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How To Write the Operations Plan Section of the Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Stage of Development Section

Production process section, the bottom line, frequently asked questions (faqs).

The operations plan is the section of your business plan that gives an overview of your workflow, supply chains, and similar aspects of your business. Any key details of how your business physically produces goods or services will be included in this section.

You need an operations plan to help others understand how you'll deliver on your promise to turn a profit. Keep reading to learn what to include in your operations plan.

Key Takeaways

• The operations plan section should include general operational details that help investors understand the physical details of your vision.
• Details in the operations plan include information about any physical plants, equipment, assets, and more.
• The operations plan can also serve as a checklist for startups; it includes a list of everything that must be done to start turning a profit.

In your business plan , the operations plan section describes the physical necessities of your business's operation, such as your physical location, facilities, and equipment. Depending on what kind of business you'll be operating, it may also include information about inventory requirements, suppliers, and a description of the manufacturing process.

Keeping focused on the bottom line will help you organize this part of the business plan.

Think of the operating plan as an outline of the capital and expense requirements your business will need to operate from day to day.

You need to do two things for the reader of your business plan in the operations section: show what you've done so far to get your business off the ground and demonstrate that you understand the manufacturing or delivery process of producing your product or service.

When you're writing this section of the operations plan, start by explaining what you've done to date to get the business operational, then follow up with an explanation of what still needs to be done. The following should be included:

Production Workflow

A high-level, step-by-step description of how your product or service will be made, identifying the problems that may occur in the production process. Follow this with a subsection titled "Risks," which outlines the potential problems that may interfere with the production process and what you're going to do to negate these risks. If any part of the production process can expose employees to hazards, describe how employees will be trained in dealing with safety issues. If hazardous materials will be used, describe how these will be safely stored, handled, and disposed.

Industry Association Memberships

Show your awareness of your industry's local, regional, or national standards and regulations by telling which industry organizations you are already a member of and which ones you plan to join. This is also an opportunity to outline what steps you've taken to comply with the laws and regulations that apply to your industry. 

Supply Chains

An explanation of who your suppliers are and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.

Quality Control

An explanation of the quality control measures that you've set up or are going to establish. For example, if you intend to pursue some form of quality control certification such as ISO 9000, describe how you will accomplish this.

While you can think of the stage of the development part of the operations plan as an overview, the production process section lays out the details of your business's day-to-day operations. Remember, your goal for writing this business plan section is to demonstrate your understanding of your product or service's manufacturing or delivery process.

When writing this section, you can use the headings below as subheadings and then provide the details in paragraph format. Leave out any topic that does not apply to your particular business.

Do an outline of your business's day-to-day operations, including your hours of operation and the days the business will be open. If the business is seasonal, be sure to say so.

The Physical Plant

Describe the type, site, and location of premises for your business. If applicable, include drawings of the building, copies of lease agreements, and recent real estate appraisals. You need to show how much the land or buildings required for your business operations are worth and tell why they're important to your proposed business.

The same goes for equipment. Besides describing the equipment necessary and how much of it you need, you also need to include its worth and cost and explain any financing arrangements.

Make a list of your assets , such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.

Special Requirements

If your business has any special requirements, such as water or power needs, ventilation, drainage, etc., provide the details in your operating plan, as well as what you've done to secure the necessary permissions.

State where you're going to get the materials you need to produce your product or service and explain what terms you've negotiated with suppliers.

Explain how long it takes to produce a unit and when you'll be able to start producing your product or service. Include factors that may affect the time frame of production and describe how you'll deal with potential challenges such as rush orders.

Explain how you'll keep  track of inventory .

Feasibility

Describe any product testing, price testing, or prototype testing that you've done on your product or service.

Give details of product cost estimates.

Once you've worked through this business plan section, you'll not only have a detailed operations plan to show your readers, but you'll also have a convenient list of what needs to be done next to make your business a reality. Writing this document gives you a chance to crystalize your business ideas into a clear checklist that you can reference. As you check items off the list, use it to explain your vision to investors, partners, and others within your organization.

What is an operations plan?

An operations plan is one section of a company's business plan. This section conveys the physical requirements for your business's operations, including supply chains, workflow , and quality control processes.

What is the main difference between the operations plan and the financial plan?

The operations plan and financial plan tackle similar issues, in that they seek to explain how the business will turn a profit. The operations plan approaches this issue from a physical perspective, such as property, routes, and locations. The financial plan explains how revenue and expenses will ultimately lead to the business's success.

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How to Write an Operations Plan Section of your Business Plan

Free Operations Plan Template

Ayush Jalan

• December 14, 2023

Your business plan is an elaborate set of instructions stating how to run your business to achieve objectives and goals. Each section describes a part of the process of reaching your desired goal. Similarly, the operations plan section of your business plan explains the production and supply of your product.

An operations plan is formed to turn plans into actions. It uses the information you gathered from the analysis of the market , customers, and competitors mentioned in the previous parts of your business plan and allows for the execution of relevant strategies to achieve desired results.

What Is an Operations Plan?

An operations plan is an in-depth description of your daily business activities centered on achieving the goals and objectives described in the previous sections of your business plan. It outlines the processes, activities, responsibilities of various departments and the timeframe of the execution.

The operations section of your business plan explains in detail the role of a team or department in the collective accomplishment of your goals. In other words, it’s a strategic allocation of physical, financial, and human resources toward reaching milestones within a specific timeframe.

A well-defined operational plan section of your business plan should be able to answer the following questions:

• Who is responsible for a specific task or department?
• What are the tasks that need to be completed?
• Where will these operations take place?
• When should the tasks be completed? What are the deadlines?
• How will the tasks be performed? Is there a standard procedure?
• How much is it going to cost to complete these tasks?

How to Write an Operations Plan Section?

Creating an operational plan has two major stages, both addressing different aspects of your company. The first stage includes the work that has been done so far, whereas the second stage describes it in detail.

1. Development Phase

In this stage, you mention what you’ve done to get your business operations up and running. Explain what you aim to change and improvise in the processes. These are the elements your development section will contain:

Production workflow

: Explain all the steps involved in creating your product. This should be a highly informative, elaborate description of the steps. Here, you also mention any inefficiencies that exist and talk about the actions that need to be taken to tackle them.

Supply chains

Quality control, 2. manufacturing phase.

The development stage acquaints the reader with the functioning of your business, while the manufacturing stage describes the day-to-day operation.

This includes the following elements:

Outline of daily activities:

Tools and equipment:, special requirements:, raw materials:, productions:, feasibility:, why do you need an operations plan.

An operations plan is essentially an instruction manual about the workings of your business. It offers insight into your business operations. It helps investors assess your credibility and understand the structure of your operations and predict your financial requirements.

An operations plan reflects the real-time application of a business plan.

Internally, an operations plan works as a guide, which helps your employees and managers to know their responsibilities. It also helps them understand how to execute their tasks in the desired manner—all whilst keeping account of deadlines.

The operations plan helps identify and cut the variances between planned and actual performance and makes necessary changes. It helps you visualize how your operations affect revenue and gives you an idea of how and when you need to implement new strategies to maximize profits.

Advantages of Preparing an Operations Plan:

• Offers Clarity: Operational planning, among other things, makes sure that everyone in the audience and team are aware of the daily, weekly, and monthly work. It improves concentration and productivity.
• Contains A Roadmap: Operational planning makes it much easier to reach long-term objectives. When members have a clear strategy to follow: productivity rises, and accountability is maintained.
• Sets A Benchmark: It sets a clear goal for everyone about what is the destination of the company and how to reach there.

Operations Plan Essentials

Now that you have understood the contents of an operations plan and how it should be written, you can continue drafting one for your business plan. But before doing so, take a look at these key components you need to remember while creating your operational plan.

• Your operations plan is fundamentally a medium for implementing your strategic plan. Hence, it’s crucial to have a solid strategic plan to write an effective operations plan.
• Focus on setting SMART goals and prioritizing the most important ones. This helps you create a clear and crisp operations plan. Focusing on multiple goals will make your plan complicated and hard to implement.
• To measure your goals, use leading indicators instead of lagging indicators. Leading indicators is a metric that helps you track your progress and predict when you will reach a goal. On the other hand, lagging indicators can only confirm a trend by taking the past as input but cannot predict the accomplishment of a goal.
• It is essential to choose the right Key Performance Indicators (KPIs) . It is a good practice to involve all your teams while you decide your KPIs.
• An operations plan should effectively communicate your goals, metrics, deadlines, and all the processes.

Now you’re all set to write an operations plan section for your business plan . To give you a headstart, we have created an operations plan example.

Operations Plan Example

Operations plan by a book publishing house

Track and Accomplish Goals With an Operations Plan

Drafting the operations plan section of your business plan can be tricky due to the uncertainties of the business environment and the risks associated with it. Depending on variables like your market analysis, product development, supply chain, etc., the complexity of writing an operations plan will vary.

The core purpose here is to put all the pieces together to create a synergy effect and get the engine of your business running. Create an effective operations plan to convey competence to investors and clarity to employees.

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Frequently Asked Questions

What role does the operations plan play in securing funding for a business.

The operations plan defines the clear goals of your business and what actions will be taken on a daily basis to reach them. So, investors need to know where your business stands, and it will prove the viability of the goals helping you in getting funded.

What are the factors affecting the operations plan?

• The mission of the company
• Goals to be achieved
• Finance and resources your company will need

Can an operations plan be created for both start-up and established businesses?

Yes, both a startup and a small business needs an operations plan to get a better idea of the roadmap they want for their business.

About the Author

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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An Ultimate Guide for Better Operations

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Operations Plan

• Lesson Materials Operations Plan Worksheet
• Completion time About 40 minutes

The operations section of your business plan is where you explain – in detail – you company's objectives, goals, procedures, and timeline. An operations plan is helpful for investors, but it's also helpful for you and employees because it pushes you to think about tactics and deadlines.

In the previous course, you outlined your company's strategic plan, which answers questions about your business mission. An operational plan outlines the steps you'll take to complete your business mission.

Your operations plan should be able to answer the following:

• Who – The personnel or departments who are in charge of completing specific tasks.
• What – A description of what each department is responsible for.
• Where – The information on where daily operations will be taking place.
• When –The deadlines for when the tasks and goals are to be completed.
• How much – The cost amount each department needs to complete their tasks.

In this session, we explain each item to include in your operations plan.

Goals and Objectives

The key to an operations plan is having a clear objective and goal everyone is focused on completing. In this section of your plan, you'll clearly state what your company's operational objective is.

Your operational objective is different than your company's overall objective. In Course One , you fleshed out what your strategic objective was. Your operational objective explains how you intend to complete your strategic objective.

In order to create an efficient operational objective, think SMART:

• Specific – Be clear on what you want employees to achieve.
• Measurable – Be able to quantify the goal in order to track progress.
• Attainable & Realistic – It's great to be ambitious but make sure you aren't setting your team up for failure. Create a goal that everyone is motivated to complete with the resources available.
• Timely – Provide a deadline so everyone has a date they are working towards.

Different departments will have different operational objectives. However, each department objective should help the company reach the main objective. In addition, operational objectives change; the objectives aren't intended to be permanents or long term. The timeline should be scheduled with your company's long-term goals in mind.

Let's look at the following example for a local pizza business objective:

• Strategic objective : To deliver pizza all over Eastern Massachusetts.
• Technology department operational objective : To create a mobile app by January 2017 to offer a better user experience.
• Marketing department operational objective : To increase website visitors by 50% by January 2017 by advertising on radio, top local food websites, and print ads.
• Sales department operational objective : To increase delivery sales by 30%, by targeting 3 of Massachusetts's largest counties.

Sales department operational objective: To increase delivery sales by 30%, by targeting 3 of Massachusetts's largest counties.

Production Process

After you create your objectives, you have to think strategically on how you're going to meet them. In order to do this, each department (or team) needs to have all the necessary resources for the production process.

Resources you should think about include the following:

• Suppliers – do you have a supplier (or more) to help you produce your product?
• Technology team: app developing software
• Marketing team: software licenses for website analytical tools
• Sales team: headsets, phone systems or virtual phone system technology
• Cost – what is the budget for each department?

In addition to the production process, you'll also need to describe in detail your operating process. This will demonstrate to investors that you know exactly how you want your business to run on a day-to-day basis.

Items to address include:

• Location – where are employees working? Will you need additional facilities?
• Work hours – will employees have a set schedule or flexible work schedule?
• Personnel – who is in charge of making sure department tasks are completed?

Creating a timeline with milestones is important for your new business. It keeps everyone focused and is a good tracking method for efficiency. For instance, if milestones aren’t being met, you'll know that it's time to re-evaluate your production process or consider new hires.

Below are common milestones new businesses should plan for.

When you completed your Management Plan Worksheet in the previous course, you jotted down which key hires you needed right away and which could wait. Make sure you have a good idea on when you would like those key hires to happen; whether it’s after your company hits a certain revenue amount or once a certain project takes off.

Production Milestones

Production milestones keep business on track. These milestones act as "checkpoints" for your overall department objectives. For instance, if you want to create a new app by the end of the year, product milestones you outline might include a beta roll out, testing, and various version releases.

Other product milestones to keep in mind:

• Design phase
• Product prototype phase
• Product launch
• Version release

Market Milestones

Market milestones are important for tracking efficiency and understanding whether your operations plan is working. For instance, a possible market milestone could be reaching a certain amount of clients or customers after a new product or service is released.

A few other market milestones to consider:

• Gain a certain amount of users/clients by a certain time
• Signing partnerships
• Running a competitive analysis
• Performing a price change evaluation

Financial Milestones

Financial milestones are important for tracking business performance. It's likely that a board of directors or investors will work with you on creating financial milestones. In addition, in startups, it's common that financial milestones are calculated for 12 months.

Typical financial milestones include:

• Funding events
• Revenue and profit goals
• Transaction goals

In summary, your operations plan gives you the chance to show investors you know how you want your business to run. You know who you want to hire, where you want to work, and when you expect projects to be completed.

Download the attached worksheet and start putting your timelines and milestones together on paper.

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Free PDF Business Plan Templates and Samples

By Joe Weller | September 9, 2020

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We’ve gathered the most useful collection of business plan PDF templates and samples, including options for organizations of any size and type.

On this page, you’ll find free PDF templates for a simple business plan , small business plan , startup business plan , and more.

Simple Business Plan PDF Templates

These simple business plan PDF templates are ready to use and customizable to fit the needs of any organization.

Simple Business Plan Template PDF

This template contains a traditional business plan layout to help you map out each aspect, from a company overview to sales projections and a marketing strategy. This template includes a table of contents, as well as space for financing details that startups looking for funding may need to provide. 

Download Simple Business Plan Template - PDF

Lean Business Plan Template PDF

This scannable business plan template allows you to easily identify the most important elements of your plan. Use this template to outline key details pertaining to your business and industry, product or service offerings, target customer segments (and channels to reach them), and to identify sources of revenue. There is also space to include key performance metrics and a timeline of activities. 

Download Lean Business Plan Template - PDF

Simple 30-60-90 Day Business Plan Template PDF

This template is designed to help you develop and implement a 90-day business plan by breaking it down into manageable chunks of time. Use the space provided to detail your main goals and deliverables for each timeframe, and then add the steps necessary to achieve your objectives. Assign task ownership and enter deadlines to ensure your plan stays on track every step of the way.

Download Simple 30-60-90 Day Business Plan Template

PDF | Smartsheet

One-Page Business Plan PDF Templates

The following single page business plan templates are designed to help you download your key ideas on paper, and can be used to create a pitch document to gain buy-in from partners, investors, and stakeholders.

One-Page Business Plan Template PDF

Use this one-page template to summarize each aspect of your business concept in a clear and concise manner. Define the who, what, why, and how of your idea, and use the space at the bottom to create a SWOT analysis (strengths, weaknesses, opportunities, and threats) for your business. 

Download One-Page Business Plan Template

If you’re looking for a specific type of analysis, check out our collection of SWOT templates .

One-Page Lean Business Plan PDF

This one-page business plan template employs the Lean management concept, and encourages you to focus on the key assumptions of your business idea. A Lean plan is not stagnant, so update it as goals and objectives change — the visual timeline at the bottom is ideal for detailing milestones. 

Download One-Page Lean Business Plan Template - PDF

One-Page 30-60-90 Day Business Plan Template

Use this business plan template to identify main goals and outline the necessary activities to achieve those goals in 30, 60, and 90-day increments. Easily customize this template to fit your needs while you track the status of each task and goal to keep your business plan on target. 

Download One-Page 30-60-90 Day Business Plan Template

For additional single page plans, including an example of a one-page business plan , visit " One-Page Business Plan Templates with a Quick How-To Guide ."

Small Business Plan PDF Templates

These business plan templates are useful for small businesses that want to map out a way to meet organizational objectives, including how to structure, operate, and expand their business.

Simple Small Business Plan Template PDF

A small business can use this template to outline each critical component of a business plan. There is space to provide details about product or service offerings, target audience, customer reach strategy, competitive advantage, and more. Plus, there is space at the bottom of the document to include a SWOT analysis. Once complete, you can use the template as a basis to build out a more elaborate plan. 

Download Simple Small Business Plan Template

Fill-In-the-Blank Small Business Plan Template PDF

This fill-in-the-blank template walks you through each section of a business plan. Build upon the fill-in-the-blank content provided in each section to add information about your company, business idea, market analysis, implementation plan, timeline of milestones, and much more.

Download Fill-In-the-Blank Small Business Plan Template - PDF

One-Page Small Business Plan Template PDF

Use this one-page template to create a scannable business plan that highlights the most essential parts of your organization’s strategy. Provide your business overview and management team details at the top, and then outline the target market, market size, competitive offerings, key objectives and success metrics, financial plan, and more.

Download One-Page Business Plan for Small Business - PDF

Startup Business Plan PDF Templates

Startups can use these business plan templates to check the feasibility of their idea, and articulate their vision to potential investors.

Startup Business Plan Template

Use this business plan template to organize and prepare each essential component of your startup plan. Outline key details relevant to your concept and organization, including your mission and vision statement, product or services offered, pricing structure, marketing strategy, financial plan, and more.

‌Download Startup Business Plan Template

Sample 30-60-90 Day Business Plan for Startup

Startups can use this sample 30-60-90 day plan to establish main goals and deliverables spanning a 90-day period. Customize the sample goals, deliverables, and activities provided on this template according to the needs of your business. Then, assign task owners and set due dates to help ensure your 90-day plan stays on track.

‌Download Sample 30-60-90 Day Business Plan for Startup Template 

For additional resources to create your plan, visit “ Free Startup Business Plan Templates and Examples .”

Nonprofit Business Plan PDF Templates

Use these business plan PDF templates to outline your organization’s mission, your plan to make a positive impact in your community, and the steps you will take to achieve your nonprofit’s goals.

Nonprofit Business Plan Template PDF

Use this customizable PDF template to develop a plan that details your organization’s purpose, objectives, and strategy. This template features a table of contents, with room to include your nonprofit’s mission and vision, key team and board members, program offerings, a market and industry analysis, promotional plan, financial plan, and more. This template also contains a visual timeline to display historic and future milestones.

Download Nonprofit Business Plan Template - PDF

One-Page Business Plan for Nonprofit Organization PDF 

This one-page plan serves as a good starting point for established and startup nonprofit organizations to jot down their fundamental goals and objectives. This template contains all the essential aspects of a business plan in a concise and scannable format, including the organizational overview, purpose, promotional plan, key objectives and success metrics, fundraising goals, and more.

Download One-Page Business Plan for Nonprofit Organization Template - PDF

Fill-In-the-Blank Business Plan PDF Templates

Use these fill-in-the-blank templates as a foundation for creating a comprehensive roadmap that aligns your business strategy with your marketing, sales, and financial goals.

Simple Fill-In-the-Blank Business Plan PDF

The fill-in-the-blank template contains all the vital parts of a business plan, with sample content that you can customize to fit your needs. There is room to include an executive summary, business description, market analysis, marketing plan, operations plan, financial statements, and more. 

Download Simple Fill-In-the-Blank Business Plan Template - PDF

Lean Fill-In-the-Blank Business Plan PDF

This business plan is designed with a Lean approach that encourages you to clarify and communicate your business idea in a clear and concise manner. This single page fill-in-the-blank template includes space to provide details about your management team, the problem you're solving, the solution, target customers, cost structure, and revenue streams. Use the timeline at the bottom to produce a visual illustration of key milestones. 

Download Fill-In-the-Blank Lean Business Plan Template - PDF

For additional resources, take a look at " Free Fill-In-the-Blank Business Plan Templates ."

Sample Business Plan PDF Templates

These sample business plan PDF templates can help you to develop an organized, thorough, and professional business plan.

Business Plan Sample 

This business plan example demonstrates a plan for a fictional food truck company. The sample includes all of the elements in a traditional business plan, which makes it a useful starting point for developing a plan specific to your business needs.

Download Basic Business Plan Sample - PDF

Sample Business Plan Outline Template

Use this sample outline as a starting point for your business plan. Shorten or expand the outline depending on your organization’s needs, and use it to develop a table of contents for your finalized plan.

Download Sample Business Plan Outline Template - PDF

Sample Business Financial Plan Template

Use this sample template to develop the financial portion of your business plan. The template provides space to include a financial overview, key assumptions, financial indicators, and business ratios. Complete the break-even analysis and add your financial statements to help prove the viability of your organization’s business plan.

Download Business Financial Plan Template

PDF  | Smartsheet

For more free, downloadable templates for all aspects of your business, check out “ Free Business Templates for Organizations of All Sizes .”

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Operational Plan Template

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This operational plan sample is structured with important details for your organization. It comes ready to print, but since most organizational details and structures are different, you can simply edit the fields by putting your own organization information. Also, using the Jotform PDF editor template, you can quickly add and delete fields, choose your own color options, etc. Finally, you can share your draft with your team members via email.

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Focus on the future and keep your company moving forward with Jotform’s Strategic Plan Template. Simply fill in the attached form with your company overview, delve deeper with a SWOT analysis, and finish off by determining your strategic goals, actions, and financial plans. Our fully-customizable template converts submitted information into polished PDFs, which you can download, print, or share instantly.You don’t need a degree in design to build a professional strategic plan. Change fonts, update colors, and add your company’s logo in an instant — with Jotform’s drag-and-drop PDF Editor, customization is a breeze! Establish goals, set your priorities, and draw up solid action plans as polished PDFs with our Strategic Plan Template. By clearly defining your goals and the steps you’ll take to achieve them, you can keep your company on track and grow your business faster.

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A single page business plan is just as it sounds: a summary of business objectives displayed on a single page. Single page business plans are typically used to pitch ideas before writing longer, more detailed business plans for potential investors and partners. Instead of starting from scratch, use our free Single Page Business Plan PDF Template to outline company goals in a professional, accessible PDF document. Once you’ve filled out a simple form with details regarding your company’s overview, objectives, challenges, and strategies, this Single Page Business Plan Template will automatically convert that information into a professional PDF that can be read at a glance. With your single page business plan saved as a PDF, you can easily download it for your records, email the file to coworkers, or print out copies for company meetings.This Single Page Business Plan Template already has a stunning design, but you can quickly customize it to meet your business needs with our drag-and-drop PDF Editor. Easily add fields for additional information such as milestones, market or competitive analysis, and financial summary. Don’t forget to represent your business by adding your logo and changing the fonts and colors to match your branding. No matter what modifications you make, your custom Single Page Business Plan Template will create an impressive, brief breakdown of business objectives to help steer your company in the right direction.

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A marketing brief can make or break your campaign. But writing a brief for every new campaign eats up time you simply can’t afford to lose. With this free Marketing Brief Template, you can quickly and easily draft marketing briefs without ever having to start from scratch. Simply fill out this simple online form with client information and project details such as objectives, budget, and materials, and the template automatically creates overviews as PDFs — easy to download, print, and share with the rest of the marketing team. Since each marketing campaign is unique, why not make your marketing brief unique as well? Luckily for you, customizing your Marketing Brief Template is a breeze with our drag-and-drop PDF Editor. You’ll be able to change the text or any graphic element in just a few clicks. Feel free to get creative — change the fonts and colors, upload your own background image, or add your company logo for a professional touch. Each time you submit details about your new marketing campaign, your custom Marketing Brief Template will display those plans in easily-accessible PDFs. With PDF marketing briefs in hand, your marketing team can get right to work promoting your products and building your brand.

