Andy Rexford had started his custom embroidery shop in his garage with just one two-head machine and an old computer. From this humble beginning, Custom Stitches had grown into a full-time family business with sales of more than $750,000 a year and supplied the local college and businesses of all sizes with embroidered caps, shirts, bags, and other items. Andy established a niche early on, taking on small jobs (often just one or two items) that the big shops would not consider. The quality of his work and his willingness to fill those small orders were important factors in getting the company to its current position. Although the business is much bigger now, Andy still handles small jobs quite willingly.
Custom Stitches now has five six-head machines (machines that can produce the same designs on six items simultaneously) and the old two-head machine Andy had used to start the company. "It still works just great," he told a friend. "Besides, how could I get rid of the machine that started all of this?"
Recently, Andy attended a workshop on business planning sponsored by the local chamber of commerce. After the workshop, Andy spent two months developing a business plan for Custom Stitches, a process that he found extremely valuable. One result of developing the plan is that Andy sees an opportunity for his company to grow significantly over the next several years. In fact, with the new accounts he has been bringing in, the contacts he has been cultivating and a plan for the future, he believes he can easily double the size of the company within two years. The primary challenge he faces is finding the money to finance that growth. The financial forecasts Andy developed for the plan show that the business cannot generate enough cash to fuel growth at that pace. Further, Andy’s forecast shows that he will need $700,000 in external capital to meet the goals and objectives he has set for Custom Stitches. As he sits at his desk looking at his business plan, Andy wonders where he can find that much money to finance his company’s growth.
1.Where would you suggest Andy look for the financing he needs for Custom Stitches? Consider three options.
2.Explain the advantages and the disadvantages of the three sources of funding you suggested in question 1.
3.Based on the three sources of financing you have explained earlier, which do you think would be most promising for Andy’s capital needs and why?
Your report MUST include a reference list. All research should be cited in the body of the paper. Reports without citations may not earn any higher grade than a ‘C’ letter grade. Your report should contain an abstract, a short introduction, and conclusion in addition to the body of the paper (note: the 3-5 pages length requirement excludes the title page and reference list pages). Please note that if you have a source in your reference section, you need to cite it in the body of the paper per APA guidelines and vice-versa. For more information on APA, please visit the APA Lab.
Please submit your assignment as a Word document in APA Style 6th edition format.
Objective: The Objective of the Unit 4 IP Assignment will involve the following the Course Outcomes and Grading Criteria with their respective percentages for the Grading Rubric:
•Explain business plans, sources of finance, and market identification. (100%)