Operations Plans

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What are Operations and Operating Plans?

Operations are actions that create and deliver goods to clients and operations plans establish the activities and facilities/systems that facilitate the actions. Operations use facilities, equipment, premises, logistics, systems, computer software, policies, procedures, manuals, and people to perform the core functions of a business namely production, marketing, selling, customer service, financial management, and administration. Operations plans, therefore, concerns creation and management of physical resources, systems, processes, policies, procedures and the activities that turn the resources to products and services. This is about planning the need, acquisition, development and deployment of physical and non-physical resources that a business requires for producing and delivering the products or services. This covers all the things and logistics needed in the value addition chain ranging from material acquisition through processing to delivery of products and services to customers.

The goal in operations management is, therefore, to have needed facilities, systems and processes and to use them effectively and efficiently to create products and services and deliver them the way customers want, where and when they want and at an affordable or competitive price. Operating needs differ from business to business. The needs of a restaurant differ from those of a retail shop or a transport company.  A business can have operations support department or unit that develops, provides, manages, and maintains operating resources for all departments in collaborations with the departments. Alternatively, each department can have a mini-operations unit to develop and maintain facilities, systems and procedures that it needs to deliver its mandate. Procurement, transport, and security units often fall under the operations department.

The bulk of capital and operating expenses will come from these plans. It is, therefore, necessary to go into some detail in considering and describing operating plans and to include estimated costs of putting them in place. The details and costs will help when making the budget and pro forma financial statements (cash flow, income, and financial position statement). The operating plans section of a business plan captures the following aspects:

  1. Product: Product/production, processes, facilities, information technology, and supply chain, inventory and quality management.
  2. Operating systems.
  3. Policies, procedures and manuals.


Product or Services

A product or service is what you produce and offer to the market. It should be something that consumers want and not what can or want to offer based on your skills or ideas.  Production is the process of producing goods and services and is a value-adding chain. It is an activity that brings together intangible inputs like research, ideas, creativity, knowledge, wisdom, skills, software and so on with tangible inputs like raw materials, semi-finished materials, unassembled materials, equipment, systems, and labour to produce goods and services. The production process combines inputs (land, labour, capital and entrepreneurship) in various proportions to produce outputs that can be goods or services that are then sold to consumers. This process is known as value addition chain. Value added is the difference between the cost of inputs and the manufacturing process and the final selling price of the product or service

The goal of the production process is to produce goods in a way that minimizes waste and maximizes production and productivity from given inputs. Production is the total output of the process and productivity is a measure of how well inputs are used (efficiency). Productivity can result in the use of fewer inputs to produce the same output or using same inputs to produce a higher output.


The production process is the method and the activities that inputs go through to become goods or services in a form that they ready for the market or end-consumer. It is how inputs that include the buildings, machinery, technology, systems, procedures and people are combined to carry out the transforming processes of creating goods or services. Depending on the nature of the business, the production processes can be arranged in a way that production takes place in a unit or job, batch, flow (or mass) or a continuous production process.

Facility layout

This is the factory, plant or processing facility and this depends on the job at hand, and the nature of the business. A job to build a house, for example, requires a fixed-position layout where all the resources are brought to where the construction takes place. A product that involves various stages of processing requires organizing the processing stages into units, sections, divisions or departments with each unit, for example, performing related processes in a process layout fashion. In another example known as product layout or flow production, the product starts the journey with the first ingredients at one end and more parts or ingredients are added by workers at various stages as the product flows down the production line until it reaches the finishing point where it is packaged and prepared for sale. In this process, the workers remain in one place and the product comes to them and passes on.

Capacity and facilities

Capacity is the ability in terms of resources like land, buildings, people, plant, machines, equipment, furniture, fittings, automobiles, technology, communication equipment and a wide array of tools to handle production loads. Required capacity depends on needed outputs and available facilities. Facilities also include systems needed for quality control, packaging and distribution, customer order management, customer order delivery systems. The facilities required very much depends on the nature of the business. What is important is to think about these requirements and have a plan of how to acquire them before going into business to avoid frustrating your business and customers, which may lead to failure even before starting.

Location and premises

Primarily, the location of the business has to be decided and this ought to be identified at the planning stage. The choice of location depends very much on the nature of the business to be conducted. For online businesses, for instance, location does not matter. In choosing a location, the following factors need to be carefully considered:

  1. The population.
  2. In some cases, it is better to stay away from competition in others like a restaurant or spare parts shop, staying with competition creates a destination for customers like a food court in a mall which benefits all competitors.
  3. Facilities/services like water, electricity, communication connections, and technology.
  4. A business that depends on drop by customers needs to be highly visible and accessible.
  5. Zoning requirements.
  6. Products that gain upon processing or are perishables need to be near the market.
  7. Proximity to raw materials and labour.
  8. Government influence such as tax relief and other incentives to locate in a certain place.

