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What Is a Business Operational Plan?
Operational planning converts strategic goals and objectives into tangible, actionable tactics. An operational plan outlines the specific day-to-day activities and tactics required to align with an organization’s broader strategy and vision. An operational roadmap guides how a business will implement its strategy through specific programs, budgets, procedures, and processes.
An operational plan is typically prepared for a 1-3 year timeframe and includes detailed action plans for each department or function. It describes the resources needed, tasks and activities to be done, deadlines, and who is in charge. The short-term execution of the strategic plan in the focus.
Examples of Operational Planning in Management
Some common operational planning examples in management are:
- Production planning
- Inventory management
- Workforce planning
- Facilities management
- Logistics and distribution
- Service operations
- Maintenance planning
- Budgeting
- OPS planning
- Contingency planning
The overall operational plan integrates these different functional plans to ensure alignment toward common business objectives. It is updated periodically by an operational planner to keep pace with changing internal and external conditions.
Who Performs Operational Planning?
Operational planning involves collaboration across various levels within an organization:
1. Managers and Department Heads
Role: Managers and department heads play a central role in the plan of operation. Their expertise guides the process, and they ensure that the plan aligns with the overall strategy.
Responsibilities:
- Ensure that operational goals are consistent with the organization’s strategic vision.
- Allocate financial, human, and material resources based on strategic priorities.
- Assign specific responsibilities to team members.
- Track progress and make adjustments as needed.
2. Cross-Functional Teams
Role: Operational planning requires input from different functional areas—finance, marketing, production, logistics, etc.
Responsibilities:
- Teams collaborate to create a comprehensive plan.
- Each team brings specialized knowledge to the table.
- Ensure that departmental plans align seamlessly across functions.
3. Individual Contributors
Role: While managers and teams drive the process, individual contributors also play a vital role.
Responsibilities:
- Implement the operational plan on a day-to-day basis.
- Provide valuable feedback based on their frontline experience.
- Adapt to changing circumstances and contribute to continuous improvement.
4. Top Leadership (CEO, Board of Directors)
Role: Although not directly involved in the nitty-gritty of operational planning, top leadership sets the overall tone.
Responsibilities:
- Define the overarching vision and long-term goals.
- Ensure that operational plans align with the organization’s mission.
- Approve major resource allocations and strategic & operational initiatives.
Operational and Strategic Planning
Strategic Planning vs Operational Planning
LendingTree research revealed that many businesses struggle to survive in the long term. Among private sector businesses in the United States, approximately 20.8% experience failure within the initial year, while 48.4% face challenges within the first five years. The numbers escalate further, with 65.1% encountering difficulties within the initial decade. A significant contributing factor to this elevated failure rate is the absence of efficient operational practices.
Operations are influenced by two essential yet distinct types of organizational planning: strategic planning and operational planning. While they are complementary and interlinked, let’s start with understanding what is strategic planning and operational planning before understanding the key differences:
Strategic Planning
Strategic planning is all about defining the core purpose and vision for an organization. It involves looking ahead 3-5 years to set broad goals and priorities across the business. The aim is to determine the path ahead – where we want to go, what we want to achieve, and how we’ll stay competitive.
Some key questions strategic planning tries to answer:
- What’s our raison d’être as a company – why are we here?
- What’s the dream for our future – where do we envision ourselves in 3-5 years?
- What high-level accomplishments do we want to target over that timeframe?
- How will we maintain an edge over competitors in our industry?
The strategic plan sets the long-term targets and big goals that show what we want to become in the future.
Operational Planning
While strategic planning focuses on the “what,” operational planning focuses on the “how.” Operational plans detail the concrete strategies, initiatives, resources, processes, and actions required over a 1-3 year timeframe to deliver on the goals outlined in the strategic plan. Operational plans answer questions such as:
- How will we organize resources to deliver on strategy?
- What specific actions, projects, tactics, and steps must each department undertake?
- What budgets, systems, processes, and timelines are needed?
- Who will be responsible for each element?
Operational planning deals with the short-term, practical planning and implementation required to turn the strategic vision into reality through day-to-day operations.
The key differences between operational vs. strategic planning are summarized in the table below:
| Aspect | Strategic Planning | Operational Planning |
| Time Horizon | Long-term (3-5 years) | Short to medium term (1-3 years) |
| Focus | Vision, mission, overall direction | Specific actions and tasks |
| Purpose | Sets the tone for the organization | Translates strategy into actionable steps |
| Scope | Organization-wide | Departmental or functional |
| Level of Detail | High-level | Detailed and granular |
| Frequency of Review | Less frequent (periodic) | Frequent (ongoing) |
| Decision-Making | Strategic decisions | Tactical decisions |
Remember, while strategic planning provides the big picture, operational planning ensures that the organization’s wheels keep turning smoothly. Both are essential for sustained success.
