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Staffing Plan

Staffing Plan


So, the next thing we’re going to
talk about is the staffing plan. So, usually, when I ask people what
the most expensive part of a start-up is. People will say, well it’s gotta to be the equipment you
buy, or the building that you lease. But the reality is most of
the cost that you are going to be encountering in your start up
are actually in the form of people. so, coming up with an accurate
staffing plan is critical. So the most important thing you need
to know before you start building your staffing plan is what
your operating plan is. So understanding what work
you’re going to need to do when, and who is going to need to do that work,
is the key input to a staffing plan. At the end of it, you’re going to have a
table that outlines when to hire employees and roughly how big your
company will actually be. Let’s take a look at
a sample company plan here. So this is an example of
a catheter company plan. The employee plan and basically you
can see that in the, on the left, we have broken the organization up into
various different types of employees. Across the top, we have the quarters or the time period in which we would
need to hire those employees. So, what you want to do is,
I like to put my catheter, you know, my operating plan and
my employee plan on the same page because that way I can very
quickly look up and say. Let me see. I was planning in doing initial
catheter prototyping in queue one. Well I better have some catheter
engineers in queue one, and you can imagine going all the way
through the entire plan and figuring out exactly when all of
those people need to be involved. So, in this sample model the blue
numbers represent assumptions, things that can be changed, and
the black represents just basic modeling information,
things that we don’t change.  So, what you want to do is construct
your operating plan, and go through, and build your employee staffing
plan as a result of that.  So, if you look at our example
company here in the beginning this company is mostly technical people right if you look here in the first
couple of years what you see is you got a lot of engineers floating around
you’ve got a clinical advisers over here. You’ve got a manager that kind of
manages the whole thing that’s sort of the early phase of
this company if you look out in later years what you see and this
is very common is that the commercial team whether that’s the marketing folks,
or the sales force. Those guys really start to
take over the business. They become a much more integral part
of the business as you get further out. [COUGH] When we create these plans we look
for something called comps, comparables, and to, and we often construct ratios
to get a sense of how often or how things are lining up in our plan. So for example, I’ve created this analysis section
down here at the bottom of the plan. One of the multiples that
I always like to look at is the SGNA to RND multiple and
what that means is I’m basically dividing. The number of RND guys into the number of
SG&A or selling general administrative resources, and in the beginning, not
surprisingly, this ratio is less than one. This is, this makes a lot of sense, because the company is
mostly technical folks. Out at the end, what you can see is
the ratio gets up above three, and a good rule of thumb that many people use when
they look at medical device startups is, the number of SG&A to R&D, team members. When the company is fully commercial. Should be in the two and
a half to three and a half range. So when you build your models, you
should be shooting for a similar ratio. You can construct all sorts
of other ratios along the way, like the number of units per assembler. So on this particular model we’ve
decided to that we will be actually building our own product, and
to do that we have this group, we have this group called
Manufacturing Assemblers. So as our revenue goes up. We would expect the number of
manufacturing assemblers that we need to scale appropriately. What you want to do is construct a ratio
that says here’s the number of products that I believe I will sell and divide
the number of assemblers into that product to see, to give yourself the confidence
that your assumptions make sense. So, that’s how I construct a staffing
plan in a particular startup company. So, when you look at this
sample model I’ve coded this in a particular way to help you
understand how the model works. The black cells are either formulas or
data that is not meant to be changed. The blue cells all represent inputs. So, when you create your own particular
model, you can vary the inputs, based on your particular business,
by changing the cells in blue. So people often ask me where I
get these particular ratios, and what I would say is the most helpful
person to talk to about a financial model is somebody like a Chief Financial Officer
of a startup company, and so the idea if I were building this and
trying to be as accurate as possible. I would want to go ahead and find somebody
that’s built one of these before. They’re going to have all of
their own rules and tips and tricks to make sure that your plain is
realistic, because again at the end of the day, you’re going to to be using
this information of figure out how much money you need to raise, and we
want that to be as accurate as possible.

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