I see major mistakes being made on business plans... on the cost side.
People tend to guess at costs.
The best way is.. to start with the fundamental profit model - at the core.
Define unit costs for personell...eg cost of a computer, cost of a mobile, expenses ,training, safety etc....recruitment fees, no contribuition period for staff whilst they learn... So LEAD TIME!! ensuring you recruit them ahead of where they are needed.
Supervision requirement...
Then automate the addition of cost, looking through the profit model,
to determine numbers and types of staffing etc.
Then looking through staffing to add all of the costs associated with the staff - supervision etc
So when you up the sales for different scenarios - the model automatically adds in appropriate costs - at the right time.
Most people I have seen on business plans fail to increase costs properly with sales, and have no audit trail to determine - WHY do you need five staff. So their "high sales" scenario and long range scenarios tend to be woefully inadequate
This leads to what I call MUGS = Marketing universal graph system
Which is a graph going down that happens to leap up in about 18 months.
When I see it is generally because, costs have not been scaled properly
And some of the spreadsheets I have seen handed out as templates by "professionals" are nothing short of negligent.
The level of complexity for project businesses, is several levels higher, and needs project templates - particularly using proper and prudent views on the value of work in progress, whilst taking maximum use of the standards to recognise cost.
A process as complex as this, needs macros to handle it properly
And cannot be done manually on spreadsheets - so learning excel macro is a must for anyone who wants to do this well.
Having done all of that
The last serious business plan I did ..was to raise £10million public private for a high profile tech business stayed to pretty well to plan for the first 3-4 years.
The main thing we have noticed, is that the a-priori ratio of different types of project was predicted wrongly
BUT the point is because all of thenumbers have a plan audit trail, then you can go back and see which assumptions are wrong, so later forecasts become more and more accurate as underlying assumptions are tuned, so you can get accurate
Doing this on my retail business - sucking in historic data from accoutns , and predicting the rest based on profit models, including P&L and automatic cashflow and was pretty exact and year projections uncannily accurate - but only because we had learned from history.
I also used other businesses benchmarks in setting up the plan.
I have serious spreadsheets that do this, for anyone that has planning in mind - that could be tailored.
Much of my life has been in pure tech business development.
And thatit can be finger in the air!!
So the approach to pure tech is different - which I think is risk management planning.
What is the minimum thing I need to develop or prove - the tiny kernel of the idea, in order to be able to plan the rest properly
Set the plan to reach that objective first. And then conditionally rachet other resources. Dont divein blindly
