This Study Resource Was: Allison Barnard Case Study Tara Thomas Professor: Bruce Huang ENTR 510 January 7, 2018

Allison Barnard Case Study
Tara Thomas
Professor: Bruce Huang
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ENTR 510
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January 7, 2018
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1- Is this business scalable? Discuss the limitations and challenges.
Even before the financials are brought into play, Alison should carefully consider
beyond whether or not opening another location would even be possible within her vision
of tight control and being involved in the minute of everyday decisions.
Beyond whether or not the business is scalable in terms of Alison , the question then
needs to be answered in terms of financial considerations .
As she moves more inventory and can buy more inventory from jean manufacturers,
her incremental costs will decrease based on her higher volume of purchases. One thing
which may work against her in this regard is that she carries so many different lines of
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jeans, tops and jewelry in her stores. If she cannot build up her orders from companies
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substantially, they have no reason to give her a bulk discount; she will be paying as much
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to sell her 50th pair of jean as she did her 5th.
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Allison also needs to get over more of the humps on her learning curve. In order to scale
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her business up to the next level, she cannot rely on nascent family members to take care
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of her financials for her. Exactly how much bigger can her business grow on the financial
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experience of her uncle? If she were to open another location, or even expand sales
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significantly in her own store or use a more complicated accounting system and
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outsource some of the work. And possibly upgrade to a state-of – the art point of scale
system that can allow the room for scaling up without reinvestment.
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The other thing Alison should realize which does not seem apparent in her five year
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projections, is that noting is infinitely scalable. Her anticipated increases in revenue
seem unreasonable compared to the anticipated investment. Her projections shows
increase in profit for $19,000 in the first year to $384 in the fifth year without opening a
second location and only doubling her marketing expenses. Scalability also requires that
the possible revenue actually exists in her customers discretionary spending budgets. Is
she counting on an unlimited supply of such customers, or is she banking on repeat
business. Has she considered how often women will buy new pairs of jeans, and has she
perhaps over estimated that number?
2- What tasks and goals should Alison be focusing on at this stage of her
venture?
Alison’s business is doing extremely well at this stage in terms of sales, she is surpassing
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her monthly revenue goals. But in order for her business to continue to be successful,
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Alison needs to turn her attention to a few matters. First Alison needs to focus on hiring
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staff that she finds suitable for her store. From reading this case study it’s clear she is too
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personally invested in her business. If she wants it to grow she needs to work on giving
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up some of her need for so much control. She start in her business with too many
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demands on everyone from investors and everyone who works with and for her.
Interrupting her employees while they are trying to make sales and inserting herself into
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places she could easily delegate, like loss prevention. Even though her risky moves paid
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off early on, Alison should not count on such luck following her through all her ventures.
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Long-term planning, possibly expanding the current location or moving into a newer
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larger location. Alison should be focused on marketing In-jean-Ius, continuing the
upward sales trend is essential and utilizing the full compliment of her communications
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strategy plan will be key to growing the business. Additionally Alison needs to develop a
more sustainable training platform for her sales team. Currently the training is too
dependent on Alison and her methods, there is no documentation to support the training
efforts. Alison must have a staff that can compliment her passion and expertise from a
service perspective, but also feel empowered to carry on the service quality that Alison
demands.
Alison should also be focused on her investors if she has eyes on expanding to another
location and growing her business by adding more floor space. She is locked into a three
year on her current location would it make sense to move to a different location or to add
one? Alison should set herself to thinking about long range planning, as soon as she has
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worked on her management skills enough to let some of the daily task give her the
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breathing and vision space she needs.
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3- Discuss the signing of a lease prior to having the money. What was the risk?
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In signing the lease prior to having the financing in place, it was extremely risky. First,
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Alison could have easily found herself in a situation where her investors didn’t come
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through. She was extremely fortunate that she had a family that fully supported her dream
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and invested early into the business. With her not being able to secure the funding on her
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own through SBA loans and bank financing she could have been on the hook for a 3 year
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lease worth more than $30,000. By purchasing the lease before actually having the
financing Alison could have jeopardized her entire business and stopped it before it ever
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got started.
Alison could have used the three months free rent to negotiate terms with her investors or
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obtain a co-signer for the small business loan as well. While signing the lease was risky it
was a calculate one, she needed the lease to show investors that 1 she was serious about
her business and 2 she had done her homework and was ready to make her dream a
reality.
4- Discuss her fundraising and valuation. If you were an equity investor, what
return expectations would you have?
Evaluating any business is a challenge but especially for a new business. Valuation is the
future financial outlook of a company. Alison evaluated her business with first year-
projected sales of $375,000 and a startup cost of $125,000.
Her first two fundraiser efforts failed. She was turned down by Boston Private Bank
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Because they insisted on a co-signer , which she refused , wanting to take full
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responsibility herself. She was unable to secure an SBA loan because she had no
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collateral and was paying off student loans. She looked into grants but was un willing to
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go through the long process.
She offered an alternate plan investors- the would not be able to choose how much to
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invest, and the options were full equity , debt/equity or full debt. Her father took one
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share at full equity; her uncle took /debt equity , one colleague for all equity, an investor
for all debt and the final two for all equity. The last investor wanted two shares for 15%
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equity instead of 12.5%
As an investor I would want to take a long –range view for Alison’s company and not to
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expect much of a return in the first few years as she built her company , As share holder
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however I would also expect her to respond to her investors and our more experienced
view of business planning.

