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Production Plan in Business Plan: A Comprehensive Guide to Success
June 9, 2023
In any business venture, a solid production plan is crucial for success. A production plan serves as a roadmap that outlines the steps, resources, and strategies required to manufacture products or deliver services efficiently. By carefully crafting a production plan within a business plan, entrepreneurs can ensure optimal utilisation of resources, timely delivery, cost efficiency, and customer satisfaction. In this article, we will delve into the intricacies of creating an effective production plan in a business plan, exploring its key components, strategies, and the importance of aligning it with overall business objectives.
Key Takeaways on Production Plans in Business Planning
- A production plan : a detailed outline that guides efficient product manufacturing or service delivery.
- Importance of a production plan : provides a roadmap for operations, optimises resource utilisation, and aligns with customer demand.
- Key components : demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance.
- Strategies : lean manufacturing, JIT inventory, automation and technology integration, supplier relationship management, and continuous improvement.
- Benefits of a well-executed production plan : improved efficiency, reduced costs, enhanced product quality, and increased profitability.
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What is a Production Plan?
A production Seamless Searches plan is a detailed outline that specifies the processes, resources, timelines, and strategies required to convert raw materials into finished goods or deliver services. It serves as a blueprint for the entire production cycle, guiding decision-making and resource allocation. The production plan considers factors such as demand forecasting, capacity planning, inventory management, and quality assurance to ensure efficient operations and optimal customer satisfaction.
Why is a Production Plan Important in a Business Plan?
The inclusion of a production plan in a business plan is vital for several reasons. First and foremost, it provides a clear roadmap for business operations, helping entrepreneurs and managers make informed decisions related to production processes. A well-developed production plan ensures that resources are utilised efficiently, minimising wastage and optimising productivity.
Additionally, a production plan allows businesses to align their production capabilities with customer demand. By forecasting market trends and analysing customer needs, businesses can develop a production plan that caters to current and future demands, thus avoiding overstocking or understocking situations.
Furthermore, a production plan helps businesses enhance their competitive advantage. By implementing strategies such as lean manufacturing and automation, companies can streamline their production processes, reduce costs, improve product quality, and ultimately outperform competitors.
Key Components of a Production Plan
To create an effective production plan, it is crucial to consider several key components. These components work together to ensure efficient operations and successful fulfilment of customer demands. Let's explore each component in detail.
Demand forecasting is a critical aspect of production planning. By analysing historical data, market trends, and customer behaviour, businesses can predict future demand for their products or services. Accurate demand forecasting allows companies to optimise inventory levels, plan production capacity, and ensure timely delivery to customers.
One approach to demand forecasting is quantitative analysis, which involves analysing historical sales data to identify patterns and make predictions. Another approach is qualitative analysis, which incorporates market research, customer surveys, and expert opinions to gauge demand fluctuations. By combining both methods, businesses can develop a robust demand forecast, minimising the risk of underproduction or overproduction.
Capacity planning involves determining the optimal production capacity required to meet projected demand. This includes assessing the production capabilities of existing resources, such as machinery, equipment, and labour, and identifying any gaps that need to be addressed. By conducting a thorough capacity analysis, businesses can ensure that their production capacity aligns with customer demand, avoiding bottlenecks or excess capacity.
An effective capacity plan takes into account factors such as production cycle times, labour availability, equipment maintenance, and production lead times. It helps businesses allocate resources efficiently, minimise production delays, and maintain a consistent level of output to meet customer expectations.
Efficient inventory management is crucial for a successful production plan. It involves balancing the cost of holding inventory with the risk of stockouts. By maintaining optimal inventory levels, businesses can reduce carrying costs while ensuring that sufficient stock is available to fulfil customer orders.
Inventory management techniques, such as the Economic Order Quantity (EOQ) model and Just-in-Time (JIT) inventory system, help businesses strike the right balance between inventory investment and customer demand. These methods consider factors such as order frequency, lead time, and carrying costs to optimise inventory levels and minimise the risk of excess or insufficient stock.
Resource allocation plays a pivotal role in a production plan. It involves assigning available resources, such as labour, materials, and equipment, to specific production tasks or projects. Effective resource allocation ensures that resources are utilised optimally, avoiding underutilisation or overutilisation.
To allocate resources efficiently, businesses must consider factors such as skill requirements, resource availability, project timelines, and cost constraints. By conducting a thorough resource analysis and implementing resource allocation strategies, businesses can streamline production processes, minimise bottlenecks, and maximise productivity.
Maintaining high-quality standards is essential for any production plan. Quality assurance involves implementing measures to monitor and control the quality of products or services throughout the production process. By adhering to quality standards and conducting regular inspections, businesses can minimise defects, ensure customer satisfaction, and build a positive brand reputation.
Quality assurance techniques, such as Total Quality Management (TQM) and Six Sigma, help businesses identify and rectify any quality-related issues. These methodologies involve continuous monitoring, process improvement, and employee training to enhance product quality and overall operational efficiency.
Strategies for Developing an Effective Production Plan
Developing an effective production plan requires implementing various strategies and best practices. By incorporating these strategies into the production planning process, businesses can optimise operations and drive success. Let's explore some key strategies in detail.
Lean manufacturing is a systematic Seamless Searches approach aimed at eliminating waste and improving efficiency in production processes. It emphasises the concept of continuous improvement and focuses on creating value for the customer while minimising non-value-added activities.
By adopting lean manufacturing principles, such as just-in-time production, standardised work processes, and visual management, businesses can streamline operations, reduce lead times, and eliminate unnecessary costs. Lean manufacturing not only improves productivity but also enhances product quality and customer satisfaction.
Just-in-Time (JIT) Inventory
Just-in-Time (JIT) inventory is a strategy that aims to minimise inventory levels by receiving goods or materials just when they are needed for production. This strategy eliminates the need for excess inventory storage, reducing carrying costs and the risk of obsolete inventory.
By implementing a JIT inventory system, businesses can optimise cash flow, reduce storage space requirements, and improve overall supply chain efficiency. However, it requires robust coordination with suppliers, accurate demand forecasting, and efficient logistics management to ensure timely delivery of materials.
Automation and Technology Integration
Automation and technology integration play a crucial role in modern production planning. By leveraging technology, businesses can streamline processes, enhance productivity, and reduce human error. Automation can be implemented in various aspects of production, including material handling, assembly, testing, and quality control.
Supplier Relationship Management Continuous Improvement
Continuous improvement is a fundamental principle of effective production planning. It involves regularly evaluating production processes, identifying areas for improvement, and implementing changes to enhance efficiency and quality.
By fostering a culture of continuous improvement, businesses can drive innovation, optimise resource utilisation, and stay ahead of competitors. Techniques such as Kaizen, Six Sigma, and value stream mapping can help businesses identify inefficiencies, eliminate waste, and streamline production workflows.
Frequently Asked Questions (FAQs)
Q1: what is the role of a production plan in business planning.
A1: A production plan plays a crucial role in business planning by providing a roadmap for efficient production processes. It helps align production capabilities with customer demand, optimise resource utilisation, and ensure timely delivery of products or services.
Q2: How does a production plan affect overall business profitability?
A2: A well-developed production plan can significantly impact business profitability. By optimising production processes, reducing costs, and enhancing product quality, businesses can improve their profit margins and gain a competitive edge in the market.
Q3: What are the common challenges faced in production planning?
A3: Production planning can present various challenges, such as inaccurate demand forecasting, capacity constraints, supply chain disruptions, and quality control issues. Overcoming these challenges requires robust planning, effective communication, and the implementation of appropriate strategies and technologies.
Q4: What is the difference between short-term and long-term production planning?
A4: Short-term production planning focuses on immediate production requirements, such as daily or weekly schedules. Long-term production planning, on the other hand, involves strategic decisions related to capacity expansion, technology investments, and market expansion, spanning months or even years.
Q5: How can a production plan be adjusted to accommodate changes in demand?
A5: To accommodate changes in demand, businesses can adopt flexible production strategies such as agile manufacturing or dynamic scheduling. These approaches allow for quick adjustments to production levels, resource allocation, and inventory management based on fluctuating customer demand.
In conclusion, a well-crafted production plan is essential for business success. By incorporating a production plan into a comprehensive business plan, entrepreneurs can optimise resource utilisation, meet customer demands, enhance product quality, and drive profitability. Through effective demand forecasting, capacity planning, inventory management, resource allocation, and quality assurance, businesses can streamline production processes and gain a competitive edge in the market.
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What Is Production Planning & Why Is It Important?
Business success often hinges on making the products that customers want in a timely and cost-effective way. Production planning helps companies achieve those goals. It maps out all the processes, resources and steps involved in production, from forecasting demand to determining the raw materials, labor and equipment needed. Production planning helps companies build realistic production schedules, ensure production processes run smoothly and efficiently, and adjust operations when problems occur.
What Is a Production Plan?
A production plan describes in detail how a company’s products and services will be manufactured. It spells out the production targets, required resources, processes and overall schedule. The plan also maps all of the operational steps involved and their dependencies. The goal is to design the most efficient way to make and deliver the company’s products at the desired level of quality. A well-designed production plan can help companies increase output and save money by developing a smoother workflow and reducing waste.
What Is Production Planning?