These templates are suggested forms only. If you're using a form as a contract, or to gather personal (or personal health) info, or for some other purpose with legal implications, we recommend that you do your homework to ensure you are complying with applicable laws and that you consult an attorney before relying on any particular form.

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Simple Business Plan Templates

Focus on the future and keep your company moving forward with Jotform’s Strategic Plan Template. Simply fill in the attached form with your company overview, delve deeper with a SWOT analysis, and finish off by determining your strategic goals, actions, and financial plans. Our fully-customizable template converts submitted information into polished PDFs, which you can download, print, or share instantly.

Get down to business with a customizable Single-Page Business Plan template from Jotform. Customize your plan in minutes. No coding. Drag and drop to build.

This Operational Plan Sample is structured with important details for your organization. It comes ready to print, but you can simply edit the fields by putting your own organization information.

Managing a marketing campaign or promotion is a challenging task. You need to have a marketing plan in order to execute the campaign smoothly with the time and budget provided. Creating a Marketing Brief is very beneficial because it summarizes the marketing strategy for a specific campaign.If you are in the advertising agency or part of the marketing department, then this Marketing Creative Brief Template is for you. This well-designed template contains the client information, project information, and the marketing materials that will be used. The project details explain the project title, description, objectives, target audience, budget overview, advertising guidelines, and competitors.

Glamping Business Plan Template

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Lean Business Model Canvas Template

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Creative Brief Template

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About Simple Business Plan Templates

Plans, strategies, roadmaps – Businesses rely on these things to gain perspective on what’s about to happen. Milestones laid down in strategic and careful planning for growth and expansion, visions of where the company’s headed 10 years from now, goals that should meet timelines, all these require a smart, prudent and calculated planning.

Whether you’re a startup, an SMB, or close to a Fortune 500, a solid business plan is crucial. And of course, writing business plans is a huge task. But, what if you needed something that requires input from others though? Say, an online form or a PDF template where responses from your colleagues and managers matter? Well, here’s a collection of PDF templates for business planning.

These are beautifully designed templates, specifically tailored for businesses and companies who don’t know where to start. The hard part was already done and that’s designing the template. These will serve as boilerplates for whatever milestone your business needs. You won’t need to worry on building something from scratch, you just need to focus on the content. Some of these templates will contain or collect executive summaries, opportunities, expectations, execution, financial plans, forecasts, the whole nine yards.

Business plan templates help give a clear vision of what lies ahead. They help you get things organized, planned out, and help you check off items from your to-do list more efficiently.

Frequently Asked Questions

1) what are the seven parts of a business plan.

• Executive summary. This is an overview of your business plan. The executive summary should include your company’s offerings, mission, goals, and projections. Think of it as the elevator pitch for your business plan. If you can’t get investors interested here, it’s unlikely they’ll want to keep reading.
• Company description and history. Describe your business’s legal structure and history in addition to what you do. If you just started this business, you may replace company history with your leadership team’s experience. The purpose of this section is to explain the company structure and build confidence in the people running the company.
• Products and services. Talk about what your company offers, whether that’s products, services, or a combination of the two. Describe your products and services in detail. Explain what makes your offering unique, what your profit margins are, what kind of demand you’re seeing for it, etc.
• Market and competitor research. Investors want to know if there’s demand for your offering. Describe the target market and how your product or service benefits potential customers. Include projections of where the industry is headed over the next few years. Additionally, detail your competitors and how saturated the market is.
• Sales and marketing strategy. This part of the business plan explains how you’ll promote your product. Outline elements such as your ideal customer profile (ICP) as well as your marketing channels, budget, and methods.
• Operations and logistics. Explain how you’ll source materials if you sell products as well as the technology you need to deliver such products and services. Also, provide details about your team, like how many people you’ll need and how you’ll manage employees.
• Financial plan and projections. It’s crucial to prove that your business will be financially viable. For this, you’ll need revenue and expense projections. Many investors want to see sample account statements, balance sheets, and cash flow projections.

2) How do you write a business plan?

Your business plan should be a realistic roadmap that helps you build a successful company. When writing it, take a balanced approach so that you’re not blind to the potential pitfalls and risks. You’ll draft each of the seven sections previously discussed.

Tackling these sections can be overwhelming, so some people like to start with a one-page business plan that includes short paragraphs for each element. Another way to give yourself a head start is by working from a business plan template. Once you have a good start, you can expand each section to make a compelling case for your business.

3) Can I write a business plan myself?

Yes, you can. However, depending on your writing experience and goals, you may want outside help. If the business plan is for internal use with the purpose of improving business functions, you’ll likely be OK tackling it alone. But if you’re trying to secure funding from a bank or investors, a professional business plan writer can give you a leg up.

Even if you decide to do it yourself, have a trusted friend or business mentor review your plan and provide feedback. An objective point of view will help you refine your work.

4) What are the four types of business plans?

• One-page or mini business plan. The one-page option is a great way to improve the focus of your business plan and highlight the essential elements. It can be an effective way to workshop your company’s plan or quickly give others a rundown of your entire business.
• Traditional business plan. The traditional business plan is more in-depth than its one-page counterpart and will be more thorough in each section (often, plans exceed 40 pages). For example, it may contain detailed financials, branding samples, and competitive research documents.
• Business model canvas (BMC). The business model canvas is a more visual representation of your business architecture. It includes sections for infrastructure, offering, customers, finances, etc. Many businesses find the BMC appealing since it can be summarized in a single page.
• Strategic business plan. The strategic business plan can have different purposes, like proving feasibility, discussing planning operations, or projecting growth. It will outline the company’s goals, its strategy for reaching them, and the company structure. The main difference between this and the traditional plan is its focus on specific strategic initiatives.

5) What are the common mistakes in business plans?

• Poor writing. Sloppy writing may suggest that you’re not serious about your business or you lack the needed professionalism.
• Unrealistic expectations. While you should be optimistic about your business, if your financial projections reflect your hopes more than reality, people may hesitate to back your business.
• Lack of supporting documentation. People reviewing your business plan want to see how you back up your claims. You can include research docs, sample financials, and estimates to make your case.
• Failing to define the target audience. For a successful marketing plan, you need to define your target audience. Investors and financial institutions need to see if you’re confident about who you’re selling to.
• Unbalanced. It’s important to lay out the risks and potential upsides. This analysis shows investors that you’re considering the whole picture regarding your business.

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Expertly Writing the Operations Plan Section of Your Business Plan

Written by Dave Lavinsky

Operational plans are important for any effective business plan . They provide a roadmap for how the company will operate on a day-to-day basis. The operational strategic plan should outline the company’s goals and objectives, as well as the strategies and actions that will be taken to achieve them.

Business Operations Section of a Business Plan

The operational plan or operations section of a business plan is where you describe how your business will function on a day-to-day basis. This includes everything from the resources you’ll need to run your business, to the people who will be responsible for carrying out various tasks, to the processes and procedures you’ll use to get work done.

Purpose of the Operational Plan Section of a Business Plan

An operational plan is essential for any business because it provides a roadmap for how it will function. It ensures that everyone involved in the business is on the same page and knows what their roles and responsibilities are. Having an operational plan also makes it easier to track and accomplish goals, while driving cost reduction and improving overall results. Finally, your operations plan section helps show readers that you can turn your vision and goals into reality.

Benefits of an Operations Plan Include:

• Identifying the key processes your company must perform to achieve its goals
• Mapping out short-term and long-term milestones so you have specific goals and a roadmap for achieving them
• Understanding the human and other resources required to execute your vision

Writing an Operations Section of a Business Plan

When writing the operations section of a business plan, there are a few things you’ll want to keep in mind. First, be sure to describe the resources that will be required to run your business. This includes everything from office space and equipment to human resources. Next, detail the processes and procedures that will be used to get work done. Be as specific as possible so that there is no confusion about how things should be done. Finally, identify the people who will be responsible for carrying out various tasks. This includes both employees and contractors.

Tracking Key Performance Indicators with Operational Planning

As a business owner, it’s important to track your progress against your company goals. This is where KPIs come in. KPIs are performance indicators and an important part of creating a strategic plan that can help you track your progress and identify areas of improvement. You should document your KPIs in the operation plan of your business plan

There are a few things to keep in mind when choosing KPIs for your business:

• Make sure that the KPIs you choose are relevant to your company’s goals.
• Choose KPIs that can be easily measured.
• Avoid choosing too many KPIs, as this can be overwhelming. Stick to a few key ones that will give you the most insights into your business’s progress.
• Set realistic targets for each KPI. This will help you track your progress and identify areas of improvement.
• Review your KPIs on a regular basis to ensure that they are still relevant and accurate, while also being in line with strategic plans.

Some Examples of KPIs that You Could Track with an Operational Plan

When creating an operations plan, it’s important to track key performance indicators (KPIs) to measure your progress against your company goals. Some examples of KPIs that you could track are:

• Sales growth
• Delivery times
• Customer satisfaction ratings
• Product Quality
• Production Process
• Employee retention
• Operational costs

Creating an operational plan with KPIs will help you track your progress, identify areas of improvement, improve strategic planning and make necessary changes to reach your company’s strategic objective.

Example of an Operations Section of a Business Plan

Here is what an operations plan example might look like:

The XYZ Company will require the following resources to operate:

• 1,000 square feet of office space
• $10,000 for office furniture and equipment
• 3 full-time employees
• 2 part-time employees
• 1 contractor

The XYZ Company will use the following processes and procedures to get work done:

• All new clients will be contacted within 24 hours of the initial inquiry
• Initial consultations will be scheduled within 48 hours of contact
• Proposals will be presented within 10 days of the initial consultation
• Work will begin within 2 weeks of proposal acceptance

The following people will be responsible for carrying out these tasks:

• John Smith, full-time employee, will contact new clients
• Jane Doe, full-time employee, will schedule initial consultations
• John Smith and Jane Doe will conduct initial consultations
• John Smith and Jane Doe will prepare proposals
• John Smith and Jane Doe will manage projects
• Joe Johnson, contractor, will provide support as needed

An operations plan is a critical part of any business planning work. It provides a roadmap for how the business will function on a day-to-day basis. This includes everything from the resources you’ll need to run your business, to the people who will be responsible for carrying out various tasks, to the processes and procedures you’ll use to get work done. Having operational plans in place will ensure that everyone involved in the business is on the same page and knows what their roles and responsibilities are. It will also make it easier to track and accomplish goals.

Key Takeaways

A few key things to remember when writing your operations plan:

• Describe the resources that will be required to run your business
• Detail the processes and procedures that will be used to get work done
• Identify the people who will be responsible for carrying out various tasks

Following these tips will help you create a comprehensive and effective operations plan for your business.

A strategic plan is one of the critical components of any successful company. The operations plan outlines the roadmap for your business, outlining the steps you need to take to achieve your goals. If you’re not sure where to start, we can help. Our team of experts has created a comprehensive business plan template that will guide you through the process of creating an operational plan tailored to your specific business needs. Ready to get started? Download our template today and get access to all the tools and information you need to create a thriving business.

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What Is the Operational Plan Section of the Business Plan?

Learning what an operation plan is and learning how to make it is something critical to any business. 3 min read updated on February 01, 2023

An operation plan section of the business plan is an essential part of any business. Learning what an operation plan is and learning how to make it is something critical to any business. Here are the main things you need to know about an operation plan.

Definition of an Operation Plan

An operation plan is a guiding path for the business to follow in order to achieve all of its goals and objectives described in the general business plan.

The operation plan mainly includes details about the people responsible for completing the required actions, and all the costs and KPIs (key performance indicators) for these actions to be accomplished.

In order for any business to be stable in the long run, the operation plan must be updated regularly in order to ensure the stability of the business.

What Is the Operations Plan Section and How to Properly Make It

The section of the operations plan which is included in the business plan mainly specifies all the physical requirements for the operation of the business. These physical requirements mainly include equipment, facilities, and location.

In order to make a complete business plan , three things need to be clarified to the reader:

• Everything was done for the business from the start to reach its current position
• Acknowledgment that you know exactly what should be done for any business to get off the ground
• Full awareness and understanding of the delivering and manufacturing processes of the service or the product you offer.

Operating Section of the Business Plan: Stage of Development Section

While you're developing the stage of development section, you should begin with the previous procedures that have been taken so far, along with mentioning what is best to be done in the future, it should be as follows:

• Production workflow : In this, you will describe in detail the exact steps of how your service or your product will be made, along with the acknowledgment of any possible problem that could be faced during the process.
• In addition, you will include details about how to train the employees to solve any upcoming problem and avoid any risks as much as possible. Along with mentioning any dangerous equipment that will be used, and the proper ways of using and storing these pieces of equipment.
• Supply chains: In this section you clarify the identity of the suppliers, the prices they offer, and their terms and conditions, In addition to providing the possible alternatives in case it doesn't work out with the current suppliers
• As an example, in case you are willing to have a specific quality control certificate, like the ISO 9000, you should identify and explain the required procedures.

What Are the Key Components to Include in an Operational Plan Regarding the Business Organization?

Here are the main components to be included in the operational plan:

• Most of the tasks in the operation plan are carried out by the company's managers and the employees under them, so it is essential that to clarify their identity, describe their qualifications, and describe the jobs and tasks which they will be responsible for.
• Providing an organizational chart to describe the structural hierarchy of the business.
• The philosophy and tactics of the company, and the role they play in the development and stability of the business.
• A statistical measurement of the performance of the employees and managers, and the ways of reward and punishment.
• Explain the methods that you will use to find the right employees, putting into consideration the required qualifications needed, the job description of each one, and the compensation rates that you will offer.
• In case the business will need any outside consultants it should be noted, along with the specific functions required from any outsider consultant or employee.

In the end, one could conclude that the success or a failure of a business depends heavily on the quality of the business and operation plan put forward.

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How to Write the Operations Section of Your Business Plan

2 min. read

Updated January 3, 2024

The operations plan covers what makes your business run. It explains the day-to-day workflows for your business and how you will deliver the product or service that you offer. As part of your plan, it’s your chance to describe what you’ve set up so far and that you understand what is still left to make your business fully operational.

• How to write about business operations

Like some of the other sections in your plan, the information you include fully depends on your type of business. If you run a subscription box service you’ll need to cover how you source and fulfill each order. If it’s a service-oriented business (like a mechanic or coffee shop) you’ll need to go into more detail about your location as well as the tools and technology you use.

The important thing is that the information here fully addresses how your business runs.

What to include in your operations plan

The components of your operations plan fully depend on what’s necessary to produce your product or service. For most, you’ll be adding details about your location and facilities, the technology being used, and any equipment or tools.

Location and facilities

The information you include about your business location fully depends on the state, city, and neighborhood you’ve chosen. This will determine the specific taxes, registration, licenses, permits, zoning laws, and other regulations you’ll be subjected to.

Once you’ve legally established your business be sure to reference the relevant paperwork and legal documentation in this section. You may also want to point to mockups of the building, copies of legal agreements, and any other supporting documentation for how valuable the property is and how it helps your business function.

Sourcing and fulfillment

How will you create your product/service and what will it cost? You’ll include detailed breakdowns in your financial plan, but here you’ll talk about what it will take, who you will work with, and any alternatives.

How and when to write about technology

Is your product or service driven by a specific technology or process? Let investors, banks, or other necessary parties know why it’s a valuable part of your business.

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• Why you need an operational plan

Understanding your business operations makes your processes real. It ensures that you have organized steps in place to produce a product or service.

For investors, this helps prove that you know what you’re doing and can back up the rest of your plan with actual work that makes it happen. For you as a business owner, it’s a starting point for optimization. You have a blueprint for how things work. And as you run your business, can begin to identify opportunities for improvement.

If you don’t cover operations as part of your business plan, then you’re flying blindly. There’s no documented process for how things should work and no connection to the other strategic elements of your business.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Table of Contents

• What to include

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How to Create an Operating Plan for Your Business Plan

What is an operating plan.

An operating plan outlines how a business will manage its day-to-day operations. It includes information on the physical facilities and equipment needed for production, the manufacturing and business process, inventory management, personnel, regulatory compliance, risk management, and financial projections.

The operating plan is essential to the business plan .  It will provide a comprehensive overview of how the business will function to achieve its goals. It serves as a roadmap for the business owner, investors, and stakeholders to understand the company’s operations and to guide informed decisions.

Beyond defining an operating plan, this post will detail what to include in each section. For example, you’ll find a functional operating plan template, operating plan examples, and details about how to write an operational plan for your business plan.

Using the information provided, you’ll be well-positioned to create an operational plan that helps you meet your business goals.

How is an Operating Plan Different from a Strategic Plan?

An operating plan outlines how a business will manage its day-to-day operations. It is a tactical plan that covers a short-term period of one year or less and focuses on implementing the company’s strategies to achieve its goals. The operating plan deals with the practical aspects of the business, such as production, sales, marketing, and finances with details for each specific department.

On the other hand, a strategic plan is a comprehensive document that outlines long-term company goals and objectives, along with the strategies and tactics required to achieve them. It is a high-level plan that covers a more extended timeframe of three to five years or more. The strategic plan deals with the big-picture aspects of the business, such as market analysis , competitive positioning, growth opportunities, and risk management.

Simple Outline of an Operating Plan

An operating plan will cover the following categories of information. We’ll expand on each category in more detail in the operating plan template below. Plus, we’ll elaborate on how to customize the operating plan for your business and industry.

• Physical facilities and equipment
• Manufacturing process
• Inventory management
• Regulatory compliance
• Risk management
• Financial projections

Eight Essential Sections for Your Operating Plan Template

The operating plan template below covers the eight essential elements that should be included in your business plan. The aim is to provide an overview so that you capture all the essential information in your business plan operating plan.

You’ll see things that do not apply to your business or industry. The section that follows, provides industry-specific ideas for fine-tuning your plan.

1. Overview of Operations

• Briefly introduce the company’s operations, including its products/services, location, and any unique aspects of the operations.

2. Facilities and Equipment

• Describe the business’s physical location, including any facilities or equipment necessary for operation.
• Discuss any costs associated with the facilities or equipment, and how they will be acquired.

3. Production and Manufacturing

• Outline the process for creating the company’s products or delivering its services.
• Discuss any suppliers or vendors necessary for production and any agreements or contracts.

4. Inventory Management

• Describe how inventory will be tracked and managed, including any software or systems used.
• Discuss any potential issues with inventory, such as spoilage or obsolescence.

5. Personnel

• Detail the roles and responsibilities of employees, including management positions and any necessary training.
• Discuss any employment contracts, benefits, or compensation plans.

6. Regulatory Compliance

• Explain any regulations or legal requirements the business must comply with, such as licensing or permitting.
• Discuss any potential legal or regulatory issues that could affect the business.

7. Risk Management

• Identify potential business risks, such as natural disasters or supply chain disruptions.
• Discuss any contingency plans in place to address these risks.

8. Financial Projections

• Include financial projections related to the operating section of the business plan, such as expected revenue and expenses and how they will be managed.
• Summarize your break-even analysis, and discuss any capital requirements for the business.

Overall, the operating section of a business plan should provide a comprehensive review of how the business will operate and manage its day-to-day operations.

Fine Tuning the Operating Plan for Specific Types of Businesses

Effective operational plans will differ depending on the type of business due to variations in their operations, facilities, equipment, personnel, and regulatory requirements.

The examples below help to illustrate the latitude you can take when drafting your plan:

• Restaurant: An operating plan for a restaurant would focus on issues such as food preparation, kitchen management, menu design, customer service, and staff training. An operating plan for a restaurant will cover food safety regulations, health inspections, and inventory management.
• Software company: An operating plan for a software company would focus on issues such as product development, project management, quality control, and customer support. The plan should address rapid technological change, intellectual property protection, and software testing and debugging.
• Candle manufacturer: An operating plan for a manufacturing business would focus on issues such as raw material sourcing, production processes, quality control, and marketing and sales. The plan would need to address the unique challenges of the manufacturing industry, such as supply chain management, environmental regulations, and product packaging and labeling.
• Used car dealership: An operating plan for a used car dealership would focus on vehicle acquisition, pricing, sales and marketing, and customer service. It should also address vehicle maintenance and repair, financing and insurance, and compliance with state and federal regulations.

To determine what to include in an operating plan for their industry, business owners can research best practices and industry standards, consult with experts in their field, and seek guidance from industry associations.

They can also analyze their business’s specific needs and challenges and tailor their operating plan accordingly. By developing a comprehensive and realistic operating plan, business owners can ensure their business is well-positioned for success.

Restating Other Parts of Your Business Plan – Stay in Sync

It’s common for an operating plan to briefly mention certain aspects of a business that are covered in more detail elsewhere in the business plan. For example, the revenue forecast may be mentioned in the operating plan, but the financial or sales sections will provide more detailed information on how that revenue will be generated. However, it’s crucial to ensure that everything is consistent across all sections of the plan. The numbers and information presented must be accurate and match up in order to avoid confusion and maintain credibility.

Business plans and operating plans are dynamic documents that should be updated regularly as a company grows and evolves. It’s important to remember that any updates or changes made to one section of the plan should be considered with what has already been written in other areas. This will ensure that the plan remains consistent and cohesive and that any changes made are in line with the overall goals and objectives of the company.

Regularly reviewing and updating the plan will also ensure that it remains relevant and valuable as a guiding document for the business.

Operating Plan Example for a Retail Business

The operating plan below follows the business plan outline we provided. You’ll see that the operational plan for a business plan primarily demonstrates that you have thought through the most critical aspects of operating the business.

However, it does not have to be an operating manual explaining all the details as long as your operating plan conveys that you understand the business operations.

Overview of Operations

Our company, Sporting Goods Resale, is a retail business selling high-quality, gently used sporting goods. We will be located in a busy shopping center in downtown Anytown, USA, and will offer a wide variety of products for athletes of all ages and skill levels.

Facilities and Equipment

Our store will occupy a 2,000 square foot space in the shopping center, which we have leased for five years. The space has will be fully renovated to suit our needs, including shelving and display cases. Other resource requirements include purchasing the necessary equipment, including cash registers and point-of-sale software.

Production and Manufacturing

We will not manufacture any products but purchase gently used sporting goods from individuals and sell them in-store. Our purchasing process will be streamlined, and we will offer fair prices to customers looking to sell their used equipment.

Inventory Management

We will use a computerized inventory management system to track our products. We will have an efficient process for accepting and sorting items we purchase and will dispose of any items that do not meet our quality standards. In addition, we will regularly review our inventory and adjust prices as necessary to ensure profitability.

Our store will be staffed by a team of six employees, including a store manager, an assistant manager, and four sales associates. All employees will be trained on how to appraise used sporting goods, customer service, and store operations. We will offer competitive wages and benefits to attract and retain top talent by working with an outside human resources advisory firm.

Regulatory Compliance

We will ensure compliance with all local, state, and federal regulations related to retail operations. This will include obtaining all necessary licenses and permits and ensuring we are up-to-date on sales and other tax requirements.

Risk Management

We will have a contingency plan in place in case of emergencies, such as power outages or natural disasters. We will also have security measures in place to prevent theft and damage to our inventory.

Financial Projections

Based on market research, we project $750,000 in revenue for our first year of operations, with expenses of $600,000. Our break-even point is $500,000 in revenue. We will have adequate working capital to cover our startup costs and will regularly review our financials to ensure we are meeting our goals.

Overall, we believe that Sporting Goods Resale will be a successful retail business that fills a gap in the market for high-quality, affordable used sporting goods. Our efficient operations and knowledgeable staff will set us apart from our competitors and ensure our long-term success.

Operating Plan Example for a Manufacturing Business

To demonstrate the differences between businesses from different industries, we recommend you read through this manufacturing business operating plan, even if you’re in another sector. Take note of how a sense of experience and confidence in how the company will be operated is conveyed.

