Question

Homework foe Flower store(small buisness managment)

What production/supply risks might you face? What are your contingency plans for those risks? How will you handle suppliers who: raise prices? become erratic in their deliveries or their quality?

Any distributor risks? Contingency plans?

Any regulatory risks? Contingency plans?

Capital-related risks--potential cash flow problems, notes coming due, etc.? Contingency plans?

What insurance coverage do you have? On key people? On physical plant, equipment, and inventory?

What other potential risks are part of your specific business?

Answer 1

Homework for Flower Store (Small business segment)

• Production/Supply risk: The garden owner of the farmer who is a regular supplier fails to supply and meet the demand. Contingency plans can be lining up more than one supplier especially during peak seasons like Christmas , New year etc.
• Handling supplier is tricky. Suppliers must be contracted based on price beforehand at least for 6 months and prices must be stable for that periods. This can be done by mentioning the same in the contract. A handful of suppliers will ensure proper and timely delivery. A proper forecasting technique must be in place to ensure that their is no demand supply mismatch.
• Distributor risk is minimum since most of it is a Business to Customer segment. Distribution channel might involve wholesalers but it is always advisable to keep the channel players to a minimum to save cost.
• Regulatory risk can arise if the local Government introduce some law against plucking or selling of flowers. A proper mechanism through external environment analysis must be in place to analyze such risks , so that these risks can be avoided.
• Capital related risks: Proper financial management and budgeting techniques must be designed to study cash flow patterns ensuring that the business does not run into trouble for want of cash. Capital budgeting using Net Present value method taking into account interest risks must be in place as well. Loans if taken must be ensured to be paid back on time.
• Insurance. Insurance of the store, fire etc. along with insurance for the stock must be taken to avoid any untoward event due to fire, flood, riots etc. The key employees must be covered under group insurance scheme of the store.
• Other potential risks include advent of artificial flowers at a much cheaper rate , as a competitor along with chain of stores using penetrative pricing strategies to grab new customers. A proper competitive analysis must be done at regular intervals to understand potential threats if any.