Production planning involves developing a comprehensive strategy for making the company’s products and services. Initially adopted by large manufacturers, production planning has since become more popular among small and midsize businesses in multiple industries — largely because technology has made it easier to plan and track production processes with less effort. Production planning covers many different aspects of production, from forecasting demand to determining the raw materials, workforce, equipment and steps needed to make the company’s products.
Production Planning vs. Production Scheduling
While production planning provides an overview of what the company plans to do, production scheduling creates a more detailed view of exactly how the company will do it. The production schedule describes when each step in the production plan will occur, as well as the workers, machinery and other specific resources assigned to the job. Production scheduling can be extremely complex, especially when there are many interdependent production steps and the company is making multiple products simultaneously. Production scheduling software (opens in new tab) can help businesses create complex schedules, monitor progress in real time and quickly make adjustments when necessary.
- Production planning describes in detail how a company’s products and services will be manufactured.
- A production plan defines the production targets, required resources and overall schedule, together with all the steps involved in production and their dependencies.
- A well-designed production plan helps companies deliver products on time, reduce costs and respond to problems.
- Technology has made it easier for small and midsize companies in multiple industries to use production planning to optimize operations.
Product Planning Explained
Production planning is a broad discipline that involves much more than a focus on manufacturing process efficiency. It is intertwined with nearly every other aspect of the business, including finance, sales, inventory and human resources. Production planning activities include demand forecasting to determine the right mix of products to meet customer needs, as well as selecting the optimal approach to building those products. Production planning also assesses the resources needed to meet production goals and lays out in detail all the operations in the production process. Production plans must include the flexibility to make operational adjustments when problems occur — such as machine breakdowns, staffing shortages and supply-chain problems.
Why Is Production Planning Important?
A well-constructed production plan can help to boost revenue, profit and customer satisfaction, while a poorly designed plan can cause production problems and perhaps even sink the company. Specific benefits of production planning include:
- Knowledge. A production plan provides a framework for understanding the resources and production steps required to meet customer needs. It also helps companies understand the potential problems that may occur during production and how to mitigate them.
- Efficiency. Detailed production planning reduces bottlenecks and helps minimize costs. It also helps ensure the high quality of a product, and it keeps expenses on budget.
- Customer satisfaction. Production planning helps ensure that the company can make and deliver products to customers on time, leading to higher customer satisfaction and a greater likelihood of repeat business.
Types of Production Planning
The design of a product plan depends on the production method that the company uses, as well as other factors, such as product type, equipment capabilities and order size. Here are three of the main types of production planning:
Batch production planning.
Refers to manufacturing identical items in groups rather than one at a time or in a continuous process. For some businesses, batch production can greatly increase efficiency. A bakery creating items for sale the next day might first make a batch of chocolate chip cookies, then move on to oatmeal raisin cookies followed by loaves of semolina bread. A clothing manufacturer making goods for the summer might first set up its cutting and sewing machines to make 500 navy-blue T-shirts, then switch to red fabric and thread to make 400 tank tops. A good production plan for batch processing should look out for potential bottlenecks or delays when switching between batches.
Job- or project-based planning.
Used by many small- and medium-sized businesses, job production planning focuses on the creation of a single item by one person or team. Job-based planning is typically used where the specificity of each client’s requirements means it is difficult to make products in bulk. Many construction businesses use this method. Makers of custom jewelry and dresses are other examples of businesses that may use job production planning.
Flow production planning.
In flow production, also known as continuous production, standardized items are continuously mass-produced on an assembly line. Large manufacturers use this method to create a constant stream of finished goods. During production, each item should move seamlessly from one step along the assembly line to the next. Flow production is most effective at reducing costs and delays when there’s steady demand for the company’s products. Manufacturers can then readily determine their needs for equipment, materials and labor at each stage along the assembly line to help streamline production and avoid delays. The automotive industry and makers of canned foods and drinks are among the companies that use this method.
5 Steps to Make a Production Plan
Production planning is a robust undertaking that starts with forecasting and includes process design and monitoring. Here are five typical production planning steps:
Forecast product demand.
Estimate how much of each product you’ll need to produce over a designated period. Historical data can help with forecasting, but you’ll also need to pay attention to other factors that can affect demand, such as market trends and the economic situation for your customer base. Demand planning software can help companies make more informed decisions about the right amount of product needed to meet demand.
Map out production steps and options.
This step determines the processes, steps and resources needed to produce the required output. At this stage, the company may also examine different options for achieving its production goals, such as outsourcing some stages. The production mapping identifies which steps are interdependent and which can be performed simultaneously. Let’s say the job is to produce 1,000 children’s bicycles. Manufacturing the bicycle frames consists of a series of steps that must happen in sequence — cutting metal tubes, welding and painting — while other activities like assembling wheels can occur in parallel. Do you have all the right equipment? What happens if a machine breaks down? Are your suppliers able to meet your demand?
Choose a plan and schedule production.
Select a production plan after comparing the cost, time required and risks for each option. Sharing the selected plan with all necessary stakeholders typically helps assure a smoother production process since all the stakeholders are aware of what’s needed. Create a detailed production schedule that lays out in detail how the company will execute the plan, including the resources and timing for each step.
Monitor and control.
Once production has begun, you’ll need to track performance and continually compare it against the targets described in the production plan. Careful monitoring helps the company to detect any issues as soon as they pop up, so they can be quickly addressed.
It’s almost inevitable that production will be affected by events that you can’t plan for or predict. Those events can include changes to client specifications, supply chain lags, equipment failures and worker illness. You may also see ways to improve the production plan after seeing it in action for a while. So it’s vital to keep production plans flexible enough to allow for adjustment when needed. Football coaches often make adjustments to their game strategy at halftime — and the same holds true for production planning.
3 Common Product Planning Mistakes
Being aware of potential pitfalls ahead of time can help companies avoid or mitigate problems once production has started. Here are three of the most common production planning mistakes.
Not anticipating hiccups along the way.
In any complex production process, plans can go awry. Production planning should therefore include risk management strategies, including backup plans companies can rely on in the event of problems. Failing to do so can result in serious problems. For example, if a machine breaks on the line and you didn’t budget for repairs and workforce overtime, the issue may strain the company’s financial resources.
Keeping your distance.
Though production management software can provide real-time visibility into a company’s production status, it’s a good idea to supplement that information with in-person visits to the production line. Those visits can provide valuable insights into how production works in practice — insights that you might not gain if you’re stuck behind a desk.
Failing to maintain equipment.
There’s a tradition in football that the quarterback buys presents for his offensive linemen at the end of each season. Why? Because they protect him and enable him to do his job. Your manufacturing equipment is your company’s offensive line, so don’t neglect it. Tracking usage and paying for regular preventive maintenance helps ensure that your machines can keep your business functioning.
Production Planning KPIs
Key performance indicators (KPIs) are important metrics that help companies track the health of their production processes. By monitoring KPIs and comparing them to target values defined in production plans, businesses can determine whether production is on track and pinpoint problems that need to be addressed. Typical production KPIs include:
This key efficiency metric tracks the percentage of time that production is not occurring during scheduled operating hours. Causes include machine breakdowns, tool adjustments and accidents. Some downtime may be necessary for functions such as machine maintenance, but generally, the less downtime the better.
Also referred to as changeover time, this is the amount of time it takes to switch between jobs. Setup time impacts overall productivity because production is halted during these periods. Production schedules should consider how much time and effort it takes to reconfigure production for each job, including changes to the equipment, raw materials and workforce. Designing production schedules to minimize changeover time can increase efficiency.
In a manufacturing environment, this is typically measured as the number of units produced during a specific period. Comparing the actual production rate for each process with the planned rate can help businesses identify strengths and weaknesses and begin to address problems.
Overall equipment effectiveness (OEE).
This is a measure of overall manufacturing productivity that accounts for quality, performance and availability. The formula for OEE is:
OEE = Quality x performance x availability
Quality is typically measured as the percentage of parts that meet quality standards. Performance is how fast a process is running compared to its maximum speed, which is expressed as a percentage. Availability is the percentage of uptime during a company’s scheduled operating hours. Increasing OEE can be achieved by lowering downtime, reducing waste and maintaining a high production rate.
This is the number or percentage of products that failed to pass quality checks. Depending on the nature of the product and the problem, it may be possible to salvage some rejected items by reworking them, while others may need to be scrapped.
Production delays can be costly both in terms of money and reputation. Generating products on schedule means you’re less likely to need costly expedited shipping or other emergency measures to meet deadlines. And delivering orders on time helps keep customers happy, which means they’re more likely to keep doing business with your company.
Production Planning Tools
Businesses rely on a variety of tools to build production plans and track progress, ranging from visualization tools to sophisticated software that automates many of the steps involved. Typical tools include:
A Gantt chart is a detailed visual timeline of all the tasks scheduled for a particular job. More than 100 years since its invention by mechanical engineer Henry Laurence Gantt, this chart remains integral to manufacturing and many other industries. Production planning involves coordinating and scheduling many tasks , and the Gantt chart visually represents when each task will take place and how long it will last. Manually creating and updating Gantt charts to reflect complex, ever-changing production schedules can be a time-consuming and error-prone job, however.
Small companies sometimes start out by tracking simple production plans using spreadsheets. However, for most companies, the inherent complexity of production planning quickly outstrips the capabilities of spreadsheet software.
Production planning software.
Production planning involves a wide range of activities, including forecasting, managing the supply chain, tracking inventory and scheduling jobs. Those activities require information from across the company and beyond. Production planning information is integral to business operations and is used by other groups within the company, including finance. That’s a key reason many companies use enterprise resource planning (ERP) application suites that include production planning software and provide a single solution for managing the entire business.
