1. Royal Pawn   Royal Pawn has two locations, including one that recently opened nearby. It focuses on providing collateral loans to people who want short-term loans but cannot easily obtain them from banks or other financial institutions. Valuable items such as electronics, jewelry, cameras, musical instruments, and sporting goods are provided to Royal Pawn as collateral for a loan, which usually represents a small portion of the item's value. The average loan is $100 to $300. This is a walk-in business where borrowers drop off their items and usually receive cash immediately. While interest rates are relatively high on these loans, they usually amount to less than bank overdraft fees, utility reconnect fees, or credit card late fees; defaults will not negatively affect the borrower's credit rating. Upon repayment of the loan, the borrower receives the item back. If the borrower defaults on the loan, the collateral becomes the property of Royal Pawn, which then sells the item in the store.

     2. Dazzling Dancers Dance Studio   Dazzling Dancers was started by a professional dancer, Ava Chen, who wanted to provide high-calibre dance lessons to interested dancers  from novice to advanced  in her home town (population 25,000). Based on demographics, previous enrolment, and interest expressed on the business's website, a schedule of classes is developed each September for the upcoming 10 months. Regular classes do not occur over the summer; instead, Dazzling Dancers offers several week-long dance camps geared to students of various ages on summer holiday. Since Ava is not able to instruct all of the classes, dance instructors are hired on a contract basis as needed. However, it can be challenging to find experienced instructors as there are two other dance studios in town.  

 Required: For both cases, provide two business risks and a solution to mitigate each risk. 

Answer rating: 100% (QA)

Business Risk High default rates on collateral loans Mitigation Implement a thorough risk assessment ... View the full answer