Annual Operations Plan for Managing Your Business 3

Every business needs to plan
Unfortunately, there is a myth that associates planning with start-ups. That’s particularly common in the United States. Because of that myth, inertia, putting out fires, and related reasons, a lot of businesses miss out on the opportunity to manage themselves a bit better.

As an owner or manager of a small or medium business, can you afford not to plan? Do you leave the annual plan for the large businesses, and let your business depend on reacting to events? Or do you want to plan for priorities, and manage your growth proactively. That’s a leading question, of course, the answer is obvious.

You could call it an annual plan, or an operational plan; the name doesn’t matter as much as the management of it. While these kinds of plans are common in larger enterprises, they are surprisingly rare in small and medium business.

Benefits

  1. Guide your growth: Your business will grow, or not, depending on a lot of different factors, including overall economic trends, location, specific market needs, hard work, and other elements. Businesses that plan do it to guide and influence their growth, so that they move proactively towards defined objectives rather than just reacting to business events.
  2. Manage priorities: Strategy is focus. Allocate resources where they will do the most good. Work towards your strengths and away from your weaknesses. Develop the company by doing the most important things, according to your long-term objectives.
  3. Assign responsibilities: A plan gives you a place to develop organizational responsibilities.
  4. Track progress: Think of a plan as a business positioning device. With a plan, you can track your progress towards goals, measure results, and manage the business. Without a plan, how do you tell whether or not you are moving in the right direction. What do you measure against?
  5. Plan for cash: Profits are not cash, and cash is not intuitive. You spend cash, you don’t spend profits. However, businesses don’t plan well for cash, and they need to. That may not sound strategic, but it is. It is also the core of an operations plan, and an annual plan. Whatever else, you have to plan for cash.

Main elements
Regardless of the name you use, annual plan or operational plan, the vast majority of these plans include some or all of the following main points:

  1. Focus on main priorities: Planning assigns priorities. Of the whole range of possible market segments, and the whole range of services and possible sales and marketing activities, which are your main priorities?
  2. Specific responsibilities, activities, deadlines, and budgets: We call these Milestones. They are the bricks and mortar of business planning, critical to business success.
  3. Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs cash.

About the Author Tim Berry is the founder of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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  • http://www.phoenix-energyco.com Tajudeen Adeniji

    the article is great

  • Pingback: Start Up Business Resources | Small Biz Basics

  • http://amplify.ie David Murphy

    Very useful article, some great advice and essential for all business.

  • http://www.smallbusinesswizardry.com Dane Pymble

    Totally agree. What is the point of having a business plan at the point of start-up, only to leave it in the bottom draw once the business is up and running. I think it is important that all your business’ operations staff have buy-in into the annual operations plan. You should be able to break the plan down so all elements of it are assigned to a particular staff member or team. If these staff don’t believe that what is outlined in the operations plan can be successfully implemented and/or is the right way to go then all your planning will be a waste.