BLOG FOR BUSINESS QUESTIONS

Sunday, August 27 2006

I am a single woman who has a relatively successful costume jewelry store in a mall. The store next to me is becoming vacant. I have some extra cash and I was wondering what your opinion is? Should I rent the store next to me and add new lines of merchandise or should I open a second store about 10 minutes away?

I have my best friend from high school who is a single mother and currently unemployed, she currently wants to manage the second store. She doesn't have any money to invest but she did work at the gap clothing store for a few months before being laid off. Also if I have a second store, I could buy larger quantities of merchandise and save about 5%. The second store I am looking at is only 500 square feet, the rent is only $800 per month, however it is a block off the main downtown shopping district. What should I do?

Response from Thomas McGovern, MBA- Business Consultant

Dear Shana:

This is a typical problem most business owners face. Choice A or B. Many attribute it to luck whether the business will succeed or fail? However if you use a more mathematical and analytical approach the answer will become more obvious.

Analyze the problem as follows:

Expense structure of New Store:

Project revenue of new store based on parameters such as advertising, walk in

Expense Structure of expanding Existing Store:

Project revenue of expanding existing store based on parameters such as advertising, walk in

Human issues:

Cost of internal control and theft (including management theft by your "Best friend from high school"

What happens if her child is sick. Can a store that size support the payroll in a low traffic location?

Posted by: Shana Rebert AT 10:47 am | Permalink | Email

Thomas McGovern, MBA, CVA

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Brooklyn Neighborhood with zip codes

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