Scenario

You are a partner in Creative Crafts, a small shop in your towns historic district. The district attracts many tourists from nearby states as well as regular customers from town. During your first year, your monthly sales average was about $25,000.

You and your partners invested all your personal savings in the shop. Business has been better than you forecasted, but you believe that sales and profits could have been even better. You sell on a cash-only basis. Your motto has been, In God we trust; all others pay cash. You are wondering about continuing this policy since one in four people who comes into the store leaves without buying when told you dont accept credit cards.

You and your partners are trying to decide how to go about offering credit to your customers, if you should at all. None of you has experience in dealing with credit, but you each have your own ideas on the matter.

Questions:

Why would you not sell on credit in the first place?

Why do you think the lack of credit caused some shoppers not to buy from you?

What alternatives for offering credit can you and your partners suggest? Which alternative do you recommend? Justify your answer.