Mike and Rhonda Hicks dreamed of opening their own bed-and-breakfast business after vacationing in cozy New England
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Felker had retired to Hot Springs, Arkansas, and was working on an herb farm twenty miles out of town in rural Jessieville, at the edge of the Ouachita National Forest. After listening to her daughter and son-in-law kick around the bed-and-breakfast concept any number of times, Felker told them to get down to business. The couple sought permission to buy nine scenic acres from the herb farm. Then they hired an architect to design an attractive country inn with eight spacious guest rooms, an old-fashioned wraparound porch, and private quarters for the owners. The Hickses estimated that purchasing the land, building the inn, buying furniture, and landscaping the property would cost nearly $600,000.
1. If you were a banker, would you have approved the loan the Hickses needed to build their bed-and-breakfast? Explain your answer.
2. How can establishing realistic goals and objectives, budgeting, and monitoring and evaluating financial performance help the Hickses to manage the Mountain Thyme Inn?
3. Why would the owners need a capital budget for Mountain Thyme years after its opening?
4. Often, small businesses such as this bed-and-breakfast struggle to make ends meet. And yet there is no shortage of people who want to become entrepreneurs. After reading this case and how difficult it was for the Hickses to obtain financing, were the benefits of a small business such as this bed-and-breakfast worth the effort? Justify your answer.
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Business
ISBN: 978-0324829556
10th Edition
Authors: Willian M Pride, Robert J. Hughes, Jack R Kapoor
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