| One of the finest features in Microsoft Excel is | | | | you can get a good estimate by observing what |
| sensitivity analysis using either a table (Excel 2003) or | | | | others are charging and what quality of service and |
| 'What-if' in Excel 2007. Suppose you want to start a | | | | environment they are providing. |
| cybercafe or a restaurant in a new mall. You have | | | | Arranging all your data properly, click on 'Data' in the |
| done a study on the footfall and the kind of people | | | | ribbon in Microsoft Office 2007 or 'Data' in the menu |
| who visit the mall. You have also found out about the | | | | bar in Excel 2003. In Excel 2007 select 'What-if' |
| business atmosphere, security and rent or the | | | | analysis and finally 'Data Table...'. In the popup window |
| outright purchase price. You also know the rates in | | | | in the 'Row input cell' type the data that you have |
| the market that other businesses are charging, let's | | | | input horizontally next to the profit and in the 'column |
| say, for surfing the net per hour. You then estimate | | | | input cell' write down the price and vary it it by 1% |
| your capital costs like doing up the cybercafe and the | | | | 0r 2% so that that Excel can perform an analysis for, |
| price of the computers. You also use the Excel | | | | say., $0.5 per hour charge for a cybercafe to $1.5 per |
| spreadsheet to estimate and calculate the number of | | | | hour. The horizontal values can be the number of |
| people you'll need to run the show and the amount | | | | people per hour or month or year that will visit the |
| of salaries you'll have to pay. You have also | | | | shop and keep on varying the values by a certain |
| estimated other variable costs like electricity and | | | | estimated percentage. Click 'OK' and you can see |
| phone. | | | | how your profit varies with the number of |
| From the above data in the Excel worksheet you | | | | customers and the price you charge. This is also |
| can calculate your total monthly or yearly costs. Now | | | | known as a two variable table because you |
| based on a certain price that you will charge the | | | | calculated the changes in your profit based on two |
| customers, number of computers and working hours | | | | parameters - price and number of customers. |
| you can calculate your revenue per month or per | | | | You can also do a single variable sensitivity analysis |
| year. From the data of revenue and income you can | | | | by selecting only one parameter. |
| easily calculate the profit. Till now everything was | | | | You can use the 'Data' and 'Table' feature in Excel |
| easy to implement in Excel. | | | | 2003 to implement the same analysis. |
| Now you decide to find out how your profit can vary | | | | The practical implementation of the above sensitivity |
| if you vary the charge per hour or the number of | | | | analysis in the form of a training video can be found |
| people who will visit your cybercafe or establishment. | | | | in the link below. |
| Of course, you cannot charge what you want but | | | | |