Republic of the Philippines

Department of Education
REGION I
SCHOOLS DIVISION OF CANDON CITY
Candon City, Ilocos Sur

Business Enterprise Simulation 12

Quarter 3 (Week 7) – Module 5
Prepared by: Sadiri Mat T. del Rosario

Lesson
Writing the Operating Plan
1 Section of Your Business Plan
I. OBJECTIVES:
1. Define the purpose of preparing the operating plan.
2. Identify the important components of your operating plan.
3. Design the operating plan section of your business plan (ABM_BES12-Id-j-c7) based
on the given example
II. GUIDE QUESTIONS:
1. What is the purpose of preparing your operating plan?
2. What are the important components of your operating plan?
3. How do you outline the operating plan section of your business plan?
III. DISCUSSION
The operations plan section of your over-all business plan discusses the necessary
operating elements of your business, such as your physical location, facilities, and equipment
(office and/or factory). It may include inventory requirements, suppliers, and a brief
description of manufacturing operational flow, depending on the nature of your business.
When making your operational plan, consider it as an outline of your initial capital
requirements. Capital requirements are the necessary expenditures to be able to start operating
the business and bring in its initial revenues and return of investments.
There are two important sections of what you need to discuss to your readers in your
operational plan. The first section will compose of: (1) What you have already done so far,
and (2) what still needs to be done to get your business off the ground. The second section is
to show to your readers that you understand the manufacturing process of producing your
product or delivery process of your service (if you’re into service business).
Let’s discuss each section in detail.
Section 1: Stage of Development
As already mentioned, start your operational plan by explaining what you’ve already
done to start the business. Next, you explain the things that are yet needed to be done.
 According to “the balancesmb.com”, your discussion of this section (stage of
development) should include the following:
 Production workflow: This is a detailed, step-by-step description of how your
products or service will be made where problems that may occur in the production
process are also identified. Within the scope of your discussion, you may also add a
subsection entitled, “Risks,” which outlines the potential problems that may occur and
interfere with the production process and what you’re going to do to evade or limit these
risks. If you find any part of the production process as something hazardous that your
crew people will be exposed to, you should describe how they will be trained first to
safety protocols. If there are health-hazard chemicals and materials that will be used,
you should describe how they will be safely stored, handled, and disposed.
 Industry association memberships: This is your discussion of how aware you are or
not of your industry’s local, regional, or national standards and regulations by
mentioning which industry organizations you should be a member of (if you are not yet
a member) and in which you plan to join. Outline what steps you should take to comply
with such laws and regulations pertaining to the industry which your business will be a
part of.
 Supply chains: These are your explanations of who your suppliers are and their prices,
terms, and conditions. You should describe what compromise agreement you have
made or will make and your options in case one or all of these mentioned suppliers let
you down.
 Quality control: An explanation of the quality control measures that you've set up or
are going to establish. For example, if you intend to pursue some form of quality control
certification such as ISO 9000, describe how you will accomplish this.
Section 2: Production Process
If your “stage of development” section serves as an overview of your operational plan,
your “production process” section will serve as a detailed description of your business’s day-
to-day operations. As already mentioned at the outset, this second section is for you to
demonstrate your understanding of how your products or services are manufactured or
delivered to your clienteles.
The component of your second section discussion are the following:
 General: Of course, to start with, do an outline of your business' day-to-day operations
like your hours of operation and the days the business will be open. If the business is
seasonal, be sure to mention the details, as well.
 The physical plant: This includes your establishment. Your sales office and your
manufacturing site maybe one and the same building or otherwise not. Still, you must
describe the type, site, and location of premises of these facilities. If applicable, include
drawings of the buildings, copies of lease agreements, and recent real estate appraisals.

