Understanding Business
Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
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Read the following case and answer questions that follow.
Jill Kearns was in her first year of college, and was running low on money. She needed to make
at least $500 to cover her expenses. She considered getting a full-time job, but realized that she
did not have enough time to do her studies and keep the job. Her solution was to start a small
business venture with the members of a jazz band to which she belonged. They would hold jazz
concerts and sell tickets to Jill's performances.
Jill's idea for this venture came from her and a friend's interest in jazz. As the popularity of jazz
has grown, she would have seen the potential for a business venture expanding. The idea of using
her interest in music to earn the money was very appealing. Currently, the group members have
$500 in the bank. In order to give a concert, Jill anticipated that they would have the following
start-up expenses: an advertising cost of printing posters, rent on a concert hall, cost of printing
tickets, and incidental expenses for transportation, telephone calls, etc.
By deferring as many payments as possible and obtaining credit, she found that they needed
$465 to hold their first concert. Jill figured their total expenses would be about $2000. By giving
two shows and multiplying the ticket price by the legal capacity of the hall, she calculated that
the maximum gross receipts would be $2900. The business venture would earn a profit of $900!  

Question

What risks are involved in this business venture,

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