FurnitureCraft will specialize in creating high-quality and customizable furniture for residential and commercial use. Our facility will be located in a suburban area, and we will pride ourselves on our attention to detail and personalized customer service.

Our manufacturing facility will include a 20,000-square-foot warehouse that will house all of our equipment and materials. We will acquire six CNC machines, three table saws, and a variety of other equipment necessary for our operations. We will also purchase a fleet of delivery trucks for transporting finished products to customers. The costs associated with our facility and equipment have been accounted for in our startup budget.

Our furniture will be made using a combination of handcrafted techniques and modern technology. We will source our materials from trusted suppliers, and our manufacturing process will include cutting, shaping, sanding, and finishing. We will have agreements in place with our suppliers to ensure that we have a steady supply of materials.

We will use a software system to track our inventory, which will allow us to manage our materials and finished products efficiently. Our system will also alert us to any potential issues with inventory, such as items that are at risk of spoilage or obsolescence. We aim to keep a lean inventory to reduce waste and minimize costs.

Our team will include skilled craftsmen and craftswomen, as well as management staff, to oversee operations. We will provide training to all employees to ensure that they are able to perform their roles effectively. Our employment contracts will include competitive salaries, health benefits, and paid time off.

We will be required to comply with regulations related to health and safety, as well as environmental regulations. We will obtain all necessary permits and licenses to operate our business, and we will regularly monitor our operations to ensure compliance.

We have identified potential risks to our business, such as supply chain disruptions and natural disasters. We will have contingency plans in place to address these risks, such as working with multiple suppliers and having emergency response plans.

Our financial projections indicate that we will break even within the first year of operations, with expected revenue of $2 million and expenses of $1.8 million. We plan to reinvest profits into our business to expand our product offerings and increase our market share. We will secure funding for our startup costs through a combination of investors and loans.

For More Help

There are several authorities and resources that individuals can turn to for credible advice on developing an operating plan. Here are a few for you to consider.

• Small Business Administration (SBA): The SBA provides free resources and advice for small businesses, including guidance on creating an operating plan.
• SCORE: SCORE is a non-profit organization that provides free business advice and mentoring services. They offer guidance on developing an operating plan, as well as other aspects of starting and running a business.
• Business consultants and coaches: Hiring a business consultant or coach can provide valuable guidance on developing an operating plan tailored to your specific business needs.
• Industry associations and trade groups: Industry associations and trade groups often provide resources and guidance specific to their industry. These resources can be useful in developing an operating plan that takes into account industry-specific factors.

It’s important to ensure that any sources of advice or guidance are credible and reputable. It’s also important to consider the specific needs and goals of your business when seeking guidance on developing an operating plan.

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Blog Business

10+ Operational Planning Examples to Fulfill your Strategic Goals

By Danesh Ramuthi , Oct 25, 2023

An operational plan is a comprehensive, action-driven document that maps out how daily activities within an organization fuel the journey towards achieving strategic objectives.

Essentially acting as the nexus between high-level strategy and practical execution, this plan ensures that every department, from human resources to specific departments, operates in synchrony, aligning their day-to-day activities with the broader strategic goals.

By streamlining processes, it fosters cohesive efforts amongst diverse cross-functional teams, ensuring that both individual team members and entire departments work together harmoniously towards the company goals.

Ready to sculpt your organization’s future? Start your journey with venngage business plan maker and leverage their expertly crafted operational plan templates . 

Click to jump ahead: 

Why is an operational plan important?

10 operational plan examples, what should an operational plan include, how to write an operational plan.

• Strategic plan vs operational plan: What is the difference? 

In summary 

An operational plan is crucial because it serves as a bridge between a company’s high-level strategic planning and its day-to-day activities, ensuring that the business operations align with the strategic goals. 

While a strategic plan provides a long-term vision, outlining the company’s objectives and goals to gain competitive advantages in the business environment, the operational plan outlines the specific actions, key elements and resource allocation required to achieve those objectives. 

For example, while the strategic plan might set a goal for revenue growth over the fiscal year, the operational plan provides a detailed roadmap, breaking down major projects, assigning responsibilities to individual team members or specific departments and setting key performance indicators to monitor progress and ensure the entire organization works together effectively.

Operational planning, in essence, transforms the strategic objectives into actionable plans, ensuring that the entire team, from department heads to diverse cross-functional teams, is aligned and works in tandem to support revenue growth, increase productivity, and achieve the desired outcomes. 

Operational plans, through a well-structured operational planning process, also provide a clear understanding of the day-to-day activities, allowing team members to know their roles, leading to better collaboration and synergy. 

Moreover, by having clear operational plan examples or templates, businesses can ensure realistic expectations, manage their operating budget effectively and track progress through key performance metrics, thus ensuring that the company stays on course to realize its long-term vision.

Operational plans play a pivotal role in the business landscape, bridging the gap between strategic vision and tangible actions. They translate the overarching goals of an organization into detailed procedures, ensuring that daily operations are in line with the desired strategic outcomes. 

In the section below, I will explore a few operational plan examples, shedding light on their structure and importance.

Business operational plan example

A business operational plan is a comprehensive document that elucidates the specific day-to-day activities of a company. It presents a detailed overview of the company’s organizational structure, management team, products or services and the underlying marketing and sales strategies. 

For businesses, irrespective of their size, an operational plan can prove invaluable. By laying down the business goals and objectives, it acts as a blueprint, guiding entrepreneurs through the creation and implementation of strategies and action plans. The planning process also incorporates mechanisms to track progress and performance. 

Additionally, for startups or companies looking to scale, a meticulously crafted operational plan can be pivotal in securing funds from potential investors and lenders.

Layered on this are details about the company’s organizational structure, its products or services and its marketing and sales strategies. 

The document also delineates the roles and responsibilities of each team member, especially the management and key personnel. Given the dynamic nature of the business environment, it is imperative to revisit and update the operational plan regularly.

Related: 15+ Business Plan Templates for Strategic Planning

Simple operational plan example

A simple operational plan, often used by startups or smaller enterprises, emphasizes the basics, ensuring that the fundamental aspects of the business operations are captured succinctly. While it might not delve into the intricacies of every operation, it provides an overview of day-to-day activities, highlighting the goals and objectives the business aims to achieve in the short term.

In essence, this plan revolves around core elements like the company’s main objectives for the fiscal year, key responsibilities assigned to individual team members and basic resource allocation. A straightforward market analysis might also be included, offering insights into customer needs and competitive advantages the business hopes to leverage.

Though simple, this operational plan example remains pivotal for the organization. It provides a roadmap, guiding team members through their daily responsibilities while ensuring that everyone is working together towards shared goals. It becomes especially essential for diverse cross-functional teams, where clarity of roles can lead to increased productivity.

Modern operational plan example

In today’s fast-paced business environment, the emphasis on efficiency and innovative processes is paramount. The modern operational plan example caters precisely to this demand. Ideal for organizations aiming to streamline processes and highlight workflow, this type of operational plan emphasizes a more dynamic approach to planning. 

It not only reflects the evolving nature of business operations but also provides a modern backdrop for content, ensuring that the presentation resonates with the current trends and technological advancements. The use of modern tools and platforms within this plan enables diverse cross-functional teams to work together seamlessly, ensuring that day-to-day activities are synchronized with the company’s long-term vision.

Furthermore, such an operational plan helps the entire organization stay agile, adapting rapidly to changes in the business environment and ensuring alignment with strategic goals.

Minimalist operational plan example

The minimalist operational plan example champions simplicity and clarity. By focusing on clear and concise business strategies, it eliminates any potential ambiguity, ensuring that team members and stakeholders have an unclouded understanding of the company’s objectives and goals. 

The minimalist design not only promotes easy comprehension but also aligns with the modern trend of decluttering, ensuring that only the most vital components of the operational planning process are highlighted. 

This approach leaves no room for confusion, streamlining the planning process and making sure that individual team members and departments are aligned with the business’s key objectives. 

Moreover, the flexibility offered by a minimalist design allows businesses to craft an operational plan template that is not only functional but also accurately reflects their brand image and core values, ensuring cohesion across all aspects of the business strategy.

Clean operational plan example

The clean operational plan example stands as a testament to this principle. Ideal for businesses that prioritize clarity and directness, this format seeks to convey goals and strategies without overwhelming stakeholders. 

While maintaining a neat and organized layout, it ensures that tasks are managed effectively, helping team members grasp their roles and responsibilities without getting lost in excessive details.

One of the primary advantages of a clean operational plan is its ability to eliminate distractions and focus solely on the critical aspects of operational planning. 

Such a design aids in making sure that diverse cross-functional teams can work together harmoniously ensuring that day-to-day activities align seamlessly with the company’s long-term vision. 

The simplicity of the clean operational plan not only supports revenue growth by ensuring efficiency but also reinforces the company’s strategic goals, making it an excellent tool in the arsenal of businesses that believe in clear communication and precise execution.  

An effective operational plan acts as a roadmap, directing how resources should be allocated and tasks should be performed to meet the company’s objectives. Here’s what a comprehensive operational plan should encompass:

• Goals and objectives : Whether short-term or long-term, the operational plan should define clear goals and objectives that align with the company’s strategic plan. This gives direction to the entire organization, ensuring everyone is working towards a common aim.
• Clear responsibilities for team members : It’s essential that team members understand their roles within the operational plan. By outlining who is responsible for what, the plan ensures that there are no overlaps or gaps in duties and that everyone has clarity on their day-to-day activities.
• Assigned tasks: Alongside responsibilities, specific tasks need to be allocated to individual team members or specific departments. This granularity in assignment ensures that every aspect of the operational plan is covered.
• Timeline: This provides a clear schedule for when each task or objective should start and finish. A well-defined timeline assists in monitoring progress and ensures that the plan stays on track.
• Budget and resources : Every operational plan needs to factor in the budget and resources available. This includes everything from the operating budget to human resources, ensuring that the business has everything it needs to execute the plan effectively.

Read Also: 6 Steps to Create a Strategic HR Plan [With Templates]

As businesses evolve, it’s essential to have a comprehensive and adaptive operational plan in place to navigate the complexities of the business environment. Here’s a step-by-step guide to help you craft an effective operational plan:

Step 1: Define your goals and objectives

Begin with a clear understanding of your strategic goals and objectives. This will act as a foundation for your operational plan. Ensure that these goals are in alignment with your company’s strategic plan and provide both short-term and long-term visions for the business.

Step 2: Determine roles and responsibilities

Identify the key stakeholders, department heads and team members who will play pivotal roles in executing the plan. Assign responsibilities to ensure that everyone knows their part in the planning process and day-to-day activities.

Step 3: Develop a timeline and milestones

Establish a clear timeline that breaks down the operational planning process. Include key milestones to track progress and ensure the plan remains on target.

Step 4: Allocate budget and resources

Determine the resources required to achieve your goals and objectives. This includes estimating the operating budget, identifying human resources needs and other resource allocations, ensuring you have everything in place to support revenue growth and other business needs.

Step 5: Outline day-to-day operations

Detail the day activities that are integral to the business operations. This will provide clarity on how different tasks and functions work together, ensuring efficiency across diverse cross-functional teams.

Step 6: Monitor and measure performance

Integrate key performance metrics and indicators to regularly monitor progress. Using both leading and lagging indicators will provide a comprehensive view of how well the operational plan is being executed and where improvements can be made.

Step 7: Review and adjust regularly

The business environment is dynamic and as such, your operational plan should be adaptable. Regularly review the plan, comparing actual outcomes with desired outcomes and adjust as necessary to account for changes in the business environment or company goals.

Step 8: Document and communicate

Create an operational plan document, potentially using operational plan examples or an operational plan template for guidance. Ensure that the entire team, from individual team members to the entire organization, is informed and aligned with the plan.

Related: 7 Best Business Plan Software for 2023

Strategic plan vs operational plan: What is the difference?

When running an organization, both strategic and operational planning play pivotal roles in ensuring success. However, each has a distinct purpose, time horizon and scope. Here’s a breakdown of the differences between these two essential business plans:

• Strategic plan : This plan sets the course for the organization’s future. It embodies the long-term vision and mission, detailing the objectives necessary to achieve it. The essence is how everyone, from C-suite executives to individual team members, collaborates towards realizing this vision.
• Operational plan : This is the roadmap for the day-to-day activities of the organization. While the strategic plan looks at the bigger picture, the operational plan hones in on the tactics and execution. It is crafted to support organizational goals with a focus on short-term activities specific to departments or functions.

Time horizon :

• Strategic plan : Long-term in nature, usually spanning three to five years.
• Operational plan : Concentrates on the short-term, with plans laid out yearly, quarterly, or even monthly.

Modification and updates :

• Strategic plan : This evolves over longer intervals, typically three to five years. There might be minor adjustments year over year based on changing business needs and the external business environment.
• Operational plan : Due to its short-term focus, it requires frequent assessments. Plans might be adjusted yearly, quarterly or even monthly to ensure alignment with the strategic objectives and current business environment.

Created by :

• Strategic plan : Crafted by the upper echelons of management – think CEO, CFO and other C-suite members.
• Operational plan : These plans come to life through mid-level management and department heads, ensuring alignment with the broader strategic vision while catering to specific departmental needs.
• Strategic plan : Broad in its outlook, it takes into account external factors like market trends, competition, customer needs and technological innovations.
• Operational plan : This narrows down the focus to the internal workings of the organization. It revolves around technology in use, key performance indicators, budgeting, projects, tasks and the allocation of responsibilities among team members.

As we’ve traversed through the importance of operational planning to various operational plan examples, it becomes evident that having a detailed and efficient operational plan is pivotal. 

From the business-centric to the minimalist approach, every operational plan serves as the backbone, guiding team members and ensuring that day-to-day activities align with the long-term vision and strategic goals.

By knowing what should be included in these plans and how to craft them, businesses can navigate the complexities of their operational environment with greater confidence.

For those looking to refine their planning process or start from scratch, the world of digital tools has made it significantly easier. Venngage offers business plan maker and operational plan templates designed to simplify the process. 

Whether you need to create an operational plan or draft a business strategy, their intuitive platform can guide you every step of the way.

Operational Plan for Business Plan

It is important for a business plan to have an operational plan. Your business functions will not be complete if you will not set action plans and strategies that will be used for your operations.

• 19+ Hotel Operational Business Plan Examples
• 11+ Operational Plan For Cleaning Services Examples

Business Operational Plan Template

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Operational Plan Template

Startup Operational Plan Template

Having an operational plan can help you look into the quality standards and metrics that you need to consider to attain operational successes and other business goals and objectives. May it be a monthly, quarterly, or annual operational plan that you would like to develop or update as a part of your business plan, you always have to ensure that you are fully aware of the purposes of the document and how its usage can affect the actual operations of your business.

We have listed a number of operational plan for business plan examples that you can browse through and download in this post. Refer to these downloadable examples if you want to be more specific with the formatting and content development of your own operational plan.

Operational Plan and Budget for Business Plan Example

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Operational Plan for Business Plan Elements Example

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Operational Business Plan Example

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What Is an Operational Plan for Business Plan?

Just like a project operational plan , an operational plan for business plan promotes organization within all the processes that concerned stakeholders will be involved in. Every business should have an operational plan as this document can help point out operational goals, the gap that is needed to be filled during business operations, and the business condition that is needed to be achieved with the help of a proactive and productive workforce.

Here are some ways on how an operational plan for business plan can be defined:

1. An operational plan for simple business plan deals with the daily activities of the business. It helps prepare specific action plans that can be used to support the requirements, needs, and demands of the operations. This can help the workplace become more organized, functional, and appropriate for all the work processes that are needed to be done on a day-to-day basis.

2. An operational plan for business plan is an extremely detailed document that presents the tactics and strategies necessary to be implemented for operational growth and development.

For an operational plan to be highly usable, it needs to present the entities who will be responsible for the execution of particular call-to-actions, the details of the operational plan activities, the location where specific work functions will be implemented, and the time frames that are necessary to be considered when executing general action plans .

3. An operational plan for business plan ensures that the lower management is fully aware of the desired and demands of the upper management. With this document, there will be clarity with the direction where the operations will be brought which should be relevant and aligned with the objectives of the business. You may also see operational plan for restaurant examples .

4. An operational plan for business plan adheres to low-level management. This means that this document is helpful for single-area units like specific departments. As an example, a sales operational plan can help the sales team associate its professional goals , work processes, and action plans with the objectives of the business.

Annual Operational Plan for a Business Example

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Farm Operational Plan for Business Plan Example

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Bank Group Operational Plan for Business Plan Example

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Key Elements of an Operational Plan for Business Plan Example

Using an operational plan for business plan can help you define all the factors, elements, and components that you need to consider to ensure that all the objectives and goals of the upper management for its operations can be achieved. The same goes with how event management teams use an event operational plan to ensure that the workforce is well aware of what is expected from them.

Especially when dealing with potential operational successes, it is important for you to know how strategies and tactics can help business processes, operational workloads, and stakeholders’ relationships to be better. Here are the key elements that you should not forget to include in your own operational plan for general business plan :

• The desired output of the upper management and the operational guidelines that the workforce can refer to so that they can provide all their deliverable needed during operations.
• The strategies and tactics that you will incorporate in your business operations for you to yield better results and return of investments.
• The tasks, obligations, and responsibilities that are needed to be done in a timely manner to ensure that specific operational goals and objectives will be realized.
• The particular entities who will be assigned to take ownership of the incorporation of strategies or the execution of call-to-actions.
• The timeline that will serve as guide within the entire execution of the operational plan for business plan.
• The time frames or duration where particular operational activities are expected to be done, completed, and/or provided.
• The amount that will be used for the implementation of the operational plan for business plan and the financial resources where the required budget will be coming from. You may also see event operational plan examples .
• The performance indicators that can assess the quality of the results given by the workforce and other stakeholders with the help of the operational plan.

Operations and Maintenance Business Plan Draft Example

Business Plan Outline with a Thorough Operational Plan Example

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Things That You Need to Focus on When Developing an Operational Plan for Business Plan

It is essential for you to know the phases of the business management planning processes where you will incorporate the operational plan. You have to consider the different setups within various business areas so you can develop an operational plan that works for every department and division while still considering the overall corporate goal of the company. With this, you have to be keen with the development of your own operational plan for business plan.

Here are some of the things that you always need to look into when drafting the specified document:

1. Ensure that there is clarity with your objectives. You have to be aware of what it is that you truly want to achieve. If you can present the better goals that you have in mind for the operations of the business, then it will be easier for you to come up with strategies and process guides that can help your objectives be a reality.

2. Particularly and specifically present all the activities and functions that the operations team is expected to be delivered. The people that you will be working with must be knowledgeable of what you expect from them so that they can execute work processes accordingly. Having an operational plan for a business plan can also help the operations become more sensitive with the quality standards that they need to meet.

3. Speaking about quality standards, you have to set the measures and metrics that you will use for assessment and evaluation. It is essential for you to have a thorough process of identifying whether the operational plan is working for the benefit of the business, and not against the direction where the upper management would like the business to be at. You may also see annual operational plan examples .

4. List down all your desired outcomes. This should be based on your long-term and short-term goals . Specify the things that you would like to achieve in different time frames and periods. Through this, you can be aware of whether there is growth and development that is happening to the business and its operations with the usage of the operational plan that you have created.

5. It is important for you to consider the staffing needs of the operational plan for business plan that you will develop. You have to look into the current workforce pool of the company so that you can identify whether the plans that you have are realistic and attainable based on the number of people that you can work with. You may also like  IT operational plan examples .

6. Present all the resource requirements, needs, and demands that are essential to be supplied within the actual implementation of the operational plan for business plan. You have to be aware of the resources that you will be needing, from the budget that you need up to the equipment and materials that are expected to be at hand and readily available, so that there will be a smooth execution of all your simple action plans for the business operations.

7. Develop an implementation timetable that can ensure the timeliness of all your work processes. You have to keep in mind that the daily operations of the business have particular requirements.

Hence, you have to make sure that all your listed work functions are time-sensitive. If you can present all the time frames for every operational action plan, then it will be easier for all point persons to execute their responsibilities in a timely manner. You may also checkout project operational plan examples .

8. Include all the processes, activities, programs, and efforts that are relevant to the operations of the business. You have to incorporate a particular success measure for monitoring the progress and growth of the business operations. Your b usiness operational plan  should be evaluated and updated from time to time so you can ensure that the usage of the document is still effective.

Food Truck Operational Plan for Business Plan Example

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Business Planning: Operating Plan or Operations and Maintenance Plan

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Operational Plan for Business Plan Example

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Guidelines and Instructions for an Operational Plan for a Business Plan Example

Tips and Guidelines for the Creation of an Operational Plan for Business Plan

Whether you are making an operational plan for a restaurant or any other kinds of businesses, you always have to ensure that the document that you will come up with is understandable, specific, direct to the point, and complete with all the details that you would like to disseminate to your target audience. A few of the useful tips and guidelines that you can refer to if you want to start drafting your own operational plan for business plan are as follows:

1. Ensure that the discussion in the operational plan for formal business plan are divided into clauses or segments. You have to present key points and areas of consideration in an organized manner so that it will be easier for the document to be understood and interpreted accordingly.

2. Know the nature of your business operations and how your performance as a corporate entity pars up with your competition. Having the knowledge about your current operational conditions can give you an idea on how you can develop formal action plans that can bridge the gap between the state of the business right now and the condition that you would like to experience, business operations wise.

3. Browse through a selection of operational plan for business plan examples especially those that have been used by successful businesses in the same industry. Being able to see the trends or common denominators in the development of this document can help you come up with an effective operational plan of your own. You may also see importance of business plan .

4. Be specific with your plan discussion. Limit the content of the document to its bare minimum ensuring that your operational plan only contains relevant and necessary information.

With the help and guidance of the operational plan for business plan examples that we have compiled just for you, we hope that you can have an easier and faster time in developing your operational plan for sample business plan . You can always go back to the discussion specified above if you need to refresh your mind about the proper and efficient creation of an operational plan.

Download any of our examples and try to create a well-formatted and comprehensive operational plan for business plan now.

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Create an Operational Plan that Makes an Impact

Companies often confuse strategic, tactical, and operational planning. Strategic planning sets your organization’s long-term vision and goals. Tactical planning is the process of figuring out how to achieve your strategic plan. And operational planning links the two, outlining the procedural steps you’ll take to meet your goals. A sound operational plan is critical for achieving success in your organization.

What Is Operational Planning?

Operational planning is the process of creating actionable steps that your team can take to meet the goals in your strategic plan. An operational plan outlines daily, weekly, and monthly tasks for each department or employee. During operational planning, you’ll also create milestones that help you achieve your strategic plan. For example, if your strategic plan aims to grow your customer base by 20%, your operational plan will include incremental steps to gain new leads and customers.

What Are the Benefits of an Operational Plan?

A well-constructed operational plan makes everyone’s jobs easier. The benefits include:

• Clear guidance: With actionable steps for each department, operational plans help teams understand if they are performing well or need to improve.
• Better workflow : Each team knows what they’ll be working on over the month or quarter, and they can adjust their workflow as needed.
• Improves morale : All employees can see how their day-to-day work connects to the company’s broader goals.

Creating an Effective Operational Plan

Operational plans help you hit strategic goals, so start by reviewing your strategic plan. Your operational plan should be specific to a department or team, so your organization will likely have more than one operational plan. Identify the key stakeholders for a particular team: they’ll be best suited to develop the plan, which should include:

• Departmental objectives
• Key performance indicators
• Staffing and budget needs
• Process for tracking and reporting on progress

Once the plan is complete, you can replicate this process for each department. Plans should be shared department-wide for feedback and questions.