Information Technology

Employment of technology is about the digitization of data, information, and communication as well as automation and mechanization of systems, processes, and activities. Technology is used to make work easier, faster, precise and real-time. It also saves labour, energy, time and materials and improves quality. Areas, where technology can be applied, include production, record keeping, marketing, communication, customer service, production and delivery processes, e-commerce, research, order management, shop floor operations, data mining and analytics, HR activities, payments, procurement activities, computer software Apps, internet of things, cognitive systems, artificial intelligence, 3D printing, robotics, and computer administration and security.

Supply Chain Management (SCM)

SCM which is also known as logistics is the management or overseeing and managing the interactions of the supply events of upstream agents (suppliers), midstream agents (the procuring entity’s internal processes) and downstream agents (customers) to deliver superior customer value and experience at the least cost possible. Consequently, SCM can be considered as the design, planning, execution, control and monitoring of the chain of events (value addition chain) that go into procuring of goods and services, processing these goods and services and delivery of processed goods and services to the ultimate customer that are competitive in all respects. Value addition activities generally include activities around ordering and receiving of inputs, handling and storage of inputs, the manufacturing activities, packaging, handling and storage of outputs, and delivery of goods to the marketing.

Inventory management

Inventory management is the process of tracking movements of non-capitalized stocks of raw materials and finished goods to maintain an optimum amount of each item to avoid overstocking and stock-outs. The main objective of inventory management is to ensure that there is adequate stock to provide for uninterrupted production, sales and customer service. The other goal is to prevent damage, curb waste, minimize storage costs, deter pilferage, and detect damaged, slow-moving, fast-moving or expired and obsolete goods for appropriate action. Inventory is managed using techniques such as economic order quantity (EOQ), reorder level quantity, Just-In-Time, and material requirement planning (MRP) system and concepts such as supply chain cycle (lead time), procurement cycle, manufacturing cycle, replenishment cycle, and end consumer order cycle.

Quality Management

Quality control is the process of making sure that there is not a single defective product leaving the company destined to the market. Quality is about a product that genuinely performs, is durable, and saves time and money or service that satisfies completely. To get it right, you have to ask “what are the required standards to be maintained and how can we maintain those standards”. Quality requires first-rate product design right from the beginning, setting standards (specifications) of what is acceptable and what is not, putting in places systems that track and measure performances and which ensure that poor quality does happen in the first place, training the workers on all these measures. There are four approaches to quality management and these are:

Quality assurance: This involves setting standards upfront that has to be observed and then applying these standards throughout the value addition chain. The standards usually cover product design, materials to be used, manufacturing procedures, handling procedures, delivery scheduling, after-sale service and quality control procedures.  Quality assurance is more like prevention rather than cure.

Quality control: Quality control is about ensuring that quality control procedures are being followed during production and that no product leaves the factory with defects. Controls that can be applied include visual inspection, measuring, and weighing of products. Inspectors are provided with checklists and descriptions of unacceptable product defects such as malfunctions, cracks, under-weights or surface blemishes. These controls can be carried out a product by product, by sampling or through an automated process. Written step by step and testing production procedures, tasks and processes are also used to ensure quality control.

Total quality management (TQM): Total Quality Management (TQM) is a management approach that identifies and corrects problems using fact-based decision making, empowers workers, and uses teams, as opposed to individuals to identify and solve problems. This approach also and seeks to continuously improve the organization’s all-round ability to meet or exceed the demands of internal and external customers. TQM can be viewed as a system of management based on the principle that employees must be committed to high standards of higher performance. In a TQM approach, all employees cooperate to foster teamwork; empower one another; continuously improve the quality of processes, products, services and the work culture and to generally do things right first time all the time. The main tenets of TQM are customer-focus to ensure that the customer is always satisfied, total employee involvement, process-centred, systems integration, strategic approach, continuous improvement, avoidance of faults in all stages of value addition, data-based decision making and effective communication all round.

TQM is very much related to Kaizen in the sense that both focus on continuous improvement using quality circles to identify and solve problems. Quality circles refer to a situation where groups of workers regularly meet to discuss emerging problems and possible solutions. Often, everybody seems to know what needs to be done but few, if any, appear to know how to get people to do what needs to be done. One of the goals of the TQM approach is to try to get past this hurdle.

