Budget Considerations

How to Write an Operations Manual

Operating a company without a formal set of rules and regulations is similar to sailing across the ocean without navigational charts. Rarely can objectives be reached in either case without an operations manual that explains "how to do it."

If your business seems to be sailing along without an operations manual, why take the time to compile one: Because there are at least eight ways it can benefit you and your company.

An operations manual...

• Establishes a comprehensive source of company policies and procedures
• Facilitates even-handed, consistent administration of personnel policies
• Promotes continuity in management style throughout the organization
• Helps identify problems before they arise, minimizing "crisis management"
• Reduces the number of emotional decisions, encouraging a businesslike climate of objectivity
• Defines authority clearly and distributes responsibility
• Becomes a training tool for employees
• Offers examples of standard forms, reducing the number and variety of forms used.

In any growing company, no one has the time for an extra project such as creating an operations manual. Top management must personally endorse the project and provide leadership to keep it moving. Establish deadlines and designate a "doer" in your company to get the job done.

Gather all existing procedures, systems, and forms. Talk to all levels of management and staff to get their ideas. Discuss the manual with field employees to ensure that all actual day-to-day working needs will be covered. Input from former staffers can be valuable, too. Concurrently, prepare a checklist of points that should be covered in your company's operations manual.

Consider these eleven basic sections:

1. Introduction: Purpose of the manual; how the company started; business objectives and philosophy; description of products and services; economics of your business.
2. Organizational chart: Who reports to whom; job descriptions; addresses of company's facilities; importance of each department and division.
3. General employee information: Attitude toward customers, suppliers, and other employees; statement on how to handle telephone callers and visitors; housekeeping policies.
4. Personnel administration: Hiring practices; employment forms; when and how workers are paid; outside employment; reprimands; hours of operation; coffee breaks and lunch hours; dress code; personal behavior; frequency of salary reviews; advancement opportunities; benefits paid by the company; contributory benefits; explanation of payroll deductions; labor laws; use of time cards, scheduling; overtime; vacation entitlement and holidays.
5. Products and services: Customer relations; supplier relations; sales procedures; taking pride in what the company does.
6. Operational procedures: Flowcharts, process documentation, detailed directions and procedures for each department. This detailed documentation may not necessarily be part of the “master” manual but instead may be subdivided into appropriate sections which reside in detailed department manuals.
7. Paperwork: Administrative procedures; ensuring accountability; billings; sample of each form; purpose of each document; routing flowchart for paperwork; summary of deadlines and due dates.
8. Safety and security: Protection of physical premises; personal security; statement about protection of company assets; importance of safety to the employee and the company; handling of confidential information.
9. Emergencies: How to handle accidents; what to do in case of fire, power failures, robberies and thefts’ emergency telephone numbers.
10. Maintenance and repair: Telephones; service people; who should authorize repairs; trash removal; key control; handling of equipment; property damage or loss.
11. Legal: Compliance with local, state, and federal laws; handling of regulatory agencies; inspections; record keeping requirements; maintaining ethical standards.

Once you have pinned down what you want to say, how should you say it? Convey the meaning briefly and clearly. Remember that the message is for the benefit of the readers—your employees. Too often, company documents are written either pretentiously (to enhance the stature of the writer) or ambiguously (to protect the writer should a question arise).

Don't fail to put certain procedures in writing just because it seems impossible to cover every eventuality; additions and revisions are inevitable.

Here are several tips on writing the manual:

• Present instructions in a logical order.
• Be specific. State exceptions if those exceptions have occurred frequently in the past.
• Use language and examples that are common to your company's employees.
• Adopt nonsexist language (for example: salesman becomes sales representative or salesperson, watchman becomes guard).
• Have a qualified outsider (preferably an educator or professional editor) do the editing.
• A loose-leaf, three-ring format permits great flexibility in using, reviewing, and updating material. "Sections" should correspond to chapters of a book. Within each section, the material should be in outline form.
• Do not use a "Miscellaneous" section. It becomes a catchall revealing less-than-thorough categorization.
• Each page should contain the section title, the date the page was issued, and a page number. This simplifies both the task of keeping the manual updated and the distribution of new or revised material.
• To complete the manual, prepare a thoroughly cross-referenced index to topics covered.
• A chain of command should be established to make revisions, and one person in top management should approve all proposals for change. Otherwise, duplication and overlap will create confusion.
• Finally, your operations manual should be reviewed at least once a year because, by its very nature, a growing company creates change.

