General Discussion Instructions
In order to prepare for this assignment, READ the information contained in the document “Salty Pawz BackgroundLinks to an external site..”
You are required to post to this discussion ONE TIME. Please refer to the Discussion Grading Rubric for details regarding how your performance will be assessed. NOTE: Please be certain to read the entire discussion assignment since, in some cases, there is more than one question you need to discuss, respond to, or address. Be sure that you have answered the entire question!
Your Post
This posting should be a minimum of one short paragraph and a maximum of two paragraphs. Word totals for this post should be in the 100-200-word range. Whether you agree or disagree, explain why with supporting evidence and concepts from the readings or a related experience. Include a reference, link, or citation when appropriate.
Scenario
Wanda becomes frustrated with the amount of time she is spending running Salty Pawz and decides that she would be better off getting a “real job” as a dog groomer at ShamPooch. She will no longer be answering emails at midnight and running back and forth to Pack & Ship; however, closing Salty Pawz will have an impact beyond Wanda’s daily life.
For Discussion
If Wanda closes Salty Pawz, what will the impact be on both internal and external stakeholders of the business? Select ONE INTERNAL and ONE EXTERNAL stakeholder as the basis for your discussion post. Put yourself in the place of that stakeholder and consider what the impact of Wanda’s decision would be on your life.
In addition to your analysis of the external and internal stakeholders in the first part of this response, you also need to answer the following questions: In your opinion, how much responsibility does an entrepreneur like Wanda really have to the stakeholders of the business? Do the interests of stakeholders outweigh the interest of the entrepreneur?
Salty Pawz
A Case Study in Business
Throughout the course, you will interact with Wanda, the founder and owner of Salty Pawz, a small business that specializes in preparing and selling high-quality gourmet dog treats. Like many entrepreneurs, Wanda has a great deal of experience and expertise in the specific products she produces, but knows little about the broader business environment. As a student of business, you will find that throughout the course Wanda will need your help and ask your advice. The information contained in this case study is taken from Wanda’s business operations and is provided to give you the information needed to apply the concepts and theories from your course directly to Wanda’s business.
Table of Contents
“Salty Pawz” Background
General Information about “Salty Pawz”
Salty Pawz Marketing:
Products:
Pricing:
Place:
Promotion:
Salty Pawz Financial Information:
Sales + Revenue:
Cost of Goods Sold.
Monthly Expenses.
Sales Mix:
Break Even Calculation.
Forecasting Supply and Demand.
Income Information.
“Salty Pawz” Background
Several years ago, Wanda went to the local animal shelter looking for a new dog, and when she arrived, the most pathetic looking bulldog-boxer mix she had ever encountered greeted her. The puppy had terrible skin problems, had lost almost all of his fur and his skin was pink from scratching. The poor thing looked like a naked mole rat, but Wanda fell in love with him at first sight. She didn’t look any further than that first kennel and promptly filled out the paperwork, named him Cosmo and took him to the vet. Her vet was cautiously optimistic about Cosmo’s prospects for recovery but advised Wanda that in addition to medication, Wanda would have to be very careful about what she fed Cosmo. As a result, Wanda began to research dog food and was horrified at the low quality of the foods and treats available. She began to research healthier alternatives and after some experimentation, developed several recipes for treats that Cosmo could eat without any ill side effects. As her friends watched the evolution of Cosmo from sickly pup to happy dog, they began to ask Wanda to bake those treats for their dogs as well. Soon, friends of friends were calling her for treats and before she knew it, Wanda was in the gourmet dog treat business.
As a result of this blossoming interest in what she was doing, Wanda has been successfully baking and selling dog treats out of her home for the past several years, using the product name of “Salty Pawz.” The demand for her custom dog treats has grown to the point that she has a couple of friends who help her on a regular basis. Several months ago, she began selling her treats on Etsy.com. Since then, her online orders have started to outpace her capacity. This month, her brother-in-law set up a website for Salty Pawz and at first was excited that more people would have access to her products, but did not anticipate how many orders it would generate.
She has been talking to entrepreneurs in her hometown to get advice about taking her operation “to the next level.” She has questions and concerns about almost every aspect of business – finances, legal structure, marketing, production and overall strategy: Does she even want to grow Salty Pawz further? And if so, how would she grow it successfully?
General Information about “Salty Pawz”
The business was established in 2010 as a sole proprietorship. Wanda has been claiming all of the income and expenses for her business on a Schedule C of her personal income tax return. She uses a CPA to prepare her taxes, but maintains the day-to-day bookkeeping herself. Salty Pawz has shown a profit since 2011.
Salty Pawz currently operates out of Wanda’s home in North Carolina, and has had her kitchen certified by the local health department as a commercial kitchen.