Example of a Gantt chart tracking planning, research, design, implementation, and follow-up phases of a project.
Manage and Optimize Production With NetSuite
NetSuite cloud-based production management software helps companies maximize manufacturing productivity and minimize cost. NetSuite provides real-time visibility into each aspect of the production process, from inventory tracking and monitoring the production floor to fulfilling orders. Production scheduling capabilities let businesses create and update complex real-time production schedules with minimal effort. Because NetSuite production management software is part of an integrated suite of ERP applications , businesses can share production progress with the entire organization and link production processes to financial reports, inventory management and order management.
Production planning is an important function that can boost profitability and customer satisfaction as well as efficiency. It helps companies match output to demand, optimize production processes and determine how to overcome production problems.
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Production Planning FAQs
What are the 5 steps in production planning.
Here are five typical steps in the production planning process:
- Forecast the short- and long-term demand for your product.
- Map out the various options and processes for manufacturing these goods
- Choose the option that checks as many boxes as possible, and develop a production schedule.
- Monitor production against the plan.
- Adjust the plan where needed. In other words, if it’s broken, fix it.
What are the 3 activities of production planning?
Production planning activities can be divided into three main areas: Develop a production process and strategy; gather the resources needed, from raw materials to machinery and personnel; and select and train the necessary people.
What are the types of production planning?
Three of the main types of production planning are batch planning, job planning and flow or continuous planning . The choice depends on your resources as well as the nature of the product. Batch planning makes the same item in bulk before moving on to another item. Job planning, also called project-based planning, focuses more on custom design and single-item production. Flow production involves a steady stream of mass-produced items moving along the line.
What is the role of production planning?
Production planning is critical to ensure the production process runs smoothly and efficiently and delivers products on time. Planning allows a business to make certain that all necessary preparation is completed before starting production.
What Is Perishable Inventory? Strategies, Tracking & Free Template
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Business objectives: How to set them (with 5 examples and a template)
As anyone who played rec league sports in the '90s might remember, being on a team for some reason required you to sell knockoff candy bars to raise funds. Every season, my biggest customer was always me. Some kids went door-to-door, some set up outside local businesses, some sent boxes to their parents' jobs—I just used my allowance to buy a few for myself.
Aside from initiative, what my approach lacked was a plan, a goal, and accountability. A lot to ask of an unmotivated nine-year-old, I know, but 100% required for anyone who runs an actual business.
Business objectives help companies avoid my pitfalls by laying the groundwork for all the above so they can pursue achievable growth.
Table of contents:
The benefits of setting business objectives
How to set business objectives, examples of business objectives and goals, business objective template, tips for achieving business objectives.
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What are business objectives?
Business objectives are specific, written steps that guide company growth in measurable terms. A good business objective is concise, actionable, and assigned definite metrics for tracking progress and measuring success. Coming up with effective objectives requires a strong understanding of:
What you want the company to achieve
How you can measure success
Which players are involved in driving success
The timelines needed to plan, initiate, and implement steps
How you can improve or better support business processes , personnel, logistics, and management
How, if successful, these actions can be integrated sustainably going forward
Business objectives vs. goals
Where a business objective is an actionable step taken to make improvements toward growth, a business goal is the specific high-level growth an objective helps a company reach. Business objectives are often used interchangeably with business goals, but an objective is in service of a goal.
Here's what that breakdown could have looked like for nine-year-old me selling candy for my little league team:
Business objective: I will increase my sales output by learning and implementing point-of-sale conversion frameworks. I'll measure success by comparing week-over-week sales growth to median sales across players on my baseball team.
Business goal: I will sell more candy bars than anyone on my team and earn the grand prize: a team party at Pizza Hut.
You might think it's good enough to continue working status quo toward your goals, but as the cliche goes, good enough usually isn't. Establishing and following defined, actionable steps through business objectives can:
Help establish clear roadmaps: You can translate your objectives into time-sensitive sequences to chart your path toward growth.
Set groundwork for culture: Clear objectives should reflect the culture you envision, and, in turn, they should help guide your team to foster it.
Influence talent acquisition: Once you know your objectives, you can use them to find the people with the specific skills and experiences needed to actualize them.
Encourage teamwork: People work together better when they know what they're working toward.
Promote sound leadership: Clear objectives give leaders opportunities to get the resources they need.
Establish accountability: By measuring progress, you can see where errors and inefficiencies come from.
Drive productivity: The endgame of an objective is to make individual team members and processes more effective.
Setting business objectives takes a thoughtful, top-to-bottom approach. At every level of your business—whether you're a massive candy corporation or one kid selling chocolate almond bars door-to-door—there are improvements to make, steps to take, and players with stakes (or in my case, bats) in the game.
1. Establish clear goals
You can't hit a home run without a fence, and you can't reach a goal without setting it. Before you start brainstorming your objectives, you need to know what your objectives will help you work toward.
Analytical tactics like a SWOT analysis and goal-setting frameworks like SMART can be extremely useful at this stage, as you'll need to be specific about what you want to achieve and honest about what is achievable. Here are a few example goals:
Increase total revenue by 25% over the next two years
Reduce production costs by 10% by the end of the year
Provide health insurance for employees by next fiscal year
Grow design department to 10+ employees this year
Reach 100k Instagram followers ahead of new product launch
Implement full rebrand before new partnership announcement
Once you have these goals in place, you can establish individual objectives that position your company to reach them.
2. Set a baseline
Like a field manager before a game, you've got to set your baselines. (Very niche pun, I know.) With a definite goal in mind, the only way to know your progress is to know where you're starting from.
If you want to increase conversions on a specific link by X percent, look beyond current conversion percentage to the myriad factors going into it. Log the page traffic, clicks, ad performance, time on page, bounce rate, and other engagement metrics historically to this point. Your objectives will dig deeper into that one outcome to address deficiencies in the sales funnel , so every figure is important.
Analyzing your baselines could also help you recalibrate your goals. You may have decided abstractly that you want conversion rates to double in six months, but is that really possible? If your measurables show there's potentially a heavier lift involved than you expected, you can always roll back the goal performance or expand the timeline.
3. Involve players at all levels in the conversation
Too often, the most important people are left out of conversations about goals and objectives. The more levels of complexity and oversight, the more important it is to hear from everyone—yet the more likely it is that some will be excluded.
Let's say you want to reduce overhead by 5% over the next two years for your sporting goods manufacturing outfit. At a high level, your team finds you can reduce production costs by using cheaper materials for baseball gloves. A member of your sales team points out that the reduction in quality, which your brand is famous for, could lead to losses that offset those savings. Meanwhile, a factory representative points out that replacing outdated machines would be expensive initially but would increase efficiency, reduce defects, and cut maintenance costs, breaking even in four years.
By involving various teams at multiple levels, you find it's worth it to extend timelines from two to four years. Your overhead reduction may be lower than 5% by year two but should be much higher than that by year four based on these changes.
The takeaway from this pretty crude example is that it's helpful to make sure every team that touches anything related to your objective gets consulted. They should give valuable, practical input thanks to their boots- (or cleats-) on-the-ground experience.
4. Define measurable outcomes
An objective should be exactly that. Using KPIs (key performance indicators) to apply a level of objectivity to your action steps allows you to measure their progress and success over time and either adapt as you go along or stay the course.
How do you know if your specific objectives are leading to increased web traffic, or if that's just natural (or even incidental) growth? How do you know if your recruiting efforts lead to better candidates, or whether your employees are actually more satisfied? Here are a few examples of measurable outcomes to show proof:
Percentage change (15% overall increase in revenue)
Goal number (10,000 subscribers)
Success range (five to 10 new clients)
Clear change (new company name)
Executable action (weekly newsletter launch)
Your objectives should have specific, measurable outcomes. It's not enough to have a better product, be more efficient, or have more brand awareness . Your objective should be provable and grounded in data.
5. Outline a roadmap with a schedule
You've got your organizational goals defined, logged your baselines, sourced objectives from across your company, and know your metrics for defining success. Now it's time to set an actionable plan you can execute.
Your objectives roadmap should include all involved team members and departments and clear timelines for reaching milestones. Within your objectives, set action items with deadlines to stay on track, along with corresponding progress markers. For the objective of "increase lead conversion efficiency by 10%," that could look like:
May 15: Begin time logging
June 1: Register team members for productivity seminar
June 15: Integrate Trello for managing processes
June 15: Audit time log
July 1: Implement lead automation
August 1: Audit time log—goal efficiency increase of 5%
6. Integrate successful changes
You've successfully achieved your objectives—great! But as Yogi Berra famously said, "It ain't over till it's over," and it ain't over yet.
Don't let this win be a one-off accomplishment. Berra also said "You can observe a lot by just watching," and applying what you observed from this process will help you continue growing your company. Take what worked, and integrate it into your business processes for sustainable improvement. Then create new objectives, so you can continue the cycle.
Business objectives aren't collated plans or complicated flowcharts—they're short, impactful statements that are easy to memorize and communicate. There are four basic components every business objective should have:
A growth-oriented intention (improve efficiency)
One or more actions (implement monthly training sessions)
A measurement for success (20% increase)
A timeline to reach success (by end of year)
For this year's summer swimwear line, we will increase sales by 15% over last year's line through customer relationship marketing. We will execute distinct email campaigns by segmenting last year's summer swimwear customers and this year's spring casualwear customers and offering season-long discount codes.
