In the late 1990’s, Jess Alvaro was
enjoying travelling through
Europe and Asia. As an interior
design graduate, she held a
particular interest in the design
and architecture of the interior
and exterior of many of the
buildings that she saw in her
travels.
Upon returning home, she was
inspired to open her own interior
design business. She felt that her
experiences overseas would help
her to create unique designs that
wouldn’t be seen anywhere else in
Australia. She also wanted to
focus on the high-end niche
market, with a focus on
exclusivity.
Jess’ main problem was that she lacked the finance needed to turn her
dream into reality. She had only recently graduated from university and after
spending all of her savings on the overseas trip, her goal of opening her own
business seemed like a long way off.
She approached her bank to enquire about a loan but was told she needed to
prove that her business model had potential and that she would be able to
pay the loan off within a reasonable amount of time. She was also told that
the bank needed to see a business plan before they would loan her money for
her new venture.
Jess approached her parents and asked to borrow the money from them, but
they were reluctant to share Jess’ optimism for success.
Jess took up an entry position in a large interior design firm, working alongside
people who were very experienced in the field. Over the next couple of years
while she saved up some money, she used the opportunity to discuss her
ideas with some of her fellow colleagues. One of her work colleagues, Mark,

was particularly interested in Jess’ idea and also had some available
finances.
Mark suggested that they could become business partners, with him
supplying 70% of the finance they needed if Jess could come up with the other
30%. Together, they developed a business plan using a template they
downloaded from a government website. Mark was quite experienced and
offered a lot of good ideas that Jess hadn’t previously considered.
Jess presented the business plan to her family. They were impressed by how
well thought out the business model was and decided to invest some money
into the new venture. This money, when combined with her savings, allowed
her to make up the 30% she needed. They used their limited finances carefully,
strictly staying within the budgets they laid out in their business plan. “Unique
Creations” was opened in July 2006.
After a slow start, the business gradually began to increase its reputation,
based on the quality of the work produced by Jess and Mark. They avoided
spending money on wide spread marketing and instead focused on their
niche market. After two years in operation, the business made a reasonable
profit of $10,000.
Six months later, after continued success, Mark and Jess decided to expand
the business and take on an extra employee to help with administrative tasks.
To do this they needed new office space that was larger than their current
premises. They didn’t have sufficient cash to pay for the purchase of new
equipment and fit-outs, which they estimated to cost $25,000. They also
wanted to increase their marketing budget in order to promote their business
and expand their market share. One area of concern, however, was the
ongoing slow repayment of accounts receivable by some of their larger
customers (debtors).
Make a recommendation to Jess and Mark that includes justification for
appropriate financing options for the future expansion of their business.
Your response should be approximately 200-250 words in length.
Approximately 3 PEEL structured paragraphs.