The Ernst & Young Business Plan Guide, Third Edition

Chapter Ten. Operational Plan

One set of fundamental issues a business plan must address is how the business will create its products and services. Questions that must be answered by this part of the plan include:

• What is the general approach to manufacturing? What are the sources of raw materials?

• Which processes will be used in manufacturing? What are the labor requirements?

• How will suppliers and vendors be used?

Because the business plan has the objectives of both forward planning and raising capital immediately, the entrepreneur may have some difficulty striking the proper balance between sophistication and simplicity in explaining the sometimes complicated manufacturing and process technologies.

As an internal planning document, the plan should be a detailed, in-depth operational plan. This will give the entrepreneur an opportunity to work out many potential problems on paper prior to commencing operations. As a sales tool to be reviewed by external parties, however, the content of the operational plan may have to be more straightforward.

In some cases, the business’s operations may constitute an important part of its appeal. This argues for a relatively detailed presentation. Yet an overly technical and complicated presentation might make review of the plan difficult and, as a result, be counterproductive. One should weigh what will be meaningful to reviewers in terms of two questions:

1. Will the reviewer understand the content?

2. How important is the content to the overall understanding ...