Our SaaS product's implementation team will grow to five during the next fiscal year. This will require us to submit a budget proposal by the end of the quarter and look into restructured growth tracks, new job posting templates, and revised role descriptions by the start of next fiscal year.
We will increase customer satisfaction for our mobile app product demonstrably by the end of the year by integrating a new AI chatbot feature. To measure the change in customer satisfaction, we will monitor ratings in the app store, specifically looking for decreases in rates of negative reviews by 5%-10% as well as increases in overall positive reviews by 5%-10%.
Each of our water filtration systems will achieve NSF certification ahead of the launch of our rebranding campaign. Our product team will establish a checklist of changes necessary for meeting certification requirements and communicate timelines to the marketing team.
HR will implement bi-annual performance reviews starting next year. Review timelines will be built into scheduling software, and HR will automate email reminders to managers to communicate to their teams.
Business objectives can be as simple as one action or as complex as a multi-year roadmap—but they should be able to fall into a clear, actionable framework.
Calling your shot to the left centerfield wall and hitting a ball over that wall are two different things—the same goes for setting an objective and actualizing it.
Start with clear, attainable goals: Objectives should position your business to reach broader growth goals, so start by establishing those.
Align decisions with objectives: Once you set objectives, they should inform other decisions. Decision-makers should think about how changes they make along the way affect their objectives' timelines and execution.
Stick to the schedule or adjust it: Schedules should propel change, not rush it. Work toward meeting milestones and deadlines, but understand that they can always be moved if complications or new priorities arise. Remember, it's ok to fall short on goals .
Listen to team members at all levels: Those most affected by organizational changes can be the ones with the least say in the matter. Great ideas and insights can come from any level—even if they're only tangentially related to an outcome.
Implement automation: Automation keeps systems running smoothly—business objectives are no exception. Make a plan to bring no-code automation into workflows with Zapier to move your work forward, faster.
What makes business objectives so useful is that they can help you build a plan with defined steps to reach obtainable growth goals. As (one more time) Yogi Berra also once said, "You've got to be very careful if you don't know where you are going, because you might not get there."
As you outline your objectives, here are some guides that can help you find KPIs and improvement opportunities:
How to conduct your own market research survey
6 customer satisfaction metrics to start measuring
Streamline work across departments with automation
Measuring SaaS success: 5 essential product-led growth metrics to track
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Currently based in Albuquerque, NM, Bryce Emley holds an MFA in Creative Writing from NC State and nearly a decade of writing and editing experience. His work has been published in magazines including The Atlantic, Boston Review, Salon, and Modern Farmer and has received a regional Emmy and awards from venues including Narrative, Wesleyan University, the Edward F. Albee Foundation, and the Pablo Neruda Prize. When he isn’t writing content, poetry, or creative nonfiction, he enjoys traveling, baking, playing music, reliving his barista days in his own kitchen, camping, and being bad at carpentry.
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Business Planning: Definition, Objectives, Components, and Stages
Table of Contents
Business planning is important to do before starting a business. This is considered very important because it concerns the long-term success of your business.
Therefore, this planning should not be made haphazardly. As a businessman, you need to make it detailed and systematic.
So, what business plans do you need to prepare and how do you make them? Let's look at the explanation in this one article.
1. Definition of Business Planning
Business planning is the process of developing a strategy for running a business. This strategy acts as an action plan and business roadmap from start to finish.
In this plan, there are several parts that are quite crucial, including business goals and strategies, identifying the resources needed, how to manage these resources, up to the marketing strategy, and business evaluation.
2. 7 Purpose of Business Planning
Dilansir dari berbagai sumber yang ada, perencanaan usaha tidak terlepas dari berbagai tujuan penting yang turut andil dalam keberhasilan bisnis Anda. Diantaranya sebagai berikut:
2.1 Business Establishment Planning
The first purpose of having a business plan is to serve as a guideline to help you determine what you want to achieve, as well as a guide in making decisions when facing various problems or obstacles.
Later, these problems will be sorted by category and class, so that the solution can be more effective and not spread to other domains.
2.1 Define Vision and Mission
The vision and mission of a business are generally made at the start before the business runs. Through business planning, the business you run can be more directed and focused on the goals you want to achieve according to the vision and mission you hold.
2.3 Business Development Planning
Business risks are very likely to occur to business people, including those who have been in the business world before. So, this is where the role of business planning is needed to minimize the risk of failure and how to overcome existing challenges as business opportunities.
2.4 Minimizing the Risk of Failure
2.5 analyzing the market and competitors.
With careful planning, it will be easier for you to enter the market and conduct an analysis of competitors or business players in the same field. In this way, it will be easier for you to understand consumer desires and dominate the market.
2.6 Obtain More Profits or Profits
The main goal of a business is of course to make a profit from every sale or offer made. Business planning plays an important role in determining the appropriate sales strategy and is able to attract more consumers.
2.7 Predicting Business Outcomes
In addition to the six objectives above, having this plan can help you predict business results, such as profit, profit and loss, cash flow, and so on.
3. Business Planning Stage
When you are going to make a business plan, there are several stages that you need to fulfill so that the plan is in accordance with the operational needs of your business. The stages are as follows.
Image Source: Pexels/Christina Morillo
3.1 Do a Market Analysis
The first thing you need to do in the planning stage is to do a market analysis. Market analysis is an action to study various existing problems according to a predetermined market share.
So, make sure you have determined the product or service that will be offered before going into the field to conduct market and competitor analysis.
3.2 Calculate Production Costs
Calculating production costs can help you estimate the amount of capital needed to run a business. Look for complete information related to raw materials to production costs for your business.
Production costs are generally divided into two types. The first is fixed costs (investment costs) and the second is variable costs.
Investment costs are a number of costs that you need to prepare to start a business. The amount itself is relatively large because you need to buy various needs for your business operations for quite a long time.
Meanwhile, variable costs or non-fixed expenses are consumable costs with a nominal amount that can change, depending on the amount of production and other influencing factors.
3.3 Calculate Income
Recording incoming and outgoing cash flow is a crucial thing that you shouldn't underestimate. Calculate all existing income to estimate the profit you will get and determine the strategy or future steps.
3.4 Calculate Business Results
The results of the business can be calculated after you know your income and other expenses. The existence of this calculation will show a profit and loss statement from the business that you are running. You can also find out whether in the current condition you need additional funds or you need to reduce them.
4. 8 Components of Business Planning
After you understand the flow of business planning, then you need to understand what components are there. Quoted from various sources, there are at least 8 components of business planning that you need to know about, including the following.
4.1 Business Description
The first component is a business description. A business description is needed to be able to explain what business you are going to run as well as provide a broad picture of the business idea you have.
So, later stakeholders such as potential investors, business partners, and so on can more easily understand the business concept that you will run.
4.2 Marketing Strategy
The second is the marketing strategy. This component plays an important role in studying the strengths and weaknesses of competitors. That way you can find out what opportunities you can do to meet market needs and look for more opportunities.
4.3 Market Research
Market research is a component of business planning that can help businesses understand consumer desires regarding tastes and products needed. By doing market research you can find out the market segmentation that you will enter better.
4.4 Implementation in the Production Process
When you have successfully done the three things above, the next step is to implement the results of the research and planning that you have made, including implementing a business plan and monitoring business performance to ensure that the business develops according to plan.
4.5 Product Monitoring
Pay attention to how the products and services you make are well received or not by consumers. This aims to evaluate existing deficiencies and maximize sales.
4.6 Operational Management
Business planning is inseparable from operational management which includes the arrangement of alignment, use, and management of raw materials, and production processes, to the selection of quality human resources for the continuity of efficient business management.
4.7 Financial Planning
You need to calculate the estimated costs to start a business. The existence of this financial planning contributes to making it easier for you to find out the amount of capital, profit, loss, and other matters related to finance.
The last component of business planning is to evaluate. Evaluation is carried out to review the readiness of the plan that you made.
If the existing evaluation is deemed appropriate to produce positive results, then it is likely that the implementation process will go well and bring great benefits.
BFI friends, that's brief information about business planning. Making a strategy is not easy, but running a business without careful planning will make it difficult for you in the future.
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Production Company Business Plan Template
Written by Dave Lavinsky
Production Company Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their production companies.
If you’re unfamiliar with creating a production company business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a production company business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your production company as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a production company or grow your existing production company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your production company to improve your chances of success. Your production company business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Production Companies
With regards to funding, the main sources of funding for a production company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for production companies.
How to Write a Business Plan for a Production Company
If you want to start a production company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your production company business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of production company you are running and the status. For example, are you a startup, do you have a production company that you would like to grow, or are you operating a chain of production companies?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the production industry.
- Discuss the type of production company you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
In your company overview, you will detail the type of production company you are operating.
For example, your production company might specialize in one of the following types of production companies:
- Feature Film Production Company : this type of production company handles all of the necessities that go with producing a major film – hiring on-screen and off-screen talent, writers, musicians, location scouts, a team for pre-production, post-production, legal, etc.
- Commercial Production Company: this type of production company can produce stock footage, short corporate videos, training videos, and creative projects such as music videos and short films
- Post Production Company: this type of production company handles video editing, special effects, color correction, sound mixing, and editing to eventually produce the final video.
