Barnard Case Alison Barnard Case This Business

Barnard Case

Alison Barnard Case

This business is definitely scalable, though this does not mean there are not significant barriers and difficulties that will be experienced in attempts to grow this business. Ms. Barnard's main issue appears in her desire to replicate herself as the manager at each new location; while it is without a doubt her specific drive and innovation that has made a success of her first retail location, she does not actually need (nor would she ultimately want) "duplicates' of herself as managers in the other stores. She needs individuals who are highly capable but who also are willing to commit to highly centralized planning and decision-making for the next several years. Barnard needs to take on the role of company director, not focusing on managing her original location while spawning duplicate locations elsewhere, but rather stepping back from the one store so that she can focus on the grand design and planning of multiple locations. If she truly wants to increase the scale of her business, her position in that business will need to change, and she needs other managers that are capable of following and fulfilling her instructions, not coming up with their own.

2)

At this stage in the venture, the primary tasks and goals that Alison should be focusing on include the development of a truly comprehensive and detailed plan for the growth of her business, rather than either the micromanaging of each individual store or the attempt to instill visionary and innovative leaders like herself in all stores. That is, rather than focusing on the leadership that will be provided for each store, Alison should be focusing on how best to translate the model she has created at her original store, and gauging the rapidity with which she can accomplish several similar translations. Once a basic (yet comprehensive) plan has been developed, Alison should focus on teaching the model of her business to the prospective leaders she ahs identified; this would ensure that the business remains targeted and focused the way Alison desires (and in the manner that has proven so successful for her) without necessitating finding leaders that appear to duplicate her or remaining in direct control of all locations -- an impossible task. Essentially, Alison needs to stop focusing on the tasks of the store manager -- both at her original store and in the future stores she is planning on opening -- and start focusing on being a true business leader and executive. Her goals should be those of a long-term planner and company president, not those of a small business owner and retail store manager.

3)

Signing a lease prior to actually have the money for that lease carries a great deal of risk for Alison and her business, especially given that all of the assets that are part of her original store -- all merchandise as well as cash and anything belonging to the business that was not already owed on prior obligations -- could potentially be part of a judgment against Alison and her company. By trying to grow too fast, in other words, Alison might have placed her entire venture in jeopardy. The landlord with whom she signed the lease is entitled to collect payment from Alison regardless of her financial circumstances; even if she did not ultimately move into the space she had leased, she is responsible for paying the lease she contracted to pay until another tenant is found (laws vary regarding how much effort the landlord must put into finding a tenant; sometimes, the lessee can be deemed responsible for the entire period of the lease regardless). If she is unable to generate the cash necessary to pay the lease, the landlord could litigate and seize company assets as payment, and then Alison would be left without the wherewithal to generate any revenue for future obligations -- her merchandise would be gone, leaving her without the means to conduct business. It is unlikely that things would reach this extreme with any rapidity, due both to pragmatism on the part of the landlord (things are easier for the property owner if the businesses that lease the property are successful; there would be no advantage to immediately bankrupting a business for one delayed or partial rent payment), but ultimately Alison is gambling her existing business against its future potential growth and revenue.

4)

Alison's fund raising has appeared to rely more heavily on equity investors than in the taking on of debt, and while this might provide greater security for the business's growth, it presents a much lower rate of expected return for equity investors. Given the markup that retail establishments typically employ for their products and the profit margin that exists for many similar companies, equity investors would likely expect a higher rate of return than on many other startups. This expectation would be further enhanced by the level of success that Alison has achieved with her original retail store; this is the model that investors will be viewing when determining whether or not to provide capital for future growth, and returns that are not commensurate with this level of return will be viewed as far less than ideal, and perhaps not full tenable for continued equity funding. While taking on debt is not as attractive a prospect for Alison for whatever reason, this would enable her to take on fewer equity investors, leaving her greater control over the company as well as retaining a greater portion of profits and delivering higher returns o the equity investors she does attract. This would prove more attractive to equity investors overall, and could put Alison in a better negotiating position with these investors, enabling her to secure ultimately cheaper and more profitable funding than focusing on equity investors alone.