The sections of a plan are linked when the output of one becomes the input of the next. The objective sets a target, the market shows it is reachable, operations can deliver it, and finance shows what it costs.
This lesson is part of business plans. It follows organising a business-plan structure.
What is the hand-off test?
At each boundary between sections, ask one question. If the answer is no, the link is broken.
- Objective to market: are there enough buyers for the target?
- Market to operations: can production meet what the buyers will want?
- Operations to finance: do the costs and revenue use the same quantities?
Worked example: a plan with a broken link
An invented stall plans to sell reusable bags. Its objective is 300 bags in 4 months. The market section says the school has 800 students and the plan targets 1 in 4 buyers, which is 800 ÷ 4 = 200 buyers. Each buyer takes one bag.
Objective to market: the target of 300 bags needs 300 buyers, but the market section finds only 200. The link is broken, and the plan is 100 bags too ambitious.
There are two repairs. Lower the objective to 200 bags, or widen the market. Suppose the plan lowers the target: 200 bags, with operations of 4 batches of 50, which gives 4 × 50 = 200. Finance then uses 200 bags at RM8 each, which is RM1 600 of revenue.
| Link | Figure passed on | Matches? |
|---|---|---|
| Objective to market | 200 bags, 200 buyers | Yes, after the repair |
| Market to operations | 200 bags, 4 batches of 50 | Yes |
| Operations to finance | 200 bags, RM1 600 | Yes |
The mistake of independent sections
The common slip is to write each section alone. The market section finds 200 buyers, yet operations plans 300 bags, and finance multiplies 300 by RM8 to get RM2 400.
Each section is neat, but together they describe three different plans. The repair is to write the number once and carry it forward, as in the table.
Check yourself
A plan states an objective of 120 bags. Its market section finds 150 buyers. Operations plans 3 batches of 50. Find the broken link and suggest a repair.
Answer
Operations plans 3 × 50 = 150 bags, which matches the market but not the objective of 120. The link between the objective and operations is broken.
Repair: either raise the objective to 150 bags, or make 120 bags in batches of 40, for 3 batches. The plan should state which, and finance should then use the same quantity.
What to study next
Numbers carried forward must also be correct. Continue with checking numerical consistency, then test the skills in the practice set.
The business case answer planner helps you line up figures across sections. For a teacher to read your plan with you, see online one-to-one Business tuition.