A confident expansion

A UK pre-seed bakery was considering whether to open a new outlet, a significant commitment at that stage of the business. The opportunity was attractive; the real question was whether the company could afford the move, and whether the outlet could earn back the capital and running costs it required.

The founder needed a clearer answer than instinct could provide: what the outlet would cost to open and run, what sales it would need to pay for itself, and what the move would mean for the cash in the rest of the business.

The SME CFO worked through the financials of the decision with the founder, establishing the real cost of the outlet and what it would take for the investment to pay for itself.

• We built an outlet-level model that separated up-front investment from ongoing operating costs, then tested the revenue, margin, staffing, and ramp-up assumptions behind the plan.
• We assessed the cash flow effect of opening the outlet, including the period before it reached a sustainable level of trading, so the founder could see the decision in the context of the company’s wider resources.
• We used downside and break-even scenarios to identify the conditions under which the investment remained commercially sound.

The company moved ahead knowing the numbers supported the decision.

The founder made a material commitment understanding the real cost and the sales the outlet needed to reach to justify it.

The financial case gave the founder a disciplined basis for reviewing the outlet’s performance after launch against the assumptions that justified the investment in the first place.