ISO-International Organization for Standardization: One of the ways to assure the customer that a product or service meets particular standards is to have an internationally recognized quality mark on the products. Several quality marks are available such as ISO9000 and ISO14000. ISO900 consists of a series of quality assurance standards set by ISO which when followed ensures that the resultant product consistently meets certain expected quality. ISO14000 consists of a set of uniform global environmental standards that encourage businesses to conduct business in ways that maintain cleanness, safety and avoids waste.


Besides operating facilities, a business requires operating systems and processes to help in performing and control of the processes and tasks. A business system is a blend of equipment, tools, computer software (technology), information, policies, procedures, and people to orchestrate or coordinate and control the activities of a business. A system is an assembly of interlinked things and activities that logically interact, affect, and alter each and one another to achieve an objective or perform a task.

If a business requires a hammer and nails to produce goods and services, the hammer and nails is a production system in its simplest form. A screwdriver and screws make a simple system of production. Other more complex examples of systems include production systems like Toyota Production System (TPS), computer-assisted manufacturing system, accounting system, inventory management system, supply chain management system, the computer local area network (LAN), etc.

The operating systems address the purpose of the work, specific aims of the work, and the processes or procedure that is used to do the work, and ways to improve work and the systems themselves. The goals of such systems are to ensure the activities are focused on achieving the objectives of the business most effectively and efficiently. Common business systems include the following:

Production systems

A production system is an assembly of all the functions and activities designed to gather inputs (raw materials, equipment, tools, person-hours, apparatus, parts, manuals, sketches, designs, artwork and so on), convert or process them to produce goods and package them for delivery to the market. The conversion process may be manual, automated or a chemical process.  Production scheduling or planning, supply chain management, inventory management, and quality control of inputs and outputs support the production process. Any system, manual or otherwise deployed to gather inputs, process and convert them into finished goods is a production system. Examples of production systems include computer-assisted designing (CAD) software, and computer-assisted manufacturing (CAM) software, and Material Requirement Planning (MRP) software. When all these three and other systems are integrated, they become computer integrated manufacturing (CIM) system which now plans, designs, and coordinates, and controls all value-adding activities almost from start to finish with minimum human intervention.

Delivery systems

Distribution and delivery is a vital part of running a business. This is about how products and services move from the hands of the manufacturer into the hands of end-users. A typical delivery system consists of people, equipment, facilities, tools, and computer software that are all integrated to work together to achieve a purpose most effectively and efficiently. All these require planning, creativity, information, ideas, people, facilities, equipment, tools, policies, rules, procedures, operating manuals, and computer software that are weaved together to work as a seamless system that works effectively and efficiently.

Accounting Systems

The backbone of financial management is accounting. Accounting is the methodical and all-inclusive recording of financial transactions of a business entity. Accounting is the systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and reporting financial transactions to all stakeholders. The financial occurrences that require tracking are transactions that give rise to revenues, expenses, assets, and liabilities.

The main purpose of accounting is to keep track of what a business owns in terms of assets, what it owes in terms of liabilities, the revenue it generates, expenses that are being incurred to operate the business and to establish from time to time whether the business is making a profit or not by comparing revenue with expenses. Its other important purpose is to maintain data to use for measurement and monitoring financial performance of the business, analysis and to prepare reports for information and decision-making, for communicating with stakeholders, complying with laws, and having a historical record of the organization.

When considering accounting systems, it is useful to incorporate the following sub-systems as well:

General ledger system (GL): This is the book of all accounts in the business and contains transactions of the asset, expenses, income and liability value balances. All other accounting books or systems feed into the general ledger.

Debtors’ (accounts receivables) subsidiary ledger: This book or system contains movements (transactions) and value balance of all debtors or sales on credit (accounts of people or entities that owe money to the business).

Creditors’ (accounts payables) ledger: This book or system contains movements (transactions) and value balances of entities or people the business owe money.

Payroll system: This is a system for processing the payroll of employees and it feeds transactions to mainly the creditors’ and general ledger. It also feeds the payment system such as an electronic funds transfer system, which transfers money to entities and employees’ bank accounts.

Budgeting system: This is a system that is used to prepare budgets and other forecasts such as pro forma profit and loss account, break-even points in units of products and sales figures. The budget system is normally integrated with the general ledger system to facilitate comparison of actual turnouts with budget amounts so that variances can be investigated and dealt with to keep the business on track.

