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Operations: the logistical rim on the wheel

Module by: Global Text Project. E-mail the authorEdited By: Dr. Donald J. McCubbrey

Summary:

Business Fundamentals was developed by the Global Text Project, which is working to create open-content electronic textbooks that are freely available on the website http://globaltext.terry.uga.edu. Distribution is also possible via paper, CD, DVD, and via this collaboration, through Connexions. The goal is to make textbooks available to the many who cannot afford them. For more information on getting involved with the Global Text Project or Connexions email us at drexel@uga.edu and dcwill@cnx.org.

Editor: Molly Lavik (Vatel International Business School Los Angeles, USA)

Reviewer: Debbi D Brock (Berea College, USA)

The operations of your business are the tactics and processes you implement to run your business.

Water your plants: operations hydrate your startup

Operations in a startup begin with the composition of a business plan. A new venture without a business plan is like a car without an engine; it exists but cannot get anywhere. In fact, researching and drafting the new venture’s business plan is probably the most important and necessary business practice you will ever under take. Business plans are usually written to obtain financing for a new venture. However, the business document and planning process provides a much more important function. This document will be your road map for getting your venture started. The findings of your research contained in your business plan can tell you from the beginning with pretty good certainty if your new business has a real chance of being successful financially and sustainable in the long run.

Traditional sections contained in a business plan:

  • Company Description gives a background to the history of your startup and explains what your venture will do.
  • Statement of Mission or Mantra is a short phrase that explains the purpose of your new venture.
  • Products and or Services describe what you plan to sell.
  • Target Markets elaborate on whom you plan to sell to.
  • Marketing Strategy explains what unique maneuvers your venture will under-take to accomplish the businesses goals.
  • Competitive Analysis documents who your main competitors are in the market place.
  • Management Teams are the names, titles and backgrounds of the people who will lead your venture to success.
  • Operations for Investors explains what tactics you will undertake to finance the venture and the exit strategy you plan to utilize for the initial investors to make a profit on their investment.
  • Financials document the forecasted sales and expenses for the first five years of the new venture. The financials should be accompanied by a detailed assumption log which summarizes where the numbers entered in your financial spreadsheets originally came from. Most investors want to see your financial documents include balance sheets, cash flows, income statements and key ratios such is when you anticipate breaking even.
  • Long-term Goals explain what you hope to eventually accomplish with the new venture.
  • Executive Summary which goes at the beginning of your business plan but is often written last should contain a brief summary of each of the above mentioned business plan sections. Executive summaries should be limited to two or less pages. The Executive Summary is often the most read portion of your business plan so it’s important to write and re-write this section until it’s absolutely perfect. Some entrepreneurs recommend that you draft the executive summary first and use this document as a planning document to cross check what you need in order to complete the business plan.

After you have completed drafting your new venture’s business plan it may be time to establish the legal entity of your business. Check with your local government office to get directed to the rules and regulations and processes you need to follow in order to properly establish your business’s legal entity

Some of the most universal company establishments are:

  • sole proprietor
  • private limited company
  • state-owned enterprise
  • public-limited company
  • NGO
  • corporations

If you can get the resources from family and friends to pay for an attorney to help you establish your business legal entity you may lessen some of the risks associated with starting a new venture. The type of business entity you form will more than likely impact the way in which you pay taxes on your products and services and file your country’s income tax filing. The definitions for the different forms of company establishments vary from country to country. You will want to check with the portion of your government that grants company established entities for clarification

With a draft business plan in hand and your legal company business entity established it’s time to fully map out the operations/processes you plan to utilize to implement your business plan. It’s highly recommend that you make a Gantt chart to stay organized with the correct sequence and timing of each business activity.

You can use Microsoft® Excel and setup columns that list:

  • tasks
  • person(s) assigned to complete tasks
  • dates that tasks must be completed by as well as proper task sequence
  • an area to check off when a task has been effectively completed
  • a comment section to keep a historic list of reactions to the considered tasks
  • and given your unique plans, you may choose to have additional columns.

It is highly recommended that you post your new venture’s Operations Gantt Chart on a wall in a visible location so that as many people as possible have access to this information. This will allow others to make updates as well as understand what you are working on when they are considering interrupting you during the day.

Keep an open mind as you implement your operational plans for the startup. Remain flexible to continuous updates. Remember a startup is an evolving operational process that will need fine turning along the way.

Read on: Operations is the subject of (Reference)

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