Question #1 Your aunt has learned you are taking an Entrepreneurship course at college and approaches you during Family Day dinner. It appears she has been getting some requests from previous contacts to do some interior decorating consulting. She doesn't want to give up her full-time job as a office administrator, but has the time and the energy to do some consulting on the side. She wants to eventually see if it may become a viable business. She asks you whether she should incorporate or just be a sole proprietor initially. What is your recommendation to her? (2 marks) Provide, and explain, (connect to course materials) your rationale. (8 marks) (YOUR ANSWER IS TO BE IN THIS SPACE) Question #2 You have been hired as the Marketing and Sales Manager for a small printing company. You have been advised by the owner (your boss) that the owner wants to buy some other printing businesses. The Owner has asked you to assess some businesses and make recommendations on whether he should purchase any of them. a) Popular Printers: Selling for $800,000. Three similar businesses have recently sold for $800,000, $600,000, and $700,000. Using the Market Value assessment method, what is your recommendation? Validate your conclusion. (3 marks for your calculation and answer) (YOUR ANSWER AND CALCULATIONS IN THIS SPACE) b) Print King: Also selling for $800,000. Average annual earnings are $100,000. Using the Times Earnings method, and reflecting upon the range of multiples typically applied to small business sales as discussed in our readings and in-class discussions, how many times earnings is this business selling for? Is this a good deal? Validate your conclusion. (3 marks for your answer and explanation) (YOUR ANSWER AND CALCULATIONS HERE) c) Print-cesse: Selling for $1,000,000. According to the financial statements that the company has provided the depreciated assets are listed at $2,000,000 and total current liabilities are listed at $200,000. What is the book value of the business? What is your recommendation for buying or not buying this business? Validate your conclusion. (total of 4 marks for your answers) (YOUR ANSWER AND CALCULATIONS HERE) Question #3 Clearly buying a business has advantages and disadvantages over building your own business. What are four advantages and four disadvantages of buying a business rather than building from scratch, explain? (total of 10 marks for your answers and explanation) (YOUR ANSWER HERE) Read the case and answer the questions posed at the end. Based on: Petite Shop (A), D. Wesley Balderson, University of Lethbridge (Reproduced from Balderson (2018). Canadian Entrepreneurship & Small Business Management (10th Edition). McGraw-Hill Ryerson. Barb Bird is concerned. She has worked in a women's shoe store for several years and is now considering opening a store of her own. Her investigations have yielded considerable secondary information, but she is not sure how to go about estimating the potential for another women's clothing store in Sault Ste. Marie, Ontario. The "Sault" is a city of 86,100. It currently has 17 shoe stores and five department stores that retail women's shoes. During the past few years, Barb has been saving her money and learning all she could so that her Laces and Loops ladies' shoe store would be a success. In anticipation of starting her own store, Barb enrolled in a small business management course at a local college. The instructor stressed the importance of market research and mentioned several sources of secondary information that could assist in determining market potential for a new business. Barb obtained the reports she felt were relevant to her prospective business from the Provincial Department of Small Business, Statistics Canada, and the city hall in the Sault. This information is presented in Figures A and B. Now that Barb has this information, however, she is not sure how to proceed. She does not want to retail all kinds of ladies' shoes, but plans to cater to the athletic woman who wears footwear for leisure and sports activities. Barb herself is a marathon runner, and she feels she understands the difficulties women have in shopping for footwear. From her retailing experience, she estimated that about 60 percent of all shoe sales are womens and 20 percent of all women consider themselves active. She arrived at her decision to select a store directed at the athletic woman after she visited all of the 17 shoe stores in the Sault and the shoe departments of the city's five department stores. She estimates that only about 10 percent of shoe stores' stock is designated "athletic", and the five department stores devote only about 6,500 square feet of selling space to this type of women's shoe. She believes a small shop of 1,000 square feet could provide a much better selection to this market than those outlets presently provide. Figure 1 - Selected Data for the City of Sault Ste. Marie Population Number of Families Per capita income Retail sales Per family expenditure on women's shoes 86,100 29,200 $15,000 $737,700,000 $1,000 Figure 2 - Estimated Retail Space for Retail Establishments (in square feet) - in the "Sault". 1,200,000 145,000 Food & Grocery stores Shoe stores: Men's shoe stores Women's shoe stores Hardware & automotive stores Department stores 180,000 600,000 1,650,000 Questions: 1. Using the information provided, prepare an estimate of the total market in $s) for the target market at which Barb is aiming. (3 marks for your calculations) (YOUR ANSWER AND CALCULATIONS HERE) 2. What portion of the market potential you calculated above could Barb expect for her planned shop's market share? (2 marks for the calculation) (YOUR ANSWER AND CALCULATION HERE) 3. What would 3 key issues be for her, as a new entrant in the market? Think about brand awareness, supplier issues, etc.. Explain your answer (5 marks in total for the issues and your explanation) (YOUR ANSWER HERE) BONUS QUESTION: (3 marks) During the past weeks we have reviewed a number of cases that have addressed the challenges of developing a new business. Using the work that we covered for Java Nook (the downtown Toronto attempt to build a coffee shop - from week 1) and your work on DAN KIM so far, compare and contrast each situation on the following basis: (i) whether a Business Plan was adequately prepared (2 marks based on 4 relevant points), (ii) the consequences of having or not having a Business Plan. (1 mark based on 2 relevant points) (YOUR ANSWER HERE)