Operational Goals

Also referred to as departmental goals or objectives, operational goals are the short-term targets that your organization wants to hit. An operational plan includes operational goals and the steps to achieve them. Typically, organizational goals are:

• Tied to a specific department or team
• Tied to a budget line or item
• Tied to a specific short time frame, such as a month or a quarter

Operational Goals Examples

All operational goals should be measurable and actionable. Actionable means your team can achieve them – so the goal cannot be dependent on an outside factor. For example, your IT team may be tasked with training 10 new employees on security best practices each quarter. But if 10 employees aren’t hired in a particular quarter, that operational goal is not actionable.

To be measurable, there must be a clear way to tell if you met your operational goal or not. For example, one operational goal for an accounting team might be to process invoices more quickly. Their accounting software should be able to collect data on how quickly invoices are processed and paid, so the team can measure their performance over time and see if they are working more efficiently.

Share Your Operational Plan

An operational plan shouldn’t be static – it’s a living document. As time goes on, you may need to adjust your operational goals. That isn’t a sign of failure – it means you’re doing a better job of understanding how each team functions and setting your targets accordingly. You should keep your plan up to date and revisit it regularly, whether once a year or at the end of each fiscal quarter. Include key stakeholders in this process so that the plan works for everyone.

Start Your Operational Plan with Spider Impact

Creating an operational plan might seem challenging at first – but once you get started, it can help all your teams run more smoothly. See how Spider Impact helps you define, measure, manage and report on your operational goals. Click for a free test drive or demo .

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Operational Plan Template

Get your Operational Plan Template for Word or open it in ProjectManager, the best way to manage your projects online.

Once you have a strategic plan that defines your business strategy and sets up long-term goals, the next step is to achieve what you set out to do. Use our free operational plan template for Word to map out the steps you’ll take to get from where you are to where you want to be.

Or you can open an operational plan template in ProjectManager, where you can manage your plan with a Gantt chart, spreadsheet, task list, kanban board or calendar—all in an online collaborative space. Update your plan and invite your team, so you can work together in real time and track progress along the way. Get started for free and make a better operational plan.

What Is an Operational Plan Template?

An operational plan is short-term and can cover daily, weekly or monthly timeframes. It focuses on business operations, which are all the activities that are executed to deliver a product or service. The focus of the operational plan is to deliver on the strategic initiatives of a business. That’s why an operational plan is more detailed than a strategic plan; it details timelines, the scope of work and more.

The free operational plan template for Word is a tool to organize all the information you’ll need to meet the strategic goals of your business. It acts as a plan to outline the tasks, resources, budget and timeline, but also as a means of communicating the operational plan to the entire business to get buy-in from everyone involved. They have to understand deadlines, metrics for success and more.

Why Should You Use an Operational Plan Template?

Using our free operational plan template for Word provides your business with a single document that communicates the goals for everyone to understand. It helps identify parts of the business that need sharpening, can generate more revenue, are inefficient or can benefit from a partnership.

An operational plan is useful for any sized business, big or small, in that it connects teams across departments and focuses their activities on achieving the business’s strategic goals. Through the operational plan, the leadership team can detail tasks and outline what everyone in the business will be responsible for doing.

Not only does the operational plan set forth the work, but it defines the metrics that’ll measure the progress of that work to ensure that it stays on schedule. All of this works to boost productivity as there are assignments, deadlines and monitoring to keep everyone on track.

Who Should Use This Operational Plan Template?

Since the operational plan is designed to create daily tasks to achieve a business’ short-term goals, it’s a document that will touch many hands. The first is leadership, as they’re the ones tasked with developing the strategic plan that informs the operational plan.

Next, managers are often the ones assigned with the responsibility of creating the operational plan, though it’ll involve a good deal of back-and-forth with leadership to ensure it addresses everything that’s in the larger business strategy.

Finally, the operational plan filters down to the team or employees who are assigned the tasks that will deliver the goals that the business wants to achieve. As they do this work, though, managers will also be using the operational plan to monitor their progress and make sure they’re hitting the milestones which mean the work is moving forward as scheduled.

Breaking down the strategic goals into actionable steps is what makes an operational plan an effective tool for businesses. It must coordinate across different departments, often in different locations, and flow unobstructed through managerial levels. Doing this ensures that everyone is working toward the same objectives. Project management software is key to planning, managing and tracking an operational plan.

ProjectManager is award-winning project management software that can do much more than a static template. While our free operational plan template for Word sets up your operational plan, our software realizes it with robust Gantt charts that organize tasks, resources and costs on a timeline. You can link all four types of task dependencies to avoid costly delays and set a baseline to track your progress in real time against your planned effort. Get started with ProjectManager today for free.

What Does This Operational Plan Template for Word Include?

When you download our free operational plan template for Word, you get an outline of everything you’ll need to develop and execute that operational plan to achieve your strategic goals. You can add your company logo and customize the template however you want. If you need to add or subtract sections, it’s as easy as cutting and pasting.

On top of the operational plan template, you’ll find an informational box. This is where you can name the plan, who created it and the date that it was made. There’s also space to add contact information. Again, if there are additional administrative details you want to add, the template can be easily customized. After this, there’s the meat of the operational plan, which includes the following.

Executive Summary

You want to start the operational plan by summarizing it for stakeholders who are only going to want the broad strokes. In this brief section, touch on all the points that’ll follow and will be more fleshed out.

Operational Objectives

The objectives of your strategic plan are going to direct the objectives of the operational plan. The strategic initiative is more general and the operational plan must fill in the blanks to make it clear how you’ll get from where you are as a business to where you want to be. That operational goal, though, must align with the strategic one.

Tasks, Processes & Workflows

Now we’re getting into the nitty-gritty of the operational plan. This is where the tasks are determined and whatever resources are required to execute them . You’ll want to assign each task to a specific team or team member as well as what processes they’ll use and map out the workflows.

Operational Budget

Tasks and resources cost the most. This is where you’ll accurately forecast the financial side of the operational plan. You’ll want to again list your tasks and resources, but this time, add an estimated cost next to each task and the associated resources in order to figure out what the project will cost.

Operational Timeline

You’ve outlined what must be done, by who and with what, including how much it’ll cost. Now it’s time to develop a schedule . The project, by definition, has a start and end date. Each task also has a start and end date. To figure out the duration of the project, you’ll list all the tasks and add a start date, end date and duration for each one.

Hiring Plan

Depending on your organization, you might have internal teams who will execute the organizational plan or you might have to contract or hire others to fulfill the requirements of the plan. Here is where you’ll note that. If new hires are needed, detail what those hires will be.

Quality Assurance and Control

The operational plan might require that you comply with various regulations or codes. Even if there are no such things related to what you’re planning to do, you’ll still want to make sure that what you produce is meeting quality expectations. This requires having a quality assurance plan with controls to monitor and respond to issues.

Key Performance Indicators

In order to control the organizational plan as it moves into its execution, you’ll need to define key performance indicators (KPIs). These metrics will allow you to measure progress and performance to make sure you are hitting milestones, staying on schedule and meeting your budget .

Risks, Assumptions and Constraints

Every project has risks , assumptions and constraints. Here you’ll want to identify what they are and how you’ll deal with them. These all can impact the project, both negatively and positively. It’s important to have a plan in place to address them quickly to mitigate or take advantage of these things as they occur.

ProjectManager Helps With Operational Planning

In order to manage all these different parts of your organizational plan, you’ll need project management software. ProjectManager is award-winning software that helps you plan, manage and track your operational plan in real time. Our risk management, task management and resource management features help you keep the project on track and teams productive by managing time, resources and costs effectively.

Use Multiple Project Tracking Views

An operational plan is executed across departments in a business. These different parts of the organization are likely to use different tools, from development to marketing and sales. Our multiple project views mean that everyone gets to use the tool that works for them. Managers can plan on Gantt charts while others can execute the plan on kanban boards to visualize workflow (great for software developers) or task lists, calendars and more. Every project view is updated in real time so no matter which one you’re using the data on, it’s up to date and keeps everyone on the same page.

Monitor Costs, Time and Progress on Real-Time Dashboards

KPIs are essential to keeping the operational plan on track. Some of those metrics are costs, time and progress, which are all key to staying on schedule and within your budget. Our real-time dashboard automatically collects this data and displays it in easy-to-read graphs and charts that show those metrics in addition to workload and more. There’s no time-consuming or complicated setup needed as you’ll find with lightweight tools. Simply toggle over to the dashboard and it’ll give you a high-level view of your project.

Related Operations Management Content

ProjectManager is powerful project management software, but it’s also an online hub for all things related to project management. Of course, there are dozens of free project management templates to download, but there are also weekly blogs, guides and more. Below is just a sampling of what our site has to offer. We cherry-picked the operations management-related works but look around. There’s plenty more.

• Operational Strategy: A Quick Guide
• Operations Management: Key Functions, Roles and Skills
• Operational Efficiency: A Quick Guide
• Using Operational Excellence to Be More Productive

ProjectManager is online project management software that empowers teams to plan, manage and track operational plans in real time. Gantt charts map out your plan, including costs, resources and more. Use kanban boards, task lists and more to execute, and it’s easy to generate customizable reports to get more detail than dashboards can offer. Then share them to keep stakeholders updated. Get started with ProjectManager today for free. 

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Operations and Management Business Plan (+Sample in PDF)

AUG.03, 2023

1. What Is a Management and Operations Plan?

RephraseA manageme­nt and operations plan is a crucial document that outlines the­ direction and management of an organization or e­nterprise. Typically create­d with a specific objective in mind, such as achie­ving company growth, expanding operations, or launching new products, this plan de­tails the organization’s goals and objectives. It provide­s a roadmap for achieving these goals, se­rves as a refere­nce for monitoring progress, and allows for nece­ssary adjustments along the way.

The plan provide­s a comprehensive outline­ of the roles and responsibilitie­s of every manager and staff me­mber within the organization. This crucial information ensure­s effective coordination among the­ management team and he­lps facilitate goal attainment. Additionally, a well-de­veloped manageme­nt and operations plan plays a significant role in attracting and retaining inve­stors and customers.

2. Management and operations business plan Sample

The following management and operations business plan will be based on the successful startup of a new facility management business. Professional Busine­ss Planning service is focused on cre­ating a sustainable facility management busine­ss that prioritizes delivering a unique­ customer experie­nce through comprehensive­ services and cost-effe­ctive solutions.

Facility Management

The main focus will be on providing tailore­d Facility Management service­s to our clients. These se­rvices may include facilities mainte­nance, energy manage­ment, environmental compliance­, landscaping, housekeeping, and se­curity. We also offer after-hours support and mainte­nance to ensure all clie­nt needs are me­t professionally and in a timely manner.

The strategic and business plan operations management will maintain a comprehensive inventory of facility management supplies, crisis management, and equipment, including tools, cleaning and janitorial supplies, and appliance parts. The busine­ss will also keep inventory of safe­ty supplies, including non-slip mats, fire extinguishe­rs, and first-aid kits.

Objectives and Goals

The best business plans to launch its facility management services no later than six months after beginning operations. Initially, the business plan management operation and organization will focus on acquiring new clients and establishing a quality service process. After this initial stage­, the business will aim to grow its service­s and customer reach by targeting ne­arby communities and neighboring businesse­s.

Employees and Organizational Structure

The management and operations in the business plan will employ a full-time staff of three and three part-time employees. The staff will have­ several key re­sponsibilities, including scheduling service­s, addressing customer inquiries, managing facilitie­s, and keeping track of inventory. The­y will also undergo comprehensive­ training to ensure exce­llent customer service­. The business will also have a de­dicated service te­chnician available on-call and an administrative assistant to handle custome­r inquiries and scheduling.

3. Operations and management business plan examples

When de­veloping a business plan for operations and manage­ment, it’s crucial to carefully consider the­ unique goals and objectives of the­ business. For instance, if you’re starting a re­staurant, you need to give care­ful thought to aspects such as menu options, operating hours, staffing re­quirements, and other factors that are­ vital for ensuring the success of your e­stablishment. The same consideration must be given when starting a salon, home care business, or law firm. Running differe­nt types of establishments re­quires a tailored approach, including specific staffing and policie­s. Creating a successful operations and manage­ment business plan involves taking a holistic vie­w of the business while ke­eping the customer front and ce­nter.

For a restaurant, an operations and management business plan examples should include key elements like the types of foods they will serve, pricing, and a detailed schedule for opening and closing by Professional Business Plan Writers . The Restaurant Business Plan should also include plans for hiring and managing staff and the necessary systems and procedures to ensure the restaurant runs smoothly. A salon will also have to consider how they will attract customers, manage services, and care for client safety and satisfaction. Home care and law firms should include detailed plans for recruiting, selecting, and training staff; organization policies; service offerings; and customer service processes.

Overall, management and operations in a business plan for service should outline all operational processes, personnel management, customer service, and marketing tactics for the business to succeed. From food offerings to staff selection, business owners should clearly outline their plan of action and adhere to their operations and management business plan for success.

4. Unlock the Path to Growth and Profit with OGS Capital: The ‘Go-To’ Management Plan Experts

At OGS Capital, we are­ experts in operations and manage­ment business plan consulting. With over 15 ye­ars of experience­, our team of skilled business and ope­rations strategists is dedicated to he­lping businesses like yours achie­ve growth and profitability. We have a de­ep understanding of the intricacie­s involved in developing e­ffective operations and manage­ment business plans and specialize­ in creating personalized strate­gies that address each clie­nt’s unique needs.

We provide­ Professional Business Planning Services, starting with our thorough business assessment se­rvices. Our consultants offer personalize­d guidance based on their e­xtensive industry expe­rtise.

At our company, we prioritize­ strategic customer targeting in our ope­rations and management business plan de­velopment service­s. Our expertise lie­s in creating accurate customer se­gmentation models and impactful market positioning plans. The­se plans enable you to e­ffectively identify the­ most suitable customers for your products and service­s, maximizing your chances of capturing your target market.

With OGS Capital by your side every step of the way, you can be confident that your plan will be completed to the highest quality and efficacy standards. Contact us today to unlock your path to success.

Q.How do you write management and operations in a business plan?

In the manage­ment and operations section of a busine­ss plan, it is crucial to provide details about the various tasks re­quired to run your business and the role­s and responsibilities of each te­am member. This section should addre­ss important questions such as who makes decisions, who handle­s daily operations, and how the staff hierarchy is structure­d. Additionally, you should include information on how the business acquire­s resources and manages finance­s.

Q.What is an example of an operation management plan?

An example­ of an operational management plan is a compre­hensive blueprint that outline­s strategies and steps to e­nhance the efficie­ncy and effectivene­ss of producing and delivering goods and service­s. This plan includes specific details about proce­dures for improving processes, se­lecting equipment, allocating labor re­sources, managing inventory, and ensuring quality control. It also e­ncompasses provisions for monitoring, evaluating, and making adjustments to ope­rational changes. Furthermore, the­ plan identifies potential risks and provide­s strategies to mitigate the­m effectively.

Download Operations and Management Business Plan in PDF

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Small Business Trends

How to create a business plan: examples & free template.

This is the ultimate guide to creating a comprehensive and effective plan to start a business . In today’s dynamic business landscape, having a well-crafted business plan is an important first step to securing funding, attracting partners, and navigating the challenges of entrepreneurship.

This guide has been designed to help you create a winning plan that stands out in the ever-evolving marketplace. U sing real-world examples and a free downloadable template, it will walk you through each step of the process.

Whether you’re a seasoned entrepreneur or launching your very first startup, the guide will give you the insights, tools, and confidence you need to create a solid foundation for your business.

Table of Contents

How to Write a Business Plan

Embarking on the journey of creating a successful business requires a solid foundation, and a well-crafted business plan is the cornerstone. Here is the process of writing a comprehensive business plan and the main parts of a winning business plan . From setting objectives to conducting market research, this guide will have everything you need.

Executive Summary

The Executive Summary serves as the gateway to your business plan, offering a snapshot of your venture’s core aspects. This section should captivate and inform, succinctly summarizing the essence of your plan.

It’s crucial to include a clear mission statement, a brief description of your primary products or services, an overview of your target market, and key financial projections or achievements.

Think of it as an elevator pitch in written form: it should be compelling enough to engage potential investors or stakeholders and provide them with a clear understanding of what your business is about, its goals, and why it’s a promising investment.

Example: EcoTech is a technology company specializing in eco-friendly and sustainable products designed to reduce energy consumption and minimize waste. Our mission is to create innovative solutions that contribute to a cleaner, greener environment.

Our target market includes environmentally conscious consumers and businesses seeking to reduce their carbon footprint. We project a 200% increase in revenue within the first three years of operation.

Overview and Business Objectives

In the Overview and Business Objectives section, outline your business’s core goals and the strategic approaches you plan to use to achieve them. This section should set forth clear, specific objectives that are attainable and time-bound, providing a roadmap for your business’s growth and success.

It’s important to detail how these objectives align with your company’s overall mission and vision. Discuss the milestones you aim to achieve and the timeframe you’ve set for these accomplishments.

This part of the plan demonstrates to investors and stakeholders your vision for growth and the practical steps you’ll take to get there.

Example: EcoTech’s primary objective is to become a market leader in sustainable technology products within the next five years. Our key objectives include:

• Introducing three new products within the first two years of operation.
• Achieving annual revenue growth of 30%.
• Expanding our customer base to over 10,000 clients by the end of the third year.

Company Description

The Company Description section is your opportunity to delve into the details of your business. Provide a comprehensive overview that includes your company’s history, its mission statement, and its vision for the future.

Highlight your unique selling proposition (USP) – what makes your business stand out in the market. Explain the problems your company solves and how it benefits your customers.

Include information about the company’s founders, their expertise, and why they are suited to lead the business to success. This section should paint a vivid picture of your business, its values, and its place in the industry.

Example: EcoTech is committed to developing cutting-edge sustainable technology products that benefit both the environment and our customers. Our unique combination of innovative solutions and eco-friendly design sets us apart from the competition. We envision a future where technology and sustainability go hand in hand, leading to a greener planet.

Define Your Target Market

Defining Your Target Market is critical for tailoring your business strategy effectively. This section should describe your ideal customer base in detail, including demographic information (such as age, gender, income level, and location) and psychographic data (like interests, values, and lifestyle).

Elucidate on the specific needs or pain points of your target audience and how your product or service addresses these. This information will help you know your target market and develop targeted marketing strategies.

Example: Our target market comprises environmentally conscious consumers and businesses looking for innovative solutions to reduce their carbon footprint. Our ideal customers are those who prioritize sustainability and are willing to invest in eco-friendly products.

Market Analysis

The Market Analysis section requires thorough research and a keen understanding of the industry. It involves examining the current trends within your industry, understanding the needs and preferences of your customers, and analyzing the strengths and weaknesses of your competitors.

This analysis will enable you to spot market opportunities and anticipate potential challenges. Include data and statistics to back up your claims, and use graphs or charts to illustrate market trends.

This section should demonstrate that you have a deep understanding of the market in which you operate and that your business is well-positioned to capitalize on its opportunities.

Example: The market for eco-friendly technology products has experienced significant growth in recent years, with an estimated annual growth rate of 10%. As consumers become increasingly aware of environmental issues, the demand for sustainable solutions continues to rise.

Our research indicates a gap in the market for high-quality, innovative eco-friendly technology products that cater to both individual and business clients.

SWOT Analysis

A SWOT analysis in your business plan offers a comprehensive examination of your company’s internal and external factors. By assessing Strengths, you showcase what your business does best and where your capabilities lie.

Weaknesses involve an honest introspection of areas where your business may be lacking or could improve. Opportunities can be external factors that your business could capitalize on, such as market gaps or emerging trends.

Threats include external challenges your business may face, like competition or market changes. This analysis is crucial for strategic planning, as it helps in recognizing and leveraging your strengths, addressing weaknesses, seizing opportunities, and preparing for potential threats.

Including a SWOT analysis demonstrates to stakeholders that you have a balanced and realistic understanding of your business in its operational context.

• Innovative and eco-friendly product offerings.
• Strong commitment to sustainability and environmental responsibility.
• Skilled and experienced team with expertise in technology and sustainability.

Weaknesses:

• Limited brand recognition compared to established competitors.
• Reliance on third-party manufacturers for product development.

Opportunities:

• Growing consumer interest in sustainable products.
• Partnerships with environmentally-focused organizations and influencers.
• Expansion into international markets.
• Intense competition from established technology companies.
• Regulatory changes could impact the sustainable technology market.

Competitive Analysis

In this section, you’ll analyze your competitors in-depth, examining their products, services, market positioning, and pricing strategies. Understanding your competition allows you to identify gaps in the market and tailor your offerings to outperform them.

By conducting a thorough competitive analysis, you can gain insights into your competitors’ strengths and weaknesses, enabling you to develop strategies to differentiate your business and gain a competitive advantage in the marketplace.

Example: Key competitors include:

GreenTech: A well-known brand offering eco-friendly technology products, but with a narrower focus on energy-saving devices.

EarthSolutions: A direct competitor specializing in sustainable technology, but with a limited product range and higher prices.

By offering a diverse product portfolio, competitive pricing, and continuous innovation, we believe we can capture a significant share of the growing sustainable technology market.

Organization and Management Team

Provide an overview of your company’s organizational structure, including key roles and responsibilities. Introduce your management team, highlighting their expertise and experience to demonstrate that your team is capable of executing the business plan successfully.

Showcasing your team’s background, skills, and accomplishments instills confidence in investors and other stakeholders, proving that your business has the leadership and talent necessary to achieve its objectives and manage growth effectively.

Example: EcoTech’s organizational structure comprises the following key roles: CEO, CTO, CFO, Sales Director, Marketing Director, and R&D Manager. Our management team has extensive experience in technology, sustainability, and business development, ensuring that we are well-equipped to execute our business plan successfully.

Products and Services Offered

Describe the products or services your business offers, focusing on their unique features and benefits. Explain how your offerings solve customer pain points and why they will choose your products or services over the competition.

This section should emphasize the value you provide to customers, demonstrating that your business has a deep understanding of customer needs and is well-positioned to deliver innovative solutions that address those needs and set your company apart from competitors.

Example: EcoTech offers a range of eco-friendly technology products, including energy-efficient lighting solutions, solar chargers, and smart home devices that optimize energy usage. Our products are designed to help customers reduce energy consumption, minimize waste, and contribute to a cleaner environment.

Marketing and Sales Strategy

In this section, articulate your comprehensive strategy for reaching your target market and driving sales. Detail the specific marketing channels you plan to use, such as social media, email marketing, SEO, or traditional advertising.

Describe the nature of your advertising campaigns and promotional activities, explaining how they will capture the attention of your target audience and convey the value of your products or services. Outline your sales strategy, including your sales process, team structure, and sales targets.

Discuss how these marketing and sales efforts will work together to attract and retain customers, generate leads, and ultimately contribute to achieving your business’s revenue goals.

This section is critical to convey to investors and stakeholders that you have a well-thought-out approach to market your business effectively and drive sales growth.

Example: Our marketing strategy includes digital advertising, content marketing, social media promotion, and influencer partnerships. We will also attend trade shows and conferences to showcase our products and connect with potential clients. Our sales strategy involves both direct sales and partnerships with retail stores, as well as online sales through our website and e-commerce platforms.

Logistics and Operations Plan

The Logistics and Operations Plan is a critical component that outlines the inner workings of your business. It encompasses the management of your supply chain, detailing how you acquire raw materials and manage vendor relationships.

Inventory control is another crucial aspect, where you explain strategies for inventory management to ensure efficiency and reduce wastage. The section should also describe your production processes, emphasizing scalability and adaptability to meet changing market demands.

Quality control measures are essential to maintain product standards and customer satisfaction. This plan assures investors and stakeholders of your operational competency and readiness to meet business demands.

Highlighting your commitment to operational efficiency and customer satisfaction underlines your business’s capability to maintain smooth, effective operations even as it scales.

Example: EcoTech partners with reliable third-party manufacturers to produce our eco-friendly technology products. Our operations involve maintaining strong relationships with suppliers, ensuring quality control, and managing inventory.

We also prioritize efficient distribution through various channels, including online platforms and retail partners, to deliver products to our customers in a timely manner.

Financial Projections Plan

In the Financial Projections Plan, lay out a clear and realistic financial future for your business. This should include detailed projections for revenue, costs, and profitability over the next three to five years.

