A bright idea is not enough for business success; it must also be piloted efficiently. That is where an operating plan steps in. What is an operating plan? An operating plan is a detailed document that explains in a definite sense just how a company will accomplish its business objectives daily, weekly, or monthly. It is a reference model of how a company operates in every aspect, from the departments and individual team members and their roles to the company’s overall strategic goals.
What is an Operational Plan, and Why is it Important?
An operational plan, also known as an operating plan, suggests how to execute day-to-day business activities that eventually lead to business success. Unlike the strategic plan, which sets long-term goals, an operational plan guarantees that the goals are reached through carefully intended actions.
Operational planning is of primary importance. A well-defined operational plan aids businesses in the following ways:
- Resource optimization – Efficient use of human, financial, and physical resources.
- Improves productivity – Discourage cross-fertilization by isolating employees on their roles and duties.
- Improve decision-making – It provides a clear direction for deciding what to do first and how to address challenges.
- Accountability – Assigns responsibilities to a team member(s) to hold them accountable for assigned duties, including performance and progress.
Operational Planning vs. Strategic Planning: Understanding the Difference
Today, most businesses confuse operational planning with strategy. Both are important, but they are for different purposes.
| Aspect | Strategic Planning | Operational Planning |
| Focus | Long-term vision and business goals | Short-term actions and daily operations |
| Timeframe | 3-5 years or more | 1 year or less |
| Scope | Broad and company-wide | Specific departments or teams |
| Key Objective | Growth, market expansion, innovation | Execution of processes and productivity |
| Responsibility | Senior management and executives | Middle management and team leads |
A business growth plan first requires a strategic plan that determines the path, while an operating plan in business plan makes sure that the company goes along the path efficiently.
Successful Operating Plan Key Components
An operational plan has to be an area of careful consideration, including various components. Here are the essential elements:
1. Clear Goals and Objectives
Your strategic plan’s objectives should align with your operating strategy. It’s crucial to specify SMART goals, which are specific, measurable, achievable, relevant, and time-bound, to ensure clarity and focus.
2. Defined Roles and Responsibilities
It holds accountable and executes business operations smoothly by assigning tasks to the proper personnel.
3. Budget and Resource Allocation
Knowledge of how much financial means you will need and how you will distribute resources to keep operations uninterrupted is paramount.
4. Performance Metrics and KPIs
Tracking performance indicators ensures that the business will assess its success and make relevant amendments.
5. Risk Management Strategy
Planning mitigation strategies helps to anticipate potential challenges and thus allow business continuity.
How to Create an Effective Operational Plan?
These are the steps to take in case you want to know how to develop an effective operation plan.
1. Start with a Strategic Plan
Since an operating plan must support the execution of a strategy, do not have a vague and insufficient strategy.
2. Break Down Goals into Manageable Tasks
The tips for execution are small and actionable. To simplify executing larger objectives, larger ones can be divided into smaller tasks.
3. Set Realistic Timelines
Be consistent, do not delay your task time, and establish deadlines for each task.
4. Involve Key Stakeholders
Plan engagement for employees and managers in terms of expectations and responsibility alignment.
5. Use Leading Indicators
Rather than looking for lagging indicators (which only show past performance), look at the indicators that predict what will happen.
6. Review and Update Regularly
Operational plans should be dynamic. The plan is reviewed regularly to be changed to changing business environments.
Operational Planning Examples
Our exploration of the importance of operational planning requires actual industry examples so that we will examine two cases below.
Example 1: A Manufacturing Company
The company wants to boost production by 30% next year, so it needs to develop operational plans for buying supplies, hiring staff, and running machines efficiently.
Example 2: A Marketing Agency
A digital marketing company builds operations plans related to creating content and advertising to reach clients’ business targets.
Example 3: A Retail Business
The retail business needs to plan how to manage goods, hire more workers during peak times, and engage customers in the best possible way to sell more products.
Why is Operational Planning Essential for Business Success?
Every business requires an effective operational plan to run successfully. Whether you run a start-up or an existing enterprise, you must create an organized operating plan to achieve these benefits.
- Streamline daily operations
- Enhance efficiency and productivity
- Maintain financial control
- Ensure compliance with industry regulations
- Stay competitive in the market
A Step Towards a More Organized Business
Business organizations need operational planning to create and implement strategies that align with their vision. What is an operating plan? A company relies on its operating plan to ensure that all daily routines support its future achievements.
Your business cannot succeed without learning operational planning basics first.
Struggling businesses require effective planning to reach success. View our blog Tips for Building Business from Scratch for additional helpful strategies. For more assistance, contact Dr. Ameet Parekh.
