I need help creating alternnatives for this scenario.

Here is the scenario:

Henriette Scovil worked for Herman Miller Office Furniture for 25 years designing fabric patterns for furniture upholstery. She loved her job. Upon turning 60 three years ago, she decided to realize her dream of owning her own fabric design business. She started the business out of her garage advertising custom furniture fabrics for home and office both locally and through word-of-mouth. She has also worked craft shows. Her boutique custom styling has brought her more customers than she can handle.

Henriette wants to expand but has conflicting ideas both personally and professionally. Personally, Henriette wonders if the business takes off will she be too old to reap the rewards. She feels her 63 years. Opening a business was hard work and took many long hours. While she is fortunate that she is healthy, she worries that the stress of expansion and required long hours may compromise her well-being. She also knows that sometimes latent illnesses may be revealed at her age. Finally, Henriette worries about her husband, Eric, who for 30 years has supported her dreams. He even contributed some of his 401K money to the new business when she started the company. While Eric is technically a silent partner, he has never taken anything more than a casual interest in its operation. He seems to be happy that it is making money. He is nearing retirement age and at 63 is looking forward to traveling, which they had planned to do. Although he does not have to retire at 65, he loves his job and seems to be very set on the idea of travel. In fact, he has set up a map of the world in the study and has begun to place pins on the countries and cities he would like to explore. Recently, he has been reading up on these tentatively planned destinations. Henriette wonders how he will feel about expanding the business. Can he wait to travel? Can travel be juggled with a growing business?

Henriette also wonders about what the expansion will mean for the business. Does she need a storefront or should she go virtual or even both?

Henriette remains conflicted. The business growth has been steady. In year one Henriette had net profits of $20,000 and $30,000 in year two. Last year she netted $40,000. Her projected net profit for 2017 (the 4^th year in business) is $60,000. She currently has $50,000 cash in the business account earmarked for the expansion. If this year goes as expected, she will add $25,000 more to the expansion account. Her current operating budget is $125,000, which covers all her expenses including the salary of two part-time employees, her salary of $30,000, as well as a minimal rent and utility payment ($400) that she makes monthly to her household account for the use of the garage. In addition, Henriette takes 50% of the net profits and leaves the rest in the business. SinceHenriette only designs the fabric and makes arrangements for production, she does not need to concern herself with inventory expenses and requires only material samples and design sample storage.

Expanding to a storefront would create additional expenses for a sales staff, a more extensive collection of material and design samples, rent, utilities, taxes and (depending where the storefront is located) a potential gross sales clause in the rental agreement as would be very likely in a mall or shopping center lease. The additional expenses should increase her operating budget by 30%. The revenue from a storefront according to Henriette’s research is projected to increase net profits by 40%.

An Internet business is less certain for Henriette to predict. She knows that the costs of setting up a website, shipping expenses and perhaps one full time employee along with the two part-time employees will increase her operating expenses by 15%. However, going virtual means dealing with international shipping, customers and cultural tastes that may not work for her. As she has no data on the idea, she remains uncertain that this is a route she wants to take. Despite her accountant’s remarks on how the Internet could bring her thousands of new customers, his statement is contradicted in various articles that she had read that suggest the opposite. If the Internet store only brought an increase of 10% new customers, with an increase of net profits of 50%, what should Henriette do?

The Decision Statement is:

Henriette must decide if she should expand to a storefront or an internet business, or both.

Now I need alternatives for the decision statement..

Answer rating: 100% (QA)

Y1 Y2 Y3 Y4 2017 Profit 20000 30000 40000 60000 Plough Back 10000 15000 20000 30000 50 of net profit ... View the full answer