Clare’s Clothes (CC)
Clare is a sole trader who has been selling women’s clothing in her local area for the last
10 years. She has built up a reputation for selling quality clothes at competitive prices. Her
shop has clothes from well known fashion designers. Now her main business objective is to
increase profit over the next 3 years.
To achieve this objective Clare is thinking of opening a second shop in another location. She
is considering 2 possible locations for the new shop and has collected the data shown in
Table 1.
Table 1: Data for each location
Clare has always wanted to own and manage a business but she was disappointed with the
level of net profit last year. She knows expansion is an opportunity to make more profit but is
unsure of where she can get appropriate finance. Her accountant has given her the figures in
Table 2.
Table 2: Key financial data for year ended 2012
Clare knows she needs at least $15 000 to set up the new shop. Clare has made an
appointment with her accountant to talk about whether she should take the risk and expand
the business.