Eco 561 Business Proposal

Submitted By Krishain-VanZandt
Words: 769
Pages: 4
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Business Proposal
Krishain VanZandt
ECO/561
May 7, 2015
Gary Wiessner

Business Proposal When creating a new business it is important to understand the market for the products that are going to be sold. A great deal of time and consideration must go into the research of the market and products in order to make the company productive and successful. I have chosen to examine the party rental business, which has a high upfront cost with a steady return almost year round depending on the location.
Market
Location and demographics of the location will play a large role in the prices that the company will be able to charge for merchandise. The party rental business has many aspects and products that can be rented out, from popcorn machines, dunk tanks, and even jump houses, which is where I will be concentrating the start of the business along with tables and chairs. Jumpers can be rather expensive when purchasing quality products. A simple 13x13 jumper with a slide will cost $1,500 each. Tables and chairs also vary in price and are cheaper when purchased in bulk. A package of 6 tables and 40 chairs will cost approximately $600. When bought together and in cash the company will offer a discount and sell the whole set for $2,000. The average rental price for a jumper is $75.00, $5.00 per table, and $1.00 per chair. The average rental price in the Antelope Valley for the whole set is $145.00. In order to bring in rentals over other companies a discount of 15 percent is given. This also makes the customer feel as if they are getting a better deal at $125.00 for the day. After researching other local companies they averaged 3-5 rentals a weekend at a minimum of $125.00-$135.00 a rental. At that price only 16 rentals would be needed to break even on the initial jumper and chair setup, which can be attained in the first 6 weeks.

Elasticity The elasticity of the product is based not only on the price of the product compared to others in the market, but also ease of the use of the product. By dropping off and setting up the jumper, tables and chairs for the customer where they would like, the ease of the product is at a maximum as they will have not have to do anything.
Cost
The initial cost of the jumpers can be rather expensive, however, the upkeep if maintained properly will be minimal as the industrial strength nylons are tough and rarely rip when the jumper rules are followed. Patch kits also come with the jumpers just in case there is an accidental tear. With minimal upkeep on the jumpers the majority of the money that comes in will turn into profit rather quickly allowing for the expansion of the business by getting more jumpers and even bigger ones that rent for more. The cost of the jumper and other equipment does not go up to much
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