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 You need to show how much the land or buildings required for your business operations
are worth and tell why they're important to your proposed business.
 Equipment: The same is true for equipment. You must also describe the equipment
you will need and how much of it you need including its or their worth and cost and
explain if you will be purchasing them in cash or financing arrangements with suppliers
or manufacturers.
 Assets: List down all the needful initial assets to start your business, such as land,
buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and
the worth of each asset.
 Special requirements: If your business has any special requirements, such as water or
power needs, ventilation, drainage, etc., provide the details in your operating plan, as
well as what you've done or going to do to secure the necessary permissions.
 Materials: These maybe the raw materials or purchases needed to produce your
products or initial inventory. Mention where you're going to get these materials or
service and explain what terms you've negotiated with suppliers.
 Production: Explain the time duration from start to finish in producing a unit of your
product. Mention also factors that may affect your time frame of production and
describe how you'll deal with potential challenges such as rush orders.
 Inventory: Explain how you'll keep track of your inventory (please refer to your
inventory management lessons in FABM 1 & 2 and Business Finance).
 Feasibility: Describe any product testing, price testing, or prototype testing that you've
done on your product or service. You may go back to your marketing survey and
product survey in modules 1 & 2, respectively, and out of them, you can make a quick
or brief summary of how feasible you think is your product.
 Cost: Give details of product cost estimates. Present in full your cost of raw materials,
and all costs that becomes part of your finished product or service.

IV. EXAMPLE
The example below is a business aligned in the restaurant industry. A restaurant is
considered a “hybrid” business because it is a little type of everything from manufacturing,
merchandising, and service. Not everything that were discussed as components of the
operational plan can be applicable to all forms of businesses. In the case of a restaurant
business, some of the operational descriptions may not be necessary. The components of the
first section, i.e., “stage of development” may not all be applicable. Production workflow will
have to be discussed in detail only if there is a multi-processing of products from their raw state
like manufacturing businesses with factory facilities. Also, if industry membership for
restaurants or resorts exists in the locality, then there is a need to pursue discussing the matter,
otherwise, it is left out. Quality control as a legal standard will only become necessary if the

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products are intended for reselling or franchising. FDA product registrations and approval may
have to be acquired first. But no other than serving the products within the facility, or delivered
directly to consumers, quality control is a simple matter of internal marketing strategy and as
sanctioned through inspection requirements by the local health department.

Illustration: Operational plan section of a Coffee Shop business plan

Section 1: Stage of Development
Supply Chains
We have negotiated an agreement with local coffee manufacturers and suppliers from
Cervantes and Suyo municipalities. Besides, we have contacted a friend in Latin America to
supply us premium gourmet Columbian coffee/espresso beans on a quarterly basis once the
business starts. Milk, juices, soft drinks, fruit, etc. will be sourced directly from Manila
suppliers on whole sale.
Muffins, scones, cookies, yogurt fruit cups, and sandwiches will be supplied on a daily
basis by Luding's Pastry and Catering Services.
Section 2: Production Process
General (including Staffing)
Our business will operate daily from 9:00 a.m. to 9:00 p.m. Two full-time and four to
six part-time baristas will be hired at industry standard wages. Baristas will be trained at a
regional TESDA barista training academy. The two full-time employees are previous
employees of the restaurant that recently closed. The part-time employees will be sourced from
the local post-secondary institutions.
Owners and staff will share all regular duties, including taking orders, making
coffee/tea, clearing tables, restocking, dishwashing, maintaining washroom facilities, etc.
To increase employee loyalty, a bonus/profit sharing system will be put in place.
Facilities (the physical plant)
The premise we have chosen is at By-Pass Road, Bagani Campo, Candon City (near the
LTO & Convention Center). The space which is already designed as a bar & restaurant features:
 2,000 square feet of indoor space in a modern, well-maintained building in an excellent
location
 approximately 500 square feet of outdoor patio space, a parking space that can
accommodate up to five SUV’s at a time and a separate area for bicycles with lockup
racks;
 existing zoning for restaurant usage; and,
 a four-year lease at ₱35,000/month with a fifth year free
The building owner is responsible for trash collection, recycling, pest control, and security.
Utilities (water, electricity, gas, internet, phone) are estimated to be ₱15,000 per month

