Why this matters
Leaders can be drawn to an attractive concept before testing what growth, costs and working capital would require in practice.
What the evidence suggests
The historical luxury-bakery exercise compared valuation approaches and funding choices. It illustrated how sensitive an apparent opportunity can be to assumptions about demand, margins, expansion pace and cash needs.
What it looks like in practice
Operational due diligence should challenge the model: what capacity is needed, when does cash leave the business, and how much room is there for a slower ramp? A range of scenarios is more informative than one precise forecast.
Practical next steps
Three things leaders can do now
State the operating assumptions behind the forecast in plain language.
Test a slower-growth and higher-cost case before approving capital.
Separate the value of the business from the preferred way to finance it.
Phull Insights Perspective
The view beneath the headline.
Finance is not separate from operations. A good capital decision connects the model to what people, assets and processes can actually deliver.
Adapted from Pupsi Phull's postgraduate research and professional reflections. Views are personal.