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Chapter 8: Management Team - Page 8.3

Discuss Your Management Gaps

You may have obvious gaps in the management, especially in start-up companies, but even in ongoing companies. For example, the manufacturing company without a production manager has some explaining to do, and the computer company without service has some problems. It is far better to define and identify a weakness than to pretend it doesn't exist. Specify where the team is weak because of gaps in coverage of key management functions. How will these weaknesses be corrected? How will the more important gaps be filled?

Other Management Team Considerations

Applicability depends on your company. Some questions that should be answered include:

  • Do any managers or employees have "noncompete" agreements with competitors?
  • Who is on your board of directors?
  • What do the members contribute to the business?
  • Who are your major stockholders?
  • What is their role in management?

At this point you should normally include a Personnel table to project personnel costs, including direct compensation and indirect costs. The indirect costs include vacation pay, sick pay, insurance benefits, education, and of course, payroll taxes and some other costs. There are different terms for all of this, but my favorite is "personnel burden," which is a cost over and above the direct wages and salaries.

Special Treatment for Home Offices

If you are working as a sole proprietor in a home office, you should still include your own compensation as part of your business plan. What you pay yourself should be added into the profit and loss as an expense. However, in this case you don't really need to include payroll burden, because these additional expenses are irrelevant until you include additional employees.

 

Copyright © Timothy J. Berry, 2006. All rights reserved.