Other Operating Systems

Other common business systems are as follows:

Procurement system

A procurement management system which is also known as a supply chain system manages the interaction between suppliers and the procuring entity in the process of finding suppliers and agreeing on terms with them. The activities that such a system would manage include the search for products or services and supplies, floatation of quotations/tenders, receipt of supplier responses, evaluation, checking of budget availability, issuing of purchase orders, and creation and signing of contracts. Other activities include raising of goods receipt notes, updating of stocks, processing of supplier invoices and payments to suppliers, and generating pertinent procurement reports. All these activities are digital and linked to the budgeting system and the creditor subsidiary ledger for automatic passing of necessary accounting entries.

Inventory management system

This is a system for managing inventory movements from receipt to use and sale of finished goods. This system normally works with the electronic point of sale system (EPOS) that captures customer payments and updates the sales accounts in the debtors or general ledger and inventory stock balances at the same time.

Asset management system

This system is the assets register and tracks movements and values of assets from receipt to movements within the entity to eventual disposal. The system also computes depreciation amount for charging to the expenses. In addition to the fixed assets register, a stocktaking software and equipment may be necessary.

Payment systems

These are systems that are used to make and control inbound and outbound payments in business. Electronic funds transfer (EFT) systems such as credit card, debit card, or other systems like real-time gross settlement (RTGS), Fed wire, telegraphic transfer (TT), SWIFT, and mobile telephone systems such as M-Pesa of Kenya can be used to pay suppliers. With such systems payments can pass a route whereby payments are processed, accounting entries passed, payments approved and money wired to suppliers and creditors’ bank accounts.

Likewise, electronic point of sale systems (EPOS) can be used to receive payments from customers and debtors at retail points of sale or online using a credit card and other forms of payment systems like PayPal, Pesapal, Alipay, and M-pesa. These payment systems can be integrated with the general ledger such that any inward and outward payments made seamlessly raise necessary entries and receipts and capture the transactions in the relevant accounts (assets, liabilities, sales/revenue and expenses) in the general ledger to avoid manual postings and other human interventions. The point of sale systems can also simultaneously update the inventory records once the sale of an item is made.

E-commerce systems

E-commerce and its derivative mobile-commerce are about online selling and buying of goods and services over the internet and online transfer of payment data to settle these transactions. E-commerce usually uses servers and desk-top computers while mobile-commerce use portable and wireless devices such as Smartphone or Tablet to carry out the transactions.

Human Resources System

Technology can be used to manage all aspects of employees including employee records, performance, remuneration, communication and generation of employee reports and statistics. Website portals can also be used for recruitment where employers post jobs on the portals; job seekers can view jobs available, submit applications and can even be screened and interviewed online thereby cutting time and costs.

Office Workflow Management System

A workflow management system (WFMS) is a digital arrangement that allows tasks and documents to flow from one stage of performance or execution to another in an office. At each stage in the workflow, one person or group persons are responsible for a specific task. As the task is completed at each stage, the system conveys the information and data to the next stage of execution and alerts the receiver about the task and so on. All these conveyances happen digitally and the system routes, distributes, and coordinates tasks and reduces or eliminates the flow of paper in the office.

Marketing and Selling Systems

Social media sites such as Facebook and Twitter can be tapped to market products and services. Appropriate software can also be used to design, manage email, and telephone text-messaging campaigns that target potential customers. Interactive websites and emails can be used to advertise and reach out to customers for information and serve customers better. Standalone systems like customer relationship management (CRM) Apps are useful in finding, servicing and retaining customers.

Communication systems

Emails, smart mobile telephones, computer tablets, text messaging and web conferencing facilities improve communication within the office, with customers, suppliers and all stakeholders. Many applications such as Outlook, Skype, Google Hangouts and similar programs can help in all these. With the right systems, communication flow in the office can be made paperless to eliminate physical movement of paper and filing of documents. All workstations and systems can also be integrated such that the whole business becomes station-less, department-less and branchless, where employees and customers deal with the business as though it was one shop. Completion of forms by staff and customers for various uses, such as placing orders and making required payments can all be made paperless and online by use of various workflow technologies.

Customer service

Social media technology can be used to conduct online customer survey through questionnaires to streamline customer service. Technology can also be used to set up a help desk to handle customer issues and for customers to make inquiries and schedule appoint and all forms of customer interactions including placing orders, making payments, registering complaints and giving and receiving feedback

Order tracking and fulfilment

Sales order tracking systems can be installed to allow customers to make inquiries, place orders, pay for the orders online, track orders from placement to fulfilment and for customers to return goods for exchange or refund.

