Create a Business Plan on Your iPhone in Three Steps with Scratchplan

Create a Business Plan on Your iPhone in Three Steps with Scratchplan

Let’s face it: creating good old Excel spreadsheets is probably one of the few reasons you still get back to your desk once in a while instead of simply ‘working’ from your office couch with your iPad or iPhone. At least it was for me.

Sure — there are Excel for iOS, Airtable, Soulver and others, but none of these seemed like a good fit for my use case: creating complex, long term calculations for the business cases of our mantro ventures. It was time to change this.

Enter Scratchplan

Scratchplan is a brand new app for iPhone and iPad. It does one thing only, and does it great: enabling you to define Indicators and observe their values over time, based on your own Definitions. Let’s give it a try and create a business plan for our sample startup, called “Awesome Apps”.

Awesome Apps is a new one-person startup that creates mobile apps for local business owners, who in return pay a fixed price for this service. Steve Awesome, the founder, wants to know how much profit he can expect from his new business.

Step 1: Setting up The Plan

After installing Scratchplan from the iOS App Store, Steve uses the Plan Creation Assistant to set up his new Plan. The Assistant guides him to the following steps:

  1. Setting a Plan Title — Steve obviously enters Awesome Apps.
  2. The Number of Periods the plan should span. Steve would like to have a look at the next three years in monthly steps, so he enters 36.
  3. The Period Unit. As described before, a Period shall represent a Month.
  4. The First Period. Steve will open his business on March 1st, 2019, so that’s what he selects. Scratchplan now knows that Period 1 will represent March 2019 and count up from there.
  5. Finally, Scratchplan offers to add an Indicator Starter Kit to the Plan. This may be handy for your first Plan, but for the sake of this tutorial, Steve wants to define his Indicators himself

After completing the assistant, Steve is taken to his Plan, which is still empty. No surprise, as he hasn’t defined any Indicators so far.

Step 2: Creating Indicators

It’s now time for Steve to create all the Indicators required to represent his business in sufficient fidelity. At this point, it’s always important to remember the original question a plan is supposed to answer to avoid creating more Indicators than required.

In our sample case, we’re interested in the monthly profit of Steve’s business. It’s a good practice to set up this very Indicator first, and that’s what Steve does. He adds an indicator called Profit.

This Profit Indicators depends on others, and now it’s time to create these supporting Indicators as well. Steve therefore adds the following Indicators:

  • Revenue: The total amount Steve’s customers pay for his apps in a month.
  • Expenses: Steve’s monthly expenses, e.g. for license fees.
  • Price per App: The price a single customer pays for a delivered app.
  • Apps Delivered: The number of apps Steve deliveries per month.

That’s it for now! Steve now sees five Indicators in his plan. Each is showing a warning sign, as no definitions have been provided for their values yet.

Step 3: Creating Indicator Definitions

Up to now, Steve’s six Indicators are mere empty shells — it’s time to define their behavior and fill them with life. To do so, Steve uses Definitions. In Scratchplan, Definitions are timed formulas that determine how an Indicator behaves over time.

Looking at Steve’s Indicators, we notice that some of them will have fixed values, while others change over time or are based on other Indicators. Thankfully, we can easily model all these behaviors in Scratchplan, without writing a single line of code.

Definitions Level 1: Constant Indicators

We start with an easy case: our Expenses Indicator. In reality, Steve’s bills will come from various sources (e.g. rent, licenses, travel), but for our case, let’s assume that Steve knows he has steady expenses of 1,000 USD per month.

All he needs to do now is add a Definition to the Expenses Indicator, valid for the complete duration of the plan that contains only one Formula Component: the number 1000. Coming back to the Plan Overview, Steve now sees that the Expenses Indicator shows a constant value of 1,000 USD.

Steve creates a similar definition for the Apps Delivered Indicator, which he defines at a constant value of 2 (apps per month).

Definitions Level 2: Variable Indicators

The Price per App Indicator is a little bit more tricky, as its value changes over time. Steve intends to sell apps for 750 USD in the first month and then increase the price to 1000 USD one year later.

To model this behavior, he creates two Definitions for the Indicator. The first Definition starts in Period 1 (March 2019) and has a fixed value of 750 (USD). The second Definition starts in Period 13 (March 2020) and has a fixed value of 1000.

In both cases, Steve does not need to define the end of validity for the respective Definitions, as the first one will automatically be overwritten by the second, and the second obviously ends at the end of the plan.

Definitions Level 3: Indicator References

Two Indicators remain to be defined: Revenue and Profit. These take Indicator Definitions to another level, as their values depend on other Indicators.

First of all, Steve looks at the Revenue Indicator. He wants to define it as the product of Apps Delivered and Price per App, so he adds a Definition with three Equation Components:

  1. An Indicator Reference Component to Apps Delivered in the Same Period.
  2. A multiplication (×) Math Operator Component.
  3. Another Indicator Reference Component, this time to Price per App in the Same Period.

In Scratchplan, Equations are read from top to bottom, so these three Equation Components form the intended Equation: Apps Delivered × Price per App.

It’s now time to tackle the final Indicator, Profit. That’s the one Steve was originally interested in. Luckily, Steve has a business degree and knows that Profit should be defined as Revenue minus Cost, and creates this Definition with three simple Equation Components.

There is no Step 4

At this point, Steve is done! He has defined five Indicators and wired them up to each other to define their behavior over time. Steve — chilling on his couch — can now use the Scratchplan Scratch Pad to travel through time and watch his revenue develop:

Where to Go From here

Let’s not kid ourselves — this scenario was very simple, and Steve would probably have been able to come to the same conclusions with a simple calculator. Yet, these three steps — setting up the Plan, creating Indicators, creating Definitions — also work on a significantly larger scale.

In the past months, I have created plans with close to a hundred indicators spanning ten and more years. At this level of complexity, working in Excel or other spreadsheet apps quickly becomes tedious, as you start to spend more time worrying about corrupted formulas then about your actual business. This is when Scratchplan really makes a difference.

After playing around a bit, Here are some things that you may want to try to grasp the full potential of this new app:

  • Sorting the Indicators in Categories — and maybe add some Emojis to their titles. 😎
  • Having a look at Advanced Indicator Settings to customize chart colors and number formatting.
  • Change the Apps Delivered Indicator to be variable, showing that Steve get’s faster over time.
  • Exporting the complete data set to a CSV file.
  • Sharing Steve’s Plan via iCloud Drive or Dropbox.
  • Having a look at the more complex Sample Plan included in Scratchplan.

Enjoy using Scratchplan!

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