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5- If women are coming to Alison's store from all over, how important is
location? Discuss the implications for growth.
Alison’s current location is in Boston’s historic and pricey North End, which draws
visitors from all over the world. The location is extremely important to the success of In-
Jean-Ius. The North End draws crowds of tourists and locals alike, there is ample foot
traffic and many independent shops and restaurants.
The market research that was created for In-Jean-Ius focused on a major metropolitan
city with a median income of $54,000. Location matters in retail, especially for a
specialty shop. Traffic drives sales, and the North End boasts visitors from everywhere.
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The sales for In-Jean-Ius reflect the benefits of location. Additionally sales would have
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suffered had the location not reflected the tonality, look and feel of the store or catered to
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the market. In-Jean-Ius is a trendy retail shop and as such needs to be in an area where
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their customer base would be. For a new retail business this is key. For instance if
Alison’s store was located in Concord Mass., sales would be entirely different, location
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matters.
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In terms of growth, In-Jean-Ius is well position to expand it’s current location or find a
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larger location in the same area because they are one of few boutiques in the area but also
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not too far from other retail boutiques. They get much of the foot traffic but less of the
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competition.
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Conclusion
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While I don’t believe Alison’s business is scalable I do be she can expand into a larger
location that can expand on her product offering to potentially include men’s jeans and
possibly children. Additionally I believe she underestimated her valuation of the business
and affected the business foundationally because had the valuation been hiring she could
have obtained investors at a higher investment that would translate into a larger location
and she would be better positioned to expand.
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References
Bygrave, W. D., Zacharakis, A. (2014-02-07). Entrepreneurship,3rd Edition [VitalSource

Bookshelf version]. Retrieved from
https://bookshelf.vitalsource.com/books/9781119133315
Entrepreneur Staff (2015, May 20). 10 Things to Consider When Choosing a Location
for Your Business. Retrieved September 17, 2016, from
https://www.entrepreneur.com/article/244866
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Allison Barnard Case Study

needs to be answered in terms of financial considerations .

projections, is that noting is infinitely scalable. Her anticipated increases in revenue

seem unreasonable compared to the anticipated investment. Her projections shows

she counting on an unlimited supply of such customers, or is she banking on repeat

perhaps over estimated that number?

larger location. Alison should be focused on marketing In-jean-Ius, continuing the

projected sales of $375,000 and a startup cost of $125,000.

equity instead of 12.5%

view of business planning.

traffic and many independent shops and restaurants.

and she would be better positioned to expand.

Bygrave, W. D., Zacharakis, A. (2014-02-07). Entrepreneurship,3rd Edition [VitalSource

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