The opening of a cash and carry as a family business in Malta : a feasibility study

Abstract

Purpose: The main purpose of this study was to analyse whether the opening of a cash and carry in Malta is viable. The reason for conducting this research was that a family business owner wanted to leave the running of his current family business in the hands of one of his children, and the running of the proposed project in the hands of the other. Design: The way that this study was carried out, was by first looking at the capital expenditure needed to convert the warehouses from where the proposed cash and carry would be operating, to bring them up to the required standard for the use of a retail outlet. Then, the researcher delved into the operating expenditure and income that the outlet would incur and generate. To do this a market survey was conducted, together with numerous meetings, telephone calls and other methods of correspondence. Findings: The results obtained were then used to conduct several investment appraisal techniques to evaluate whether the proposed project is viable or not. Besides this, a sensitivity analysis was also carried out to evaluate how sensitive the project is to changes in a number of key variables. From such techniques and analysis, a decision could be taken about whether the project should be undertaken or not. Conclusions: From the analysis conducted, it was concluded that the project would start being profitable from year 1, and that profit would steadily increase as demand for the products sold by the cash and carry also increased. Implications: The investment appraisal techniques utilised lead to a positive result. Thus, this suggests that the project is viable and should be taken on.