Growth is exciting. We can take what’s working and do more of it for increased profit and cash flow. Adding a location is one way to do this. A new location is a major commitment of time and money with the potential to expand our business and increase our profit.

A new location doesn’t always go how we planned, though. Sales come in much lower than we thought. It cost us more to open the location than estimated. It’s pulling more resources from our existing operations and strategy than anticipated. Could we have better anticipated this?

In this course, We:

• Explore some of the key financial considerations when opening a new location.
• Describe how to project common revenue and expense items for a new location.
• Explain how to build a net contribution and cash flow forecast.
• Illustrate analysis methods like breakeven analysis and scenario analysis.
• Demonstrate scenario analysis and sensitivity analysis with Excel’s Goal Seek, Scenario Manager, and Data Table functions.
• Define common metrics like NPV, IRR, and Time to Breakeven. I’ll show multiple ways to analyze this in Excel. For Excel gurus, you can do this yourself. For others, this gives you an idea of what an accountant, analyst, or consultant can do for you.
• Reveal common decision mistakes people make when analyzing new locations and how to avoid these mistakes.

There’s a lot of thought and research about adding a location that goes far beyond the scope of this course. This course is focused on the financial analysis of the location and how a new location fits financially into your larger strategy. Here are some things I don’t cover or don’t cover in detail:

• Merger and Acquisition (M&A) Analysis: The desire to add a location often flows from a growth strategy or from the opportunity to add locations. I’ve analyzed organic growth in addition to mergers and acquisitions. Sometimes M&A is leveraged with organic growth. In this strategy, the company enters the market by purchasing a smaller company and adds locations from there. Analyzing M&A would be a whole course by itself, so I’ll focus on organic growth.
• Analyzing where to locate the store.
• Detailed financial accounting entries and financial statement disclosure.
• Tax considerations and treatment. I will briefly mention some relevant tax items like cost segregation studies.

Note:This course is also available in Video-based format. https://www.illumeo.com/courses/analyzing-whether-add-new-location-capital-budgeting