to start or expand your company. For example, maybe you've decided to expand your retail operation into mail order sales—but you don't know much about acquiring and maintaining a mailing list, or designing and printing a catalog.
Rather than adding a full-time employee with the expertise you need, you may find it's more effective to hire an expert to help you get started.
There are a wide variety of consulting services available to businesses of all sizes, covering virtually all areas of business management and operations, including marketing, manufacturing, communications, distribution, and design.
And no business, no matter how small, can afford to be without a lawyer and an accountant. If you can't afford these professional services, you can't afford to go into business.
What is your vision and how will you get there?
Do good work for good clients. Have fun. Make money. Delight people in unexpected ways.
It may be the shortest mission statement ever written, but it tells our clients and our employees what our priorities are and helps us stay focused on what's really important."
Julie Battle,
Bolger+Battle, Inc.
Marketing Communications
Now is the time to ask yourself what kind of company you want this to be when it grows up. If you've always wanted to run a business so you could do things differently than the managers you've worked with in the past, you'll need a carefully thought-out plan to keep yourself on the right track. It's easy to lose sight of your vision when the demands of day-to-day operations crowd in.
The first step is clearly defining the organizational relationships of your management team in a way that maximizes the value each manager brings to the business, both personally and professionally.
Unless your business is very small, you may find it helpful to draw up an organizational chart that shows areas of responsibility and lines of authority. This helps a prospective lender see how you manage your business and employees. It can also help head off any misunderstandings among your key managers about who's doing what.
Once you've defined your organizational structure, you're ready to consider issues of culture and style.
Creating a culture; developing a style
Maybe you've never thought about the impact that management style and corporate culture can have on the productivity and profitability of your company. The fact is, it can make you or break you.
Think back to the last time you felt you were being ignored or treated unfairly by your boss. Wasn't much fun, was it? Not only that, but you probably didn't do your best work under those circumstances. Neither will your employees.
As a manager or an owner, it's your responsibility to communicate effectively with employees. If you don't tell them what you expect, how they are doing, and how they can contribute, they won't perform to their potential. They won't be happy—and you won't either.
So think about what kind of place you want your company to be. Then put the policies and protocol in place to support the company culture and management behavior that will create the work environment you desire.
Last, but not least: Where are you going with this venture?
In the first exciting months or years of business, your top priority may be survival. But sooner than you think, you could be facing decisions about new products, new locations, additional employees, and new directions for your business that you hadn't anticipated. And it's easy to make the wrong decisions under pressure.
That's why it's so important to chart a course for the next five to ten years. That way, you'll have a road map for the big decisions that come along. And investors and lenders will see that you've set clear goals against which to measure your progress.
You should be downright proud of yourself for taking your business seriously enough to devote this much time and effort to planning for success. The great news is, you're in the home stretch. With all the numbers you've developed in the management section, the last section on MONEY should be a breeze.
O.K., it's not a breeze. But it will be a lot easier than you think. So let's get on with it, eh?
Worksheet 10: Facilities and Equipment
Worksheet 11: Materials and Inventory Management
Worksheet 13: Production Management
Worksheet 15: Customer Service, Billing and Collections
Worksheet 16: Other Operational Considerations
Worksheet 17: Evaluating and Compensating Your Management Team
Worksheet 18: Outside Experts and Consultants
Northern Initiatives can be contacted at (906)228-5571