Data mining and analytics

Data mining computer techniques can be used to mine the data that are internally stored in databases, spreadsheets, XML files and other repositories to identify patterns and discover relationships in historical data to improve production, boost sales, increase customer understanding and predict future business trends. Data analytics is about the far-reaching and in-depth application of computer skills, mathematics and statistics, the use of expressive methods and foretelling models to understand patterns, trends and associations to inform decision making.

Mobile working office

This is about the use of remote desk applications to access files in the office computers. It also involves using a Smartphone and selected Apps to synchronize with cloud storage and using virtual phone numbers and electronic fax lines to stay connected to your office anywhere you are in the world.

Customer Service Apps

Service App is small, specific and downloadable software or program that allows customers to interact with for example a business through a menu mainly using mobile devices to make enquiries, request and obtain services and even transfer digital money into and out of their devices all within the comfort of their location. An example of such an App is the now popular USSDs (unstructured supplementary service data) that are used to deliver mobile financial services, for instance, *900#.

Internet of Things (IoT)

IoT is the idea of extending internet connectivity to other devices and appliances beyond the usual things like computer, Tablets, Smartphone etc to other things such as TV, refrigerator, machines, equipment, devices, etc and networking these in a way that they can talk to one another and exchange information and data and take appropriate actions.

3D Printing

3D printing is a kind of a manufacturing process where objects of any shape such as a spanner or spare part are created using a type of jet-ink printer to applying material layer upon layer until the desired item is fully formed.


Robots are a kind of machines or devices that are used to perform repetitive tasks or jobs that are considered too dangerous for humans like retrieving something in an unsafe building. They can be used and have been in used many situations such as vehicle assembly lines to perform painting and welding. They can also be used in a business environment to do varied unskilled work to improve speed, accuracy and maintain quality.

Artificial Intelligence (AI)

AI is the application of a computer program for a machine to think, learn and act as a human mind does. It is an attempt to make computers as “smart” like a human brain and to do things such as speech recognition, language understanding, image recognition, problem-solving, learning and planning.

Cognitive System 

This is a system, usually, a network of computers and programs capable of performing the cognitive or mind work of knowing, understanding, planning, deciding, problem-solving, analyzing, synthesizing, assessing, and judging as they are fully integrated with perceiving and acting. This is the so-called cognitive belief system. Cognitive is a mental system consisting of interrelated items of assumptions, beliefs, ideas, and knowledge that an individual holds about anything concrete (person, group, object, etc.) or abstract (thoughts, theory, information, etc). It comprises an individual’s world view and determines how he or she abstracts, filters, and structures information received from the world around. This field of cognitive system is related to AI.

Computer administration and security

Where computers are used, there is a need to ensure that the computers, the software and the data therein are protected and access to all these is controlled. Technology can be used to achieve these objectives.

Local Area Network (LAN) and Wide Area Network (WAN)

A local-area network (LAN) is a network of computers that are in a small area like a room, a building or a collection of buildings. A wide-area network (WAN) is a collection LANs. WAN covers a wide geographical area and often passes across public networks. The networks are connected through telephone lines and radio waves. Users in the network can share, data, devices like printers and can communicate with one another through email or chatting conferences.

Database system

A database is an ordered data held in a computer in such a way that users, using a database management software system, can create, search, retrieve, read, update, and delete the data in the database or use it in various ways. The software handles the storage, searching, retrieval, extracting, modifying, and updating of data in the database such as customer accounts, stocks, products prices, HR data, and asset, liability, sales, and expenses values.

Help desk system

A help desk is a computer software system that creates a single point of contact for system users mainly within the entity to register their requests and get attention to questions, and solutions to their problems in a structured manner from customer service operatives.

PABX system

A private automatic branch exchange (PABX) is an automatic telephone switching system of a private enterprise that has many internal lines connected to a central switchboard. PABX system is a centralized mechanism that can be used as a telephone, modem, and a fax machine for employees to use to communicate internally and externally.

Fleet management system

A fleet management system is a computer software application that is used to manage and minimize risks arising from the activities and usage of vehicles such as cars, trucks, vans, ships and trains. The system combines various functions, including communication and information (telemetric), and vehicle movements, diagnostics, maintenance, fuel usage, and driver-behaviour to create effectiveness and efficiency.

Other useful operating systems include:

Data mining and analytics systems: These are data mining analyzing computer techniques.

Service App: A program downloadable onto a mobile device that allows customer interaction.

Internet of Things (IoT): IoT extends internet connectivity to other devices and appliances.

3D Printing: A manufacturing process where objects of any shape are created using a jet-ink printer to applying material layer upon layer until the desired item is fully formed.

Robotics: Devices that perform repetitive or tasks that are considered dangerous for humans.

