Question
hi tutor can you advise Abby on her business? I need detailed analysis and recommendations which tie into the specific issues raised in this case.
hi tutor can you advise Abby on her business? I need detailed analysis and recommendations which tie into the specific issues raised in this case.
Last January, Abby started a new business named Abby's Blinds, Curtains, & Dining Essentials, orABC&DEfor short. In her business, Abby, who has always loved arts and crafts, designs unique items which are eye-catching highlights around her customers' homes. She started her business selling to friends and neighbors out of her garage, and demand quickly spread to the point where everything she made sold within a day.
Issues for recommendation and analysis:-
1) Several customers had made special requests which Abby had been struggling to fulfill since she was so busy. Some of them have already paid her and Abby isn't sure what the accounting treatment is for a prepayment.
2) Abby is considering acquiring help to help her expand her business. Her friend, Mel, is a talented tattoo artist who has shown interest in working with her. Mel has offered to buy a 49% stake in the business for $6,000 and commit to working equal hours as Abby (currently 30 hours a week). However, Abby is wondering if it may be better to hire Mel as a $24 per hour employee for 22 hours per week. Abby wants a pros and cons analysis of a new partner versus a new employee, including what she might need to do as the business owner.
3) Abby is also thinking about hiring someone to help with the administrative side of things. This person would work 18 hours a week (at a rate of $16 per hour), handling customers during peak hours, completing orders of supplies such as dishes, wine glasses, and beer mugs, and noting down special customer orders. Abby is considering getting a website made, and feels that an administrative assistant would be a must with added traffic.
4) Last year, Abby sold 330 pieces at an average price of $75 each. She estimates she purchased the supplies for $22 per piece. This year, with a larger customer base, Abby believes she can increase her average price to $85 per piece and still sell 100 more units. If she gets help from Mel, Abby believes she would be able to sell 450 pieces at the $85 price.
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