Escapes Outdoor Living Designs Inc.
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Abhishek ShoorENTR 45033/15/18Case 1: Escapes Outdoor Designs Inc.If you were Harrison, would you continue the business as is or significantly change the focus of the business? If you would change it, would you use Harrison’s ideas or something different? What factors are the most important when considering this change? After reading this case, one thing that prompted me was the lack of focus displayed by Harrison. Even though he was enthusiastic about trying out new things, and taking on any types of jobs he could get his hands on, this led to a lack of direction and focus for his company. In other words, there was no point of differentiation for Escapes Outdoor Designs Inc. when compared to other players in the market. What I recommend Harrison is to stop trying to do a little of everything, and focus on doing a lot of a few things i.e. Escapes Outdoor should try and focus on doings things that they are good at; things that customers praise about after having experienced their services first hand. For example, Harrison should focus more on landscape construction and maintenance during the warmer months, and snow removal during the winter months. I believe pooling time and capital into landscape design and Ice rink construction is not worth it, since the demand is lower for such jobs, and it requires putting employees through extensive training. Looking at landscape design, Harrison mentioned that although customers enjoyed to see the 3D designs, he was unsure whether the designs returned their investment. Therefore, focusing on the design aspect of landscaping, rather than the construction itself where Escapes Outdoor was praised a lot doesn’t make sense. Focusing on design would require Harrison to learn the program himself, and additionally train a new designer in its use. Such time and effort can in turn be used in hiring and training new foreman instead. When looking at ice rink construction, Harrison mentioned that the high upfront cost of the ice rinks coupled with very low demand made it very difficult to get any customers at all.
The factors that are most important when considering this change, as I mentioned before are areas where Escapes Outdoor would need to spend additional hours and capital compared to the outcomes. If certain jobs require high level of technicality to perform, and high upfront costs, and do not show promising signs of demand, these jobs should simply not be undertaken and the time and resources can be allocated somewhere else. Looking at Escapes financial statements, what is most important to consider in moving forward? Are there any red flags for future profitability?  Moving forward, when looking at Exhibit 7, it is clear that construction and maintenance jobs in the summer such as garden, stone, and wood account for more than 50% of the revenue, where snow removal accounts for a quarter of the revenue in the winter months. This is more or less similar when compared to Escapes Outdoor’s financial statements for prior years. Therefore, Escapes Outdoor should focus on performing these jobs as they result in the highest returns for the company. Design and playset only account for 2.7% of the revenue combined, therefore Harrison should completely stop allocating his time towards pursuing such business opportunities. The only other red flag that I found in Escapes Outdoor’s financial statements was the high increase in advertising dollars from $6,840 spent in 2011 to $11,586 in 2012. Although Harrison mentioned that he put a stop on spending on SEO and yellow pages advertisements, he should try to either reduce the advertising budget to around $8000-$10,000 or allocate his advertising dollars better i.e. spend more on channels that get the most leads. For example, home & garden shows, or landscape suppliers tend to get the biggest average job sizes, and usually have high volume as well. Such channels should be allocated the most advertising dollars in order to maximize future profitability.