Ground these projections in solid assumptions based on your market analysis, industry benchmarks, and realistic growth scenarios. Break down revenue streams and include an analysis of the cost of goods sold, operating expenses, and potential investments.

This section should also discuss your break-even analysis, cash flow projections, and any assumptions about external funding requirements.

By presenting a thorough and data-backed financial forecast, you instill confidence in potential investors and lenders, showcasing your business’s potential for profitability and financial stability.

This forward-looking financial plan is crucial for demonstrating that you have a firm grasp of the financial nuances of your business and are prepared to manage its financial health effectively.

Example: Over the next three years, we expect to see significant growth in revenue, driven by new product launches and market expansion. Our financial projections include:

• Year 1: $1.5 million in revenue, with a net profit of $200,000.
• Year 2: $3 million in revenue, with a net profit of $500,000.
• Year 3: $4.5 million in revenue, with a net profit of $1 million.

These projections are based on realistic market analysis, growth rates, and product pricing.

Income Statement

The income statement , also known as the profit and loss statement, provides a summary of your company’s revenues and expenses over a specified period. It helps you track your business’s financial performance and identify trends, ensuring you stay on track to achieve your financial goals.

Regularly reviewing and analyzing your income statement allows you to monitor the health of your business, evaluate the effectiveness of your strategies, and make data-driven decisions to optimize profitability and growth.

Example: The income statement for EcoTech’s first year of operation is as follows:

• Revenue: $1,500,000
• Cost of Goods Sold: $800,000
• Gross Profit: $700,000
• Operating Expenses: $450,000
• Net Income: $250,000

This statement highlights our company’s profitability and overall financial health during the first year of operation.

Cash Flow Statement

A cash flow statement is a crucial part of a financial business plan that shows the inflows and outflows of cash within your business. It helps you monitor your company’s liquidity, ensuring you have enough cash on hand to cover operating expenses, pay debts, and invest in growth opportunities.

By including a cash flow statement in your business plan, you demonstrate your ability to manage your company’s finances effectively.

Example:  The cash flow statement for EcoTech’s first year of operation is as follows:

Operating Activities:

• Depreciation: $10,000
• Changes in Working Capital: -$50,000
• Net Cash from Operating Activities: $210,000

Investing Activities:

•  Capital Expenditures: -$100,000
• Net Cash from Investing Activities: -$100,000

Financing Activities:

• Proceeds from Loans: $150,000
• Loan Repayments: -$50,000
• Net Cash from Financing Activities: $100,000
• Net Increase in Cash: $210,000

This statement demonstrates EcoTech’s ability to generate positive cash flow from operations, maintain sufficient liquidity, and invest in growth opportunities.

Tips on Writing a Business Plan

1. Be clear and concise: Keep your language simple and straightforward. Avoid jargon and overly technical terms. A clear and concise business plan is easier for investors and stakeholders to understand and demonstrates your ability to communicate effectively.

2. Conduct thorough research: Before writing your business plan, gather as much information as possible about your industry, competitors, and target market. Use reliable sources and industry reports to inform your analysis and make data-driven decisions.

3. Set realistic goals: Your business plan should outline achievable objectives that are specific, measurable, attainable, relevant, and time-bound (SMART). Setting realistic goals demonstrates your understanding of the market and increases the likelihood of success.

4. Focus on your unique selling proposition (USP): Clearly articulate what sets your business apart from the competition. Emphasize your USP throughout your business plan to showcase your company’s value and potential for success.

5. Be flexible and adaptable: A business plan is a living document that should evolve as your business grows and changes. Be prepared to update and revise your plan as you gather new information and learn from your experiences.

6. Use visuals to enhance understanding: Include charts, graphs, and other visuals to help convey complex data and ideas. Visuals can make your business plan more engaging and easier to digest, especially for those who prefer visual learning.

7. Seek feedback from trusted sources: Share your business plan with mentors, industry experts, or colleagues and ask for their feedback. Their insights can help you identify areas for improvement and strengthen your plan before presenting it to potential investors or partners.

FREE Business Plan Template

To help you get started on your business plan, we have created a template that includes all the essential components discussed in the “How to Write a Business Plan” section. This easy-to-use template will guide you through each step of the process, ensuring you don’t miss any critical details.

The template is divided into the following sections:

• Mission statement
• Business Overview
• Key products or services
• Target market
• Financial highlights
• Company goals
• Strategies to achieve goals
• Measurable, time-bound objectives
• Company History
• Mission and vision
• Unique selling proposition
• Demographics
• Psychographics
• Pain points
• Industry trends
• Customer needs
• Competitor strengths and weaknesses
• Opportunities
• Competitor products and services
• Market positioning
• Pricing strategies
• Organizational structure
• Key roles and responsibilities
• Management team backgrounds
• Product or service features
• Competitive advantages
• Marketing channels
• Advertising campaigns
• Promotional activities
• Sales strategies
• Supply chain management
• Inventory control
• Production processes
• Quality control measures
• Projected revenue
• Assumptions
• Cash inflows
• Cash outflows
• Net cash flow

What is a Business Plan?

A business plan is a strategic document that outlines an organization’s goals, objectives, and the steps required to achieve them. It serves as a roadmap as you start a business , guiding the company’s direction and growth while identifying potential obstacles and opportunities.

Typically, a business plan covers areas such as market analysis, financial projections, marketing strategies, and organizational structure. It not only helps in securing funding from investors and lenders but also provides clarity and focus to the management team.

A well-crafted business plan is a very important part of your business startup checklist because it fosters informed decision-making and long-term success.

Why You Should Write a Business Plan

Understanding the importance of a business plan in today’s competitive environment is crucial for entrepreneurs and business owners. Here are five compelling reasons to write a business plan:

• Attract Investors and Secure Funding : A well-written business plan demonstrates your venture’s potential and profitability, making it easier to attract investors and secure the necessary funding for growth and development. It provides a detailed overview of your business model, target market, financial projections, and growth strategies, instilling confidence in potential investors and lenders that your company is a worthy investment.
• Clarify Business Objectives and Strategies : Crafting a business plan forces you to think critically about your goals and the strategies you’ll employ to achieve them, providing a clear roadmap for success. This process helps you refine your vision and prioritize the most critical objectives, ensuring that your efforts are focused on achieving the desired results.
• Identify Potential Risks and Opportunities : Analyzing the market, competition, and industry trends within your business plan helps identify potential risks and uncover untapped opportunities for growth and expansion. This insight enables you to develop proactive strategies to mitigate risks and capitalize on opportunities, positioning your business for long-term success.
• Improve Decision-Making : A business plan serves as a reference point so you can make informed decisions that align with your company’s overall objectives and long-term vision. By consistently referring to your plan and adjusting it as needed, you can ensure that your business remains on track and adapts to changes in the market, industry, or internal operations.
• Foster Team Alignment and Communication : A shared business plan helps ensure that all team members are on the same page, promoting clear communication, collaboration, and a unified approach to achieving the company’s goals. By involving your team in the planning process and regularly reviewing the plan together, you can foster a sense of ownership, commitment, and accountability that drives success.

What are the Different Types of Business Plans?

In today’s fast-paced business world, having a well-structured roadmap is more important than ever. A traditional business plan provides a comprehensive overview of your company’s goals and strategies, helping you make informed decisions and achieve long-term success. There are various types of business plans, each designed to suit different needs and purposes. Let’s explore the main types:

• Startup Business Plan: Tailored for new ventures, a startup business plan outlines the company’s mission, objectives, target market, competition, marketing strategies, and financial projections. It helps entrepreneurs clarify their vision, secure funding from investors, and create a roadmap for their business’s future. Additionally, this plan identifies potential challenges and opportunities, which are crucial for making informed decisions and adapting to changing market conditions.
• Internal Business Plan: This type of plan is intended for internal use, focusing on strategies, milestones, deadlines, and resource allocation. It serves as a management tool for guiding the company’s growth, evaluating its progress, and ensuring that all departments are aligned with the overall vision. The internal business plan also helps identify areas of improvement, fosters collaboration among team members, and provides a reference point for measuring performance.
• Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company’s direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in the market, and develop contingency plans. By focusing on the big picture, a strategic business plan fosters long-term success and stability.
• Feasibility Business Plan: This plan is designed to assess the viability of a business idea, examining factors such as market demand, competition, and financial projections. It is often used to decide whether or not to pursue a particular venture. By conducting a thorough feasibility analysis, entrepreneurs can avoid investing time and resources into an unviable business concept. This plan also helps refine the business idea, identify potential obstacles, and determine the necessary resources for success.
• Growth Business Plan: Also known as an expansion plan, a growth business plan focuses on strategies for scaling up an existing business. It includes market analysis, new product or service offerings, and financial projections to support expansion plans. This type of plan is essential for businesses looking to enter new markets, increase their customer base, or launch new products or services. By outlining clear growth strategies, the plan helps ensure that expansion efforts are well-coordinated and sustainable.
• Operational Business Plan: This type of plan outlines the company’s day-to-day operations, detailing the processes, procedures, and organizational structure. It is an essential tool for managing resources, streamlining workflows, and ensuring smooth operations. The operational business plan also helps identify inefficiencies, implement best practices, and establish a strong foundation for future growth. By providing a clear understanding of daily operations, this plan enables businesses to optimize their resources and enhance productivity.
• Lean Business Plan: A lean business plan is a simplified, agile version of a traditional plan, focusing on key elements such as value proposition, customer segments, revenue streams, and cost structure. It is perfect for startups looking for a flexible, adaptable planning approach. The lean business plan allows for rapid iteration and continuous improvement, enabling businesses to pivot and adapt to changing market conditions. This streamlined approach is particularly beneficial for businesses in fast-paced or uncertain industries.
• One-Page Business Plan: As the name suggests, a one-page business plan is a concise summary of your company’s key objectives, strategies, and milestones. It serves as a quick reference guide and is ideal for pitching to potential investors or partners. This plan helps keep teams focused on essential goals and priorities, fosters clear communication, and provides a snapshot of the company’s progress. While not as comprehensive as other plans, a one-page business plan is an effective tool for maintaining clarity and direction.
• Nonprofit Business Plan: Specifically designed for nonprofit organizations, this plan outlines the mission, goals, target audience, fundraising strategies, and budget allocation. It helps secure grants and donations while ensuring the organization stays on track with its objectives. The nonprofit business plan also helps attract volunteers, board members, and community support. By demonstrating the organization’s impact and plans for the future, this plan is essential for maintaining transparency, accountability, and long-term sustainability within the nonprofit sector.
• Franchise Business Plan: For entrepreneurs seeking to open a franchise, this type of plan focuses on the franchisor’s requirements, as well as the franchisee’s goals, strategies, and financial projections. It is crucial for securing a franchise agreement and ensuring the business’s success within the franchise system. This plan outlines the franchisee’s commitment to brand standards, marketing efforts, and operational procedures, while also addressing local market conditions and opportunities. By creating a solid franchise business plan, entrepreneurs can demonstrate their ability to effectively manage and grow their franchise, increasing the likelihood of a successful partnership with the franchisor.

Using Business Plan Software

Creating a comprehensive business plan can be intimidating, but business plan software can streamline the process and help you produce a professional document. These tools offer a number of benefits, including guided step-by-step instructions, financial projections, and industry-specific templates. Here are the top 5 business plan software options available to help you craft a great business plan.

1. LivePlan

LivePlan is a popular choice for its user-friendly interface and comprehensive features. It offers over 500 sample plans, financial forecasting tools, and the ability to track your progress against key performance indicators. With LivePlan, you can create visually appealing, professional business plans that will impress investors and stakeholders.

2. Upmetrics

Upmetrics provides a simple and intuitive platform for creating a well-structured business plan. It features customizable templates, financial forecasting tools, and collaboration capabilities, allowing you to work with team members and advisors. Upmetrics also offers a library of resources to guide you through the business planning process.

Bizplan is designed to simplify the business planning process with a drag-and-drop builder and modular sections. It offers financial forecasting tools, progress tracking, and a visually appealing interface. With Bizplan, you can create a business plan that is both easy to understand and visually engaging.

Enloop is a robust business plan software that automatically generates a tailored plan based on your inputs. It provides industry-specific templates, financial forecasting, and a unique performance score that updates as you make changes to your plan. Enloop also offers a free version, making it accessible for businesses on a budget.

5. Tarkenton GoSmallBiz

Developed by NFL Hall of Famer Fran Tarkenton, GoSmallBiz is tailored for small businesses and startups. It features a guided business plan builder, customizable templates, and financial projection tools. GoSmallBiz also offers additional resources, such as CRM tools and legal document templates, to support your business beyond the planning stage.

Business Plan FAQs

What is a good business plan.

A good business plan is a well-researched, clear, and concise document that outlines a company’s goals, strategies, target market, competitive advantages, and financial projections. It should be adaptable to change and provide a roadmap for achieving success.

What are the 3 main purposes of a business plan?

The three main purposes of a business plan are to guide the company’s strategy, attract investment, and evaluate performance against objectives. Here’s a closer look at each of these:

• It outlines the company’s purpose and core values to ensure that all activities align with its mission and vision.
• It provides an in-depth analysis of the market, including trends, customer needs, and competition, helping the company tailor its products and services to meet market demands.
• It defines the company’s marketing and sales strategies, guiding how the company will attract and retain customers.
• It describes the company’s organizational structure and management team, outlining roles and responsibilities to ensure effective operation and leadership.
• It sets measurable, time-bound objectives, allowing the company to plan its activities effectively and make strategic decisions to achieve these goals.
• It provides a comprehensive overview of the company and its business model, demonstrating its uniqueness and potential for success.
• It presents the company’s financial projections, showing its potential for profitability and return on investment.
• It demonstrates the company’s understanding of the market, including its target customers and competition, convincing investors that the company is capable of gaining a significant market share.
• It showcases the management team’s expertise and experience, instilling confidence in investors that the team is capable of executing the business plan successfully.
• It establishes clear, measurable objectives that serve as performance benchmarks.
• It provides a basis for regular performance reviews, allowing the company to monitor its progress and identify areas for improvement.
• It enables the company to assess the effectiveness of its strategies and make adjustments as needed to achieve its objectives.
• It helps the company identify potential risks and challenges, enabling it to develop contingency plans and manage risks effectively.
• It provides a mechanism for evaluating the company’s financial performance, including revenue, expenses, profitability, and cash flow.

Can I write a business plan by myself?

Yes, you can write a business plan by yourself, but it can be helpful to consult with mentors, colleagues, or industry experts to gather feedback and insights. There are also many creative business plan templates and business plan examples available online, including those above.

We also have examples for specific industries, including a using food truck business plan , salon business plan , farm business plan , daycare business plan , and restaurant business plan .

Is it possible to create a one-page business plan?

Yes, a one-page business plan is a condensed version that highlights the most essential elements, including the company’s mission, target market, unique selling proposition, and financial goals.

How long should a business plan be?

A typical business plan ranges from 20 to 50 pages, but the length may vary depending on the complexity and needs of the business.

What is a business plan outline?

A business plan outline is a structured framework that organizes the content of a business plan into sections, such as the executive summary, company description, market analysis, and financial projections.

What are the 5 most common business plan mistakes?

The five most common business plan mistakes include inadequate research, unrealistic financial projections, lack of focus on the unique selling proposition, poor organization and structure, and failure to update the plan as circumstances change.

What questions should be asked in a business plan?

A business plan should address questions such as: What problem does the business solve? Who is the specific target market ? What is the unique selling proposition? What are the company’s objectives? How will it achieve those objectives?

What’s the difference between a business plan and a strategic plan?

A business plan focuses on the overall vision, goals, and tactics of a company, while a strategic plan outlines the specific strategies, action steps, and performance measures necessary to achieve the company’s objectives.

How is business planning for a nonprofit different?

Nonprofit business planning focuses on the organization’s mission, social impact, and resource management, rather than profit generation. The financial section typically includes funding sources, expenses, and projected budgets for programs and operations.

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FREE 14+ Business Operational Plan Samples & Templates in PDF | MS Word

When running a business, it is essential that you have a business operational plan in place to help you and your business in setting specific business goals and objectives. An operational plan is defined as a set of clearly defined actions that will support the objectives and strategic plans of higher management. With that being said, operational plans provide an outline of the the specific daily tasks that each member of a team or group must take to accomplish certain goals.

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Having an operational plan for your business will make things organized and allow you to focus and reach your business goals within the your estimated timeframe. It is actually very useful that is why a lot of different industries turn to using this awesome tool. Let us further learn about business operational plans. Business operational plan templates and samples has been prepared to help you further understand what it is. You may check them all out below.

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What Does Business Operations Mean?

In order for a business to function efficiently in the highest possible manner, business operations plan are created, tested and implemented. It includes business practices that are sure to get the job done and maximize the profit earning capability of the business. Business operations are handled or managed by the operations management team. The operations management team is responsible for converting business materials into useful products and reliable services, as well as in balancing business costs and revenues.

Specific responsibilities of operations management in business:

• Management of various strategic issues, namely project management and different methods of project implementation
• Determining the size of manufacturing plants to build or construct
• Inventory management in all levels, including quality control, work-in-process, maintenance policies, acquisition of raw materials, etc.
• Studying raw materials and their uses
• Minimizing wastes produced in manufacturing
• Inventory control or stock control

It is always best to have a business operational plan in running and managing a business so that you can have the things mentioned above done. Important tasks are handled by business operations and a business operational plan is just the perfect tool to use. If you wish to learn more about operational plans, we have related article that you may find interesting, like  Security Operational Plan Samples & Templates  and  Project Operational Plan Samples .

What Are Operational Plans for a Business?

There are basically three types of operational plans being utilized in business regardless of its nature or the industry it belongs to. The tree types of plans are strategic plans, tactical plans and operational plans. These three plans are categorized based on the level of management where they are being used on. Let us briefly discuss each of them below.

Strategic Plans

Strategic plans are created by top management and is created with the entire organization in mind as a whole. So the goals and objectives in this plan is very broad and general, which is also true with the level of detail that it included in it. The things that are being planned in a strategic plan include the future goals of the company or organization, their mission and determining the direction to which the company or organization should take to become better.

Tactical Plans

Just like a strategic plan, tactical plans are also not very detailed but they still prove to be a very useful planning tool within a company or organization. To create a tactical plan, mid-level management from different divisions or departments within the company takes a strategic plan as the basis of their plans and actions. These actions are carefully planned and  specifically created to support the strategic plan. Tactical plans are short-term plans and are not used by the entire company and may vary depending on the nature of the job of the department or team using it.

Operational Plans

Within a division or department in a company there exists different teams or groups that work together to accomplish specific goals. These teams or groups within a department or division in a company make use of operation plans. Operational plans are created by low-level management. Unlike a strategic plan and a tactical plan, an operational plan is extremely detailed that it provides the who, what, where when and how of certain tasks or activities. Just like how the tactical plan basis its actions on the strategic plan to support it, operational plans are also created in a way that supports the tactical plan and the strategic plan of the entire company or organization. This is where an outline of the day-to-day tasks and specific goals can be found.

An operational plan us further subdivided into two categories, namely single-use plans and ongoing plans.

• Single-Use Plans –  As its name implies, single-use plans are only used once and they only take care of current or existing problems. The plan will be stopped and closed ones the problem has been fixed.
• Ongoing Plans –  This is the exact opposite of the single-use plan as it is used for a long period of time. The use of the plan continues in the future and changes are done along the way if the need arises.

Knowing the different operation plans in business will help you understand about how they plan for their success, how they are able to reach their goals and they are able to maintain good panning strategies. Other related articles that you may find useful are  School Operational Plan Samples & Templates  and  HR Operational Plan Samples & Templates .

What Are the Key Components of an Operational Plan?

There are eight key components of an operational plan that you should know of, especially if your job requires you to create an operational plan for your team. The key components are the following.

• An operational plan should have clear objectives.
• An operational plan should have activities to be delivered.
• An operational plan should a set of standards for quality.
• An operational plan should have key targets and key performance indicators.
• An operational plan should have a risk management plan.
• An operational plan should have staffing and resource requirements, which includes resources for the budget.
• An operational plan should have a timetable for the implementation of the plan.
• An operational plan should have a progress monitoring process.

Simple Project Operational Plan Template

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How to Create a Business Operations Plan

Want to make an operational plan, but don’t know where to start or how start? Well, worry no more! Now, that we have little background about what an operational plan is and how it is useful in business, we will be helping you with creating your very own business operational plan. And we made sure that they are simple and easy.

• The first thing that you need to do in creating a business operations plan is to take into consideration what the strategic plan and tactical plan of the business is. If these both plans are already created then use it as a basis for your specific goals and objectives. If not, then you will need to create the strategic plan for the entire business first before starting with your operational plan.
• You know how you many specific goals and objectives you can come up with when creating your plan? There is a lot, no doubt about it. And can you really accomplish all of these goals and objectives that you have set? Well, maybe. To ensure that you get things done, make sure that you operational focuses on goals and objectives that matter. Think of what these objectives are from your list and focus on them.
• Now, how do you choose which goals and objectives to focus on or which ones matter? The answer is simple. You will need to use leading indicators. Leading key performance indicators are those that will potentially help the business do better or gain more.
• Take time to create your operational plan. Rushing and being hasty may just be a waste of time and resources if your operational plan appears to be useless or ineffective. Allot enough time for every key performance indicator you choose and create.
• Communicate your plan and key indicators to everyone involved in the business. Conduct a meeting regularly or set specific time to do so. Communication is very important in any business because it lets everyone know what you are up to and what the business needs are.

Follow these simple steps to get you started with your business operational plan. Do not forget that practice makes perfect so in time you will become better with it. Also, to make it easy and convenient for you to create your business operational plan, you can download free and editable operational plan templates online. We also have templates for other related topics that you may be interested in, like  Simple Operational Planning Samples & Templates and  Annual Operational Plan Samples & Templates .

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When you decide to set up a business, there will undoubtedly be a couple of smart goals and objectives that you’ll be seeking to achieve. However, the means by which you will achieve will all depend on how you plan everything out, meaning that you will need to go into detail as to how you should go about in doing so.

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How to Come Up With an Operations Plan for Your Business

1. the goals and objectives, attainable and realistic, sample business operation plan.

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2. The Production Process

Equipment and technology.

• Location – You’ll need to point out exactly where your employees will do their operations. Also, try to see if you need any additional facilities for certain operations that your business may need. You may also see parenting plan templates .
• Work hours – Your employees, and your investors, will want to know when your business is going to start operations on a daily basis. This means that you will need to provide a schedule as to when your employees will start working. Is their a set schedule? Or are you flexible with the operating hours? Make it clear in your operations plan. You may also see sample emergency plans .
• Personnel – You will need to know who will be in charge of completing certain tasks and place these names into the document. This way, everyone will be reminded as to what they have to achieve and what they have to do in order to achieve them. You may also see sales plan templates .

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Prudential Regulation Authority Business Plan 2024/25

Related links related links.

• PRA annual reports and business plans
• CP4/24 – Regulated fees and levies: Rates proposals 2024/25

Maintain and build on the safety and soundness of the banking and insurance sectors, and ensure continuing resilience

Be at the forefront of identifying new and emerging risks, and developing international policy

Support competitive and dynamic markets, alongside facilitating international competitiveness and growth, in the sectors that we regulate, run an inclusive, efficient, and modern regulator within the central bank, the pra’s strategy.

Our strategy for 2024/25 will be delivered through our strategic goals, extracts of which are below. For the full detail of our workplan against each strategic priorities, see pages 10 to 41 of this Business Plan . 

Foreword by Chief Executive Sam Woods

Sam Woods Deputy Governor, Prudential Regulation Chief Executive of the PRA

First, this will be our first full year operating under the Financial Services and Markets Act (FSMA 2023), which established a new, post-Brexit regulatory framework for the UK. FSMA 2023 expanded our rulemaking responsibilities and gave us a new secondary objective to support the competitiveness and growth of the United Kingdom.

