From the course: Financial Analysis: Making Business Projections

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Adjusting for changing resources

Adjusting for changing resources - Microsoft Excel Tutorial

From the course: Financial Analysis: Making Business Projections

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Adjusting for changing resources

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- In the previous video, we looked into planning our next year's revenue based on having the same resources during both years, and since next year has not yet happened, that means we can still decide if we need to have more or fewer resources next year. If I do decide to hire more sales reps, or scale back to one, or stop marketing programs that I judge not productive enough, then that will have an impact on my revenue performance. Just like before, we need to identify the changes in resources for the coming year and derive the revenue impact from it. Again, we need to look at the productivity of those resources in the previous year as a starting point. If we add resources, then we need to determine three things, when the resource will be added, how much time it will take that resource to reach full productivity, and what its maximum productivity will be. Once those are defined, we can add the underlying revenue to our forecast. If, for example, we decide to hire a new sales rep, and…

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