[Thank you, Kenneth R. Chane]

Venture Plan Outline

1. Opening, Front Page: Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
2. Executive Summary: One-page summary of the key elements of the business plan ...
3. Problem / Opportunity: The problem the venture will solve, the significance of the problem, the opportunity this offers the venture, quality of the opportunity, growth potential ...
4. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
5. Customers and Target Markets: Target market characteristics, why this market is the best for your venture, market validation research ...
6. Business Model: How your venture will earn a profit, expected margins, sources of recurring revenue, vision, mission, goals ...
7. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, competitive validation ...
8. Environment and Context: Industry overview, research results and analysis, major competitors, benchmark ventures, how your venture will position itself to meet the competition, timeliness, regulations ...
9. Marketing and Sales Strategy: Pricing strategies, distribution model, partnering, promotional strategies ...
10. Technology Strategies: Technology, product development ...
11. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
12. Intellectual Property and Legal Issues and Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
13. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, management to be added, culture, talent ...
14. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
15. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
16. Financial Plan: Key assumptions, historical financial statements, pro forma statements, return on investment ...
17. Investment Funds Sought and Use of Proceeds: Total investment funding being sought, use of funds in 4 or 5 general categories, any unusual use of funds ...
18. Harvest Plan: Return of cash to investors and entrepreneurs; most-likely exit method (IPO, acquisition, ...) ...
19. Summary: A brief who, what, where, when, why, and how of the venture; vision and mission ...
20. Appendices and Research: Detailed resumes, research results, product data sheets ...

[2.06]

Venture Plan Guideline

Here are some guidelines for a venture plan.
A typical "first round" investor-grade venture plan is usually about 20 - 25 pages plus separate appendices.
There are many possible outlines for a venture plan ... the following is pretty standard.
Remember, the purpose of a venture plan is to mitigate risk ... you are selling your concept here and need to show the reader that you know your stuff! It's not so much the plan as the planning (and learning and testing and explaining and ...)

A. Cover Page ... Company/venture/business name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...

B. Executive Summary ... independent one page document ... the exact same executive summary that you used to entice the prospective investor or corporate executive to want to read this plan. What is this venture about? Where is the market? What is the innovation and competitive advantage? Who is on the venture team? Why is this a good venture concept (ie, financial projections, et al)? When are the key development milestones? How will this venture come to fruition?

C. Table of Contents ... one page.

D. Opportunity ... tell a story here! Engage the reader! What is the hook, the story, the "grabber"? Two to four pages.

1. Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
2. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
3. Customers and Target Markets: Target market characteristics, size, why this market is the best for your venture, market validation research ...
4. Innovation: What does this venture do that is new and better?

E. Environment and Competition ... Industry overview, research results and analysis, major competitors, benchmark ventures, timeliness, regulations ... three to five pages.

F. Goals and Strategies ... critical and key information as appropriate to your venture ... three to five pages.

1. Goals, vision, mission. 
2. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, competitive validation, how your venture will position itself to meet the competition, ...
3. Business Model: How your venture will earn a profit, expected margins, sources of recurring revenue ... 
4. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ... 
5. Product Development Strategies
6. Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ... 
7. Technology Strategies: Technology, product development ... 
8. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ... 
9. Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
10. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ... 
11. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...

G. Financial Projections ... Key assumptions, historical financial statements (if available), pro forma statement summaries ... four or five pages.

H. Funding Proposal ... independent one or two page document.

1. Resource Requirements: Short summary of financial projections; total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return on investment to investors and entrepreneurs, harvest strategy ...
2. Call to Action: What do you want the reader to do ... join your team, invest, meet with you to learn more ... ?

I. Summary ... A brief summary (sales pitch) of the opportunity, environment and competition, goals and strategies, financial projections, resource requirements, return on investment ...

J. List of Available Appendices ... Variety of support information ... resumes, detailed financial statements, product data sheet, marketing brochure, research data, technology information,detailed competitive analysis, etc.

Business Venture Plan Presentation Guidelines

Here's an outline for a typical business concept presentation. These types of presentations are usually about 15 minutes for the formal presentation, 10 minutes or more for an "interactive discussion."