- Niche Production Company: this type of production company focuses on one specific niche that it has perfected. They often combine the best of animation, commercial, and post-production companies.
In addition to explaining the type of production company you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of clients served, the number of films with positive reviews, reaching X number of clients served, etc.
- Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry or market analysis, you need to provide an overview of the production industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the production industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your production company business plan:
- How big is the production industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your production company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your production company business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, companies, filmmakers, studios.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of production company you operate. Clearly, small businesses would respond to different marketing promotions than filmmakers, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other production companies.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes social media platforms, web developers, apps and even college or university students. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of clients do they serve?
- What type of production company are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide concierge services or customized packages for your clients?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a production company business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type o f production company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide video editing, music editing, pre-production, or post-production services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your production company. Document where your company is situated and mention how the site will impact your success. For example, is your production company located in New York or Los Angeles, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your production company marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Be part of filmmaker associations and networks
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your production company , including client communication and interaction, planning and producing production services, billing clients, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your production company to a new city.
To demonstrate your production company’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing production companies. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a production company or successfully running a small filmmaking company.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance s heet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you book 5 films or videos per day, and/or offer production packages ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your production company, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a production company:
- Cost of equipment and production studio supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your studio location lease or a list of production services you plan to offer.
Writing a business plan for your production company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the production industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful production company.
Production Company Business Plan FAQs
What is the easiest way to complete my production company business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your production company business plan.
How Do You Start a Production Company Business?
Starting a production company business is easy with these 14 steps:
- Choose the Name for Your Production Company Business
- Create Your Production Company Business Plan
- Choose the Legal Structure for Your Production Company Business
- Secure Startup Funding for Your Production Company Business (If Needed)
- Secure a Location for Your Business
- Register Your Production Company Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Production Company Business
- Buy or Lease the Right Production Company Business Equipment
- Develop Your Production Company Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Production Company Business
- Open for Business
Don’t you wish there was a faster, easier way to finish your Production Company business plan?
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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
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Getting started: A guide to creating a manufacturing business plan
Every day people are trying and failing at entrepreneurism.
The journey is a difficult one, and the chances of success are slim. Those that succeed sometimes have a brilliant idea, while others have a wealth of resources. The one commonality among all successful entrepreneurs is that they had a manufacturing business plan.
You need to know where you are going, how you will get there, and what you will do when you arrive. This is especially important for those in the manufacturing industry because of the significant amount of forethought required.
Even if you are leveraging digital solutions to minimize the amount of time, money, and effort required to bring your product to market, you will still need a plan. This is not an area where you can wing it and hope for the best.
Below, we will examine the basics of a manufacturing business plan, what is necessary to include, how to create one for your own company, and some common mistakes that you should avoid.
Table of contents:
What is a manufacturing business plan, why does a manufacturing company need a business plan, what are the key components of a business plan, how to write a business plan for a manufacturing company, common mistakes to avoid.
A manufacturing business plan is a formal document that outlines the goals and objectives of your business. It includes detailed information about your:
- Products or services
- Target market
- Marketing strategy
- Financial projections
- Operational details
The purpose of a business plan is to give you a roadmap to follow as you build and grow your business. It forces you to think through every aspect of your venture and identify potential problems or roadblocks before they happen.
Manufacturing business plans can also be used to attract investors or secure funding from lenders. If you are looking for outside financing, your business plan needs to be even more detailed and include information on your management team, financial history, and expected growth.
Ideally, you should update your business plan yearly to ensure that it remains relevant and accurate. As your business grows and changes, so too should your plan.
No matter how simple or complex your ideas may be, you need a plan, or they will never become a reality. A business plan will clearly understand your costs, competition, and target market. It will also help you to set realistic goals and track your progress over time.
Let’s look at a manufacturing strategy example. You have a great idea that you think will revolutionize the automotive industry . Your new safety harness will be made from a lightweight, yet incredibly strong, material that cannot be cut or torn. You are confident that your product will be in high demand and generate a lot of revenue.
But before you walk into Ford or Toyota to try and get a purchase order , you need to have a plan. You must know:
- How much will it cost to produce your product
- How many units do you need to sell to break even
- Who is your target market is
- What is your competition selling
- How will you reach your target market
You also need to clearly understand the regulatory landscape and what it takes to bring a new product to market. All of this information (and more) should be included in your business plan.
This is not just a document that you create and forget about. It is a living, breathing tool that should be used to guide your actions as you build and grow your business.
Every manufacturing business plan will be different, but almost always, they will include the same five components:
Company description, products and services, market analysis.
- Financial plan
Let’s take a closer look.
The executive summary is the first section of your business plan, but it is typically written last. This is because it should be a concise overview of everything that follows, and you can only do that once you have completed the rest of your plan.
Include the following in your executive summary:
- The problem that your product or service solves
- Your target market
- Your unique selling proposition (what makes you different from your competitors?)
- Your manufacturing business model (how will you make money?)
- Your sales and marketing strategy
- A brief overview of your financial projections
Someone should be able to quickly scan through your executive summary and have a pretty good understanding of what your business is and how it plans to be successful.
This is where you can get a bit more creative, explaining your company’s history, mission, and values. You will also include information on your team or management structure.
It can be simple but should inspire faith in your ability to execute your business plan.
You will need to provide a detailed description of your product or service, as well as any unique features or benefits that it offers. You should also include information on your manufacturing process and quality control procedures.
If you have any patents or proprietary technology, they should be listed here as significant assets for your business.
For example, let’s say you are planning on creating a brand-new line of disposable coffee cups. The dimensions, materials, and other specifications would be listed here, along with any unique benefits (such as being made from recycled materials).
You might also include information on your manufacturing process, such as the fact that the cups will be produced in a certified clean room or that you will employ workers local to where the product is sold.
Chances are, you started down this path because you realized that there was a market opportunity for your product or service. In this section, you will need to provide detailed information on the opening, as well as the analysis that convinced you to pursue it.
This should include:
- Market size (current and projected)
- Key market segments
- Customer needs and wants
- Competitive landscape
This is where you will need to do your homework, as you will be justifying your business decision to enter this particular market. The more data and analysis you can provide, the better.
For our coffee cup example, the market analysis might include:
- Information on how many cups are used every day
- Projected growth
- Key segments (such as office workers or on-the-go consumers)
- Customer needs (such as convenience or sustainability)
It would also examine the competitive landscape, including both direct and indirect competitors.
You’re in this to make money, and so are your potential investors. In this section, you will need to provide detailed information on your manufacturing business model and how it will generate revenue. This should include:
- Initial investment
- Sales forecast
- Carrying costs
- Pricing strategy
- Expense budget
You will also need to provide information on your long-term financial goals, such as profitability or break-even point. Discuss production line details, inventory management strategies , and other factors impacting your bottom line.
The process of creating a business plan for a manufacturing company is similar to any other type of business. However, there are some key considerations to keep in mind.
First, you need to understand your industry and what it will take to be successful in it. This includes understanding the competitive landscape, the costs of goods sold , and the margins you can expect to achieve.
You also need to have a clear understanding of your target market and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits.
While there will be many things specific to your company, here are five questions to answer for each of the sections listed above.
- What is the problem that your company will solve?
- How will your company solve that problem?
- Who are your target customers?
- What are your key competitive advantages?
- What is your business model?
- What is the legal structure of your company?
- What are your company’s core values?
- What is your company’s history?
- Who are the key members of your management team?
- Where is your manufacturing facility located?
Products and services:
- What product or service does your company offer?
- How does your product or service solve the problem that your target market has?
- What are the key features and benefits of your product or service?
- How is your product or service unique from your competitors?
- What is the production process for your product or service?
- Who is your target market?
- What needs or wants does your target market have that your product or service will address?
- What is the size of your target market?
- How do you expect the needs of your target market to change in the future?
- Who are your key competitors, and how do they serve the needs of your target market?
- What are the start-up costs for your company?
- How will you finance your start-up costs?
- What are your monthly operating expenses?
- What is your sales forecast for the first year, and how does that compare to your industry’s average sales growth rate?
- What are your gross margin and profit targets?
Even if you do nothing but answer these questions, you’ll be well on your way to creating a thorough manufacturing business plan.
How to stabilize your growth
However, new manufacturing entrepreneurs often fall into a handful of traps when creating their business plans.
- Not doing enough research – You can’t know everything about your industry, but you should do your best to understand as much as you can before writing your business plan. This means talking to experts, reading trade publications, and studying the competition
- Not being realistic – It’s important to be optimistic when starting a new business, but you also need to be realistic. This is especially true when it comes to financial projections. Don’t overestimate the amount of revenue you will generate or underestimate the costs of goods sold
- Not having a clear understanding of your target market – You need to know who you are selling to and what needs or wants your product or service will address. This market analysis should include information on your target customer’s demographics, psychographics, and buying habits
- Failing to understand your competition – You need to know who your competitors are, what they are offering, and how you can differentiate yourself. This information will be critical in developing your marketing strategy
- Not having a clear vision for the future – Your manufacturing business plan should include a section on your long-term goals and objectives. What does your company hope to achieve in the next five years? Ten years? Twenty years?
Creating a business plan for manufacturing can be simple. It can be quite simple if you break it down into smaller pieces.
Once you have it in place, staying on track can be quite a bit more difficult. By using ERP software like Katana , you can track all of your key metrics in real time, avoid any potential issues, and make course corrections as needed.
