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Sweats Galore

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Sweats Galore

Horace Bailey

April 24, 2012

To: Michael Woods
From: Horace Bailey
Date: 04/24/2012
Subject: Sweats Galore 1. Hello Mr. Woods. I would like to start off by congratulating you on your new business venture. I have gone over your business goal and I believe that you did an excellent job stating your desires to incorporate the four criteria into your new business. I can tell that you put a great deal of thought into this project from your information and knowledge about the area. You took great initiative traveling to Shirts and More to talk with Jayne Stoll. This shows me you are interested in achieving success and providing a quality product to Campus Town. Also, I am able to grasp your enthusiasm about undertaking such an endeavor as well as the genuine want to provide custom print sweatshirts to the town in which you graduated college. Mixing this with the ever changing economy and socioeconomic trends of our day, I personally believe your business is poised to be successful in the future as more students attend college yearly and word gets out about your product. My only concern came with your wanting to generate a net income of $25,000 annually. While there is nothing wrong with wanting to profit, I believe I could lend you a few suggestions to potentially allow you to achieve our goal earlier. To be more specific, your first three criteria are more along the lines of a mission statement. Your only true objective is criteria four. You do not truly have a plan for your business and this leads to the question, what will happen if your business does not generate a net income of $25,000? What will happen if you net the $25,000, but you do not have cash to keep the business afloat? All these scenarios are food for thought and I believe my opinions could be of use to you. 2. My first suggestion is to change your agreement with Cary Sue. If your projection were to come to fruition, do you realize Cary Sue would take home $80,000 off commission alone? That is an incredibly high amount to say that you only allotted $72,000 for six of your other employees. You could perhaps offer her a smaller percentage for her commission and trim down her salary. If Cary Sue worked off five percent and $1,000 per month, she would take home $50,000 which is much more reasonable and still very generous of you. It was not a good idea to offer such a high salary in your first year of business. Lessening her pay would get you very close to reaching your goal or netting $25,000 annually. Lessening her pay is also a good idea because her pay will increase on its own as your business becomes more well-known and you are able to generate more sales. 3. Overall, I believe you have a firm understanding of business concepts and I do not see any reason as to why your business would not thrive in a prime location such as Campus Town. I suggest that as you accumulate excess revenue, you work towards paying off that $20,000 note. It will build your business credit and could be necessary to accumulate necessary improvements and time goes by such as newer equipment and maybe even better materials. Just as reminders, it is always best for you to remain transparent with your reporting and stay in like with GAAP standards. Surely, you have hopes to expand your business and transparency could play a key factor in attracting investors. I wish you the best of luck for you and your business Mr. Woods.

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