How To Plan Your Business Without Excel
Chapters 2 and 3
Step 3: Profitability -
Add Headcounts & Expenses
To answer the business question "when your business is becoming profitable", you must add
Typically, the biggest block of expenses in a company are headcount cost. In Lean-Case, you can add headcounts via the Headcount > Plan menu. Similar to adding different revenue streams, you can add also add various Headcount teams.
Headcount Teams are the basic Lean-Case concept to add and manage different types of headcounts in your Lean-Case project, e.g. all headcounts in an Engineering Team like:
To add a new team, click on <+ Add Team> . Give your Team a name, e.g. "Engineering Team" and assign the right categories, specifically the right cost type for the team - either:
Of course, cost for headcount teams which you flag as direct cost, will also be taken into account when unit economics are calculated.
Add Headcount - Jobs
Let's set up the engineering team by adding a job, e.g. the CTO, who is an employee.
Add Headcount - Groups
Then let's add a groups of contracted software developers which have a similar job and salary profiles. You add the same data as for jobs but instead of entering a start and end date you enter a hiring plan.
To enter the hiring plan, click on the "Table" icon next to the field Hiring Plan. You find this icon throughout Lean-Case and it allows you to adjust values over time. This will launch the Lean-Case Spreadsheet Widget. You can adjust any data series - either by editing values manually, by uploading data or by creating a data series.
Let’s assume that in the first year we hire 1 new developer each month – so a total of 12 developers. Each developer is a contractor and gets a base salary of $3,000. (see video below).
Let’s save the data in the Spreadsheet widget and the Headcount Team. You can see an additional $3,000 per month and then notice that the CTO job starts in July.
Add Headcount - Manager Role
On top, we can also add Manager Roles to automatically add a management layers - let’s say that we need a lead dev per 6 developers in the group.
Let’s save this and let’s go to the Check page where you can filter by teams and job types and check the data for each job, for each group and each role.
Add Headcount - Team Role
Team Roles are typically related to sales, account management or support functions. Similar to Groups, Team Roles have similar job and salary profiles. But other than Group Members, Team Roles are not hired at specific points in time. Hiring Team Roles depends on drivers (customers, units, sales teams, sales partners or revenues), e.g. the number of Sales teams, Sales Quotas to sign up new customers per month or simply revenues to manage.
Basically, this means we are spending 1% of revenues for support but at the same time we have the benefit that we keep track of how many headcounts we need.
Now let's move to the Expenses menu which again works very similar to the headcount menu and uses the cost widgets you have already used for revenue-related cost.
Expense Groups are the Lean-Case concept to add and manage different types of general indirect cost for Sales & Marketing (S&M,) Research & Development (R&D) and General & Administration (G&A). Each expense group can be categorized by Cost Type, Function and Location.
To add a new Group, click on <+ Add Expenses>. Give your expense group a name and assign the expense category.
You find again the same cost widget which we already used to add all the revenue related cost earlier by entering a irregular expense. You can create a data series the same way you can do it with the Spreadsheet widget, e.g. Let's assume that you have a startup cost which
Actually, you can use the spreadsheet widget in this context as well if you select the switch "ShowTable".
Now, we have entered revenues, revenue related cost, headcounts and expenses. You are very close to answer business questions 3 and 4 on Profitability and Cash Flow. These answers you find in the dashboard