Introduction to this document

Capacity planning

Staff capacity is comprised of the number of people, their roles, skills, experience, motivation and potential. Capacity may be made up from permanent full and part-timers through to temporary staff. However, how can you demonstrate whether there are sufficient resources to meet forecast sales?

Required capacity

With Capacity Planning you are setting out to calculate the staff that you need to deliver your business’ sales forecast across the year. The first step in this process is to forecast the level of sales in the business across a twelve-month timeline, but building up those forecast sales from: (1) known sales, i.e. confirmed orders and virtually certain orders; and (2) unknown sales, i.e. potential orders from known customers and potential sales from prospects. This allows you to calculate the respective minimum and maximum capacities. Aim to cover at least the core capacity with permanent staff.

Next you need to convert the sales figures into time required. Use a rule of thumb such as, “40 hours are needed per £1,000 of sales” depending on the nature of your business, i.e. whether it’s in manufacturing, retail, etc.

Sheet 1 of our Capacity Planning workbook will automatically convert sales in £ into hours after you have entered your rule of thumb in the relevant box.

Current  capacity

Sheet 2 of our capacity planning workbook provides a template for a schedule for calculating existing staff capacity, (both permanent and temporary) and includes references to role, employment status, department, date of employment, cost and time available. Don’t forget to take account of known leavers and joiners and anyone going on or coming back from maternity leave.

The final step in the process is to compare existing capacity that you need to meet your sales forecasts - both core and total capacity - and plan to avoid any shortages by utilising any surpluses.

Aim to cover known business with permanent employees and, where possible, the unknown business in your sales forecast with temporary staff. This will give you a level of flexibility in your cost structure in the event that you have over-estimated the level of unknown business. Remember that your staff are not a homogenous group, so you will need to take account of different roles and levels when matching existing capacity to business need.