Mary Margaret Glenn knew the going would be tough the first couple of years. She
ID: 449888 • Letter: M
Question
Mary Margaret Glenn knew the going would be tough the first couple of years. She was now finding out exactly how tough. After five years of working for others, Mary and her former college roommate had pooled their resources and purchased a small building not far from the college campus. In it, they served gourmet coffees and specialty pastries. Business was good, when ‘‘good’’ was defined as consistently increasing weekly sales levels and strong profit margins. Unfortunately, during the recently completed campus Spring Break, their sales volume fell significantly (about 80%). As Mary’s roommate pointed out, however, the expenses did not fall. Rent, insurance, utilities, and lease payments were just a few of the operation’s expenses that did not take a break during Spring Break. As a result, cash was tight. The operation would make its bi-weekly payroll, but not by much. Fortunately, the students had returned, and so had revenues. But it had been a narrow escape—too narrow, thought Mary.
What are some specific operations-related activities you could suggest to Mary to avoid a cash flow crisis the next time her business volume reduces dramatically?
Explanation / Answer
Mary should work on crisis management. Mary has got past data of how much shortfall she has during campus spring break. for e.g Mary was short of say 100 $ during the break period. Then she has to find out the ways to get 100$ during next campus brak period
There are different ways of dealing with crisis
1) Mary can increase the coffee or pastries cost if demand is not elastic or less elastic. this will her to save significant amount by the time campus break comes up.
2) she can negotiate the cost with owners of rent or lease during campus break and reduce the expenditure.
3) She can take a small loan to continues its business during the crisis period.