Case analysis

Case Analysis

Cathy Harts is at a crossroads. She has been working out of her home in Boise, Idaho, making gold-plated holiday ornaments for the past three years, ever since she gave up work as a real estate agent. That job had been too demanding for the mother of pre-school twins. "You have to work at it all the time," she complained to another agent and friend, Tomy Clark. The pace of the holiday ornament business is more predictable, and she loves the creativity it requires.

In the spring, Cathy solicits custom orders and works on designs. In the summer, she communicates with a supplier on the East Coast. In the fall, she advertises her standard ornaments and processes orders. In November, she and her husband, who works full time at his own automobile repair shop, pack and ship ornaments out of their basement. Sales for last year were $30,000, about double those of the year before.

However, Cathy misses being around people. In addition, she would like to earn more money. Now that her kids are in school, she is toying with the idea of becoming a residential real estate appraiser.

Estimating the value of residential property at various times (such as prior to a sale, when getting insurance, in the event of a loss, or during a divorce or bankruptcy), she would be in frequent contact with other adults. Cathy estimates start-up costs at about $10,000—to cover a 75-hour licensing course, business stationery, professional association dues, and cameras. She already has a computer, printer, and software. She has read an estimate of typical annual revenues (gross income before expenses) of $40,000, based on completing four appraisals a week at $200 each.

Cathy asks Tomy for advice. Should she stick with the ornaments, move into real estate appraisal, or...?

In the role of Tomy Clark, write a report to Cathy Harts persuading her of the direction you think she should take.