Most businesses go thru the annual process of budgeting and planning for the next financial year. Smart businesses take this planning process as an opportunity to delve deeper into the business to better align the operating plan to business delivery.
What is an operating plan? An operating plan is a detailed plan, covering sales, marketing, human resources and operations that provides a roadmap for the following financial year. It is different to a strategic plan, as in most instances it is focused on next year, rather than the longer term view a strategic plan offers. It can be delivered independently across business units, but always rolls up to one business wide operating plan.
The operating plan will align to the strategy of the business, but will offer the “nuts and bolts” of how the strategy will be delivered next year.
So who should be involved in the operating planning process? As the operating plan covers all facets of a business, so stakeholder engagement across these facets need to be considered in the plan. The operating plan will fail if delivered in isolation or not including the areas of the business that will impact the business goals and delivery.
The operating plan should not be a finance function, they may manage the process, but it should be a contribution from all functions of the business, across all business units.
What a successful operating plan looks like!
The operating plan should provide clear metrics to the business that can enable tactical and broader changes to the business, should the need arise. Many operating plans deliver a high level sales number and profit, but more detailed metrics needs to be detailed. The operating plan should provide an understanding of what will be sold and by who, how it will be delivered, the marketing success required to see these sales.
As important as the delivery of a concise operating plan is the ability to measure the progress of the parts of the business to that operating plan. Just measuring sales only goes part ways to understanding the progress of the business. Focus need to be instilled in the delivery of the tools and reports that measure all facets of the business to truly understand success.
