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CASE STUDY #1 – XYZ DELICATESSEN Previous Page | Next Page

 


XYZ Delicatessen’s owners need to make a decision on renewing the lease on their store location. They have located a new space that looks more appealing to them, but the rent would be higher. Their current landlord is willing to renew their lease at the same rate for the next year, but they really like the other space better.

Their current space has provided them a good income with a profit, so they have been able to put money into a savings account. When they reviewed their savings balance, they decided they could afford to improve their deli equipment by buying a new oven.

Just as the old lease expired, the refrigerator that holds their drinks broke down. They are faced with having to replace it. Since most of their savings were used to purchase the new oven, they are a little short on cash in savings.

Question: Should they ignore the refrigerator problem, not replace it and go ahead and lease the new deli space?

OR

Should they buy a new refrigerator and wait another year before they move into new space?

THIS IS CALLED SETTING YOUR PRIORITIES. WHICH IS MORE IMPORTANT:

1) The refrigerator?

OR

2) The new store space?

XYZ Deli owners determined that if they moved into the new space without a refrigerator for drinks they would not make as much profit as before. If their profits went down, then they might not be able to afford the new store space.

They had set priorities.

Their greatest priority was making a profit. It would be better for them to buy the new refrigerator and wait for one year before looking at new space. At the end of one year, their oven and refrigerator would still have a long life and they would have extra money in the savings account that could help them with the moving expenses of a move to a new location.



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