BUS 521 WEEK 4 DISCUSSION - 86305

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1) "Money Management" Please respond to the following: • From the case study, suggest a new business strategy for this company, forecasting potential growth for the next five years. Determine the steps that the company should explore to improve the business while minimizing financial risk. Note: Use the PlanningShop’s Business Plan Financial package to support your strategy. The PlanningShop’s Business Plan Financial package is located in the online course shell. • Speculate on at least two potential challenges that your new business strategy may experience as a result of this new approach. Next, suggest the methods that the company can take to confront these challenges. 2) "Financial Planning" Please respond to the following: • Evaluate the financial planning process for new business ventures in terms of how it both challenges and benefits new ventures. Provide an example of each (i.e., challenges and benefits) from industry to support your position. • Determine the key benefits and challenges of using bootstrapping for financial planning. Provide at least two examples of businesses that can lend themselves to bootstrapping as a means of raising money. Support your response. NOTE; MORE THAN ONE ANSWER POSTED FOR EACH DISCUSSION AS A BONUS
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DISCUSSION 1

 

From the case study, suggest a new business strategy for this company, forecasting potential growth for the next five years. Determine the steps that the company should explore to improve the business while minimizing financial risk. Note: Use the PlanningShop’s Business Plan Financial package to support your strategy. The PlanningShop’s Business Plan Financial package is located in the online course shell.

This company’s new business strategy should be to reduce their growth rate and focus on cash flow. They have already learned, so they say, that in order to grow at the pace they wanted, they took on a lot of debt, too much. They should not grow any faster than what the increase in Gross Margin allows. For instance, if their Gross Margin grows by 3%, they should invest that money into their growth plans and not take on any additional debt. Keeping debt at a minimum also minimizes their financial risk.

The luggage industry is expected to grow 4.5% between 2014 – 2019 according to PR Newswire US released on 10/2/14. Even though J.W. Hulme grew from 2009 $866 to $2.6 million in Sales in 2012, this should not be their continued expected growth. They should use the 4.5% as their guide and not take on additional debt. They can manager their debt by tracking their debt ratio monthly. They just divide total liabilities by total assets to calculate their ratio. The lower the ratio, the better.

In addition, they need to focus on cash flow. They should negotiate with suppliers to possibly extend terms out another 10 days. They also need to protect inventory by ordering what they need and not over ordering.

References

http://www.investopedia.com/university/ratios/debt/ratio2.asp

Abrams, R. (2012). entrepreneurship A Real-World Approach. Palo Alto, CA: PlanningShop.

PR Newswire. (2014). Global Luggage and Leather Goods Industry 2014-2019: Trends, Forecast, and Opportunity Analysis.

Speculate on at least two potential challenges that your new business strategy may experience as a result of this new approach. Next, suggest the methods that the company can take to confront these challenges.

Two challenges that may arise due to the new business strategy are loss of revenue and loss in quality. If they do not expand to keep up with demand, they may lose sales. If their existing suppliers cannot keep up with their growth, they may also lose sales because they will not be able to produce the products to sell. They will need to keep open communication flowing to make sure they are producing enough to make the Sales projections and keep suppliers in that communication chain to keep the correct amount of supplies available.

OR

From the case study, suggest a new business strategy for this company, forecasting potential growth for the next five years. Determine the steps that the company should explore to improve the business while minimizing financial risk. Note: Use the PlanningShop’s Business Plan Financial package to support your strategy. The PlanningShop’s Business Plan Financial package is located in the online course shell.

 

The new business strategy the company should consider is to maintain capacity while managing their finances, until they are financially able to grow. It appeared that they wanted to grow before their time, and in doing so, they created a financial dilemma that made them vulnerable while relying on others to bail them out of their own crisis situation. To help them improve their business, they should consider looking at their income stream. They were so reliant on the bank to give them a loan to help with the debt situation, it put them in a position to fail when the bank decided not to loan them any money anymore. This was also a sign that their focus was in the wrong direction, because while they were taking loans, they continued to build upon their debt. Most small business fail due to heavy relying on lending from banks and credit card companies.

Speculate on at least two potential challenges that your new bu

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