To start following your plan and creating a successful manufacturing company, try out Katana’s 14-day free trial today.
- Manufacturing guide
- 1.1. Production vs manufacturing
- 1.2. Production scheduling software
- 1.3. Production tracking software
- 2.1. How to manufacture a product
- 2.2. Manufacturing best practices
- 2.3. A guide to creating a manufacturing business plan
- 2.4. Manufacturer e-commerce
- 2.5. Marketing for manufacturers
- 2.6. Manufacturing business processes
- 2.7. Food manufacturing
- 2.8. Small business manufacturing software
- 3.1. Job shop manufacturing
- 3.2. Production quality control checklist
- 4.1. Just-in-time (JIT) manufacturing
- 4.2. Tips to reduce manufacturing waste
- 4.3. Manufacturing KPIs
- 5. Light manufacturing
- 6. Advanced manufacturing
- 7. IoT in manufacturing
- 8.1. Manufacturing execution system (MES)
- 9.1. Manufacturing overhead formula
- 9.2. Manufacturing inventory software
- 10. Good manufacturing practices (GMP)
- 11.1. MRP in supply chain management
- 11.2. Best MRP software
- 12.1. Best ERP software for manufacturing
More guides from Katana
Manufacturing Business Plan – Detailed Example & Template
Use this manufacturing business plan as your template to start and grow your manufacturing company. This business plan for a manufacturing company includes market analysis, strategy, and more.
Download this Manufacturing Business Plan free for easy editing in Microsoft Word, Google Docs or Apple Pages to make a PDF:
Also Read: MoreBusiness.com’s Free Starting a Business Guide
Table of Contents
Manufacturing Business Plan
1.0 executive summary, 1.1 company.
Titus Mold Manufacturing, Inc. designs prototypes and molds, which are used by production manufacturers to fabricate consumer products. We are a start-up company that developed and patented revolutionary design software called Virtual Design Center. Our initial plan is to create a precision manufacturing facility to produce prototypes and molds for clients. Our goal is to provide our customers with fast turnaround, exceptional quality, unparalleled customer service, and competitive pricing.
1.2 PRODUCTS & SERVICES
We design and manufacture prototypes and molds. By utilizing Virtual Design Center, we will work in real-time with our customers to meet their design needs, which will reduce errors and detect design flaws early in the process. In turn, this will save the customer time and money. We plan to position ourselves as a forward-thinking company that continually invests in new ideas and technologies – unlike our competitors, which are similar mold manufacturing facilities. Because of our unique software, sophisticated technology and efficient processes, we will be in a position to potentially compete on price and quality. As this manufacturing business plan will outline, our unique Virtual Design Center gives us a definitive advantage.
1.3 MARKET ANALYSIS
The U.S. manufacturing industry makes up a substantial portion of the GDP, and the mold-manufacturing sector generates sales of more than $5 billion. Manufacturing drives the U.S. economy more than any other industry. Within that enormous industry, we have identified two strong markets with very high growth potential – automotive parts and medical devices manufacturing. As new car companies respond to shifting consumer demands for more fuel-efficient cars, and as the medical community develops new technologies, the need for new parts, designs and molds grows.
1.4 STRATEGY & IMPLEMENTATION
To achieve our business goals, we will create a high-tech, precision manufacturing facility and will implement highly efficient operations processes. We plan to promote Titus Mold Manufacturing and our proprietary Virtual Design Software with an aggressive, targeted marketing campaign. This will include a media campaign, print and online advertising and a targeted direct-mail campaign. In addition, we will focus heavily on establishing our presence within the industry at relevant trade shows.
Our leadership team currently consists of Chief Executive Officer John Baker, President Michael Smith, and Vice President Susan Jones. Additional key leaders will include directors of finance, marketing and sales, human resources, information technology and operations. While these positions remain unfilled at this time, we do have several extremely qualified candidates interested in joining with us in this new venture.
1.6 FINANCIAL PLAN
Our Company will earn revenue from the sale of design services and manufactured molds. The attached Income Statement demonstrates that our gross profit margin will exceed 72%, and we will achieve break-even with sales of $XXX,XXX. We expect to reach profitability by the middle of Year 2.
1.7 SOURCES & USE OF FUNDS
Titus Mold Manufacturing, Inc. requires $4,450,000 to launch. At present, we have raised $150,000 in venture capital funds. In addition, co-owners John Baker, Michael Smith and Susan Jones have each invested $100,000 into the company. We are currently seeking funds from outside investors and business loans.
The start-up funds will be used to cover the facility, build-out costs, equipment, software and initial operating costs including payroll, taxes, and utilities.
2.1 company & industry.
Titus Mold Manufacturing, Inc. is located in Molder, Missouri. Our company designs and manufactures prototypes and molds for use in casting metals or forming other materials, such as plastics, glass or rubber. Our business operates within the manufacturing industry and is classified under NAICS code 333511 – industrial mold manufacturing.
2.2 LEGAL ENTITY & OWNERSHIP
Titus Mold Manufacturing is an S-Corporation that was formally organized in Missouri. The company’s principal owners are John Baker, Michael Smith and Susan Jones, who hold equal shares of ownership in the company.
2.3 COMPANY HISTORY TO DATE
Our company is a new business that will create prototypes and quality molds, utilizing the latest design software, e-commerce technology, high tech machinery and innovative operations processes. As the company’s founders and owners, we have a combined 40 years of experience in software development and the manufacturing industry. Our experience includes product research and development, engineering and production management. After recognizing the need for and value of creating a more efficient customer experience to secure and retain business, we decided to create Titus Mold Manufacturing, Inc.
Our company is preparing to lease a manufacturing facility in Molder, Missouri. We are presently operating out of temporary administrative offices at the Barton Business Incubation Center.
We are working with a local realtor and BBIC to identify potential industrial space available for lease. We require a 10-12,000 sq. ft. facility to accommodate product development and engineering, a mold shop, a tool shop, quality assurance area, inventory storage and administrative offices. As the business grows, we intend to add injection-molding capabilities.
2.5 KEY ASSETS
Titus Mold Manufacturing holds a patent for its revolutionary Virtual Design Center (VDC). The VDC combines the best of virtual and in-person presentations and meetings, allowing customers to work in real-time with our design engineers. This allows us to serve clients nationwide.
Titus Mold Manufacturing, Inc. will make prototypes and molds for the manufacturing of consumer products. A mold, which is usually made from aluminum or steel, is a hollow form that gives a particular shape to a product while it is in a liquid state. The molds are used for products made from plastic, glass, metal or other raw materials.
There are three main phases to manufacturing a prototype or mold. First, engineers and product developers create a design. Titus Mold Manufacturing is able to complete a design from start to finish for a customer. If need be, Titus will work with the customer through the design process via our one of a kind Virtual Design Center. Secondly, we make test molds. We then inspect and test the molds for quality assurance. Finally, we manufacture prototypes and molds based on specific design specifications, using precision machinery to form the desired prototype or mold.
3.2 FEATURES & BENEFITS
Virtual Design Center will be the key to distinguishing and drawing attention to our company. Once we have a particular industry or customer’s attention, we will sell them on our fast turnaround, exceptional quality, unparalleled customer service and competitive pricing.
Obviously, speed, quality, service and price are qualities most of our competitors will list in their mission statement. However, Titus Mold Manufacturing will – from the beginning – invest in top quality, highly sophisticated machinery as well as implement innovative operations policies. These steps will ensure our ability to deliver beyond normal industry standard and surpass our customers’ expectations saving them time and money.
Our competitors are companies that provide similar types of design and mold-making services. There are far too many competitors to list specifically in this manufacturing business plan. To their advantage, they have an established customer base. Further, many mold-making companies also have injection-molding machinery, which enables them to manufacture actual products.
However, the vast majority of our competitors are not taking full advantage of current technology, nor are they implementing modern operational systems. Their waste is ultimately passed along to the customer via longer turnaround times and higher overhead costs .
3.4 COMPETITIVE ADVANTAGE/BARRIERS TO ENTRY
By relying on our technology and an activity-based costing system, rather than a time-based system, we will be able to maintain competitive prices and sustain high profitability. Our technology and systematic efficiencies will allow us to have advantages in cost, speed and design capability. Ultimately, these advantages will quickly come to define Titus Mold Manufacturing as an industry leader.
Our Virtual Design Center technology gives us a significant advantage over our competitors, and our patent prevents others from being able to replicate the services we offer.
As our company grows, we plan to expand our facility and create an injection-mold manufacturing plant. At that point, we will be able to control all operations in-house from initial design to mold creation and even mass production of the finished products. In addition, we will stay atop technology trends and upgrade equipment and processes as needed and can be afforded. We will also continue to research and pursue shares of existing markets such as packing, defense, electronics and telecommunications and update portions of this manufacturing business plan accordingly.
4.0 MARKET ANALYSIS
4.1 market size.
The US manufacturing sector includes more than 300,000 companies with combined annual sales of about $4 trillion. Furthermore there are approximately 2,500 mold manufacturers with combined annual sales of more than $5 billion. To capture a portion of those sales, Titus Mold Manufacturing will utilize a targeted industry approach to pursue specific, definable, market segments.
4.2 TARGET CUSTOMER
After extensive research, we decided to initially pursue market segments in the automotive and medical devices industries. These are two very distinct markets with very different needs. While the automotive industry’s purchasing decisions are driven primarily by price, the medical device industry focuses on a fast turnaround time and quality to make purchasing decisions.