Competitiveness and growth have always been important considerations for the PRA. Nonetheless, this new objective represents a significant change, and embedding it into our approach has been a major priority for the organisation as a whole, and for me personally as CEO. That effort will continue this year.

Our business plan includes a range of initiatives aimed squarely at promoting the UK’s competitiveness and growth. Some of the most significant are:

• Our ‘Strong and Simple’ project, which aims to simplify regulatory requirements for smaller banks, thus reducing compliance burdens without compromising on strong standards.
• The ‘Solvency UK’ reforms of insurance capital standards, which will reduce bureaucracy in the regulatory regime, while also allowing insurers to invest in a wider range of productive assets.
• The Banking Data Review, which aims to reduce burdens on firms by focusing our data collection on the most useful and relevant information.
• Improvements to our authorisation processes – we have made significant progress in improving the speed and efficiency of authorisations without sacrificing the robustness of our controls; maintaining this progress will be a key focus for next year.
• Reforms to ring-fencing, following the independent review led by Sir Keith Skeoch.

The second point I want to highlight is our ongoing programme of work to maintain the resilience of the UK’s banking and insurance sectors, which is at the heart of our role. The events of 2023 (including the high-profile failures of Silicon Valley Bank (SVB) and Credit Suisse (CS)) demonstrate the importance of a focus on resilience – and while I am encouraged by how the UK banking and insurance sectors have remained stable through a stressful period, we cannot take this for granted.

A major priority this year will be the implementation of the Basel 3.1 standards, which will complete the long process of post-financial crisis regulatory reform. While I expect the capital impact of these reforms to be limited for UK banks, they will nonetheless play a vital role in maintaining sufficient consistency in risk measurement across firms and jurisdictions – which is the cornerstone of the bank capital regime.

Another major priority this year will be ensuring firms have adequate standards of operational and cyber resilience. Following FSMA 2023, we have new powers to oversee the services provided to regulated firms by so-called ‘critical third parties’, and we will be implementing that regime over the coming year. And in March 2025 we will reach an important milestone with the full implementation of our wider operational resilience policy.

The day-to-day work of supervision will continue alongside these reforms. As always, our supervisory teams continue to work with PRA-regulated firms to ensure high standards of financial and operational resilience, governance, risk management, and controls. Stress testing remains a key element of our approach to resilience, and alongside colleagues from the wider Bank of England we will deliver a desk-based stress test of banks, and a system-wide exploratory scenario, in 2024. We will also work towards the next round of insurance stress tests in 2025.

I have really only scratched the surface of the work we are doing this year, as you can see from a glance at this document’s contents page. In order to deliver this work, we will need to run an efficient and effective regulator, and I am particularly excited by the potential of our data and analytics agenda to create new opportunities to improve how we work. And if past years are anything to go by, we will continue to engage with innovation in many forms across the industry, whether in the form of new entrants or new approaches to doing business in areas like digital money.

I am very much looking forward to the challenges that the next year will bring, and to working together with a team of very committed colleagues at the PRA to deliver on this business plan.

11 April 2024

Overview of responsibilities and approach

The PRA has two primary objectives: a general objective to promote the safety and soundness of PRA-authorised persons, and an objective specific to insurance firms for the protection of policyholders.

The PRA has two secondary objectives:

• the competition objective, which is focused on facilitating effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities; and
• the competitiveness and growth objective, which is focused on facilitating, subject to alignment with relevant international standards, (a) the international competitiveness of the economy of the UK (including, in particular, the financial services sector through the contribution of PRA-authorised persons), and (b) its growth in the medium to long term.

In its December 2022 recommendations letter to the Prudential Regulation Committee (PRC), HM Treasury (HMT) set out aspects of the Government’s economic policy to which the PRA must have regard, while building on the important themes of openness, competitiveness, competition, and innovation, as well as delivering energy security and net zero.

In December 2023, the PRA published a consultation paper (CP)27/23 – The Prudential Regulation Authority’s approach to policy , which sets out the PRA’s approach to policymaking as it takes on expanded rule-making powers introduced through FSMA 2023. These expanded powers will enable the PRA to replace relevant assimilated law (previously known as retained EU law) with PRA rules and other policy material, and move towards a more British system of regulation, with most of the technical rules made by independent UK regulators within a framework set by Parliament. In addition, FSMA 2023 introduces new accountability measures that require the PRA to keep its rules under review , and to establish a Cost Benefit Analysis (CBA) Panel composed of external members, which will scrutinise and provide input into the PRA’s CBA framework. These measures should enable the PRA to deliver policies that are well suited to the UK’s financial sector. In addition:

• In December 2023, the PRA took a significant step towards implementing the remaining Basel III standards in the UK by publishing the first of two near-final sets of rules with policy statement (PS)17/23 – Implementation of the Basel 3.1 standards near-final part 1 , which takes account of responses received to CP16/22 . The near-final rules aim to promote the safety and soundness of PRA-regulated firms and support their international competitiveness by making capital ratios more consistent, comparable, and aligned with international standards. The PRA will publish its second near-final policy statement in 2024 Q2 on the remaining aspects of the Basel 3.1 package, which include credit risk, the output floor, reporting, and disclosure requirements. The PRA plans to implement the Basel 3.1 standards over a 4.5-year transitional period beginning on 1 July 2025 and ending on 1 January 2030. Among other things, the PRA will also continue to support international efforts to monitor and promote the implementation of Basel 3.1.
• In December 2023, the PRA published PS15/23 – The Strong and Simple Framework: Scope Criteria, Liquidity and Disclosure Requirements , taking account of feedback to CP4/23 . The policy addresses liquidity and disclosure requirements for Simpler-regime Firms and Pillar 3 remuneration disclosure. The PRA will move further towards finalising and implementing the Strong and Simple prudential framework for Small Domestic Deposit Takers (SDDTs) during 2024. footnote [1]
• Following the publication of discussion paper (DP)3/22 – Operational resilience: Critical third parties to the UK financial sector , in December 2023, the PRA published CP26/23 , jointly with the Bank of England (‘the Bank’) and FCA (‘the supervisory authorities’). CP26/23 sets out the supervisory authorities’ proposed requirements for critical third parties (CTPs), footnote [2] including the mechanism for identifying potential CTPs, recommending them for designation by HMT, incident notification triggers and requirements, and proposed CTP Fundamental Rules. In 2024, the PRA will continue to work with the supervisory and other authorities to develop the final policy and oversight approach.
• In September 2023, the PRA published CP19/23 – Review of Solvency II: Reform of the Matching Adjustment , which marks a significant milestone in the PRA's reforms to the Solvency II regime for the UK insurance market. Following the publication of PS2/24 – Review of Solvency II: Adapting to the UK insurance market and PS3/24 – Review of Solvency II: Reporting and disclosure phase 2 near-final , the PRA will publish its final rules, subject to alignment with anticipated legislation, in 2024.

The PRA’s objectives and priorities are delivered through regulation and supervision, and by developing standards and policies that set out expectations of firms. The PRA’s approach to supervision is forward-looking, judgement-based, and focused on the issues and firms that pose the greatest risk to the stability of the UK financial system and policyholders. This approach is set out in the  PRA’s approach to supervision of the banking and insurance sectors .

The PRA’s regulatory focus is primarily at the individual firm and sector level, with the most important decisions taken by the PRC, which works with the Bank’s other areas of remit, including its role as supervisor of Financial Market Infrastructures (FMIs), the UK’s Resolution Authority, and its committees, including the Financial Policy Committee (FPC), which has responsibility for the stability of the entire UK financial system. The PRA also works closely with the Financial Conduct Authority (FCA), including through the Chief Executive of the PRA being a member of the FCA Board and the Chief Executive of the FCA being a member of the PRC.

The PRA regulates 1,330 firms and groups. footnote [3] These consist of 730 deposit-takers (banks, building societies, credit unions, and designated investment firms footnote [4] (DIFs)), and 600 insurers of all types (general insurers, life insurers, friendly societies, mutuals, the London market, and insurance special purpose vehicles (ISPVs)).

Chart 1: PRA supervised deposit-takers, as at January 2024

Chart 2: pra supervised insurers, as at january 2024, the pra’s strategy, shaping the pra’s strategy.

Each year, the PRA is required by law footnote [5] to review and, if necessary, revise its strategy in line with its statutory objectives:

• the general primary objective to promote the safety and soundness of PRA-authorised firms;
• specifically for insurance firms, a primary objective to contribute to the securing of an appropriate degree of protection for those who are or may become policyholders;
• a secondary objective to act, so far as is reasonably possible, in a way that facilitates effective competition in the markets for services provided by PRA-authorised firms; and
• a new secondary objective to act, so far as reasonably possible, in a way that facilitates the UK economy’s international competitiveness and its growth over the medium to long term, subject to alignment with international standards.

In addition to the statutory objectives, the PRA’s strategy is shaped by other responsibilities, such as the requirement to implement legislation and other changes necessary to meet international standards, and to continue to adapt to market changes in areas such as financial technology (FinTech), climate change, and digitalisation.

When considering how to advance its objectives, there are a set of regulatory principles to which the PRA must also have regard. This includes regulatory principles from FSMA 2000, and considerations from HMT’s December 2022 letter to the PRC on the Government’s economic policy, the Equality Act 2010, the Legislative and Regulatory Reform Act 2006, and the Natural Environment and Rural Communities Act 2006. In its pursuit of its objectives, the PRA will review all the regulatory principles, identify which are significant to the proposed policy, and judge the extent to which they should influence the outcome being sought.

Furthermore, as part of the Bank, the PRA contributes to the delivery of the Bank’s wider financial stability and monetary policy objectives, for example by:

• maintaining and, where appropriate, strengthening or updating prudential standards;
• being at the forefront of identifying new and emerging risks, and developing international policy; and
• ensuring that banks and other financial institutions can continue to provide essential services.

Strategic priorities for 2024/25

This year’s business plan continues to be structured around the PRA’s four strategic priorities, as set out in its 2023/24 Business Plan . The PRA’s strategic priorities for 2024/25 will remain unchanged because the PRA updated its priorities in 2023 to take account of its new powers, new secondary objective, and expanded role brought about by FSMA 2023. The strategic priorities for 2024/25 are to:

• maintain and build on the safety and soundness of the banking and insurance sectors, and ensure continuing resilience;
• be at the forefront of identifying new and emerging risks, and developing international policy;
• support competitive and dynamic markets, alongside facilitating international competitiveness and growth, in the sectors that we regulate; and
• run an inclusive, efficient, and modern regulator within the central bank.

PRA Business Plan 2024/25

Maintain and build on the safety and soundness of the banking and insurance sectors and ensure continuing resilience.

During the decade following the financial crisis of 2007-09, the PRA designed and implemented extensive reforms that materially improved the safety and soundness of firms, insurance policyholder protection, and financial stability. Since then, the robust regulatory standards that the PRA has implemented and its strong international collaboration have played a key role in maintaining the resilience of the banking and insurance sectors, consistent with its objectives and those of the FPC. The PRA will continue to ensure that the firms it regulates remain adequately capitalised and have sufficient liquidity and stable funding profiles, with appropriately defined impact tolerances for disruption to their business services. The PRA’s regulatory framework encourages PRA-regulated firms to take a holistic approach to managing risks by identifying, monitoring, and taking action to remove or reduce systemic risks.

The PRA’s role as a rulemaker was further expanded following the introduction of FSMA 2023. Under the new regulatory framework , the PRA will continue to be a strong, accountable, responsive, and accessible policymaker, and make rules to meet its regulatory obligations, while adopting a risk-based approach, as set out in CP27/23 , in a way that is tailored to the specific features of financial services in the UK. Among other things, the PRA will continue to faithfully implement agreed international standards and reforms in a way that best serves the UK. For example, in 2024 the PRA will publish its final rules on the implementation of the Basel 3.1 standards and on replacing relevant and/or remaining firm-facing Solvency II requirements from assimilated law with the PRA’s own rules, which will become part of the PRA’s Rulebook and other policy materials. In addition, the PRA will move further towards finalising and implementing the Strong and Simple prudential framework , which provides a simpler but robust set of prudential rules for non-systemic, domestic-focused banks and building societies in the UK.

The PRA will also continue to pay particular attention to the business opportunities and threats that are posed by changes in the economic environment, both in the UK and other jurisdictions, that could pose risks to the UK.

The PRA will continue to promote a strong risk culture among regulated firms, including a conscious and controlled approach to risk taking activities, and ensure that this is supported by adequate financial and non-financial resources. At the same time, the PRA will maintain a robust regulatory regime that is able to respond to the external factors that pose the greatest risk to firms’ safety and soundness.

Risk factors also include global geopolitical risks, which have intensified over the past year. The PRA will continue to ensure that PRA-regulated firms are resilient to such risks by liaising with both domestic and international regulatory counterparts and continuing to monitor and engage with affected firms. Effective international collaboration remains central to addressing global risks and maintaining UK financial stability as well as the safety and soundness of internationally active firms.

The PRA will monitor and assess firms’ ability to manage cyber threats through the ongoing use of threat-led penetration testing ( CBEST and STAR-FS ) and the cyber questionnaire ( CQUEST ). In collaboration with the FCA, including in response to known technology, cyber and third-party incidents, the PRA will continue to monitor and engage with firms on their execution of large and complex IT change programmes. Furthermore, the FPC’s cyber stress testing has broadened the PRA’s understanding of how operational disruptions such as cyberattacks may affect financial stability.

The PRA will continue to engage in collective action to develop a view on sector-wide risks, support the building of firm- and sector-level resilience, and enhance the sector’s ability to respond to system-wide disruption. This will include ongoing sector engagement through the Cross-Market Operational Resilience Group (CMORG), which delivers industry guidance, response capabilities, and technical solutions, and through cross-jurisdictional coordination via the G7 Cyber Experts Group (CEG). Through CMORG, the PRA will deliver a sector-wide simulation exercise (SIMEX24) to assess the sector’s resilience to major operational disruption. The PRA will continue to develop its ability to respond to operational incidents in the sector through its authorities ( Authorities Response Framework ) and sector ( Cross Market Business Continuity Group ) response mechanisms.

Financial resilience – banking

Implementation of the basel 3.1 standards.

In March 2023, the PRA concluded its consultation on proposals published in November 2022 about the parts of the Basel III standards that remain to be implemented in the UK (‘Basel 3.1’). In September 2023, the PRA announced that it would split the publication of the near-final Basel 3.1 rules in two, moving implementation back by six months to 1 July 2025 to reduce the transitional period to 4.5 years and ensure full implementation by 1 January 2030, in line with the proposals set out in CP16/22. The first near-final PS17/23 – Implementation of the Basel 3.1 standards near-final part 1 , covering market risk, credit valuation adjustment risk, counterparty credit risk, and operational risk, was published in December 2023. The PRA will publish the second near-final PS, covering the remaining elements of credit risk, the output floor, as well as Pillar 3 disclosure and reporting requirements, in due course.

The near-final rules from the two PSs will be made final once Parliament has revoked the relevant parts of the Capital Requirements Regulation (CRR). The PRA expects this to happen later in 2024. In addition to finalising Basel 3.1 rules, the PRA will continue to increase its supervisory focus on firms’ implementation plans.

Bank stress testing

The concurrent stress testing of firms is one of the key tools used by the PRA and the Bank to support their microprudential and macroprudential objectives. Banking stress tests examine the potential impact of a hypothetical scenario on the major UK banks and building societies that make up the banking system, and on the system as a whole. The PRA normally runs two types of banking stress test – the annual cyclical scenario and other exploratory scenarios.

In 2024, the PRA will support the Bank in taking stock of and updating its framework for concurrent bank stress testing. The stocktake will draw on lessons from the first decade of concurrent stress testing, and so ensure that the framework continues to support the FPC and PRC in meeting its objectives. The PRA will also contribute to supporting the Bank’s desk-based stress test in 2024, which is being conducted in place of an ACS. The desk-based exercise will make use of the PRA’s risk expertise along with models developed in the PRA and elsewhere in the Bank to test the financial resilience of the UK banking system under more than one adverse macroeconomic scenario. Stress testing exercises involving firm submissions of stressed projections are currently expected to resume in 2025.

In addition, the Bank is conducting a system-wide exploratory scenario (SWES), working closely with and with the full support of the PRA, FCA, and TPR (The Pensions Regulator). The exercise was launched in June 2023 and aims to improve the understanding of the behaviours of banks and non-bank financial institutions (NBFI) in stressed financial market conditions. The participating firms in this exercise are representative of markets that are core to UK financial stability.

Private equity and credit

The evolving macro environment is expected to challenge firms’ approach to risk management, increasing the need for robust governance, risk management, and controls. One area of focus for the PRA will be exposures to NBFI, particularly any challenges that may manifest around the trend toward illiquid private equity financing and private credit. The PRA will continue to closely monitor private asset financing and the way that firms consider the risks they could face from these activities. In particular, the PRA will look for further improvements in firms’ ability to identify and assess correlations across financing activities with multiple clients.

Replacing assimilated law

HMT has prioritised the CRR as one of the initial areas of focus in the process of transferring assimilated law into the supervisory authorities’ rules and legislation following the enactment of FSMA 2023. The latter granted the PRA expanded rulemaking powers to replace assimilated law with PRA rules, thereby moving towards a more British system of regulation. In 2024/25, the PRA will consult on proposed rules to replace, with modifications where appropriate, the relevant firm-facing provisions in Part Two of the CRR.

Model risk management (MRM) and internal ratings-based approach/hybrid models

Banks’ use of and reliance on models and scenario analysis to assess future risks has increased significantly over the past decade. The introduction of new, sophisticated modelling techniques – including the potential use of Artificial Intelligence and Machine Learning (AI/ML) – has highlighted the need for sound model governance and effective model risk management practices.

In 2023, the PRA published a supervisory statement (SS)1/23 – Model risk management principles for banks , which applies to firms with internal model (IM) approval to calculate regulatory capital requirements. It is structured around five high-level principles that set out the core disciplines necessary for a robust model risk management framework to manage model risk effectively across all model and risk types. The adoption of these principles will help banks to develop good practices of model risk management, raising prudential standards at banks operating in the UK. The new policy comes into effect on 17 May 2024. Banks within the scope of the policy are expected to conduct an initial self-assessment against these principles, and, where relevant, prepare remediation plans to address any identified shortcomings.

During 2024, the PRA will focus on how banks are embedding and implementing the expectations set out in SS1/23. In particular, the PRA will seek to understand the extent to which banks’ management teams are adopting the principles and promoting the management of model risk as a risk discipline in its own right across their firms.

The PRA has published a range of policy statements on changes to the internal ratings-based (IRB) approach to credit risk over recent years. footnote [6] The PRA will continue to work with firms as they progress their model approval and review submissions in line with these requirements and expectations. The PRA will focus on the ‘hybrid’ approach to mortgage modelling, and the IRB repair programme, both carried forward from previous years.

Where appropriate, firms are holding post-model adjustments (PMAs) in the form of risk-weighted asset (RWA) add-ons, helping to mitigate potential capital underestimation while they develop their new models. During 2024, the PRA will continue to assess the adequacy of the PMAs to ensure any potential capital underestimation is addressed.

Liquidity risk management

The events of 2023 brought a further focus on the liquidity and funding risks faced by deposit takers, in particular the deposit outflows experienced by CS and SVB leading up to their acquisition and resolution, respectively.

The PRA will continue its close supervision of firms’ liquidity and funding risks in light of recent stresses. Through its ongoing supervision of banks and building societies, the PRA will follow up on how firms are taking account of the lessons they learnt from the events at CS and SVB. The PRA will continue to use its regular programme of Liquidity Supervisory Review and Evaluation Processes (L-SREPs) across PRA-authorised firms to assess their liquidity and funding risks, in quantitative and qualitative terms, and to ensure appropriate financial and non-financial resources are in place to manage and mitigate these risks.

The PRA will also continue to engage with firms and within the wider Bank on PRA-authorised firms’ access to the Bank’s Sterling Monetary Framework .

The PRA will also monitor closely how firms consider changes in depositor behaviour in the current funding environment and proactively take into consideration forthcoming changes in bank funding and liquidity conditions. footnote [7]

Credit risk management

The PRA is closely monitoring firms’ credit risk management practices given the uncertain credit risk outlook across key markets. The PRA’s assessment will include a focus on how credit risk management practices have evolved – in particular, how they can remain robust and adaptable to changing conditions, whether there is appropriate consideration of downside and contagion risks, as well as firms’ monitoring and planning for the impacts of customer refinancing. The PRA will undertake a thematic review of smaller firms’ credit risk management frameworks during 2024/25.

The PRA will monitor changes to firms’ business mix and credit exposures, and continue to monitor vulnerable segments, including cyclical sectors and key international portfolios, as well as traditionally higher-risk portfolios such as buy-to-let, credit cards, unsecured personal loans, small to medium-sized enterprises, leveraged lending, and commercial real estate. In addition, counterparty credit risk will remain a key area of supervisory focus through 2024, especially exposures to NBFI across certain business lines.

Separately, in 2024, the PRA will continue to progress its review of regulatory policies to assess whether the policy framework for trading book risk management, controls, and culture is adequate, robust, and accessible.

The UK banking system is well capitalised. However, the overall operating and risk environment remains challenging, and firms must manage their financial resilience to ensure that the financial sector can continue to support businesses and households. The PRA will continue to assess firms’ capital positions and planning, including firms’ use of forward-looking capital indicators, stress testing, and contingency plans.

The PRA intends to review its Pillar 2A methodologies (see section ‘Review of the Pillar 2 framework’ of PS17/23 ) for banks after the rules on Basel 3.1 are finalised, with a view to consulting on any proposed changes in 2025.

Securitisation regulation

HMT has prioritised the Securitisation Regulation as one of the initial areas of focus in the process of transferring assimilated law into regulatory rules and legislation following the enactment of FSMA 2023. The PRA will publish its final policy (simultaneously with the FCA) on final rules to replace or modify the relevant firm-facing provisions in the Securitisation Regulation and related Technical Standards in 2024-25.

The PRA also intends to consult on draft PRA rules to replace firm-facing requirements, subject to HMT making the necessary legislation. The PRA has gathered views and evidence from firms through DP3/23 – Securitisation: capital requirements , which will inform its approach to capital requirements for securitisation.

Financial resilience – insurers

Solvency uk implementation.

In June 2024, the PRA will publish its final policy on the matching adjustment (MA) reforms set out in CP19/23 – Review of Solvency II: Reform of the Matching Adjustment . The majority of these reforms will take effect from end-June to allow PRA-authorised firms to take immediate advantage of new investment opportunities. The remaining Solvency II reforms consulted upon in CP12/23 – Review of Solvency II: Adapting to the UK insurance market will take effect on 31 December 2024.

To facilitate implementation of the reforms consulted on in CP12/23 and CP19/23, the PRA will streamline the application processes for new internal model permissions and variations of existing permissions. There will be similar proposals for MA permissions, if the final policy is the same as set out in the CP. The PRA remains committed to assessing and providing decisions on applications for permissions as quickly as possible and aims to do this within the timescales published in the associated statements of policy. This will be supported by the establishment of dedicated, specialised teams for reviewing applications.

In practice, delivering timely decisions will in part depend on good engagement between firms and the PRA during the application process, and on the preparation of high-quality and complete applications by firms. To facilitate this, the PRA will publish templates for use by firms , including templates for reporting the updated Matching Adjustment Asset and Liability Information Return (MALIR) and the Analysis of Change (AoC) and Quarterly Model Change (QMC) for internal models. These measures are intended to assist with a smooth transition to the Solvency UK regime.

A variety of proposals were made in responses to CP19/23 to further reform the MA in the form of so-called ‘sandboxes’, which would allow an element of self-certification of eligibility, or a route to further expand eligibility in response to innovations in primary financing markets. In 2024, the PRA will explore these proposals with industry with the goal of determining whether they can be developed into schemes that further advance the objectives of the Solvency II review.

