Expansion Feasibility Calculator
Evaluates whether a business expansion (new market, location, or product line) is financially viable. Calculates required investment, projected returns, payback period, and NPV to support a go/no-go decision.
Business - Expansion Feasibility Calculator.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- No framework to evaluate whether an expansion will be profitable
- Difficulty estimating the true total cost of entering a new market or opening a location
- Unclear how long it will take to recoup the expansion investment
- Inability to compare multiple expansion options on equal financial terms
- Risk of committing capital without understanding downside scenarios
Who This Is For
- CEOs evaluating growth opportunities
- Business development managers building expansion cases
- Franchise operators assessing new location viability
- Investors reviewing expansion proposals from portfolio companies
Inputs
- $Total Investment Required
- $Monthly Operating Costs
- $Projected Monthly Revenue
- #Revenue Ramp-Up Period (months)
- %Discount Rate
- #Analysis Period (years)
Outputs
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Payback Period (months)
- Break-Even Month
- Cumulative Cash Flow by Year
- Go / No-Go Recommendation
How Calculations Work
The model projects monthly cash flows by ramping revenue from zero to the target over the specified ramp-up period while subtracting operating costs. It then calculates NPV by discounting those cash flows, derives IRR, and identifies the month where cumulative cash flow turns positive. A go/no-go flag is set based on whether NPV is positive and IRR exceeds the discount rate.
Example Use Case
Scenario: Opening a second retail location: $150K investment, $12K/month operating costs, projected $25K/month revenue at maturity, 6-month ramp-up, 10% discount rate, 5-year analysis.
Result: NPV of $198K, IRR of 42%, payback period of 18 months, break-even at month 14. Go recommendation based on positive NPV and IRR well above the discount rate.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
What does the revenue ramp-up period represent?
The number of months from launch until the expansion reaches its projected steady-state monthly revenue. During this period, revenue increases gradually from zero.
How is the go/no-go recommendation determined?
The recommendation is 'Go' if NPV is positive and IRR exceeds the discount rate. Otherwise, it is 'No-Go.' You can adjust the thresholds in CONFIG.
Can I model multiple expansion scenarios side by side?
Enter each scenario as a separate row in INPUT. The OUTPUT sheet will compare them in a summary table ranked by NPV.
Does this include working capital requirements?
Include working capital as part of the total investment required. The model treats it as an upfront cash outflow.
How should I estimate monthly operating costs for a market I have not entered yet?
Use comparable location data, industry benchmarks, or quotes from local vendors. Enter a conservative estimate and test sensitivity by adjusting the value up by 15-25%.
Download Expansion Feasibility Calculator
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.