The U.S. automobile manufacturing industry includes about 160 companies with combined annual revenue of about $250 billion. While the majority of those sales are swallowed up by a handful of major car manufacturers, there are thousands upon thousands of parts needing to be manufactured for each vehicle. By specializing in manufacturing molds for certain parts, we will establish our niche in the market. Our research indicates this is a perfect time to assimilate into this industry as carmakers make dramatic shifts in design and efficiency to address rising fuel costs.
The medical devices industry is by far one of the most forward-thinking, always-evolving industries. Researchers and product developers are continually striving to improve products and procedures. With this constant change and product evolution comes the constant need for new product molds. Couple the advances in medical technology with an increasingly aging population, and it’s clear the healthcare industry as a whole is a solid market and mold manufacturers will reap the benefits.
4.4 SWOT ANALYSIS
The SWOT analysis for this manufacturing business plan is as follows:
- Propriety software (Virtual Design Center)
- Potential for global customer base
- Manufacturing & production expertise
- Software development expertise
- Understanding of emerging technologies
- Understanding of target markets
- Competitive product pricing
- Exceptional quality and customer service
- Implementation of cost saving processes
- No company history
- Small initial customer base
- Lack of leverage with new relationships
- New products & processes
- Bringing new technology into the industry
- Developing a new reputation
- Hiring new talent
- New innovations and applications of our technology
- Impact of new legislation
- Technologies developed by competitors
- Challenges in building a talented staff
- Retaining key staff members
- Market demand fluctuations
5.0 STRATEGY & IMPLEMENTATION
Titus Mold Manufacturing’s business philosophy is to make the needs of our customers our main priority. It is our mission to provide our customers with fast turnaround, exceptional quality, unparalleled customer satisfaction and competitive pricing. With the introduction of our patented Virtual Design Center program and the unveiling of our modern design and manufacturing facility, we will position Titus Mold Manufacturing as a superbly innovative company and a future industry leader.
To achieve this position, we will implement our company’s plan to create a state-of-the-art mold-manufacturing facility and invest in the most accurate precision machinery available. We will implement the most comprehensive design software and set the highest standards of operational systems and quality control.
5.2 INTERNET STRATEGY
Our plan is to position Titus Mold Manufacturing as a technology-driven innovative company within the mold-manufacturing sector of the manufacturing industry. To do this, we are putting forth a great amount of time and resources into developing a premiere Web site. We are working with a design firm and have secured a domain name – TitusMolds.com. We have already initiated the process of integrating our Virtual Design Center into the site.
In addition to describing our manufacturing processes and design capabilities, we will feature numerous success stories and images of prototypes and molds we have produced. Our site will also include a simple online form to complete for custom quotes as well as a generic form to submit questions and comments.
Our vision is to create a Web site that will become an integral part of our marketing, sales and daily operations. We will use Wix to set up our site. This tool has all of the features we need, including the ability to create and edit the site very quickly. It also has ecommerce and other capabilities. Using Wix will also enable us to save money since we can create the site ourselves and will not have to hire a web designer.
5.3 MARKETING STRATEGY
Titus Mold Manufacturing recognizes the critical importance of marketing. We will require a properly designed and executed marketing plan to ensure market penetration and business success. Until we hire an in-house sales and marketing team, we will work with a marketing and public relations firm. Once a sales and marketing staff is in place, we will reassess the need for an outside firm.
In addition to conveying to our potential customers the fast turnaround, exceptional quality, unparalleled customer service and competitive pricing offered by Titus Mold Manufacturing, we will also position our company as future-minded and a leader in the integration of innovative technology into the mold manufacturing process.
Our marketing plan will include an initial publicity campaign that introduces our company and patented Virtual Design Center. Further, we will launch a comprehensive advertising campaign in automotive manufacturing and medical devise trade publications and related Web sites. The publicity campaign will be closely followed by a direct-mail campaign to targeted customers.
The other main component of our marketing plan will be to attend trade shows which will require booth construction and maintenance, marketing materials such as brochures, and promotional items such as pens with our logo.
To increase local awareness of our company and to foster a positive public perception, we will participate in and sponsor local charity events such as Walk for the Cure and March of Dimes and youth sports teams. We will also reach out to local high schools and colleges to offer internships and promote careers in manufacturing.
5.4 SALES STRATEGY
Titus Mold Manufacturing will build a sales team focused on securing new business in the short and long term. The sales team will be motivated by commissions and performance-based bonuses.
Under the direction of executive management, we will employ an outside sales staff as well as an inside sales staff, which will be cross-trained to handle general customer service calls. The outside sales staff will focus primarily on trade show attendance, comprehensive follow up, relationship building, closing deals, and securing referrals.
5.5 STRATEGIC ALLIANCES
We plan to develop strategic alliances with local and regional injection-molding manufacturing facilities that do not have mold-making capabilities within their facilities. One such alliance has been developed with Hilden Manufacturing Company located within our region. More are developing.
Our facility’s space will be divided in proportion to our needs and will include product development and engineering labs, mold shop, tool shop, quality control and testing area, inventory storage and administrative offices. Each area will be staffed with trained employees and wherever possible factory-floor technicians will be cross-trained. Our administrative offices will include space for executive, marketing and sales, accounting, information technology, security, maintenance, and human resource departments. To become a fully operational mold-manufacturing facility, we will require the following machinery and software.
- Viper, SLA 7000 & SLA 5000
- Eden260, Eden333 & Eden500V
- Vantage, Titan & Maxum
- RTV Tooling
By utilizing the latest precision machinery and software and superior operational and quality control processes such as LEAN Manufacturing, Rapid Prototyping and Manufacturing, and Six Sigma , Titus Mold Manufacturing will control costs while ensuring quality. Additionally, once we are operational, our company will become ISO 9001-2000 certified. Titus will also follow FDA requirements and comply with Medical Directive standards to further ensure quality control.
Operationally, our strengths lie in our knowledge and expertise within the manufacturing industry. We know what fixed assets we require and what regulations we must adhere to. However, while we cannot know for certain the quality of our managerial team at this point, we expect to hire and implement a top notch team. As previously mentioned, we have several promising prospects and will, of course, strive to recruit top talent.
The following is a list of business goals and milestones we wish to accomplish within the next three years.
- Secure necessary funds.
- Locate and lease suitable manufacturing facility.
- Purchase machinery, equipment and supplies.
- Hire skilled employees to complete our team.
- Set up shop and open for business.
- Successfully penetrate targeted markets.
- Secure contracts to achieve projected sales goals.
- Become a profitable company.
- Establish a solid reputation as an industry leader.
Our first major milestones will be securing funds and setting up our business. This is our primary focus right now. In three years, we hope to have established our company in the community and within our industry.
5.8 EXIT STRATEGY
Should management or our investors seek a business exit, there are several options we would be willing to pursue. Our company could most likely be sold to a manufacturing company that does not already have mold manufacturing capabilities. A management buyout could also be pursued once our business credit is firmly established.
6.0 MANAGEMENT ORGANIZATIONAL STRUCTURE
6.1 organizational structure.
Titus Mold Manufacturing understands the importance of a loyal and enthusiastic team to reduce turnover and increase productivity. Our company’s management philosophy will encourage responsibility and mutual respect. While we will present a strong decisive management team, we will also foster an atmosphere of genuine employee appreciation and open communication.
Our company will be managed and run by our executive staff including Chief Executive Officer John Baker, President Michael Smith, and Vice President Susan Jones, as well as our Board of Directors. Our management staff of directors and supervisors will oversee daily operations. However, as a small manufacturing facility starting out, the CEO, President and VP will be responsible for the majority of purchasing, hiring, training, quality control, and additional day-to-day duties.
Additional key leaders will include directors of finance, marketing and sales, human resources, information technology and operations. While these positions remain unfilled at this time, we do have several extremely qualified candidates interested in joining with us in this new venture.
As we start our mold manufacturing business, we will implement a plan to hire management and production staff first and fill in with mid-level management and administrative staff as our budget and needs change.
6.3 BOARD MEMBERS & ADVISORS
Our Board of Directors is not yet fully formed. CEO John Baker will serve as Chairman. The board will consist of company owners (shareholders), officers and directors.
Duties of the Board of Directors may include:
- Establishing broad company policies and objectives.
- Selecting, appointing, and reviewing the performance of executive staff.
- Insuring the availability of adequate financial resources and approving annual budgets.
- Accounting to the stakeholders for the organization’s performance
We will actively seek individuals to sit on our Board of Directors who will have the ability to add to and advise our organization such as lawyers, accountants, and professionals in the automotive or medical fields.
7.0 FINANCIAL PLAN
Titus Mold Manufacturing, Inc. requires $4,450,000 to launch and operate. We are currently seeking funding from outside investors and business loans. We are also looking into additional options including supplier financing, deferred rent, subleasing space, partnerships, vending and client advance payment.
At this time, we have raised $450,000 in working capital and are seeking the additional funds to start our business. We have raised $150,000 in venture capital funds. In addition, co-owners John Baker, Michael Smith and Susan Jones have each invested $100,000 into the company.
7.2 USE OF FUNDS
The start-up funds will be used to cover operating costs including payroll, taxes, and utilities. Start-up funds will also be used to purchase capital expenditures such as leasehold improvements, software and machinery, which will produce future benefits for the company. Approximately forty percent will be spent on assets, while the other sixty percent will be spent on operations until we realize profitability.