Operational Planning Process
The operational planning process is the sequence of steps that are followed to create, implement, and evaluate an operational plan. Here are the primary steps in operational planning:
Step 1: Develop a Strategic Plan
- Define vision, mission, goals, and objectives
- Identify key stakeholders, resources, risks, and opportunities
- Align with organizational values and culture
- Use tools like SWOT analysis, SMART goals, and balanced scorecard
- Set a time frame of 1-3 years
Step 2: Prioritize Your Goals
- Identify and prioritize the most important and urgent goals for the short-term
- Align them with your strategic plan and make them specific, measurable, achievable, relevant, and time-bound
- Use tools like the Eisenhower matrix, MoSCoW method, or Pareto principle
Step 3: Use Leading Indicators
- Choose measurable factors that indicate progress and performance
- Track and evaluate the effectiveness of strategies and actions
- Examples: customer satisfaction, employee engagement, quality, productivity, revenue, etc.
Step 4: Draw on Your Organization
- Identify people, departments, teams, and processes involved in the execution
- Assign roles and responsibilities, define expectations and standards
- Establish communication and collaboration channels
- Use tools like the RACI matrix, Gantt chart, or resource allocation matrix
Step 5: Communicate Your Plan
- Share the operational plan with stakeholders, employees, customers, and partners
- Explain the purpose, benefits, and challenges of the plan
- Solicit feedback and suggestions, address concerns or issues
- Keep everyone informed and updated on the status and results
- Use tools like newsletters, presentations, meetings, or surveys
Step 6: Monitor and Evaluate
- Use leading indicators and other tools to measure outcomes and impacts
- Compare actual results with expected results, identify gaps or deviations
- Analyze root causes and effects of gaps, determine corrective actions or improvements
Step 7: Review and Revise
- Regularly review the operational plan and assess relevance and alignment with the strategic plan
- Make adjustments or changes as necessary, based on feedback, data, and lessons learned
An operation plan in a business plan covers aspects such as production, facilities, technology, resources, and market requirements. Here are some common components of an operational plan:
- Executive summary – A brief overview of your operational plan and its main points and purpose.
- Operational budget – A financial plan that estimates the income and expenses of your business operations.
- Operational objectives – The specific, measurable, achievable, relevant, and time-bound (SMART) goals that you want to accomplish through your business operations.
- Processes and workflows – The steps and procedures that you and your team will follow to create and deliver your products or services.
- Operational timeline – A schedule that outlines the milestones and deadlines for your operational objectives and projects.
Benefits of Operational Planning
Good operations planning is really important for companies to meet their big picture goals. By thoughtfully designing, syncing up, and managing the everyday work needed to run a business, operations planning gives some key benefits:
- Provides a clear direction and guidance for the team members, and defines their roles and responsibilities.
- Helps to monitor the progress and performance of the team, and to identify and resolve any issues or challenges that may arise.
- Enables the team to adapt to changing circumstances and to respond to new opportunities or threats.
- Improves the communication and collaboration among the team members and other stakeholders.
- Increases the productivity and quality of the work, and enhances customer satisfaction and loyalty.
At OGSCapital, we have a team of expert business plan writers and consultants who can provide operational and strategic planning services. Our high-quality and customized business plans have helped thousands of clients in different industries raise billions of dollars. We can help you create a realistic and achievable operational plan to guide your daily operations and decision-making. We also offer full customization, revisions as needed, and strategic advice for your operational plan. Contact us today to help you take your operations to the next level.
Frequently Asked Questions
Q. What are the disadvantages of operational planning?
Some disadvantages of operational planning are:
- Multi-level dependency, which means that the success of the operational plan relies on the coordination and collaboration of different components of the organization;
- Human error, which means that mistakes can occur during the execution or evaluation of the operational plan; and
- Loss of creativity, which means that the operational plan can inhibit innovation and adaptation to changing conditions.
Q. What is a good operational plan?
A good operational plan should be clear and precise that helps in preparing strategies and directs the day-to-day operations and choices of a business or organization. It explains what the business or organization wants to do, how it will do it, what it will need, how it will measure its progress, and what results it expects.
OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.
