2nd April 2007 Guessing the costs, guess, guess again, then add a little more
Business Planning is just a collection of best guesses, but if you're smart, it's your worst best guess!
When I started I was advised to create a spreadsheets to include all expected costs, and all expected income. I was told to play around with it looking at best and worst possible income, and best and worst possible costs. Having looked at what I had considered the worst possible scenario, I was advised to take these figures, add a further 20% to the costs, and take a further 20% and see how bad it looked, if we were still surviving, we've got a goer.
Wise words indeed, it does seem to be that the worse you plan it to be, the better you do against expectation and vice versa. In particular, never under estimate the impact of suppliers on your task. I've always thought it risky to promise something you subsequently can't deliver just to get the business, and always deliver what you say you'll deliver, by when you said you would deliver it by. Yet is does seem that the vast majority suppliers do not heed these basic rules. I spent most of my day waiting for a company who should have transferred our domain names last Friday, but still hasn't (now Monday). Our new accountants, who we moved to because the last two didn't deliver accounts on time, have also missed the deadline, accumulating a fine for us, and now look like missing the fine deadline. Last week we finally got our new jobs site live, it had been due 2 weeks previous.
So there you go, when business planning, work out just how bad suppliers could be in your worst dreams, then expect a little worse and you won't be far wrong. But smile, because this is why I'm still in business, there's so many people in business doing such a bad job, the opportunities to compete and do better are endless!
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