Should you continue operating your business?
Tags:copiers, cots, homework question, local bank, store space,
4
Suppose we confirm to open the duplicate store. You franchise store space (signing the a single year lease), as well as we take out the loan during the internal bank as well as make use of the income to squeeze 10 copiers. Six months after the vast sequence opens the duplicate store dual blocks divided from yours. As the result, the income we embrace from your duplicate store, whilst enough to cover the salary of your employees, as well as the costs of paper as well as utilities, doesn’t cover all of your franchise as well as the seductiveness as well as amends cots upon the loan we took out to squeeze the copiers. Should we go on handling your business?
sorry, we should have put, this is the task question, not genuine life
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shut down, you can’t cover your fixed costs. You can lay people off, but not taking care if fixed costs on scale is where you shut down.
You would need to figure out all your sunk costs and fixed costs. Economist argue that sunk costs are not relevant here, but I always say remind yourself of what you have buried in something before you bury your business.With contracts with the landlord and the banks, even covering some of these costs is better than bowing out and losing the whole deal. When you can’t make a profit, you should at least attempt to minimize your loss. So, if running at a loss is less of a loss then closing and dealing with those losses, then keep going and re-evaluate your position. Or you could open a for cash only poker game in the back and keep those proceeds, etc. Just joking!! I know somebody that did this and it worked great until the cops found out.
I’d say that’s up to the business owner.
Some things to consider, they already have a copy shop, so why not use that to make advertising to send out. Especially to nearby offices.
Another option is to relocate to where there is business, they have the equipment and staff, so they just need to move that.
Whether they do that or they can close, both of which depend more on how much it costs to break the lease. If it’s a lot it might be cheaper to stay in the sinking ship so to speak.
Certainly you should continue. A little competition is good for the business. You just have to alter your prices to be a good competition for the other people. Do things cheaper. It doesn’t have to be a lot cheaper, just cheaper. Do other things that the other store doesn’t do.
I own a tattoo and body piercing studio. In the beginning I was the only one now there are about 5 or 6 in the same city I’m in. they are no competition because everyone is unique with their art and when it comes to body piercing, we are the highest priced but we do one thing that no other place does. We make our basic jewelry instead of buying it. I’ve been in business for 10 years now and things just keep getting better. People know where to go for quality.