Page 114 - Business Plans that Work A Guide for Small Business

Operations and Development: Execution • 105

Operations Strategy

The first subsection provides a strategy overview. How does your busi-
ness win/compare on the dimensions of cost, quality, timeliness, and
flexibility? The emphasis should be on those aspects that provide your
venture with a comparative advantage. Lazybones has perfected an effi-
cient operation over years of refinement that allow it to clean tons of
laundry and make sure it is delivered to the right people at a lower cost
than its competition.
It is also appropriate to discuss geographic location of production
facilities and how this enhances the firm’s competitive advantage. Proxi-
mate location to large universities is central to the Lazybones business
model. Discuss available labor, local regulations, transportation, infra-
structure, and proximity to suppliers. The section should also provide a
description of the facilities, how the facilities will be acquired (bought or
leased), and how future growth will be handled (e.g., renting an adjoining
building, etc.).

Scope of Operations

What is the production process for your product or service? A dia-
gram powerfully illustrates how your company adds value to the vari-
ous in puts. Constructing the diagram also facilitates the decision of which
production aspects to keep in house (build) and which to outsource (buy).
Considering that cash flow is king and that resource-constrained new
ventures should typically minimize fixed expenses on production facili-
ties, the general rule is to outsource as much production as possible.
However, as already discussed, there is a major caveat to that rule. Your
venture should control aspects of production that are central to your
competitive advantage. Outsourcing the aspects that aren’t proprietary
reduces fixed cost for production equipment and facility expenditures,
which means that you have to raise less money and give up less equity.
As with most things in entrepreneurship, over time you will revisit this
question.
The scope of operations should also discuss partnerships with ven-
dors, suppliers, and partners. Again, the diagram should illustrate the
supplier and vendor relationships by category (or by name if the list isn’t
too long and you have already identified your suppliers). The diagram
helps you visualize the various relationships and ways to better manage