She does not currently need a business license because all of her product is shipped and she has no customers coming to her home.
Salty Pawz does have a Federal Employer Identification number for tax withholding purposes, a NC Sales Tax identification number and is registered with the NC Employment Security Commission for the purposes of reporting NC Unemployment Insurance Tax.
Two of Wanda’s friends help her on a part-time basis, primarily at night and on weekends after their regular jobs. She pays them in dog treats and is not currently paying salaries or wages.
Wanda’s brother-in-law manages her website, posting information about her products and keeping the information on the company current. He doesn’t charge her anything, but she feels badly asking him to do too much work for “free.”
Wanda spends most nights answering emails and inquiries through Etsy and her website while her friends bake and package the treats. She is working 15-hour days, 7 days a week and knows she can’t keep this pace up much longer. She is very reluctant to change how she is doing business because she doesn’t want to give up on the success she has built.
She is using the local “Pack & Ship” to get her dog treats to her customers, but sometimes she finds herself running to Pack & Ship more than once a day. She is trying to figure out a better way to handle shipping but hasn’t made any decisions about what would be best.
Party Pooch = 4 each of 3 flavors
Salty Pawz Marketing:
Products:
Product. Wanda sells three varieties of dog treats: Chicken Cuties, Bison Bites and Lamb Lovies. Each treat comes in a plastic pouch containing 12 treats. She has the following assortments available:
Chicken Cuties= 12 Chicken
Bison Bites = 12 Bison
Lamb Lovies = 12 Lamb
Salty Pawz Commitment to Healthy Dogs
Since the very beginning, Wanda has been committed to providing a healthy alternative to mass produced dog treats. Consequently, she has been very careful about sourcing her ingredients. The chicken she uses in the Chicken Cuties is from free-range chickens that are fed no artificial growth hormones or antibiotics. It took her a while, but she was able to find several ranchers who raise lamb and bison in an environment where they are fed only non-GMO grains. She does not add preservatives, dyes or fillers to her treats.
Pricing:
Wanda has priced her treats on what would be considered the “high” end of the market. She determined her price based on her costs and what she wants to earn every month. Although she pays attention to what other businesses are charging, she has never conducted any research to determine how she stacks up against the competition. She is selling as many treats as she and her friends can make, so price is not something she is concerned about at this time.
Place:
Salty Pawz products are sold via the Internet and all of Wanda’s business is conducted through some form of e-commerce. She has her treats listed on www.etsy.com where they are one of a large variety of treats available. Her brother-in-law recently launched her website using Webley and she is still getting used to managing the site. In reality, when she gets a “sale” through her website she is sending the customers to etsy to complete the purchase. When she told Jim this he asked her “aren’t you afraid that when your customers get to etsy they will find someone else’s treats and buy them instead?” Wanda just scratched her head.
Promotion:
Salty Pawz does not have marketing materials, does no promotions or advertising. Wanda thinks it might be a good idea, but currently she relies on word of mouth to advertise her business. She has business cards she purchased from an online service and encloses one with each order. Jamie dropped some off at the local veterinarian’s office a few months ago, but no one ha checked to see if they are still there.
Salty Pawz Financial Information:
Sales + Revenue: For the last 6 months, Wanda’s sales have broken down as shown below. She has also provided you with her cost for each variety of treat.
Products/Services % of Sales Sales Price COGS Contribution Profit Margin WeightedProfit Margin
Party Pooch 45% 20.00 10.40 9.60 48.00% 21.60%
Chicken Cuties 18% 15.00 7.80 7.20 48.00% 8.64%
Bison Bites 5% 21.00 10.80 10.20 48.57% 2.43%
Lamb Lovies 32% 24.00 12.60 11.40 47.50% 15.20%
(Must equal 100%) 100% Average profit margin: 47.87%
Sales Price
COGS
Chicken Cuties 1.25 0.65
Bison Bites 1.75 0.90
Lamb Lovies 2.00 1.05
Cost of Goods Sold. Wanda’s COGS include the packaging, labeling, the ingredients, and the time it takes to make the treats. Since she can bake them in big batches, her labor cost per unit is very low.
When Wanda ships her products, she charges just what it costs her. Shipping is done on a cost recovery basis and currently she doesn’t consider it in her income/expenses.
Monthly Expenses. Currently Wanda’s monthly expenses are:
Expenses Cost in USD
Rent 0.00
Electricity 0.00
Telephone 100.00
Water / Sewer 0.00
Internet 60.00
Website 175.00
Salaries 0.00
Owner’s Draw 1000.00
Office Supplies 50.00
Loan Payment 0.00
Insurance 85.00
Other 0.00
Total Overhead $1,470.00
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