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 There are existing kitchen and washroom facilities already in place. A former bar and
restaurant owner in the city who had recently closed his business to pursue another industry
has offered to sell used kitchen equipment at heavily discounted prices.
Equipment
The following equipment will be purchased:
 Commercial grade La Marzocco Espresso machine (₱80,000)
 Espresso grinder (₱12,500)
The used commercial equipment items that we are negotiating to purchase from the
previous restaurant owner, includes:
 Glassdoor fridge (₱25,000)
 Dishwasher (₱20,500)
 Microwave (₱12,000)
 Misc. shelving, storage bins, etc. (₱30,000)
Maintenance contracts for the equipment will be negotiated with the former maintenance
companies or other local vendors.

V. GENERALIZATION
As you will be writing your operational plan, you may use all the necessary subheadings
described in the discussion for both sections of your plan and then provide the details as related
to your business in paragraph format. If any of those subheadings do not apply well to your
particular business, leave it out.
When you’re through with your operating plan section of your whole business plan,
you do not only have a material to show to your readers or potential investors, but also, you
have a convenient record of what you have accomplished and a guide as to what other things
are needed to be done to make your business a reality.

VI. EXERCISES
A. MULTIPLE CHOICE. Choose the letter of the correct answer and write on the blank
before the number.
___1. Which of the statements correctly describes the purpose of the operating plan?
a. It will instruct employees on what to do next.
b. It will convince suppliers to grant a credit line.
c. It encourages readers to enter into the same industry.
d. It lists down what you have done and what needs to be done
___2. What subheading in your operating plan can you include discussion of risk
management?
a. General information c. Quality control
b. Production workflow d. Special requirements

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___3. What is one subheading in your operating plan that is a concise description of the result
of your marketing surveys?
a. Feasibility c. Production
b. Inventory d. Supply chains
___4. In what subheading will you discuss your opening and closing hours and regular days of
operations?
a. General c. Production
b. Physical plant d. Special requirements
___5. What is one subheading in the operating plan that is usually left undisclosed if you’re
into “online” business?
a. Assets c. Physical plant
b. Equipment d. Production workflow

B. MATCHING TYPE. The items in column A are examples of each subheading of your
operational plan. Write the letter of the correct subheading to which this belongs as found in
column B.
Column A Column B
___1. “The business needs construction of its drainage a. General
system.”
___2. “Business is registered with Phil. Society of Baking.” b. Industry association membership
___3. “ISO certifications were received today via courier.” c. c. Production
___4. “Factory test-runs are set to be done to establishd. d. Quality control
minimum time-frames of manufacturing.”
___5. “Shop is open from 9am to 5pm, no lunch breaks,e. e. Special requirements
Mondays to Fridays only.”

C. PERFORMANCE TASK
Following the instructions as specified in page 4 of this SLM’s discussion and example
part: “As you will be writing your operational plan, you can use all the headings described
above in both sections as your subheadings and then provide the details as related to your
business in paragraph format. If any of those subheadings do not apply well to your
particular business, leave it out,” design your own operational plan as RELATED to the
marketing plan you’ve already done in module 4. Both will form part of your business plan
later on.

VII. References:
Websites:
Ward, Susan. n.d. The balance small business. —. 2020. thebalancesmb.com. December 08.
Accessed May 11, 2020. https://www.thebalancesmb.com/operating-section-of-

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 business-plan-2947031; https://www.thebalancesmb.com/a-coffee-shop-business-
plan-4153010
n.d. Grasshopper.com. Accessed May 11, 2021.
https://grasshopper.com/academy/developing-a-business-plan/operations-plan/.
n.d. Study.com. Accessed May 11, 2021. https://study.com/academy/lesson/what-are-
operational-plans-for-a-business-definition-types-examples.html.

VIII. Answer Key

5. A 4. C 3. D 2. B B. 1. E
5. C 4. A 3. A 2. B A. 1. D

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