Artificial Intelligence (AI): Application of a computer program for a machine to think, learn and act as a human mind does.


Risk Management

Risk is the possibility of an adverse event occurring and once a business is up and running, risks will inevitably show up from time to time. Risk management is the active identification, analysis, assessment and prioritization of risks followed by coordination and economical application of resources to control, avoid, minimize, or eliminate unacceptable risks or maximize the realization of opportunities. Instead of reacting to risk events as they come, it is far better for an organization to actively identify risks long before they happen and prepare strategies to counter them should they materialize. Some risks can be completely resolved without materially affecting the business if such risks are anticipated and action was taken in advance but can spell failure if the business waits until they happen. Identification of risks involves deliberate scanning of the business’s operations to identify possible areas of risk, analyzing the risks and recording them in a risk register in a prioritized fashion according to likelihood and severity.

An organization may use any of the following methods to manage risks that include risk assumption, risk avoidance, risk reduction, risk transfer, or any other strategy or combination of strategies in the management of future possible events.

  • Risk assumption is a legal term that simply means a businessperson voluntarily and knowingly assumes the risks inherent in the business undertaking without any attempt to manage or mitigate the risk in any way probably hoping that the risk will not materialize or will not be severe.
  • Risk reduction involves efforts to reduce the likelihood of occurrence, to minimize its severity, have early warning systems, improve preparedness, and diversify.
  • Risk avoidance is simply not engaging in an activity that carries risk.
  • Risk transfer involves the contractual shifting of the risk from one party to another such as the purchase of insurance cover for the specific risk.

Risk management’s objective is to ensure uncertainty does not draw away the endeavour from the business goals. Risks come from various sources including uncertainty in financial markets, threats from project failures due to unforeseen circumstances, legal liabilities, credit risk, accidents, system and process failures, system and process weaknesses that lead to losses, natural causes, and disasters, deliberate attacks or any unpredictable event. Negative events are categorized as risks and positive events are classified as opportunities. There are various methods of managing risks and methods used depend on the context of the risk. Whatever the method, the basic elements of risk management include:

  1. Identifying the risks or definition of the risk universe and classifying the threats posed by the risks. Risk universe is all possible risks that could affect the entity or the business undertaking.
  2. Assessing the vulnerability of critical resources to the specific potential risks.
  3. Determining the risk in terms of expected likelihood and consequences of specific types of attacks to assets.
  4. Identifying ways and strategies to reduce, avoid, or transfer the risks.
  5. Prioritizing risk mitigation measures based on the strategies to be used.

Risk management should be an integral part of running an organization and should be part of day-to-day decision making in the business. Risk management should be part of the annual business planning and part of any contemplated undertaking or project. This management of risks requires systems to capture necessary data and analyze it. It also requires policies, procedures, and manuals to guide the process of identifying risks and formulating mitigating measures.

Business Continuity Management

Once your business is ongoing and it is now your main source of livelihood, you do not want it to be wiped out of business by a disaster. You should, therefore, have a written plan of how to back up the operations of the business on a day-to-day basis and what to do in the event of disruptive events to get back to business as quickly as possible with very little loss of assets and time. The goal is to have steps and actions to take when disruptive events occur to ensure the safety of employees, assets and data and to ensure that vital business functions can be sustained or reinstated as fast as possible in the event of a disruptive incidence. A plan is also necessary to minimize the financial, legal and reputational impact of such incidences.

Disaster recovery planning requires that you plan in detail for such eventuality and put in place precise and practical back up arrangements to enable resumption of business within a very short time after the disaster. Plans should be made around the following questions and plans:

  1. Where can I work if I can’t work in my current office?
  2. How would I reach my employees? Do I have a comprehensive list of their names and contacts?
  3. How would I reach my key customers? Do I have a comprehensive list of their names and contacts?
  4. Are all my important customers, employees and other key business records backed up regularly and stored offsite? These records include customer accounts, personnel and payroll records, tax returns, policy manuals, inventory of office equipment including serial numbers.
  5. Do I have an exit plan out of the office or building in case of need?
  6. Is every employee aware of what to do in case of disaster? Drill exercises may be necessary for this.

