Kathy is a local Brisbane resident and she is the founder of ‘Lara Jean Pty Ltd’, a Brisbane-based company
that creates activewear for women. With the trend of being healthy and going to the gym increasing,
demand for activewear has been rapidly intensifying and Kathy has been able to open 3 stores across
Since Lara Jean has been so successful, Kathy wants to expand the company interstate and obtains advice
from Peter, the sole owner and financial advisor of ‘Precision Financials’. Peter started his sole practice after
having 20 years of experience as a finance advisor and is extremely well known for his professional services
for small business and retail chains. Kathy has no experience in running a business in States other than
Queensland, as it is where she grew up and she needs advice as to the company’s position and whether it’s
ready to make the interstate move.
During their initial meeting, Peter glances at Lara Jean’s Financial Statements from the prior year for the first
time and then advises Kathy that her company is in a great financial position to make the move interstate. In
the same meeting, he also tells Kathy that Western Australia is the perfect market for her to enter into as he
believes that gyms in Perth are opening in record numbers and that her designs would sell “in no time”.
Kathy, being cautious about opening a new store so far from Brisbane, asks whether she should start small
with a boutique store and whether Peter needed to do some more analysis on her company before giving his
final advice on her proposed move to Western Australia. Peter replies by telling Kathy to have more
confidence in her designs and to open a grand store at the largest shopping centre in Perth. Peter reassures
Kathy that he knows the retail market inside out since that is his speciality. He then states that normally he
would have to perform a more thorough financial analysis of Lara Jean, such as providing a written review
and cashflow forecasting of the potential profits of Lara Jean in Perth, however, given the fact that Lara
Jean’s profit in the last year would pay for the new store in Perth, he does not consider it a risk.
Peter then advises that Kathy should consider designing, manufacturing and selling sport shoes to go with
her active wear since it’s the “same sort of thing” anyway. Peter believes that she should launch her new line
of shoes at the grand opening of her new store in Perth, as that would be a great marketing strategy. Based
on this advice, Kathy invests $200,000 from Lara Jean’s profits to create a new designer shoe line and
$300,000 on the fit-out and rent for the new store in Perth’s largest shopping centre.