Martz Witty
Head of the Martz Group.
www.martz.co.nz
When pondering what to offer a viewpoint on, I was drawn (back) to capacity modelling.
Yes I have written on this before, but this is a constant nagging issue we are striking with clients day in and day out currently… hence I felt I had to offer a further deliberation on it.
So the age old question is: do you get the work and then acquire the staff… or get the staff and then chase the work?
It’s not a ‘one-size fits all’ unfortunately and will depend on the product or service you sell, the style of delivery and your levels of service. Nonetheless, the fundamental rule of thumb is that nothing sucks cash from a business like unprecedented growth. Also, heavy growth can distort and clutter quality of service delivery.
If your business claims service delivery is paramount and a point of difference, then clearly you need to get the staff before the work (or figure out a method to get the work done on contract or sub-contract), so that your service levels, and therefore brand, are not diminished.
A big challenge around capacity modelling is knowing what you are going to produce, going to sell, when and how and why. Yes, many more questions than answers and very often you simply don’t know the answers – but educated guesses have to be made.
Educated ‘what if’ analysis and educated stabs in the dark even. Remarkably, more often than not with the right guidance and questions, you get it more right than wrong.
It all starts with big picture planning. How big do you want to be? How busy do you want to be?
Some early yardage numbers need sorting. Average transaction value, average transaction frequency, margin analysis (how much do you make on each transaction) – then it becomes a game of just pure mathematics. The wonderful thing about this is you are in control of the mathematics; you can be as big or small, as busy, as profitable as you want to be.
It sounds so very easy and it can be, but if you need a hand then get hold of a cost and management accountant and thrash out the ‘ifs, buts and maybes’.
There are loads of templates in Excel online, or there are fantastic bits of forecasting software so you can start working your numbers if you want to do most of the work yourself.
If you are reading this and just don’t know where to go first – then ring us – no obligation, no pressure.
