Rhiannon started a new business last year making and selling rings. She buys stones which have been cleaned and coated for $3 apiece (on average). Other materials cost about $2 per ring. Rhiannon sells her rings online for $15 each and $20 each in person. She realizes that her customers could shop online to save money, but they would still need to pay for shipping (flat rate of $10 per order which is about $2 higher than her typical shipping cost). She doesnt market all her creations online, keeping the best pieces as treats for regular customers. In her first year, Rhiannon sold 1,100 rings of which 60% were in person- she estimates that online shoppers buy three rings per order on average, while in-person shoppers buy two per visit. She is looking for feedback on this sales strategy. Also, Rhiannon has heard of cost-volume-profit analysis and she is wondering how things look for her currently (and maybe in the future) from a break-even and margin of safety standpoint.

Rhiannon is debating whether to continue working out of a makeshift office/store in her basement as opposed to a store in the city. Her home expenses total $1,000 a month and she estimates her basement takes 40% of the homes available space. A store would cost $2,000 per month, but grow sales by 75% (80% of the sales would now be in person). If she decides to go in this direction, Rhiannon plans to hire a part-time helper who would produce 1,000 rings per year. Rhiannon estimates that this worker would work 250 hours a year at a rate of $16 per hour. Rhiannon is wondering about the cost-benefit analysis of going in this direction. She is also wondering how she might evaluate the helpers performance once she has actual sales and expense numbers. Also, she wants some insight on the best ways to discuss performance with employees.