Planning the things you ought to do, be it the simplest task or the most complex ones, will give you a higher chance of succeeding. Organizing the activities you need to do, arranging the things you need and preparing for future issues and outcomes will help you get the end point that you want. It may be difficult at first since you may get confused where to start your planning process, but once you get the hang of it, you get a sense of direction and fulfillment.
In business, it is completely necessary that you have some sort of a plan on how to operate, market, improve, etc., your own business. As they say, you cannot go into battle unarmed; in this case, a plan will be your best way of succeeding. To be more specific, an operational plan is a very significant and practical document not only in business but also in events, projects, and other institutions. It gives direction and focus on how things should go in order to achieve the expected result. In this guide, the focus will be on the operational plan of companies or organizations as well as the significance of an annual operational plan.
An annual operational plan basically outlines the yearly activities and targets that the company or organization will have to follow in order to work toward fulfilling the goals and objectives set forth by the company or organization’s strategic plan. As mentioned, the annual operational plan is a practical document that puts the annual activities and targets in perspective so that it can be checked, achieved, and updated.
A business operational plan is generally linked to the funding or budget of the company or organization and is also linked to the overall strategic plan of the company or organization. It basically provides the necessary framework as guide to the company or organization’s day-to-day operations. Although it usually covers the operations for the whole year, there are also operational plans that only cover a single day, a week, or a month; this is usually prevalent to limited or short-term projects and events.
The strategic plan of your business is directly supported by the annual operational plan since your operational plan will help achieve the goals that were set in the strategic plan. Basically, the operational plan is the method and guide used by the company or organization slowly ease through and tick off what has been included in the strategic plan. This means that the strategic plan is the basis for the formulation of the operational plan of the business. In the same sense, the company or organization’s budget must also directly relate to the operational plan since most, if not all, activities and targets in the operational plan can only be achieved if given enough resources.
Simply put, the annual operational plan of the business is the overall summary of the day-to-day activities that the company or organization will have to fulfill in a span of a year. It contains what the company or organization needs to do in order to fulfill what has been on their long-term plan or their strategic plan. It is a very important document that can greatly affect the rate of success a company or organization has since it is the framework or outline that guides them on what to do, what tasks need to be done first, what’s everyone’s responsibilities, etc., on the daily, or in this case, in a year.
You may have noticed how these two words have been used in relation to one another. But do you know the difference between the two? In order for you to be able to deeply understand the roles that each of these plans play in a company or organization, you have to be able to distinguish their differences. Here are some of the major differences between a strategic and operational plan:
The strategic plan is focused on the long-term goals for the next three to five years. Therefore, the strategic plan is the basis for the business’s plans, activities, targets, etc., in order to continue thriving for the next couple of years. Meanwhile, the operational plan consists of the short-term plans in order to achieve what has been reflected in the strategic plans. It is basically the plan, generally for a whole fiscal year, that helps the business fulfill what has been the company’s target/s for the next three to five years.
As mentioned, the strategic plan is focused on the long-term vision and the plans on how all the departments are supposed to work together to achieve those long-term plans. It is focused on how the entire company can work together to achieve the goals and objectives. On the other hand, the operational plan is focused only on the departments the entire company has.
There can be an overlap of activities for the departments, but that shouldn’t be the case for all of the departments. In addition, larger departments may require having more than one operational plan to help them carry out their tasks and responsibilities.
The people responsible in generating the strategic plan are the executive officials or team of your company or organization. Once it is completely created, cross-functional teams make sure the the strategy is successful. The operational plan is made of the leaders or heads of every department. Although each operational plan is made for every single department, their successful implementation will lead to company-wide or organization-wide success.
The budget for the strategic plan comes from a Strat-Ex budget that your company or organization may implement. This means that you have a strategic budget in order to fully implement your strategic plan. For the operational plan, the budget for it comes from your department’s annual budget. But you have to make sure that everything in your strategic and operational plan is aligned to make sure you are able to function effectively within the intended budget.
When reporting the strategic plan, the strategic planning committee or executive team will want to look at how the company is working and how well the company is performing on some measures they choose. Contrary to the strategic plan, when reporting, the operational plan will have to outline hundreds of projects or tasks the department employees are working on.
As you may now know, your operational plan is essential for your to achieve and fulfill what has been in your long-term vision or your strategic plan. However, aside from that, what are the other benefits that your company and organization can gain when you make an annual operational plan, most especially when you are just starting out as a small business enterprise? Here is a list of the benefits of an annual operational plan to small or start-up businesses:
The chances of your business growing and thriving depends on a lot of factors such as overall economic trends, location, specific market needs, hard work, and other elements. However, you can still do your best to push your company forward by planning ahead. Your annual operational pan will serve as a guide on how you should do things, and maybe even influence the growth of your company in order to advance proactively toward the goals and objectives you have defined beforehand.
Since the operational plan contains the activities, tasks, targets, and so on that directly correlates to what is in your strategic plan, it helps you manage what should be your priority. It puts your goals into perspective so that you can immediately see what goals or objectives in your strategic plan need to be addressed first or what targets should be prioritized so that there is continuous flow of activities.
Since it will give you a glimpse on what needs to be prioritized first, it will also give you the idea on who or what team to assign specific tasks to. Besides that, since it also gives you the goals or objectives you need to achieve, you can plan out who is best to assign for efficient accomplishment of each tasks. Taken that you are still a small business, you will have to make small teams consisting of employees you know best suits the responsibilities with each tasks, you have to make cost-effective decisions to ensure your success.
Your annual operational plan will be able to let you see and know how far up the task or activity list you have accomplished so far. It will give you visual representation of what you and your team has successfully done in order to track your progress as well as your growth. It will enable you to look into what has caused delay into some tasks and what led to the success of others. Simply put, it shows you a record of your progress in other tasks so that you can track and compare it to the remaining ones.
This just means that your operational plan helps you plan for the cash you use to spend on the actual expenses your company consumes. As you may know, you need to spend cash fro expenses, but you shouldn’t spend your profit. This aspect of your business is the main focus of your annual operational plan. It will help you plan how to acquire and how to spend the cash you acquire wisely.
We hope that this guide has helped you better understand the significance of an annual operational plan in your business, and may you find the given examples insightful.