Solvency II reporting reforms

To deliver the regulatory reporting and disclosure reforms consulted on in CP14/22 and CP12/23 , the PRA published PS3/24 – Review of Solvency II: Reporting and disclosure phase 2 near-final , including finalised templates and instruction files. The PRA will also publish a finalised single taxonomy package in 2024 Q2, which encompasses proposals in CP14/22 and CP12/23 , and deletions published in PS29/21 . The PRA will engage with firms, including through industry roundtables, to prepare them in meeting the new reporting requirements coming into force from 31 December 2024.

Solvency II transfer

The PRA will publish a CP in 2024 H1 that will set out how it will transfer the remaining Solvency II requirements from assimilated law into the PRA Rulebook and other policy material such as supervisory statements or statements of policy (‘the UK framework’).

This will provide a more comprehensive Rulebook and will make it easier for firms to access and navigate the rules that apply to them.

Insurance stress testing

Stress testing forms an important part of the PRA’s supervisory approach and risk assessment of insurance firms, helping to assess and identify the vulnerabilities of life and general insurance sectors to a range of risks in different scenarios.

Major life insurers participate in regular and concurrent stress testing prescribed by the PRA, and the next test will take place in 2025. For the first time, the PRA will publish the individual results of the largest annuity-writing firms to help inform stakeholders about the level of firms’ resilience in the scenarios set out, and thereby strengthen market discipline.

The PRA will continue to engage with the industry on the technical, operational, and communication aspects of the stress test, and will publish an approach document for the life insurance stress test 2025. The 2025 test will for the first time include an exploratory scenario to assess exposure to the recapture of funded reinsurance contracts.

For general insurers, the PRA has previously conducted four general insurance stress test exercises between 2015 and 2022. In 2025, the PRA will run its first dynamic stress test . The objectives of the exercise will be to:

• assess the industry’s solvency and liquidity resilience to a specific adverse scenario;
• assess the effectiveness of insurers’ risk management and management actions following an adverse scenario; and
• inform the PRA’s supervisory response following a market-wide adverse scenario.

The dynamic nature of the 2025 exercise represents a significant change from previous exercises and will involve simulating a sequential set of adverse events over a short period of time. The PRA has begun engaging with industry trade bodies and will provide more details of this exercise (including participation, design, and timelines) during 2024. Results of this exercise will be disclosed at an aggregate industry level.

Cyber underwriting risk

As the scope of technology continues to expand globally, cyber underwriting risk has become increasingly relevant, as reflected in the actual and planned growth of cyber insurance within the UK sector. As well as being inherently volatile and systemic in nature, cyber underwriting risk is diverse in how it can manifest in different lines of business.

Given the uncertainty of this risk, robust risk management, risk appetite-setting, and stress testing will be important factors in ensuring that capital and exposure management capabilities reflect firms’ actual exposures.

Monitoring and assessing cyber underwriting risk will be at the core of the PRA’s supervisory focus, particularly for firms with material exposures. The PRA will share the aggregate findings of its recent thematic project focused on cyber underwriting risk with industry, and continue to monitor the risk landscape and market dynamics to identify and assess potential risk drivers, including areas such as contract (un)certainty risk.

Model drift

The PRA will continue its scrutiny of internal models used by insurers to calculate capital requirements and aid risk management, to identify potential trends in the strength of firms’ calibrations, and as an indicator of the effectiveness of firms’ risk management.

In its 2023 model drift analysis , the PRA identified a number of findings across firms using internal models within the non-life sector. These are related to levels of allowances for inflation uncertainty, potential optimism in expected underwriting profits, potential optimism in the cost and benefit of reinsurance, and the limited allowance for economic and geopolitical uncertainties.

In 2024, the PRA will address perceived systemic trends that may weaken the robustness of models used across the market as a whole. The PRA will also focus on specific model drift within individual firms, with an emphasis on improving the effectiveness of internal model validation, so that firms can develop the capability to self-identify and address potential challenges.

Funded reinsurance

In 2024, the PRA will continue to pay close attention to the rapidly increasing use of funded reinsurance transactions in the UK life insurance market, and the risks that the growth in their use may pose to policyholder protection and UK financial stability. The PRA is particularly focused on the risk of an erosion in standards for assets used as collateral in these transactions, and individual and sectoral concentrated exposures to correlated, credit-focused counterparties.

As well as preparing to examine exposures to the recapture of funded reinsurance in the 2025 life insurance stress test, in 2024. The PRA will also, subject to responses to CP24/23 – Funded reinsurance , finalise and implement its policy expectations for UK life insurers that use funded reinsurance arrangements. As stated in the PRA’s letter on ‘ Insurance supervision: 2024 priorities ’, these policy expectations will cover how firms should manage risks associated with funded reinsurance at both individual transaction and at aggregate level. This will include the expectation that firms place limits on their activities to ensure sound risk management.

Impact on general and claims inflation

Claims inflation continues to be a significant risk for general insurers. Following a thematic review, the PRA published a Dear Chief Actuary letter in June 2023 setting out its findings that, while reserves have increased, there remains material uncertainty and the potential for excessive optimism with respect to reserving, pricing, and capital and reinsurance planning.

The PRA expects a continued lag in the emergence of claims inflation in the data, which insurers should be alert to. The PRA will continue to monitor the ongoing impact through the regulatory data collected and supervisory activities throughout 2024. Should the PRA’s assessment of this risk change, further focused work may be considered.

Market-wide stresses in March 2020 and September 2022 highlighted gaps in insurers’ liquidity risk management frameworks and, consequently, the importance of having comparable, accurate, and timely information on insurers’ liquidity. The PRA will build on the existing liquidity framework, currently based on risk management expectations set out in SS5/19 – Liquidity risk management for insurers , and develop liquidity reporting requirements for insurance firms most exposed to liquidity risk. The information collected will be used to supervise firms’ liquidity positions more effectively and produce meaningful peer comparisons. The PRA will work closely with firms to inform them about its development of these requirements and explore the necessity of a minimum liquidity requirement as part of a future policy consultation.

In addition, the Bank has signalled its intention to develop a new lending tool for eligible NBFIs to help tackle future episodes of severe dysfunction in core markets that threaten UK financial stability. The development of the PRA’s approach to supervising liquidity will therefore inform the design of the lending tool as it relates to insurers.

The reforms to Solvency II offer life insurers opportunities to expand the range of credit risk assets that are used to back their annuity liabilities, and enable them to meet their commitment to invest in assets that contribute to the productivity of the economy and the transition to net zero. These opportunities require sophisticated credit risk management, and insurers’ capabilities will remain a key focus. Increased activity in the bulk purchase annuity (BPA) market is expected to lead to further growth in firms’ exposure to credit risk, and potentially to concentrations in exposure to internally valued and rated assets.

The PRA will continue to focus on the effectiveness of firms’ credit risk management capabilities and seek further assurance that firms’ internal credit assessments appropriately reflect the risk profile of their asset holdings. The PRA will assess how firms’ credit risk management frameworks are evolving in line with its supervisory expectations, and also review the suitability of firms’ current and forward-looking internal credit assessment validation plans and approaches. In both cases, the PRA will seek to provide feedback on a firm-specific or thematic basis as appropriate.

Regulatory reforms

Operational risk and resilience (including the implementation of the critical third-party regime).

Operational disruption can impact financial stability, threaten the safety and soundness of individual firms and financial market infrastructures, or cause harm to consumers, policyholders, and other parts of the financial system. The PRA defines operational resilience as the ability of firms and the financial sector to prevent, respond to, recover, and learn from operational disruptions, including cyber threats.

The FCA, Bank, and PRA’s operational resilience policies came into force in March 2022 . Firms have now identified their most important business services, set impact tolerances, and commenced a programme of scenario testing. The PRA will continue to work closely with the FCA to assess firms’ progress, with a particular focus on the ability of firms to deliver important business services within defined impact tolerances during severe but plausible scenarios over a reasonable time frame, and no later than March 2025.

The PRA will also continue to monitor threats to firms’ resilience, including their growing dependency on third parties, while respecting the principle of proportionality.

Critical third parties to the UK financial sector

Section 312L of FSMA 2023 gave HMT the power to designate certain third-party service providers as ‘critical’ if they provide services to the financial sector, which, if disrupted or subject to failure, could cause financial stability concerns or risks to the confidence in the UK’s financial system. Prior to designating these parties, HMT must consult with the Bank, PRA, and FCA (the authorities the Act appoints as Regulators of the new regime). FSMA 2023 also gives the Regulators new powers to oversee the services provided by critical third parties (CTPs) to regulated firms. In December 2023, the PRA, Bank, and FCA jointly published CP26/23 – Operational resilience: Critical third parties to the UK financial sector , proposing how these powers could be used to assess and strengthen the resilience of services provided by CTPs to firms and FMIs, thereby reducing the risk of systemic disruption. The PRA will continue to work with other authorities to develop the final policy and oversight approach in 2024.

Additionally, the PRA is developing regulatory expectations on incident reporting, aligned with its operational resilience expectations.

Review of enforcement policies

Enforcement supports and supplements the PRA’s regulatory and supervisory tools by ensuring that it has credible mechanisms for holding regulated firms to account when they do not meet requirements and expectations. Enforcement policies also provide a wider deterrent effect. The PRA is therefore committed to holding individuals to account and, when appropriate, taking regulatory and/or enforcement action against those individuals that breach its standards. The PRA clearly sets out, for the benefit of the whole regulated community, the actions and standards of behaviour that are considered unacceptable ( The Bank of England’s approach to enforcement ).

In January 2024, following a review of its policies and public consultation, the PRA published PS1/24 – The Bank of England's approach to enforcement , which sets out the revised approach to enforcement across the Bank’s full remit (including when acting as the PRA).

The PRA is committed to conducting any enforcement investigations as promptly and efficiently as possible. In line with that aim, PS1/24 introduced a new Early Account Scheme (EAS or ‘the Scheme’), which provides for a new path for early cooperation and greater incentives for early admissions with the aim of reaching outcomes more quickly in specific cases.

Diversity and inclusion in PRA-regulated firms

Enhancing diversity and inclusion (D&I) can support better governance, decision-making, and risk management in firms by reducing groupthink and promoting a culture that allows employees to feel able to speak up and challenge the status quo.

In September 2023, the PRA published CP18/23 – Diversity and inclusion in PRA-regulated firms . Under the proposals, all in-scope firms would need to understand their D&I position, develop appropriate strategies to make meaningful progress, and monitor and report on progress. The proposals are flexible and carefully tailored to recognise that firms are at different stages of their work on D&I, and, most importantly, are best placed to develop their own D&I solutions.

The PRA also outlined that the proposals in CP18/23 contribute towards its secondary objectives of ensuring effective competition and facilitating competitiveness and growth, because enhanced D&I can help support greater innovation and make firms more attractive in the labour market.

In 2024, the PRA will continue its industry engagement, assess responses to CP18/23, and provide a further update in due course.

The PRA maintains flexibility to adapt and respond to changes in the external environment, economic and market developments, and any other risks that may affect its statutory objectives or priorities. The PRA has continued to use its horizon-scanning programme to achieve the following aims:

• identify emerging external risks, regulatory arbitrage, and potentially dangerous practices;
• highlight features of the regulatory regime that are not yet delivering the desired results; and
• allocate supervisory and policy resources to tackling the highest-priority risks in a timely manner.

Consistent with its mission, the PRA will continue to contribute to lessons learned internationally, policy/standards evaluation, and, in particular, internationally agreed standards with the aim of promoting the safety and soundness of the firms it regulates. For example, in 2024/25, the PRA will continue to focus on identifying and addressing emerging risks internationally, working closely with the BCBS on its response to consultations launched in 2023 (including on cryptoassets; disclosure for climate-related financial risks; and the Basel Core Principles and other outstanding work in support of its 2023/24 work programme and strategic priorities ). The PRA will also continue to work closely with the International Association of Insurance Supervisors (IAIS) on its finalisation of the Insurance Capital Standard (ICS), Insurance Core Principles on valuation (ICP 14) and capital adequacy (ICP17) .

In addition, the PRA will continue to monitor the potential for capital and profit erosion in firms that are slower to adopt new technologies, as well as firms’ involvement in new technologies, and changes in the profile of cyber-risks they face.

International engagement and influencing regulatory standards

The PRA plays a leading role in influencing international regulatory standards and will continue to participate actively in global standard-setting bodies, such as the Basel Committee on Banking Supervision (BCBS) , the IAIS, and the Financial Stability Board (FSB) .

Building on the BCBS’s report on the 2023 banking turmoil , the PRA will work with international stakeholders and the BCBS to strengthen supervisory effectiveness and identify issues that could merit additional guidance at a global level. The PRA will work with BCBS to pursue additional follow-up analytical work based on empirical evidence to assess whether specific features of the Basel Framework have performed as intended, such as liquidity risk and interest rate risk in the banking book, and assess the need to explore policy options over the medium term, alongside supporting the BCBS in pursuing its medium-term programme on evaluating the impact and efficacy of Basel III, and in light of lessons drawn from the Covid-19 pandemic.

In addition, the PRA pursues international collaboration through less formal mechanisms, for example through regular bilateral and trilateral engagements, ensuring close collaboration on a number of supervision, risk, and policy topics of joint interest. The PRA also collaborates internationally on joint global thematic reviews with other regulatory authorities, for example, to address a joint interest in banks’ exposures to NBFIs and the use of critical third parties.

The PRA will also continue to support international efforts to monitor and promote consistent implementation of Basel 3.1, as well as the implementation and monitoring of the ICS.

Supervisory co-operation

Effective international collaboration remains crucial to addressing global risks, and is central to maintaining UK financial stability, the safety and soundness of internationally active firms, and reducing regulatory arbitrage.

The PRA will continue to promote international collaboration through supervisory colleges and set out clear expectations for firms wanting to branch into the UK. The PRA will also maintain its existing memoranda of understanding (MoUs) and, if needed, expand the number of jurisdictions with which it has an MoU to facilitate the supervision of international groups and therefore enhance the safety and openness of the UK for financial services activities.

The PRA will continue to support HMT via its international collaboration activities (eg The Berne Financial Services Agreement ) and with assessments of other jurisdictions to facilitate safe access to overseas markets for UK firms, among other benefits.

Overseas bank branches

The PRA will consult on targeted refinements to its approach to banks branching into the UK, reflecting lessons from the failure of SVB to ensure the PRA’s framework for assessing branches captures activities of potential concern. The PRA is committed to the UK remaining a responsibly open jurisdiction for branches, and expects the vast majority of branch business to be unaffected by any changes. The PRA also intends to consult on clarifying expectations for group entity senior manager functions (SMFs) footnote [8] and expectations of booking arrangements.

Operational and cyber resilience

The PRA engages internationally on operational and cyber resilience, in support of its supervision objectives and to raise international standards. The PRA co-chairs the G7 Cyber Expert Group (CEG), which works to coordinate cyber resilience strategy and management across G7 jurisdictions. The PRA also co-chairs the European Systemic Cyber Group (ESCG), which helps European authorities develop systemic capabilities to prevent and mitigate risks to the financial system that might emanate from cyber incidents. The PRA has also led work at the Financial Stability Board (FSB) on cyber incident reporting. In 2024, the PRA will continue to engage with standard-setting bodies and bilaterally with other jurisdictions on third-party risk management and CTPs.

Managing the financial risks arising from climate change

Climate change presents a source of material and increasing financial risk to firms and the financial system. Managing the risks to firms’ safety and soundness from climate change requires action and remains a key priority for the PRA. The Bank first set out expectations around enhancing banks’ and insurers’ approaches to managing the financial risks emanating from climate change in April 2019 via SS3/19 –  Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change . The PRA has since provided further guidance via two Dear CEO letters, footnote [9] incorporating observations from supervisory processes and the 2022 Climate Biennial Exploratory Scenario exercise , as well as by providing thematic feedback via Dear CFO letters footnote [10] to promote high-quality and consistent accounting for climate change .

As noted in its 2024 priorities letter to firms, the PRA expects firms to make further progress and demonstrate how they are responding to the PRA’s expectations, and to set out the steps they are taking to address barriers to progress. The PRA will continue to assess firms’ progress in managing climate-related financial risks. In 2024, the PRA will commence work to update SS3/19 and publish thematic findings on banks’ processes to quantify the impact of climate risks on expected credit losses.

The PRA, alongside the FCA, will continue to work with industry through the Climate Financial Risk Forum to produce practical guides and tools that help financial firms embed the financial risks from climate change into their operations. The PRA will also continue to engage with domestic and international partners, including international standard-setters, to contribute to the development of international frameworks in support of managing climate-related risks.

Artificial Intelligence and Machine Learning

Following the publication of a feedback statement (FS)2/23 – Artificial Intelligence and Machine Learning , the PRA and FCA intends to conduct the third edition of the joint survey on machine learning in UK financial services , in 2024 Q2. Responses to the survey will allow the PRA and FCA to further explore how best to address the issues/risks posed by AI/ML in a way that is aligned with the PRA’s and FCA’s statutory objectives. The PRA will also continue to monitor firms’ compliance of its expectations, as set out in SS1/23 , and will seek to explore further updates where necessary.

International policy on digitalisation and managing associated risks

The PRA aims to be at the forefront of identifying and responding to opportunities and risks faced by PRA-authorised firms as they seek to use technology in innovative ways to attract and retain customers, reduce costs, and increase efficiencies.

External context and business risk are important facets of the PRA’s approach to supervision. Developments are monitored, with specialist input from the Bank’s Fintech Hub , to identify risks such as fragmentation of the value chain, novel outsourcing arrangements, and concentration risks across and within firms.

In order to take a responsive and responsibly open approach, the PRA will continue to consider policy proposals to respond to digitalisation and adapt its supervisory approach accordingly. Through the New Bank Start-up and Insurer Start-Up Units, the PRA will continue to engage with applicant firms that have novel uses of technology. The PRA will continue to work closely with domestic and international partners, and through engagement with industry and stakeholders, to take a pro-active approach to digital innovations within the financial sector.

The PRA is a significant contributor to discussions on digitalisation in international standard-setting fora, and will continue to support the BCBS’s work on the developments in the digitalisation of finance and the implications for banks and supervisors . The PRA will also continue be an active part of the IAIS Fintech Forum.

Digital money and innovation

In February 2023, HMT published a consultation and Call for Evidence on the future financial services regulatory regime for cryptoassets , focused on enhancing market integrity, custody requirements, and transparency. The consultation closed in October 2023 with the publication of an update on the government’s plans for its legislative approach to the regulation of stablecoins. HMT confirmed that tokenised deposits would continue to be regulated as deposits. The PRA will continue to work with HMT and the FCA to ensure that the regulatory perimeter and the boundaries between different activities are clearly and robustly delineated.

In November 2023, the Bank, PRA, and FCA published a cross-authority package on innovations in money and payments . As part of this, the PRA published a Dear CEO letter to provide clarity on the PRA’s expectation on how deposit-takers should address risks arising from the emergence of multiple forms of digital money and money-like instruments. footnote [11] It published the letter alongside the Bank’s proposed regime for systemic payment systems using stablecoins and related service providers , and the FCA’s proposed regime for stablecoin issuers, custodians, and the use of stablecoins as a means of payment. A roadmap paper was also published to explain how these regimes fit together.

The PRA will continue to contribute to the Bank’s broader work on innovation in money and payments, which in 2024 will include work on wholesale payments and settlements – and their interaction with retail payments.

In 2024, the PRA will continue to work within the global regulatory community to finalise a set of amendments made to the international standard on the treatment of banks’ cryptoassets exposures. These amendments were published for consultation by the Basel Committee in December 2023, following the finalisation of the standard in 2022.

Once the amendments are finalised, the PRA will implement the standard within the UK, following the PRA’s policymaking process. Alongside this, the PRA will continue to engage with international partners, including the BCBS, to assess bank-related developments in cryptoassets markets, the role of banks as issuers of stablecoins and tokenised deposits, custodians of cryptoassets, and potential channels of interconnections with the cryptoassets ecosystem.

The PRA advances its primary and secondary objectives by making rules that support competitive and dynamic markets in the sectors that it regulates. The PRA will go further in developing proportionate and efficient prudential requirements, thereby reducing the burden on firms where appropriate, and pursuing its secondary objectives. The PRA also remains committed to playing an active role in international standard-setting, given the important role of global rules in safeguarding the UK’s open economy through ensuring safe financial markets.

Regulatory change – embedding the PRA’s approach to rule-making

FSMA 2023 has significantly changed the powers and responsibilities of the PRA, allowing it to ensure the UK financial services framework is fit for the future, reflecting the UK’s position outside of the EU. FSMA 2023 also introduces enhanced objectives and accountability requirements that support the PRA’s transparency and accountability to Parliament.

FSMA 2023 provides a framework to repeal and replace assimilated law relating to financial services. Most technical rules will now be made by operationally independent regulators within a framework set by Parliament, enabling the PRA to deliver policies better suited to the UK financial sector. The PRA’s responsibility, in cooperation with HMT and FCA, is to ensure that the new rules are made in accordance with the PRA’s remit and statutory objectives, including the new secondary competitiveness and growth objective.

The PRA has worked closely with HMT and FCA on the sequencing of the repeal and the replacement of the files of assimilated law. Once the replacement material is in PRA rules, the PRA will have the power to evaluate these rules, amend them if needed, and/or create new rules when required.

The PRA has already made good progress with respect to the files that HMT has prioritised into the first two ‘tranches’, including key files such as Solvency II, Securitisation, CRR, among others. The PRA has consulted on significant parts of tranches 1 and 2 in 2023 and will continue this work throughout 2024 and 2025. The completion of the repeal and replacement of Solvency II and Securities Regulation files is expected by the end of 2024, and the last of the PRA's tranche 1 and 2 files is planned for implementation in 2026. Work on the remaining files that were not included in tranches 1 and 2 will begin in 2024.

The PRA is consulting its stakeholders as it develops its approach to policymaking in light of the new requirements. In December 2023, the PRA published CP27/23 , setting out the proposed approach to policy under the regulatory framework as amended by FSMA 2023, and building on the previously published DP4/22 – The Prudential Regulation Authority’s future approach to policy . CP27/23 outlines the PRA's planned approach to maintain robust prudential standards, which are the cornerstone of UK financial stability and long-term economic growth, while addressing risks and opportunities in a responsive manner, appropriately adapted to the circumstances of the UK. Responses to CP27/23 will inform the PRA’s finalised approach document to be published in 2024 H2.

Secondary competitiveness and growth objective (SCGO)

FSMA 2023 gave the PRA a new secondary objective which requires the PRA to act, so far as reasonably possible, to facilitate the UK economy’s international competitiveness (including in particular the financial services sector through the contribution of PRA-authorised persons) and its growth over the medium to long term, subject to alignment with international standards. FSMA 2023 maintained the PRA’s other objectives without change.

In addition to specific policy measures, the PRA has taken practical steps to embed the SCGO in its operations, including through internal changes, and the launch of a research programme to deepen its understanding of the ways prudential requirements can affect the international competitiveness and growth of the UK economy.

The PRA will continue to look for ways in which it can facilitate the UK’s competitiveness and growth when discharging its general functions. The approach focuses on strengthening the three regulatory foundations that were set out in CP27/23, specifically:

• Maintaining trust among domestic and foreign firms in the PRA and UK prudential framework via a range of policies, including those that promote strong prudential standards appropriately calibrated for the UK, and the alignment of said policies with international standards.
• Adopting effective regulatory processes and engagement, including providing for the efficient handling of regulatory processes, such as authorisations and data collections, as well as facilitating the accessibility of the PRA Rulebook to reduce the operating costs of firms.
• Taking a responsive and responsibly open approach to UK risks and opportunities, including making rules that account more effectively for the needs of the UK. This approach means responding faster to emerging risks and opportunities in the UK financial sector, for example, by using regulatory tools to support innovation safely. To this end, in 2024, the PRA will hold a pilot roundtable to gather stakeholders’ views on how the PRA can help to reduce the barriers to innovation that the industry faces.

The policy initiatives discussed in the rest of this section provide examples of how the PRA will advance its secondary objectives in 2024/25.

