Startup VS Consulting

The following structure provides an overview of the case:

Information that can be shared if inquired:

• # of customers/purchases per day: in a small cafe start-up this can be estimated by the size of the cafe (max. 1 customer per 2 m2) and the opening hours. For a more realistic number consider hours of full and little occupancy and build an average over time.
• Example:
  • Cafe area: 40 m2,
  • 20 customers at high
  • 3 customers at low capacity
  • 14h open
• Income per customer and year is assumed to be €5.

Usually, revenue estimations can be carried out by the simple formula:

Here the interviewee should find reasonable assumptions for #costumers and the income per customer for his start-up.

According to the structure, the second estimation will be the costs.

First we will calculate the left side of the tree, the fix costs per year.

After the calculation is finished, the interviewee should come back to his structure and answer the following question.

Consider your profit analysis. What decision would you make and why?

This question opens a general discussion about the attractiveness and future of entrepreneurship or a employee position, in this case a consultant.

A good response to this question should focus on the attractiveness of both options in general terms, the future of the business and personal goals.

• What do the future margins/salaries look like? How big can they grow over time?
• How are the working conditions and hours in both options?
• How profitable is the startup in the chosen city?
• Are there many competitors?
• What are personal goals to achieve in both occupations?
• Entrepreneurship is far more risky than employment. What would be the worst case scenario in both options?

Conclusion

The conclusion should be that this startup might be more profitable than a job but is more risky. One should only go ahead with this idea if opportunities are very good and the startup matches personal goals

• Special location with big market demand or growth
• Low local competition