NAPKIN PLAN

There’s something special about a napkin and a pencil.

All it takes to do a “what-if” scenario is a realtively clean paper napkin and a pocket-knife to keep the pencil sharp..

With proper stimulation from a good burger, home-cut fries and an inattentive wait-staff-not-selling-raffle-tickets, a good business plan can take shape upon this treasured work-space.

Intricate Proforma statements are useful for adding details and clarifying foggy thinking.  Business plan software is fine when the heavy thinking has been thought.

But ah, the blank napkin has no blinking cursor begging for input.

The napkin space corrals us to think in brevity about the things that matters most. It seems easier to understand numbers and relationships with pencil scribble.  Mistake-filled napkins are easily crumbled and tossed with no worry of forensic recovery.

The next time your business lunch spawns a new idea, decorate the classic white with a few bullets:

  • Project demand.  No econometrics needed.  Just scribble an estimate of how many people (percentage of a market segment converted to a real number) may purchase the product. Pick a number.   It’s only a napkin.
  • Select a few price points.  Multiply selected prices by demand.  Circle this number and label it “Total Revenue.”
  • COGS—Cost of Goods Sold—Estimate how much it will cost to produce the product or service.  If you have no clue, estimate COGS at 35% of sales.
  • Labor?  How many employees will be needed?  Entry level skills or advanced?  Estimate labor as a percentage of sales.
  • Rent and other Overhead—Industry averages are readily available
  • Margins tell the story.  Is the margin potential worth the risk and time required for a start-up?

If the napkin margin doesn’t excite you, it’s unlikely a spreadsheet will spread more joy.

There’s always another lunch.

Extra napkins, please.

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