7.3 INCOME STATEMENT PROJECTIONS
The accompanying income statement demonstrates our company’s profitability. Our income shows a gross profit margin of seventy-two percent. Our monthly operating expenses average $116,325. Projected net income will average $54,075 per month in our third year.
After completing a comprehensive break-even analysis, we will achieve our break-even point by the middle of year two.
7.4 CASH FLOW PROJECTIONS
The nature of our business requires that our company collect payment after the product is complete. So we have included the accompanying cash flow statement, which projects our monthly flow of cash. While we expect to reach break-even by our eighteenth month, it will take nearly two years to become cash flow positive.
7.5 BALANCE SHEET
Our balance sheet will depend greatly on our sources of capital. We expect to raise approximately $1.5 million through loans and $2.95 million through equity capital.
Our assets will be comprised of cash, leasehold improvements, equipment, software and other tangible assets.
Our projections are based on the assumption that the manufacturing industry, particularly the medical and automotive industries, will continue to follow present trends. Industry regulation and government legislation is always poised to interfere with business projections, but there are no indications at this time to expect any negative influence to our projections. Additionally, we are not relying on new regulations or the passage of new legislation to enable our company to reach our projected numbers.
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What Are Manufacturing Goals and Objectives? 5 Tips for Setting and Achieving Them
From day-to-day tasks to long-range planning, setting manufacturing goals and objectives can help a company refine its operation, improve efficiency, and reach the pinnacle of business success—long-term, sustainable growth.
Maximize uptime. Minimize downtime. Boost productivity by optimizing maintenance management.
Having a clear direction of where you want to take your company is the foundation of any business plan. But what goals and objectives should you set for your own manufacturing company?
Let’s start with the basics.
What Are Manufacturing Goals and Objectives?
Manufacturing goals and objectives are the accomplishments a company would like to achieve and the steps they plan to take to get there . Goals and objectives each play a big part in aligning employees to the company’s overall mission and create a road map to follow on a day to day basis.
Goals are the big picture outcomes you want to achieve with your company. Objectives are the measurable steps and actions you take to reach those goals.
Think of goals as your destination and objectives as your mile markers. Despite their different purposes, both are instrumental in creating more efficient workflows and increasing quality, safety, and productivity, and ultimately boosting the bottom line.
For example, a steel manufacturer might have a goal of having a 15% market share of the U.S. steel exports. In order to achieve that, they may set objectives that help them get there, like increasing productivity by connecting the workforce through a digital collaboration tool.
Manufacturing Goals and Objectives Examples Companies Should Follow
Manufacturing objectives and goals should represent a cross-section of your organization. From HR to marketing, sales to production, every department in your manufacturing company should have targets they need to hit. Together, this broad set of goals and objectives will help your company realize greater success and help you reach your desired revenue.
Here are some examples of manufacturing goals and objectives to include in your company’s long term planning:
- Workforce wellbeing: It’s no secret that the happiness and wellbeing of your workforce is directly linked to company growth and success. Whether it’s through flexible schedules, advancement opportunities, or free lunches, there are many different ways companies can create objectives that result in happier workers. Organizations that take care of their employees are rewarded with lower turnover and higher engagement.
- Consistent, manageable growth: While growth can happen organically, companies should create strategies to deliberately set new targets. But leaders should set realistic expectations. Setting growth goals that are too ambitious could result in delayed production schedules and delivery that negatively impacts the customer experience.
- Greater business agility: Manufacturing operations are rooted in longstanding traditions, which means they can be resistant to change and slow to adopt new processes. But high-performing companies can easily adapt to change, so your objectives and goals should contribute to greater business agility.
- Digital transformation: Manufacturing led the charge during the Industrial Revolution. Now, the industry lags behind in digital maturity, especially when it comes to enterprise-wide tools. Companies should set goals to increase their digital communication capabilities that can create opportunities for collaboration, productivity and growth.
- Manufacturing maintenance objectives and goals: A large part of manufacturing inefficiency and wasteful spending occurs due to equipment failure or malfunction.
This unplanned downtime can cost companies up to $250,000 every hour .
Companies should implement steps towards becoming smart factories, automating processes through smart machines that can self-regulate and keep workflows running seamlessly.
Challenges When Setting Manufacturing Goals and Objectives
When doing your long-range planning, you may encounter some hiccups and discover operational inefficiencies. But navigating these challenges will ultimately make your company more resilient.
Goal-setting is more important than ever for manufacturers. There’s already significant strain on existing production systems from surging demand as the economy begins its recovery, leading to pressure on manufacturers to add automation and other advanced technologies to remain competitive. But guess what? Those newer technologies require advanced skills for both operators and maintenance personnel. Having the right goals in place for desired business growth and capital investment will drive equally vital staffing and training goals to support that growth. Right now the training of skilled workers isn’t keeping pace with demand, so knowing your personnel needs well in advance will make your recruitment efforts far more likely to succeed. And it will drive the right internal training efforts to keep your current workforce up to speed as well. – Jim Vinoski, Forbes writer and manufacturing expert
Here are a few challenges you might experience when determining the goals and objectives for your manufacturing company:
Making Safety a Top Priority
It’s easy to get tunnel vision when goal setting. But in manufacturing, which has a higher incident rate than other industries, it’s important to look at how every decision will impact safety. For instance, when a company is looking to reduce operating expenses, make sure budget restructuring does not sacrifice safety for cost. Spending more upfront can save you money in the long run.
One example—investing in mobile communication for your employees to give them equal access to information can reduce safety costs by more than $40,000 .
Lack of Accurate Data
Your goals and objectives should be as specific as possible. This means setting defined target numbers. But in order to really know what your company is capable of achieving, you need to understand where you’re at now. Make sure you have a productivity and collaboration platform that collects data in one place and delivers metrics in real-time.
Supply Chain Management
You can do your best to set goals and deadlines, but some issues will be out of your control and can throw you off schedule. Streamline your supply chain so there are fewer moving parts that can disrupt your operation and stop your progress toward achieving goals.
Labor Shortage and Skills Gap
Manufacturers have been facing a labor crisis. There is both a shortage of skilled workers in today’s Industry 4.0 factories and an overall shortage of people entering the manufacturing field. Reaching goals and objectives will take longer without the internal support needed to achieve them. Companies should focus on recruiting the next generation of workers who are looking for digitally progressive companies to build a robust, skilled team.
Ability to Communicate Goals
Reaching goals is a company-wide effort, and leaders should align their entire workforce to the mission. In manufacturing, most workers are on the frontlines without access to work email. A mobile communication tool enables leaders to include everyone on the shared objectives and assign, and track, individual tasks to workers directly. It creates two-way communication so workers can provide updates on their progress.
10 Reasons You Should Set Manufacturing Goals and Objectives
Manufacturing is an industry with many moving parts which must be in sync to perform complex functions. A company should focus on improving the performance of each individual part by setting specific targets they want to reach.
Having set goals and objectives can help a manufacturing company: 1. Easily navigate challenges 2. Align an organization on a clearly defined path 3. Meet customer expectations and delivery targets 4. Create a streamlined supply chain 5. Reduce waste 6. Boost innovation 7. Increase productivity 8. Bring the purpose of the business into focus 9. Create a common mission and increase collaboration 10. Track your progress on your business journey
5 Tips for Setting Manufacturing Goals and Objectives
While every company will have a unique set of circumstances that will guide what goals and objectives they set, here are five general tips to take into consideration:
1. Make the Goals Specific
Goals and objectives need to be specific. For example, instead of “increase revenue,” set an actual target like, “increase revenue by $150,000 next quarter.” Having a specific number helps align expectations and gets every department and employee working towards the same target.
2. Track and Measure Your Progress
On any given day you should know if your company is on track to reach its target. You should measure every objective so you can adjust strategies as needed to help reach your final goal. Using a communication platform creates one centralized location where workers can upload reports and spreadsheets to track progress.
3. Include Everyone
Manufacturing goals and objectives can only be achieved when every employee understands how their job plays a part in achieving them. Leaders need to be transparent and share goals and progress with their entire team. 69% of leaders believe that when business goals are communicated and understood across an entire company it helps increase employee engagement. Assign employees tasks that play to their strengths. Gallup suggests “Based on your employees’ roles and strengths, place them in positions that help the team achieve quality success in your goals.”
4. Set Deadlines (and stick to them )
Whenever possible, include a deadline for goals and objectives. This sets better parameters for your employees. It allows people to create schedules and use time management skills to accomplish their tasks related to company-wide goals. Avoid getting into the habit of extending deadlines unless absolutely necessary.
5. Create a Goal-Oriented Culture
When you accomplish objectives and reach goals, celebrate those major milestones. But remember that long-term, sustainable growth comes from setting goals, reaching them, and then setting new ones. Create that mindset in your employees, too. You’ll create a goal-oriented culture where everyone is driven by the same mission.
Want to streamline your maintenance and inspection process? Get access to our template library below!
Most frequently asked questions.
1. Workforce wellbeing 2. Consistent, manageable growth 3. Greater business agility 4. Digital transformation 5. Manufacturing maintenance objectives and goals
To set goals, it is extremely important to make the goals specific and to track the progress. In addition, the goals should be shared with everyone so that every employee feels included. Finally, setting deadlines and creating a goal-oriented culture also help to form goals.
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