Challenge
A mid-sized business which provides pre-packaged meals for body builders had expansion plans but needed to better understand what activities were profitable. Their business, which has a national footprint, has a diverse and complex set of revenue and cost drivers that were certainly challenging to model. Management needed the financial guidance to know the financial impact of expanding each of the product lines, but the information needed simply did not exist.
Solution
The owner of the business initially tried to build a model but quickly found that it would be better to engage a professional such as Analytical Models. We quickly understood what was driving the revenue and cost lines of the business and validated this as a baseline by recreating the company’s financial baseline. Having learnt from the business the different expansion options that they were considering the capability of flexing the business in each of those dimensions was appropriate modelled.
Outcome
The business now has an easy-to-use robust and dynamic financial model that is easily updated using standard reports that were already in use by the business. The model is used frequently to understand the likely impact of changing the way they do business. The model has allowed them to grow not only the business but also, most importantly, their profitability.