Furthermore, the Bank’s Independent Evaluation Office (IEO) is evaluating the PRA’s approach to its new secondary objective. Both the outcome of the IEO’s evaluation and the PRA’s response to it will be included in the PRA’s – ‘Secondary Objectives Report’ to be published alongside the PRA’s Annual Report 2023/24. The Secondary Objectives Report will also give an overview of all the PRA’s policy initiatives that have advanced the SCO and the SCGO .

Strong and Simple framework

In 2021, the PRA published FS1/21 – A strong and simple prudential framework for non-systemic banks and building societies , that set out a vision to simplify prudential requirements for smaller, domestic-focused banks and building societies, while maintaining those firms’ resilience.

As outlined in the PRA 2023/24 Business Plan , the PRA will continue its planned programme of work on creating a simpler but equally resilient prudential framework for smaller, domestically focused banks and building societies, known as the Strong and Simple framework. This framework is designed to maintain the financial resilience of banks and building societies operating in the UK, while reducing costs associated with prudential requirements for non-systemic banks and building societies. In 2023/24, the PRA published its final policy on scope criteria and simplified liquidity and disclosure requirements for SDDTs in PS15/23.

In December 2023, the PRA published PS16/23 – The Strong and Simple Framework: Scope criteria, liquidity and disclosure requirements , which finalises the scope of the framework. The PS builds on the first layer of the Strong and Simple framework, which focused on the smallest firms and is known as the SDDT regime. The overall aim of the framework is to maintain the financial resilience of banks and building societies operating in the UK, while addressing the ‘complexity problem,’ under which the same prudential requirements are applied to all firms, regardless of size, even though the costs of interpreting and operationalising those requirements are higher for small firms, relative to the associated public policy benefits.

In 2024/25, the PRA will move further towards finalising and implementing the Strong and Simple prudential framework for SDDTs. A key step will be to implement the simplifications to liquidity requirements that were introduced in Phase 1. The PRA will also finalise the rules for the Interim Capital Regime, which will allow firms eligible to be SDDTs to stay under capital rules equivalent to those currently in place until the simplified capital regime for SDDTs is implemented. The PRA plans to consult on a simplified capital regime for SDDTs in 2024 Q2.

Insurance Special Purpose Vehicles regime

In 2017, the PRA introduced a framework for the authorisation and supervision of ISPVs to provide guidance for parties wishing to obtain authorisation as an ISPV, or for insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II.

The UK ISPV regime has not seen as much activity as originally envisaged. While new issuances of insurance-linked securitisations (ILS) transactions in the UK over the last two years have exceeded USD400 million, there are steps to be taken which can improve the regime and increase its usage.

The PRA has been in discussion with industry on this matter with the aim of understanding the key areas of the regime in which market participants would recommend changes.

The PRA expects to consult on a package of reforms to the UK ISPV regime. These reforms are intended to:

• allow a wider range of transaction structures in the UK regime;
• improve the speed of the application process, and thereby also reduce costs for applicants; and
• clarify the PRA’s expectations of UK insurers who cede risks to ISPVs, wherever they are established.

Remuneration reforms

The PRA’s remuneration rules ensure that key decision-makers and material risk-takers at PRA-regulated firms have the right incentives and can be held accountable. In 2023, following consultation, the PRA removed the bonus cap and made changes to its rules to enhance proportionality for small firms .

In advancing its primary and secondary objectives, the PRA is considering further changes to the remuneration regime that is better suited to the UK’s financial sector, while maintaining the remuneration regime’s overall structure and objectives, which are based on internationally agreed FSB principles and standards . The PRA intends to consult on any changes in 2024 H2.

Implementing changes to the Senior Managers & Certification Regime (SM&CR)

In March 2023, the PRA and FCA jointly published DP1/23 – Review of the Senior Managers and Certification Regime (SM&CR) , with a particular focus on gathering views about the regime’s effectiveness, scope, and proportionality. HMT in parallel launched a Call for Evidence covering the legislative aspects of the SM&CR. The period for sending responses to the discussion paper ended on 1 June 2023.

The PRA received over 90 responses relevant to its work as a prudential regulator, reflecting the significant level of stakeholder interest in the regime. The PRA, working closely with the FCA and HMT, is considering potential policy options for reform in response to the comments received and intends to consult on proposed changes to the regime in 2024 H1.

Complete the establishment of the Cost Benefit Analysis (CBA) Panel

The PRA is continuing to make progress under the new framework provided by FSMA 2023, setting out CBA as an integral part of developing the best possible policy approach, and the results will help shape the PRA’s policymaking. CBAs inform and refine the policy approach to identified issues, helping to design approaches that offer the greatest benefits.

One of the key elements of enhancing the PRA’s scrutiny and accountability mechanisms relates to its approach to CBA and the establishment of a new CBA panel. The role of the CBA Panel is to support increased transparency and scrutiny of the PRA’s policymaking by providing regular, independent input into the PRA’s CBAs relating to PRA rules and the PRA’s statement of policy in relation to CBAs . The Panel will review how the PRA is performing more generally in carrying out its duties with regard to CBA and may provide recommendations to the PRA.

The PRA has completed an open, competitive, and rigorous recruitment process for identifying and appointing a diverse range of expert individuals to constitute the CBA Panel. The PRA will finalise the set-up of the Panel and then start consulting it on the PRA’s statement of policy in relation to CBAs and on the preparation of CBAs. The appointments, including that of the Chair, will be announced in due course.

In 2024, the PRA will consult on its CBA framework, which will set out how the PRA intends to continue to conduct a robust CBA and how it engages with the CBA panel.

PRA Rulebook

The new regulatory framework set out in FSMA 2023 enables the PRA to develop a more coherent and easily accessible Rulebook. The aim is to improve the efficiency and accessibility of the PRA Rulebook by reducing the number of policy document formats currently in use to three: rules, supervisory statements, and statements of policy. In order to achieve this, the PRA’s specialist teams will begin the process of reviewing the EU Guidelines, European Supervisory Authorities (ESA) Q&As, and UK technical standards (UKTS) that are relevant to PRA rules, to determine what should be incorporated into those rules or related supervisory statements and statements of policy. Once the review of these documents is completed, references to the EU Guidelines, ESA Q&As, and UKTSs will be removed.

The PRA is also looking at grouping the elements in the Rulebook to make it easier for users to access relevant information. To support usability and clarity, the PRA will take a consistent approach to the structure of, and language in its policies.

The speed at which the PRA will achieve many of its ambitions for the Rulebook will partly depend on the Government’s approach to the repeal of relevant assimilated law and its replacement in PRA rules and other policy materials. However, the PRA will move ahead with the proposed reforms as quickly as possible to help users more easily navigate the new regulatory landscape.

Banking Data Review

The Banking Data Review BDR, launched in 2023-24, will be delivered as an integral part of the Transforming Data Collection TDC programme. The work will enable the PRA’s banking regulatory data collections to be better aligned with the day-to-day needs of supervisors, ensure the PRA has good-quality data to carry out its new policymaking responsibilities in line with the post-Brexit regulatory framework, and reduce burdens on firms by better integrating and streamlining data collections.

The PRA will consult on the first of three phases of reforms under the BDR in 2024 H2. The consultation will focus on streamlining of the existing regulatory reporting estate, removing reporting templates that may no longer be needed or which contain information that can be gathered at lower cost elsewhere, reviewing collections of counterparty credit information, and incorporating lessons from recent market events.

In parallel, the PRA will continue to work on plans for future phases of reform, focused on credit risk in the second phase, and with all remaining areas covered in a third phase. Engagement with industry participants will be done under the newly appointed TDC Advisory Board, which will be responsible for setting industry working groups on key topics relating to TDC. The TDC’s main industry forum in this area is the Data Standards Committee (DSC), which led the work on the recommendations underpinning the jointly published response by the Bank and the FCA, entitled Transforming data collection – Data Standards Review with recommendations and Bank of England and FCA response . A further working group is the BDR Industry Consultative Forum that is open to all PRA-regulated banks.

Supporting and authorising new market entrants via new ‘mobilisation’ regime

The PRA will continue to support potential market entrants in navigating the authorisation process. This includes providing clear online guidance and industry engagement to build awareness of expectations and seek feedback on firms’ experience of the process. The PRA offers potential applicants the opportunity to meet with staff through a structured pre-application stage, allowing firms to iterate and develop their proposition to support a better-quality application.

The PRA will continue to make use of the mobilisation stage for newly authorised banks, where appropriate, to allow them to operate with restrictions while they complete their set-up before starting to trade fully.

In line with PS2/24 – Review of Solvency II: Adapting to the UK insurance market , the PRA will introduce a new ‘mobilisation’ regime to facilitate entry and expansion for new insurers from 31 December 2024, similar to the mobilisation stage for new banks. Mobilisation will help to facilitate competition, and the international competitiveness and growth of the UK insurance sector, with the aim of benefiting firms who are contemplating applying for authorisation as an insurer in the UK now or in the future.

Newly authorised insurers in mobilisation could be offered the option of using a set period of extra time to build up systems and resources while operating with business restrictions, proportionate regulatory requirements, and lower minimum capital requirements. New insurers could be suitable for mobilisation when they have a shortlist of activities to complete before they can meet full regulatory requirements.

Ease of exit

Improving how firms can leave regulated markets in an orderly way is a vital corollary to greater ease of entry into those markets. It enables a dynamic and competitive market which entrants can join and leave with minimal impact on the wider market and the PRA’s statutory objectives. The PRA has published the first of two planned policy in this topic, (eg, PS5/24 – Solvent exit planning for non-systemic banks and building societies ). A further PS on solvent exit planning for insurers is expected in 2024 H2, following the completion of the market consultation initiated by CP2/24 – Solvent exit planning for insurers . Both of these form part of the PRA’s strategic focus on increasing the ease of exit.

Ring-fencing regime

The Bank and PRA continue to work closely with HMT on implementing the recommendations made in March 2022 by the Independent Review of Ring-fencing and Proprietary Trading , led by Sir Keith Skeoch. On 28 September 2023, both HMT and the PRA published consultations with the aim of giving effect to recommendations of that review.

HMT consulted on removing the blanket restriction which prevents ring-fenced bodies (RFBs) operating in countries outside the EEA. The PRA consulted on introducing a new rule and updating SS8/16 – Ring-fenced bodies (RFBs) , to align with HMT’s proposed legislative changes. These changes aim to implement certain safeguards to ensure that RFBs are not exposed to material risks through the business of their overseas subsidiaries or branches. The PRA will publish its policy and a rule Instrument once the legislative changes are brought into force. Simultaneously, the PRA will update SS8/16 to reflect the changes.

FSMA requires the PRA to conduct a review of its ring-fencing rules and provide a report to HMT every five years. The first such review was completed on 12 December 2023 and the resulting report was laid before Parliament on 25 January 2024 and published on the Bank’s website.

The PRA intends to consult on potential changes to the ring-fencing regime identified by the Rule Review once a fuller exploration of costs and benefits has been undertaken. The Bank and PRA will continue to support HMT with technical advice to enable HMT to finalise its legislative changes, and to consider responses to its Call for Evidence on longer-term reforms.

Effective authorisation processes

The PRA handles over 1,800 regulatory transactions a year, ranging from new firm authorisations to variations of permission for existing firms and cancellations of permission for firms leaving the market. Over the coming year, the PRA will continue to handle these transactions in more streamlined, efficient, transparent, and accessible way while maintaining strong risk controls to ensure the UK’s success as a global financial centre.

In parallel to consulting on reforms to the SM&CR, the PRA will continue to enhance and streamline internal processes on SM&CR applications and other transactions to drive further improvements in operational effectiveness, as measured through the quarterly publication of metrics on timeliness of decisions. This will include close collaboration with the FCA to ensure an efficient and coordinated review of cases, as well as improvements to case handling and recording technology platforms. The PRA will extend existing industry engagement on New Bank Start-ups to also cover new insurers and SM&CR applications in order to promote transparency and spread best practice in support of efficient case handling. In addition, the Wholesale Insurance Accelerated Authorisation Pathway, developed jointly by the PRA and FCA, will continue to provide an accelerated route for the authorisation of a sub-set of London market wholesale applicants.

The PRA’s operation within the Bank plays a critical role in maintaining the stability and integrity of the UK’s financial system. In pursuit of its objectives and work programme, the PRA ensures that its regulatory framework is inclusive, considering the diverse landscape of financial institutions. It aims to create a level playing field, while recognising and planning for the potential impact of the changes in the environment in which we are operating.

In line with its mission, the PRA continually adapts regulations to address emerging risks and opportunities, fostering inclusivity to enhance trust, transparency, and accountability in the financial sector. As a prudential regulator, the PRA maintains and strives for operational efficiency in its regulatory processes, technology, and its workforce. This involves streamlining procedures, driving inclusive recruitment, and leveraging technology to enhance effectiveness – noting that efficient regulation benefits both regulated entities and the broader economy by reducing unnecessary burdens and facilitating smoother interactions between financial institutions and the regulator.

Data and technology

The PRA will continue its programme of work to strengthen and transform its data-related capabilities. The PRA will also continue to play a leading role in international collaboration on the regulatory use of data and technology, liaising closely with other regulators, central banks, academic institutions, and industry. The PRA intends to run a multi-day innovation-focused event for PRA colleagues to support learning and increase awareness about the impact of technological advances and initiatives across the financial sector.

Transforming Data Collection by building on digital regulatory reporting

The PRA will continue to work towards achieving the objectives of the TDC programme for 2026:

• Goal 1: the PRA has the data and tools it needs to rapidly identify and probe emerging issues, risk, and policy questions, including integration into a single customisable supervisory dashboard; and
• Goal 2: the PRA only collects data that it needs from firms, thereby reducing unnecessary burdens on firms.

Regarding Goal 1, the PRA will continue to improve existing and deliver new priority data visualisation and analysis tools to support supervision, covering financial and operational data for PRA-regulated firms. The PRA will also make use of speech-to-text technology to support day-to-day work for staff, and to contribute to the Bank’s wider work on the appropriate use of artificial intelligence to support its objectives, including large third-party language models. This will be underpinned by ongoing support for PRA staff undertaking renewed digital skills training alongside individual and group coaching for some staff cohorts, and planning for those programmes in future years.

Regarding Goal 2, the PRA will continue to work with the FCA and the wider Bank on the TDC programme , which envisions that ‘regulators are able to get the data they need to fulfil their mission at the lowest possible cost to industry’ through improvements to the integration of reporting, reporting instructions, and data standards. Over the coming years, TDC therefore aims to deliver a new target operating model for all of the Bank’s regulatory, statistical, and stress-testing data collections.

Diversity, equity and inclusion at the PRA

The PRA continues to take action to strengthen its culture and working environment. The Bank’s Court review into ethnic diversity and inclusion reported its findings in July 2021. The PRA, alongside the rest of the Bank, is implementing the recommendations of this review and has made considerable progress in terms of embedding inclusive recruitment, investing in talent development, and advancing a psychologically safe culture to promote employees’ ability to voice their opinions via the ‘speak my mind’ initiative. There is also increased accountability for senior leaders to advance a diverse and inclusive Bank.

The PRA recognises the importance of all staff feeling valued and being able to thrive. Key focus areas for 2024/25 include progressing initiatives to improve psychological safety, ethnic and gender representation, and disability disclosure. The PRA continues to benefit from the Bank’s excellent employee networks that cater to diverse groups such as disability, LGBTQ+, social mobility, gender, age, carers, different ethnicities, and many more.

PRA Agenda for Research

The PRA plans to build on its research efforts in 2024/25, including through improving central coordination and capacity-building projects.

Research priorities are captured in the PRA Research agenda 2023+ below (Table 1). The PRA will continue to deliver on those, while making sure that a timely delivery of high-quality research, expertise, and critical evaluation is given to PRC, FPC, and other senior decision-making activities. These deliverables are captured in the research metrics and the PRA Research Annual. The metrics track the quantity, quality, and impact of the PRA’s research, while the PRA Research Annual provides further details on how timely and effective the research advisory (inside and outside the institution) has been. New for this business year is that the PRA will additionally produce impact cases, with the purpose of tracking the lifespan of key research projects and evaluating their total policy/social impact.

To ensure that the organisation has the right capacity and skills, the PRA will initiate new capacity-building projects on models, tools, and data, while reinforcing external collaborations on those. It will also continue efforts to disseminate this work and foster strategic cooperations with research departments at other central banks, regulatory authorities, research institutes, or universities.

Table 1: PRA Research agenda 2023+

Risks to delivery of business plan.

Operating in a complex and fast-moving environment gives rise to risks to the delivery of this business plan. The PRA monitors, manages, actively mitigates (where possible), and reports these risks to the PRC and relevant Bank fora on a regular basis.

Over the course of 2023/24, attrition levels reduced and there was an improvement in recruitment into key roles. Looking ahead to 2024/25, headcount required to deliver this Business Plan is forecast to remain broadly flat.

The PRA will continue to impose discipline on how it deploys its budget to ensure resources are allocated appropriately. The PRA will also need to reprioritise during the year in response to changes in the external environment, as it routinely does. The PRA will continue to focus on managing operational risks and strengthening horizon-scanning capabilities so that it can respond quickly to changes in risk and drive decisions on prioritisation, business planning, and resourcing.

Having access to the right technology and data remains a key area of focus in 2024/25 as part of a multi-year investment across the PRA and the Bank to ensure that the PRA’s technology capabilities support its strategic priorities. This focus will take account of developments in regulatory technology, reduce inefficiencies, and leverage the benefits of being a regulator within the UK’s central bank. There is a risk that the PRA may be unable to deliver its intended technology ambition given the congested change agenda across the Bank. This challenge is being managed through careful prioritisation and scoping of key projects, including delaying some lower-priority activities.

Dependencies

Given the interconnected nature of the global financial system, dependencies on external parties, such as the FCA, HMT, and overseas regulators, could present a risk for the PRA. Policy development, authorisation processes, and supervision activities are contingent on maintaining relationships and co-operation with these parties. The PRA fosters its domestic relationships to ensure effective regulation and supervision across the UK financial sector. The PRA also works closely with international regulators to address cross-border risks for firms operating internationally. The PRA continues to foster these important relationships at all levels of the organisation through several channels, including international committees, supervisory colleges, joint reviews, information-sharing, and joint publications.

PRA Budget 2024/25

The PRA’s provisional budget for 2024/25, which is subject to finalisation of pension costs and year-end adjustments, is estimated at £353.0 million. This is an increase of £34.0 million (11%) on the 2023/24 budget. To reduce the impact to firms in 2024/25, the PRA has taken two measures, as set out in CP4/24 , to limit the increase in fees paid by firms to 7%. This increase follows a 1% reduction to fees in 2023/24 compared with 2022/23.

The PRA is constraining the increase in its own direct costs to 2%, which means a real-terms cut to the budget that will be managed by increasing efficiency in the PRA’s supervisory approach, end-to-end policymaking process, and operations. Alongside this, the PRA needs to fund inflation-driven increases in support services provided to the PRA by the Bank and the PRA’s share of tackling obsolescence in the Bank’s technology estate on which the PRA relies.

Budgeted headcount is forecast to remain broadly flat for 2024/25 ending the year at 1,541 (this compares closely to the actual year-end headcount position for 2023/24 of 1,537). The budgeted headcount reflects the PRA’s need to invest in key areas, including increasing the capacity to approve the efficiency of the IRB model review process, the implementation and supervision of CTPs, investment in the BDR, and implementing lessons learned from the failure of SVB and CS.

Details on how the PRA proposes to fund its budget can be found in CP4/24 – Regulated fees and levies: Rates proposals 2024/25 . It includes proposals for allocating costs of the PRA’s 2024/25 ongoing regulatory activities across PRA fee payers.

Abbreviations

ACS – Annual Cyclical Scenario

AI/ML – Artificial Intelligence/Machine Learning

AoC – Analysis of Change

Bank – Bank of England

BCBS – Basel Committee on Banking Supervision

BDR – Banking Data Review

CBA – Cost Benefit Analysis

CEG – Cyber Expert Group

CEO – Chief Executive Officer

CMORG – Cross Market Operational Resilience Group

CP – Consultation Paper

CRR – Capital Requirements Regulation

CTP – Critical Third Party

DEI – Diversity, equity, and inclusion

DP – Discussion paper

DSC – Data Standards Committee

D&I – Diversity and inclusion

EAS – Early Account Scheme

EU – European Union

ESA – European Securities and Markets Authority

ESCG – European Systemic Cyber group

FCA – Financial Conduct Authority

FinTech – Financial Technology

FMI – Financial Market Intermediary

FMIs – Financial Market Infrastructures

FPC – Financial Policy Committee

FRF – Future Regulatory Framework

FSB – Financial Stability Board

FSMA – Financial Services and Markets Act 2000 (as amended)

HMT – His Majesty's Treasury

IAIS – International Association of Insurance Supervisors

ICS – Insurance Capital Standard

ILS – insurance-linked securitisations

IRB – internal ratings-based

IRRBB – interest rate risk in the banking book

ISPV – Insurance special purpose vehicle

L-SREPs – Liquidity Supervisory Review and Evaluation Processes

MA – Matching adjustment

MALIR – Matching Adjustment Asset and Liability Information Return

MDA - Maximum distributable amount

MoU – Memorandum of Understanding

MRM – Model Risk Management

NBFI – Non-Bank Financial Institution

PMA – Post Model Adjustment

PRA – Prudential Regulation Authority

PRC – Prudential Regulation Committee

PS – Policy statement

QMC – Quarterly Model Change

RFB – Ring-fenced bodies

RWA – Risk-weighted asset

SCGO – Secondary Competitiveness and Growth Objective

SCO – Secondary Competition Objective

SDDT – Small domestic deposit takers

SMCR – Senior Managers and Certification Regime

SME – Small and medium-sized enterprise

SMF – Senior management function

SS – Supervisory statement

SVB – Silicon Valley Bank

SWES – System-wide exploratory scenario

TDC – Transforming Data Collection

TFSME – Term Funding Scheme with additional incentives for SMEs

TPR – The Pension Regulator

UKTS – UK Technical Standards

Contacting the Bank of England and the PRA

Please send any enquiries related to this publication to [email protected] .

In PS15/23, the PRA set out its rationale to rename Simpler-regime firms to Small Domestic Deposit Takers (SDDTs), and Simpler-regime consolidation entities to SDDT consolidation entities. To avoid confusion, throughout the rest of this document, the PRA will refer to SDDTs, SDDT consolidation entities, the Small Domestic Deposit Takers regime or SDDT regime, and SDDT criteria, rather than Simpler-regime firm, Simpler-regime consolidation entities, simpler regime, and Simpler-regime criteria, even when referring to past consultations.

A CTP is an entity that will be designated by HMT by a regulation made in exercise of the power in section 312L(1) of 2000, as amended by the FSMA 2023.

As at 1 January 2024.

Strictly speaking, DIFs do not accept deposits and are included under the category of deposit-takers for presentational purposes only.

Section 2E of FSMA.

SS11/13 – Internal Ratings Based (IRB) approaches .

As set out in the 2024 priorities letter on UK deposit takers .

SMFs are a type of controlled function carried out by ‘approved persons’, ie individuals who have to be approved. SMFs are the most senior people in a firm with the greatest potential to cause harm or impact upon market integrity.

Managing climate-related financial risk – thematic feedback from the PRA’s review of firms’ SS3/19 plans and clarifications of expectations and Thematic feedback on the PRA’s supervision of climate-related financial risk and the Bank of England’s Climate Biennial Exploratory Scenario exercise .

Thematic feedback from the 2021/2022 round of written auditor reporting and Thematic feedback from the 2022/2023 round of written auditor reporting.

‘Digital money’ refers to claims on deposit-takers or other financial institutions, which exist only in electronic form and whose value is preserved through a combination of strict regulation and issuers’ access to central bank deposits. ‘Digital money-like instruments’ refers to other assets that exist only in electronic form and are used for payments. Some of these are regulated to support a stable value, but their issuers do not have access to central bank deposits and are subject to lighter regulation.

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