It’s easy, and eventually painful, to overlook significant costs when planning your business. For instance, imagine that you are interested in starting a home-based floral shop. You plan to offer delivery of flowers to weddings and funeral. When constructing your operating model, you assumed a relatively low cost for each delivery, assuming that you would be making the deliveries yourself using your personal vehicle. However, once the business really gets off the ground, you find yourself too busy taking orders and making arrangements to manage all of the deliveries yourself. Suddenly, you need to think about hiring another employee—and about paying for the use, gas, and maintenance for another vehicle. If you haven’t accounted for such expenses in your operational model, your profits may be lower than expected or, worse, you may not have the cash on hand to make this required investment in your expansion.

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