A.  Opening and Introductions (see 1 below for content suggestions)
B.  Problem/Customer/Solution Opportunity Story (crafted to fit the venture ... see 2, 3, 4 below for content suggestions)
C.  Competition, Environment, Innovation, Competitive Advantage, Differentiation (crafted to fit the venture ... see 5, 6, 7 below for content suggestions)
D.  Earn, Work, Team, et al, as appropriate to the venture (crafted to fit the venture ... see 8, 9, 10, 11, 12, 13, 14, 15 below for content suggestions)
E.  Financial Projections (crafted to fit the venture ... see 16 below for content suggestions)
F.  Funding Proposal, Summary, and Call to Action (crafted to fit the venture ... see 17 and 18 below for content suggestions)
G.  Closing and Interactive Discussion (see 19 and 20 below for content suggestions)

Detailed elements of the presentation include ...

1. Opening Billboard Slide: Company name, company location, contact information, legal statements (proprietary information, copyright, etc.) ...
2. Problem / Opportunity: The problem your venture will solve, the significance of the problem, the opportunity this offers your venture, quality of the opportunity, growth potential ...
3. Product and/or Service Solution Description: Essential product/service idea, category of product/service, proprietary protection, entry strategies ...
4. Customers and Target Markets: Target market characteristics, size, why this market is the best for the venture, market validation research ...
5. Environment and Context: Industry overview, research results and analysis, major competitors, benchmark ventures, timeliness, regulations ...
6. Innovation: what the venture does that is new and better
7. Competitive Advantages: Market focus, value proposition, core competencies, barriers to entry, differentiation, competitive validation, how the venture will position itself to meet/beat the competition, ...
8. Business Model: How the venture will earn a profit, expected margins, sources of recurring revenue ...
9. Marketing and Sales Strategies: Pricing strategies, distribution model, partnering, promotional strategies ...
10. Technology Strategies: Technology, product development ...
11. Operational Strategies: Production methodologies, manpower requirements, equipment requirements, material management, flow diagram of key processes ...
12. Intellectual Property and Legal Issues Strategies: Patents, trademarks, trade names, copyrights, trade secrets, operating and other agreements, legal structure ...
13. Organization: Management team, relevant domain knowledge of the team, commitment, advisers, directors, management to be added, culture, talent ...
14. Development Plan: Current company status, number of employees, development stage, early revenue, number of customers, relevant historical information, long-term venture goals, growth strategies, timeline ...
15. Risks and Contingencies: Downside risks and contingency plans, upside risks and expansion plans ...
16. Financial Projections: Key assumptions, historical financial statements, pro forma statements, return on investment ...
17. Funding Proposal: Total investment funding and resources being sought, use of funds in 4 or 5 general categories, any unusual use of funds, return of cash to investors and entrepreneurs, harvest strategy ...
18. Summary: Vision; mission; goals; a brief who, what, where, when, why, and how of the venture ...
19. Closing Billboard Slide: Company name, company location, contact information ...
20. Variety of support slides keyed to most-likely-to-be-asked questions

Recommendations: presenter's name on each slide, company logo on each slide.

Tip: Keep in mind WHO is your audience. WHO are you trying to impress. It's usually NOT everyone in the room, rather it's the decision makers ... the boss, the investor, the president of the company with which you are trying to form a collaborative partnership.

10 Tips for Launching a New Venture

1. Don't wait for a revolutionary idea ... it will never happen ... just focus on a simple, exciting, empty space and execute as fast as possible.
2. Share your idea ... the more you share, the more you get advice and the more you learn ... meet and talk to your competitors.
3. Build a community ... use blogging and social software to make sure people hear about you.
4. Listen to your community ... answer questions and build your product with their feedback.
5. Gather a great team ... select those with very different skills from you ... look for people who are better than you.
6. Be the first to recognize a problem ... everyone makes mistakes ... address the issue in public, learn about and correct it.
7. Don't spend time on market research ... rather, launch test versions as early as possible ... keep improving the product in the open.
8. Don't obsess over spreadsheet business plans ... they are not going to turn out as you predict, in any case.
9. Don't plan a big marketing effort ... it's much more important and powerful that your community loves the product.
10. Don't focus on getting rich ... focus on your users ... money is a consequence of success, not a goal.

[Thank you, Loic Le Meur]