The following posts set out some ideas from a lecture I deliver at the Cambridge Judge Business School. The talk has become known as‘Guerilla Finance’ much in the vein of guerilla marketing campaigns that leverage existing resources to achieve results. The central idea is that sophisticated software and skills are not needed in order to create management tools that will help you plan run and finance the business.
The Goals of the ‘Guerilla Finance’ approach
Businesses solve customers problems and get paid for it. The success of the business is dependent on how many customers it can secure and how efficiently it can delver them product. It takes resources to develop and deliver product.
The discussion that follows is about building a simple management tool that documents the assumptions and connections in your business model. It assumes that you have target customers identified and a business model in mind. The resulting tool may help you test and refine those assumptions.
In order to build a business you must be able to identify from where cash may come and estimate costs of obtaining those cash flows. This does not have to be complicated, indeed starting with a simple story and iterating over it gaining detail each time can be very useful.
The key questions to ask are:
1) What do you need to service you customer?
2) Why do you need it; how does it create value?
3) When do you need it?
Answering these questions in a systematic way results in a tool that serves several purposes. In the first instance it is an exercise in taking assessment of what you know and what you might still need to investigate. In the second, it is always a good idea to document the assumptions you are making when planning. If something in the business or the environment changes one of your assumptions the effects of that change can be easily seen as the cascade through the model. A clear and explorable model is a living management tool that both helps you plan but can also measure your progress.
Below you can download the slides from this talk.