What-if analysis in Magnifi

What-If

What-if - Projections

You can undertake a what-if based on the budgets or combined budget & actual results. For example, by selecting the period as Jul 2022 to June 2023 and Actuals to October 2022, you can view the current projected profit for the year based on 4 months actuals + 8 months budgets and then consider what-if scenario's by entering a % or using the scroll bar.


The values will automatically update for those accounts that are calculated as a % of another account. In the example above, by increasing Parts Income by 50%, it has also increased the Other Direct Costs by 39.38% as it includes costs that are calculated as a % of income. 

If you use Income Drivers the income will expand as per below and you can enter variables at the driver level.

What-if - Capacity

You can vary the capacity levers at an employee level or an overall level. For example, to understand the impact of a 10% increase in the workforce you could increase the Total Hours 10%. Or if you wanted to understand the financial impact of employing another employee, you could increase a similar employee's hours by 100% as shown below;



If you hover over the Total Hours it will reveal the # FTE's.

If you change the total hours, the leave hours and labour cost will be automatically updated so you can determine the financial impact on the direct profit. By using the example above, you can see below that it has automatically increased the labour cost based on the employee's average cost per hour (including on-costs), resulting in the following direct profit increase;



What-if - Capacity v Demand

An increase in Capacity does not necessarily result in an increase in Profit. The additional Capacity needs to be applied to additional Demand (clients) in order to increase Income & Profit. Therefore it is important to compare the Capacity v Demand to ensure that its appropriately balanced. 

There are a number of steps involved when analysing the Capacity v Demand;
  1. Enter Assumptions;
    1. Specify the income accounts that report the income from Labour. If the income consists of Materials & Labour and is reported against the 1 account (eg Total Sales), you can specify the estimate % of Labour revenue. However, we suggest you consider reporting your Labour v Material income separately to provide greater insights regarding your financial performance
    2. Specify the key driver and the average $ OR quantity per annum. For example, if you specify "clients" as the key driver, you could enter expected # clients per annum or the average $/client (labour component only). 
  2. Assess the Current Position;
    1. Magnifi will compare the current Capacity with the Projected Income to determine the Capacity Surplus/(Deficiency). Any surplus effectively means that you are not achieving your current Capacity target.
    2. The first step is to work towards utilising the current Capacity which basically means the employees are hitting their current productivity targets etc. If this occurred, you would enter 100% in the box below which would result in 100% of the excess capacity showing as profit (given you are already covering the employees labour cost).
    3. The Capacity breakdown at an employee level can be viewed under Capacity Summary. The "What-if - Capacity" will also provide the detailed breakdown.
  3. Increase in Capacity;
    1. Apply inc/(dec) to the levers to see the impact on Capacity. Note that some levers refer to % increases and other levers refer to pt (points) increases. Eg, if productivity is 70% and you apply a 5% increase, it will increase it to 75%.
    2. When you increase Total Hours, it will also increase the labour cost based on the current average cost per hour (including on-costs). This will show as a negative in the profit column.
    3. Hover over the Total Hours to reveal the # FTE's
  4. Increase in Demand;
    1. Magnifi will automatically adjust the # clients so the Increase in Capacity will match the Increase in Demand. 
    2. If you adjust the "Average $/Client" or the "Price Increase", it will automatically adjust the # Clients required. 
    3. Hover over the # clients to reveal the increase required per week/month.
    4. Hover over the values appearing in the Profit column to reveal the calculations.
The Capacity is based on available hours x productivity % x sell rate x recovery %. If you want to include a "buffer", you can use the recovery %. For example, a 90% recovery would indicate that you expect to bill 90% of the productive hours. This allows for time written off, re-work etc.