Regency Real Estate Inc. is a relatively new licensing and educational business on the outskirts of

downtown Vancouver. It is housed in a three$-$story building with twelve presentation$/$

training$/$assessment rooms $($on average, each room has $27$ seats$).$ As Vancouver is a real estate hotbed

with lots of real estate activity, the ownership and management are trying to find ways of expanding

business operations. Hence, they have contracted you, a talented team of MBAs with accounting$/$finance

expertise, to supply a business report analyzing the current issues faced by the business with specific,

detailed recommendations.

Regency attracts a mix of local and international customers. The institution offers competitive licensing

and course$/$workshop enrollment rates to similar, smaller$-$sized businesses in the region. Still, Regency

has benefitted from the highest growth rate and now enjoys the largest employee and customer groups.

The business has quickly filled to nearly $100\%$ of its physical capacity in three short years $($some

availability must be maintained for emergency meetings and events$).$ Hence, it needs to explore

expansion options to continue serving new customers and generating higher profits.

Based on sales data and surveying of customers, the top motivation for entering business with Regency

is to obtain realtor or real estate appraisal licensing$-$ this is often the primary goal of local customers.

However, a close secondary goal for individuals outside the country is to understand Vancouver real

estate better. With this knowledge, they can make better investments or help wealthy clients, friends,

and family back home achieve their investment objectives in Vancouver. Some customers have even

reported that they have opted to move to Vancouver after enrolling in a course with Regency and seeing

the beautiful city!

The sales data and survey results have the marketing director, Shelly, reconsidering the business$$s

marketing strategy. She wonders if the business$$s marketing should promote an investment bridge, or

even a living bridge, into Vancouver$-$ even though other factors could impact one$$s ability to move or

invest here. Shelly understands that advertising should be tasteful and ethical but also wants it to be

adequate to impress the higher$-$ups with her work.

Local residents and news outlets have raised concerns over the availability and cost of real estate in

Vancouver. Regency employees have heard many complaints from Vancouver residents about their part

in making the local housing situation worse. Although they have pointed out that Regency also offers

workshops and courses on real estate development and others on renting units out, Regency seems to

continue to get its share of hate in the city. Shelly wants advice on how the business can market itself for

growth and still improve its brand locally.

A real estate oversight board managed by the BC government has recently warned Regency that it will

regulate the growth of such businesses$/$industries more closely in the upcoming year. Regency would

likely need to cap customer numbers at end$-$of$-2024$ levels. Hence, management believes this to be the

business$$s final real opportunity to grow without restrictions from the oversight board. The business$$s

President, Don, urges you to analyze the two options carefully and give a detailed recommendation.

As a starting point for the analysis of expansion plans, Don suggests that you look at the financials for the

year just ended. At the end of the year, the business had $2,420$ currently enrolled customers $($the year

had started with $1,780$ customers$)$ and had delivered over $400$ courses$/$workshops in the year!

Figure $1$: Selected revenues and expenses for $2023$:

Revenues $$22,600,000$

Salary expense$-$ Admin$/$staff $4,300,000$

Salary expense$-$ Trainers $5,200,000$

Salary expense$-$ Executives $1,900,000$

Rent expense $3,000,000$

Marketing expense $1,400,000$

Interest expense $800,000$

Supplies expense $300,000$

Other expenses $200,000$

Don mentioned that he considered the building$$s rental agreement quite favourable as the landlord has

been great at promptly addressing the institution$$s needs. Since the business moved to the space a year

ago, many operating expenses have been included in the rental agreement, including internet, electricity,

natural gas$/$heating$.$ The only significant recurring expenses Regency covers are security and janitorial

services$-$ the admin$/$staff salary expense includes three security guards $($one for each floor$)$ and two

janitors. Don mentions that as the business has roughly doubled in size over the past year, the following

expenses have also roughly doubled:

$$ Salary expense$-$ Admin$/$Staff

$$ Salary expense$-$ Faculty

$$ Supplies expense

$$ Other expenses

Don states that the other expenses have remained about the same over time, except for the salary

expense for executives. As reward for the business$$s impressive growth, the five executives,