Do-it-yourself disaster recovery software manuals are available through Disaster Survival Planning Network, Inc, www.disaster-survival.com

International Organization for Standardization (ISO)

ISO (International Organization for Standardization) sets standards that provide guidelines on how organizations can apply best practices in their various fields of business operations. ISO standards are available covering all aspects of running any business including in the areas of governance, management, operations, planning, reporting, policies, values, and cultures. You only need to search and adopt the standards that are applicable and will add value to your business. Application of these standards allows for effective and efficient decision-making and management of resources. One of the ways to assure stakeholders that a business, product or service meets particular standards is to have an internationally recognized quality certificate or a mark on the products. Several quality marks such as ISO9000, ISO14000, and ISO31000 are available. ISO900 consists of a series of quality assurance standards which when followed ensures that the resultant product consistently meets certain expected quality. ISO14000 consists of a set of uniform global environmental standards that encourage businesses to conduct business in ways that maintain cleanness, safety and avoids waste. ISO31000 is about risk-based decision-making within the business.

To use these marks, the business has to apply and to qualify; the business will be required to meet certain standards and rules throughout their operations that may be onerous for a small business but it is worth trying. Something else that helps to attract and retain customers is to subscribe to websites that track user comments and recommendations. Again several sites offer this service. TripAdvisor is one of such sites. However, subscription to such sides is a double-edged sword that can cut either way. Positive comments may attract customers and negative comments may do the opposite. You use such sites only when you are confident in your product.

Embracing ISO means deliberate use of best standards and practices in all aspects of running a business. Applying appropriate ISO standards in running a business and mixing these with risk management and business continuity planning allows the business to use tested effective and efficient operating systems to produce and deliver products and services. It also enables the business to gather quality and pertinent information, which facilitates a total view of the business and risks and this, allows the business to be better prepared for any possible adverse occurrences. A combination of all these best practices leads to the production of quality products, great customer service, better information gathering, and decision making in the allocation and management of resources.


Policies, procedures and manuals are guiding principles set to influence decisions, actions, and activities and ensure all these take place within the confines set by the policies and procedures to produce results as desired effectively and efficiently. They ensure that desired goals of the business are translated, with very little or no discretion and distortion, into steps and actions that result in an outcome compatible with the desired objectives and goals. They are prepared to get rid of or reduce risk, to set preferred conduct, and enlighten employees on why and how to perform tasks. Below is a brief explanation of policies, procedures, and manuals.


Policies are broad statements of intent and often embody both rules and procedures. They mainly address the “what” and “why”. The policy part that is related to rules guides and constrains conduct and behaviour such as is the case with HR policies. The other part that is connected with procedures represents mini-mission statements and contains the purpose and a performance measure that communicates how achievement of the purpose will be tracked.


A procedure is a particular way of accomplishing a task. Procedures capture expectations of process design, its purpose and expected outcomes.  Procedures are the day to day series of repetitive and consistent steps usually developed to implement each policy and explain how to apply the policy to the business’s customers, employees and products, and generally how to follow the policy. They mainly answer the “how” “who” “where” and “when” questions. The goal of procedures should be to ensure consistency so that anyone who performs the procedure will perform it the same way every time and get the same consistent results.

Rules and regulations

Rules are usually administrative requirements that constraint behaviour or actions. An example of rules is staff rules of conduct usually known as HR policies. Regulations, on the other hand, are normally there to expound a law to provide details of how a law should be administered in concordance with other existing laws.

Standard Operating Procedures

For policies and procedures to operate and to be applied effectively, there should be written standard operating procedures (SOPs) for some key elements of each policy. An SOP is a set of step-by-step guidelines written by a business to facilitate workers to perform routine but complex and repetitive tasks. Their goal is to clarify how a task is performed in a step-by-step manner to gain effectiveness, efficiency, quality, and consistency of output while minimizing misunderstanding and non-compliance. They are also useful for internal control and ensuring that any worker can perform any task without the need for a lot of training.

Activities that need Policies and Procedures

Policies and procedures can be developed for any activity that requires guidance or control. The need for PPs in any area is guided by the level of tolerance of risks, variations, and levels of discretion in the performance of tasks in the organization. If the need to control risks, variations, and discretion is high, then documented standard ways of how to do things in key areas is necessary to avoid ambiguity, misunderstanding, variations in performance and mistakes. Examples of activities where businesses typically develop policies, procedures and manuals include:

General ledger activities

Policies and procedures in this area should focus on the procedures for capturing all transactions relating to revenues, expenses, assets, and liabilities as they arise; approving any adjustments and amendments once records are created, and for preparing and disseminating financial statements and management reports.  The policies and procedures must show clear responsibility for maintaining accurate and complete financial records and reporting them to stakeholders. The goal is to ensure that there are standard and documented procedures for ensuring all financial records are accurate, financial data is properly classified, complete and reliable and to ensure that necessary reports are prepared and availed for information and timely decision-making. One of the procedures manuals should be a document or a booklet that explains where each revenue, expense, asset, and liability item should be posted to in the books of accounts (GL). The policies and procedures should also outline the accounting cycle that should be followed.

