Nightshifts

"This year I am going to do something for myself; this is my twenty-third year and it's going to be a great one," Karen Daly whispered these words to herself as the clock struck midnight on December 31, 1992 and she hugged her husband, Paul.

In January, 1993 Karen launched her independently owned and operated sewing venture which she named "Nightshifts." During the first month of operations in her Mount Pearl, Newfoundland home, Karen sewed twenty flannel ladies' nightshirts and prepared to sell them at a local flea market. The support of friends and family gave her great confidence that her $16.00 flannel nightshirts would be quickly sold.

Unfortunately, Karen knew very little about the competitive crafts industry or about cost projections and her initial sales were very poor. At present, her spirits were crushed and her resources were exhausted. Karen must now decide how to proceed.

Background Information

During the fall of 1992, Karen Daly had been considering starting a home-based sewing venture in her home, but she always seemed to find some reason for not really getting started with her ideas. She promised herself that 1993 would be the year that she made some changes in her life and one of them would be finding a way to use her sewing talents to supplement her modest family income. Paul's work as a maintenance person in a local sports facility only provided a meager salary which just kept food on the table for this family of four. Since their marriage in 1989, two beautiful yet costly children had been born to this young couple. Totally preoccupied with the care of their children, neither of these struggling parents had pursued further training or education since their high school graduation.


This case was prepared by Kathy A. Hickman for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management. Material in this case has been disguised.

Copyright 1993, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes, but all such reproduction must acknowledge the copyright. This permission does not include publication.


Karen was tired of the callous remarks from friends and family which suggested that being a mother was just not enough; she really wanted something that she could call "her own." However, time and money constraints would not permit Karen to find work outside of her basement apartment home, or to consider further formal education. With no affordable childcare for her two small children, and a husband who worked long and unpredictable hours, Karen realized that bringing in a few extra dollars would not be an easy goal to accomplish. However, Karen felt confident that some economic hope existed if she concentrated on her sewing talents.

Her family and friends always raved about the comfortable, tailored nightshirts that she made for them for special occasions, so Karen decided to start sewing nightshirts and to sell them once a month at a local flea market. Karen attended these Sunday morning flea markets, like hundreds of other women, in search of bargains in children's clothing. Even though the economy was very depressed, Karen was sure that these shoppers would be eager to buy her nightshirts because all the women she knew wore cozy, flannel nightwear in the winter in Newfoundland. She considered many names for her venture and she finally chose "Nightshifts"; she figured it to be an appropriate name because she would be working late into the night while sewing her nightshirts.

Production

Through reading the local newspapers and spending one morning a week visiting fabric stores around the city, Karen was able to obtain fabric on sale for about $2.00 per metre; a total of three metres per nightshirt was required. The additional sewing supplies required for production such as thread, pattern, buttons and interfacing added an average total of $1.35 to the costs of each nightshirt. Consequently, Karen figured that the total cost of producing one nightshirt was about $7.35. Production of each nightshirt required an average of three hours, and the most Karen could accomplish during any week was a total of five nightshirts. Karen chose a $16.00 sale price, in order to achieve an estimated profit of $8.65 on each item and an estimated total product markup of 45.9% on her costs.

Sales

After borrowing three hundred dollars from her parents, Karen worked feverishly for the first month of 1993. The last Sunday of January, she arrived at 10:00 am at the flea market with her twenty nightshirts and neatly arranged them on her table. The rental costs of this table were $15.00 per Sunday. Asking just $16.00 for the gowns, she was sure that they would be sold quickly and that she would be home by 1:00 p.m. to go sliding with her children. Unfortunately, things did not go as planned.

Seated quietly behind her small, handwritten sign Karen watched the hours tick away as mothers grabbed up the cheap second-hand toys and clothing that the vendors to her left and right were offering for sale. While a few women hesitated and looked over her folded nightgowns with interest, at 4:00 p.m. there were still 18 nightshirts remaining on her table. Karen's spirits were shattered as her family came to take her home. Paul was equally disappointed that her dream had not come true. Worst of all, this young family had been depending on earning the $320 from the sale of the nightshirts to begin to pay back the money they had borrowed.

Questions for Discussion

  1. Were you surprised that Karen's business idea was not an immediate success? Comment on Karen's marketing research efforts by making specific reference to each of the following: Product, Price, Place and Promotion.

  2. By attending the flea market once a month and setting a retail price of $16.00, would Karen really be making a profit of $8.65 on each nightshirt? What costs has Karen neglected to include? Calculate her per hour wage if all products sold.
  3. Assume that Karen wishes to pursue her nightshirt venture at the local flea market. What do you think Karen should do now? Describe a market information gathering activity to support your recommendation and name four local sources of information which could help her with this activity.