Logix advises on investor-backed start-up

Logix were initially engaged to prepare a robust financial model to test the feasibility of an ambitious start-up plan to acquire over 20 freehold sites to open to trade from within the next five years.

After the feasibility stage, the model was presented to potential investors for them to consider the cash injection requirements and to assess the potential return across a seven-year modelled period.

Logix also carried out scenario analysis to assess the impact on cash flow and investment required under different strategies. The main analysis was centred around two different assumptions:

1. The start-up rents its trading sites.
2. The start-up acquires its trading sites.

The model was integrated into the overall business plan to present to the board, banks, investors (debt and equity) and other key stakeholders.

Joshua Robinson (Logix founder and director) attended pitches with the CEO and other key management personnel, jointly presenting the business plan. This helped to secure the first round of funding to cover the acquisition of the first trading site and the working capital required to get the site fully operational.

Since the model has been built, it has been used by management to test a variety of different assumptions over the five-year acquisition plan.

Having helped to secure funding, Logix were then engaged to provide a wide range of outsourced services including bookkeeping, management accounts/reporting, business strategy/advisory, budgeting, year-end compliance (annual financial statements & corporation tax), stakeholder relations, financial negotiations and more.

Outsourcing some of the finance function can be an effective way to reduce overheads in the early stages of business, thereby improving cash flow which can be reinvested into the next growth stage of a business plan.

Once this start-up scales up, finance staff will be onboarded. Logix will be involved in the recruitment and training of new staff and the handover of relevant services.

The handover will be implemented bottom-up on the finance function hierarchy in a four-stage approach:

1. Bookkeeping/ transactions services will be transitioned over to an inhouse function.
2. Junior accountants will be recruited, reducing the dependency on Logix for general accountancy services.
3. Mid-tier finance management will be recruited, reducing some of the supervision required from Logix.
4. Logix will provide outsourced FD/CFO advisory services and oversight of the finance function until such a time when/if the board decides to bring inhouse.