Expanding a one-Store Operation to Two-Store Operation

Option A. Expanding a one-store operation to a two-store operation

Assume you currently run a small retailing business in the lobby of a

large office building. Your store occupies 1000 square feet of space. You

spend fifty hours a week at the store and hire two employees, each of

whom spends thirty hours a week at the store. Your annual revenues are

between $150,000 - $300,000 a year. The products you sell are a mixed

bag of items. Basically, you stock up with items that occupants of the

office building will want, including snacks, pre-wrapped sandwiches, bottled/canned beverages, greeting cards, newspapers, paperback books,

and small gift items that the building’s tenants might find attractive.

A new office building will open two blocks away from the building you

now occupy. You would like to expand your business to that building. In

fact, you begin to dream that you can establish a chain of such stores in

large buildings downtown. You have even cooked up a name for the

potential chain, “Buster’s” (named after your pet Labrador retriever).

At this point, you are not sure how you want to fund the expansion. You

need to put together a business plan to develop a sense of the financial

requirements of the new operation. You may decide to fund it using your

savings and by taking out a second mortgage on your house. Three other