Originally Posted by george.millman:
“I think Leah was more of a risk than Luisa. Her business would be more profitable if it succeeded, but Luisa's had more chance of succeeding as she had done that sort of thing before and Leah hadn't. But he went with Leah because he apparently felt like taking a risk.”
No question Leah's was the more risky plan, particularly in terms of negative PR for Sugar if something goes wrong. I remain unconvinced it was a more risky business model, though. The final went through this in some detail - Leah had a modest roll-out plan in terms of opening new sites, the products themselves are both high value and high margin, and she had a clear exit plan - she wasn't intending to be "the biggest and best [insert business here] ever", but she had a plan to build the business to a certain size and then cash out.
There was the matter of scale with Luisa's business too. It was, ultimately, a wholesale business with a retail brand tacked on. Wholesale businesses rely on thin profit margins and therefore require large volumes to succeed. Even if Luisa had spotted a gap in the market, she would have struggled to achieve scale without a significant investment in warehousing, vehicles etc - much more than the £250k on offer.
It's impossible to say without seeing the detail, but the key to the plans is balancing risk with how quickly Sugar would see a return on his £250k investment. Given the business models involved, I think Leah's plan had a much greater chance of returning enough profit to repay the investment within 3-5 years. Luisa's might ultimately have been successful, but it would have been a slower burn.
I'd question Luisa's level of experience too. She understood baking as a market, but not the logistics side of running a large wholesale operation. That's not to say her market knowledge wasn't useful, but we're talking very different skill sets. I work for a large global manufacturing company and know our markets well, but I wouldn't have a clue where to start in terms of knowing the supply chain side of the business.
Ultimately we'll never know. and which plan you see as riskier depends a lot on exactly how you define risk and your willingness to accept it - no two people's risk profiles are ever the same.