Successful small business owners look to others for counsel on important business decisions. In this assignment you will work with your in-class counsel (learning team) to come up with ideas, calculate risks, and contemplate opportunities related to choosing a location for your business operations.
Your company is thinking about purchasing a small, successful business. You have two choices: Small Business A or Small Business B. The purchase price of each business is $250,000 (and you cannot spend more than that, so acquiring both is not an option).
Review the following data:
Small Business A:
Revenue = $100,000 in year one, increasing by 10% each year.
Expenses = $20,000 in year one, increasing by 15% each year.
Depreciation Expense = $5,000 each year.
Tax Rate = 25%
Discount Rate = 10%
Small Business B:
Revenue = $150,000 in year one, increasing by 8% each year.
Expenses = $60,000 in year one, increasing by 10% each year
Depreciation Expense = $10,000 each year
Tax Rate = 25%
Discount Rate = 11%
Identify the key factors to be considered when it comes to choosing a business location.
Analyze how models such as Reilly’s Law of retail gravitation can affect understanding the competition and financial success.
Create a team presentation of 25 slides in total with appropriate references in which you outline the key factors you used to select a business location. Explain why the choice of location can make or break a business, and analyze how capital budgeting impacts location in both the short and long run.