Page 112 - Business Plans that Work A Guide for Small Business

7 OPERATIONS AND

DEVELOPMENT:

EXECUTION

Operations Plan

The operations section of the plan has progressively shortened as more
companies outsource nonvital aspects of their production. For a service
company like Lazybones, on the other hand, the operations plan tends to
be more detailed as it shows how the company provides its service to the
customer. Figure 7.1 illustrates the main sections of the operations plan.
The key in this section is to articulate operational competitive advantages
and address how operations will add value to your customers. Further-
more, the section details the production cycle, allowing the entrepreneur
to gauge the cycle’s impact on working capital. The “cash conversion
1
cycle” is always a point of concern for a start-up. For instance, when
does the company pay for inputs? How long does it take to produce the
product? When does the customer buy the product and, more impor-
tantly, when does the customer pay for the product? The time from the
beginning of this process until the product is paid for will drain cash flow
and has implications for financing.

1 CCC = number of days between distributing cash and collecting cash in connection
with undertaking a discrete unit of operations.
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