I am a single woman who has a relatively successful costume jewelry store in a mall.  The store next to me is becoming vacant.  I have some extra cash and I was wondering what your opinion is?  Should I rent the store next to me and add new lines of merchandise or should I open a second store about 10 minutes away?

I have my best friend from high school who is a single mother and currently unemployed, she currently wants to manage the second store.  She doesn't have any money to invest but she did work at the gap clothing store for a few months before being laid off.  Also if I have a second store, I could buy larger quantities of merchandise and save about 5%.  The second store I am looking at is only 500 square feet, the rent is only $800 per month, however it is a block off the main downtown shopping district. What should I do?

Response from Thomas McGovern, MBA- Business Consultant 

Dear Shana:

This is a typical problem most business owners face.  Choice A or B.  Many attribute it to luck whether the business will succeed or fail?  However if you use a more mathematical and analytical approach the answer will become more obvious.

Analyze the problem as follows:

Expense structure of New Store:

Project revenue of new store based on parameters such as advertising, walk in

Expense Structure of expanding Existing Store:

Project revenue of expanding existing store based on parameters such as advertising, walk in

Human issues:

Cost of internal control and theft (including management theft by your "Best friend from high school"

What happens if her child is sick.  Can a store that size support the payroll in a low traffic location?