Case study
Case study

Entrepreneur Saves $510,000 by spending less than $5,000

24 August 2016

Our client had built and sold a successful bookkeeping business in the UK, then emigrated to Australia and started a new business – developing software for business coaches.  After investing $100,000 in it, she wanted to know what more it would take to make it a success.

We conducted a viability analysis and talked her through the results…

After several days of intensive analysis, the answer was this:

  • Required Investment: thanks to her lack of experience in product and website development, she had a product that was the result of several development teams, resulting in what is termed “spaghetti code” behind the scenes.  Already on to her fifth development team, we determined she would need to invest a further A$110,000 to achieve minimum viable product status based on a detailed assessment of the current product and our history with website application development project management.
  • Propensity to achieve a sale: None without the investment of new money to achieve a Minimum Viable Product (MVP). No considerable product advantage over competitors when MVP is achieved – only a price advantage to test with the market.
  • Cautious Payback Timeframe: At $99 per month and assuming a 20% conversion rate after trial, 13 months to offset the estimated investment required to reach minimum viable product status.  Notwithstanding the fact that there weren’t enough coaches in Australia to buy her product and she would have to market internationally, adding more to the amount requiring payback.
  • Product Development path: In order to develop a product that was a true competitor to the leading products on the market, she would need to invest around $400,000 more once payback on the first $110,000 was achieved.
  • Alternative Uses: There were alternative uses for her money which either provided very safe returns on her capital, which required little risk or which built on her past history in lines of business where she had some expertise.

Our conclusion was that she would be $510,000 ahead of her future position by making the decision not to proceed with her business, despite the $100,000 she had already invested.  Upon reviewing the discoveries and our recommendation, she agreed.  She spent less than $5,000 to save one hundred times as much.

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