Well that glorious day has arrived and you have opened up your owned beautiful business consulting practice in that new tower located on the corner of 56th Street and Lexington, New York City!!! Who would have believed the day that you were sitting on top of the world. You unlock the doors and await that first client.
After about two hours of playing paper clip football, and with the home team down three touchdowns in walks a little old lady, who looks like she might be 1000 years old, and you have to contain yourself not to ask if she went to kindergarten with George Washington. You gird yourself and walk over to the nice lady with the best business smile you can muster, "Yes, miss, may I be of assistance to you?" "Well, unless, you can tell me how to help my business, then you can tell me where the ladies' room is and I'll be on my way!" she replied indignantly. Reaching deep within inside yourself not to respond to the old betty's remarks, you muster the next best smile you possessed since the day your date picked you up for your junior prom in that pink tuxedo, and your mom told you that it would be a nice thing to do. "Yes of course, Mrs., I am sorry I did not get your name." "Mrs. John McCarthy." "Well Mrs. McCarthy please explains to me your problem.
Mrs. McMarthy explains that she has been selling these new quilt covers that she has been making by hand and has seen a recent burst in revenue. She cannot turn them out faster than the orders are coming in and she has hired on three women to help her in preparing the quilts. Even though the orders are bursting the top drawer in her antique courier, which of course she purchased in Macy's when Macy's was a real retailer, not like now just trying to please the local consumer with a little skin, she digressed a lot during her narrative; nevertheless, she was making very little profit on the quilts she sold. You asked Mrs. McMarthy if she expected more sales, and she said that she has on standby 5 orders from various New England Bed and Breakfasts that saw her quilts in a recent trade magazine and wish to put them on all their beds in their hotels.
You asked Mrs. McCarthy a few more questions, like how much material did she buy on a weekly basis, which she replied that purchases were done according to the orders, you asked her also about the wages of the employees, which she also responded depended upon the amount of work was produced.
Without the use of figures, analyze Mrs. McCarthy's situation and determine the cost structure she is using and whether it is helping her profit margin or hurting it. Can you think of any suggestions that might help Mrs. McCarthy increase her bottom line. Are there any pitfalls to the potential advice you might give her. Consider the complete picture.