According to Steve Smith, President and Founder of GrowthSource Coaching, a California company that educates business owners and other professionals about improving their companies, an operating plan is a “day to day map how to run a business.” An operating plan details the guidelines of how a company owner manages the day-to-day minutiae of running their enterprise.
Elements of a well-written operating plan A well-written operating plan is thorough, covering every aspect of overseeing the business so that if the owner isn’t available, the plan can direct employees how to handle any matter that may arise.
To create an effective operating plan, a business owner should be certain it details:
How decisions are made
The systems to be used to support daily operations
The processes implemented to produce a consistent outcome
Methods for measuring how standards are met and whether the resultant outcomes are what was envisioned to occur
According to Smith, an operating plan “encompasses all of your standard procedures, everything you do to run a business.” Those considerations include how meetings are run and how the business handles the interviewing, hiring, rewarding and firing of employees.
He says it’s imperative an operating plan refers to the company’s written employee manual, which should contain the business’s Standard Operating Procedures (SOPs).
SOPs are “very carefully thought out and are the Bible of how a company runs,” says Smith.
Operating plans vs. business plans Business plans are very different than operating plans. Whereas operating plans detail how to run a company, business plans are used when the entity is new.
“It’s the story how to be successful,” says Smith.
Whereas an operating plan is the Bible of running a company, a business plan is generally obsolete after six months or so, he says. “Most of the time, business owners don’t look at them unless they are seeking capital,” Smith says.