Opening the doors is not the finish line. Working capital matters.

[Viable Food]

A grocery project can raise enough money to renovate a building, buy equipment, install a POS system, purchase opening inventory, and still open undercapitalized.

The expensive part does not stop on opening day.

After opening, the store still has to survive:

• payroll,
• utilities,
• insurance,
• replenishment inventory,
• repairs,
• spoilage,
• credit-card settlement timing,
• vendor terms,
• marketing,
• unexpected equipment problems,
• lower-than-expected early sales,
• and the normal learning curve of a new operation.

Opening inventory is not the same thing as working capital.

A store can have shelves full of merchandise and still be short on cash.

A development budget should therefore ask:

• What does the store need to reach opening day?
• What cash does it need to survive the ramp-up period?
• What happens if sales are slower than expected?
• What costs are likely to be underestimated?
• What amount of cash needs to remain untouched for operations?
• Who has authority to make decisions if the opening plan has to change?

A grand opening is a milestone.

Sustainability is the goal.

What operating expense or cash need do you think grocery development budgets most often underestimate?