1. Work with a team of your classmates to generate ideas to help Abby and Daniel Larson to establish a sound financial base for Abby’s Gift Emporium.
2. Refer to the “Lessons from the Street-Smart Entrepreneur” feature in this chapter and review the model described there. Use the model to analyze Abby’s Gift Emporium’s business model. Work with a team of your classmates to use the questions posed in the “Street-Smart Entrepreneur” feature to make suggestions for changing their business model to a more successful one.

Abby and Daniel Larson started their small gift shop, Abby’s Gift Emporium, in 2001 with financing from their own pockets and a bank loan of $40,000. At first, sales were slow as the company began to build name recognition and a base of loyal customers, but the Larsons managed to ring up sales of $250,000 in their first year of operation. Their business grew, and by 2005, they had repaid their original bank loan and had established a $75,000 line of credit at the local branch of a large national bank. They often relied on the line of credit to fill seasonal shortfalls in their cash flow and to extend credit to their customers, some of whom stretched their credit terms well beyond the “net 30” terms that the Larsons offered.