The second site is judged against a P&L that includes free labour
Most expansion cases are built by trimming the first site's numbers for caution: which quietly assumes the first site's numbers were ever real.
SBy Steve··5 min read
A business with one profitable location and more demand than it can serve tends to build the expansion case the same way: take the existing site’s P&L, trim it a little for caution, assume a few months of ramp, and see whether the return justifies the fitout. It is a reasonable-looking method. It is also wrong in two places at once, and both errors push in the same direction: flattering the second site while understating what it will consume. The first error is in the benchmark. The second is in…
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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.