Client Background
A boutique candle manufacturer specializing in hand-poured, organic soy candles was looking to expand its operations and needed cash flow projections to secure a bank loan for purchasing new equipment. While demand for their candles was growing, the owner was unsure if they had enough financial stability to take on additional debt. The client hired Development Theory to make cash flow projections.
The Challenge
Unpredictable Seasonal Sales: Sales spiked during holidays and winter months but dropped significantly in the summer.
Cash Flow Strain from Inventory Costs: Large upfront costs for raw materials and packaging created short-term cash flow problems.
Wholesale vs. Direct-to-Consumer Revenue Mix: The company had two revenue streams with different profit margins, but financial tracking wasn’t clear.
Uncertainty About Loan Affordability: The owner wasn’t sure how much they could afford to borrow without hurting cash flow.
Our Approach
Seasonal Cash Flow Modeling: Created 12-month cash flow projections to account for seasonal fluctuations.
Break-Even & Debt Affordability Analysis: Determined how much the business could comfortably borrow while maintaining positive cash flow.
Inventory Cost Optimization: Adjusted ordering schedules to spread out material costs more evenly.
Revenue Stream Analysis: Modeled profitability and cash flow impact for wholesale vs. direct-to-consumer sales.
Bank Loan Readiness Package: Prepared financial documentation to increase loan approval odds.
The Solution
Delivered a structured cash flow forecast, showing the business could support a $75,000 equipment loan without liquidity issues.
Optimized inventory purchases, reducing short-term cash flow dips.
Shifted wholesale pricing strategy, increasing margins by 12%.
Created a cash reserve plan to prepare for slow months.
Results & Impact
Bank approved $75,000 in funding for equipment expansion.
Year-round cash flow stability improved, reducing seasonal stress.
Gross margins increased, making the business more profitable.
Expanded production capacity, allowing the company to scale its wholesale business.
Client Feedback
"I knew my business was growing, but I wasn’t sure if I could afford to expand. These cash flow projections gave me the confidence and clarity I needed to secure funding and scale!"
Development Theory Can Help Business Owners Like You
Cash flow is the lifeblood of your business—without it, even profitable companies can struggle. At Development Theory, our Strategic Planning service helps business owners plan ahead, prevent shortages, and make informed financial decisions. Whether you're seeking financing, preparing for expansion, or just want better control over your finances, we provide accurate, data-driven forecasts to keep your business running smoothly. Don’t let cash flow surprises hold you back—start planning for a more stable financial future today!
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