Production activities

The policies, procedures, and manuals governing production should outline guidelines surrounding the use of and operation of equipment, facilities, and systems to ensure that production operations are effective and productive. They are also to ensure the safety of the people, equipment and the environment.

Delivery activities

The policies, rules, procedures, and operating manuals around delivery systems should provide guidelines and information on how to handle, fulfil, and deliver customer orders. More importantly, they should provide guiding principles on how to handle customers to provide great service.

Debtors’ (accounts receivables) subsidiary ledger activities

The policies and procedures for managing debts should cover criterion for selling on credit, vetting of who should get credit, credit terms, collection/demand procedures including when to involve debt collectors and lawyers, provision procedures and write-off procedures.

Creditors’ (accounts payables) activities

The focus for policies and procedures here is to ensure that there is always an accurate list of creditors, fake creditors are avoided or promptly detected, double or over/underpayments are prevented or swiftly identified, and that suppliers are paid as agreed.

Payroll activities

Policies and procedures around this area should ensure that there are steps for placement and removal of employees from the payroll, amendment of payroll details and comparison of payroll data from one month to another. The goal is to ensure that they are no unauthorized payroll amendments; no ghost workers and that any statutory and other deductions from the payroll are paid to relevant agencies as required.

Procurement activities

The policies and procedures that govern purchasing of goods, services, and works should focus on how the initiation of purchases are approved; how a supplier is identified and contracted; how goods, services, and works are received, inspected and recorded in the books of accounts, and how expenses relating to purchases are approved for payment. The link between the commitment of expenditure through the issuance of a purchase order and availability of a budget line should be well-coordinated by the use of automated systems and policies and procedures.

Other Activities that require Policies, and Procedures

Other important areas where businesses require developing policies, procedures and manuals are:

Inventory management activities

The policies and procedures governing inventory management should focus on how the inventory is kept; moved around and out of the gate; issued for sale or internal use; replenished; regularly and physically counted (stocktaking) and revalued and how damaged, slow-moving, expired, and obsolete goods are disposed of away.

Fixed assets management activities

The policies, procedures, and operating manuals over asset management should cover asset acquisition, deployment, safeguarding, accounting including depreciation, maintenance, regular stocktaking and valuation, movement within the business and out of the gate and eventual disposal.

Payments activities

The commitment of expenditure and processing of outbound payments from the business should be governed by policies and procedures that ensure that payments are prepared, verified, and approved and also ensure that inbound payments get to the coffers of the business.

Budgeting activities

Policies and procedures in this area are to ensure that the budgeting process follows a structured method that makes sure that the budget is prepared using latest and reasonable assumptions, it is inclusive, comprehensive and realistic in terms of revenue and expenses, validated, approved at the right levels, and circulated in time for use at the start of the next operating cycle.

HR Policies

HR policies tend to cover a wide area and usually include employee benefits, terms, and conditions of service, rights and obligations, working hours, absence management, dress code, code of conduct, performance management, staff training and development, promotions, official travel, official communications, disciplinary process, grievance handling, sexual harassment, health and safety, staff welfare, substance abuse, ethics, separation, etc.

Compliance Policies

These are policies and procedures prepared to guide compliance with laws and regulations of the land. Failure to comply with laws can draw penalties and the business may wish to have policies and procedures to ensure compliance to minimize risks of noncompliance.

Customer Service policies

Customer service policies address issues such as how employees should handle and treat customers to offer consistently great customer experience. This includes guidelines to follow when handling customers who are dissatisfied with a business’s products or services. Customer service policies and procedures ensure that all employees understand the importance of satisfying a customer and serving consistently high quality of product or service.

Communication policies

Communication policies and procedures are prepared to set standards and guidelines for appropriate communication among employees and between employees on the one hand and customers and the public on the other.

Information Technology policies and procedures

Policies and procedures in this area are necessary to guide on how to arrange for data backup and recovery, network security and prevention of unauthorized access. They also guide on disaster recovery plans, employee use of computers, replacement of computers, servicing and maintenance of computers, disposal of computers, complying software licenses, employee safety, infringing on privacy, prevention of mail spam, prevention of viruses, protection of confidential information, and prevention of system downtime.

Business Continuity Management policies and procedures

Business continuity policies and procedures are standards and guidelines that outline how risks or disruptive events should be managed, the steps that should be taken when the events occur to ensure the safety of employees, assets, data, and that vital business functions can be sustained or reinstated as fast as possible in the event of a disruptive incidence.

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