What is an operating plan?
Operations are the lifeblood of any organization. An operating plan details the task required for running a business – the who, what and when of your daily operations, and how a team or department contributes to reaching company goals.
To be a strategy-focused organization, you need a strategic plan and annual operational plans. The strategic plan focuses on your objectives and the operating plan details the resources to get there. Mapping out the day-to-day tasks in an operating plan ensures a clear path to achieving your business goals.
If you already have a strategic plan, do you still need operational plans? Yes!
Ultimately, operational planning is a tool for carrying out a strategic plan. It defines how human, financial, and physical resources are allocated to achieve shorter-term goals and longer-term strategic objectives.
On a day-to-day basis, your operating plan will answer questions like:
- What individuals are working on or who is responsible for what
- How to allocate resources to a given task
- When should each strategy be complete
- What is the budget and/or costs
- What risks are present
- How to mitigate those risks
Operational plans work best when an entire team or department buys-in, assigning due dates, reporting on issues and measuring KPIs. They work even better when there's communication and collaboration across teams to ensure that the whole machine is running smoothly.
Everyone in the company should the plan (if not be involved in creating it), understand what metrics you use, why they are important and what everyone's roles are in working toward your goals.
Related reading: Managing Change & Healthy Transitions
What are the benefits of an operational plan?
Your operating plan is a manual ensuring your entire organization and its employees execute the day-to-day operation duties in a way that supports your business goals. When properly developed, it can maximize the efficiency of your organization, identify areas that aren't generating as much revenue as they could, detail how the overall team can work together to meet objectives and help establish the performance of key staff.
As employees become aware of the necessary regulations and procedures, it can spur workplace accountability and efficiencies. This saves valuable time and supporting institutional knowledge.
Every plan has a massive effect on all team members involved. One of the most important benefits of the ongoing or standing plan is that they encourage organization alignment and supports a business' vision. Conversely, an improper plan can not only derail your growth but affect employee morale and team communication.
The good news is you can recover. By evaluating your plan and operations, you can see operations' direct effect on the company's bottom line in real time, or at every benchmark, so you know exactly where to pivot. And with an individualized plan for each department, it is possible to know exactly where things go wrong and why.
Being able to continually update and refer to an operating plan enables a thorough understanding of business goals and provides a guide for every step of the process.
Common mistakes in the planning process
Of course, setting out on this process is not easy. Nor can a proper plan be in place without a bit of legwork. Below are common pitfalls which can derail your operation plan.
- Lack of a clear, measurable strategy
- Poor collaboration between different departments
- No in-depth analysis of data
- Failing to benchmark against competitors
- Overlooking process improvement
- Failure to plan for both short and long term
Creating a successful operating plan
A successful operational plan starts with defining your operational and strategic goals. From there, the details greatly depends on your company, resources and targets.
That said, there are some broad strokes to keep you on a solid footing:
- Start with a strategic plan and your vision.
- Focus on essential goals.
- Define the right KPIs, with the help of your whole team.
- Assign human and financial resources.
- Communicate, communicate, communicate.
Once you have a plan in place it's important to be vigilant. Monitor its progress, be flexible and open to changes, and make adjust when needed.
Partners for growth
Not every company has the luxury of a dedicated COO. That's where Focused Energy's outsourced operational and financial services come into play. With a fractional COO, you can employ an experienced professional to help connect the dots between operating and business performance. To get started on your company's enduring health, contact Focused Energy today.