Be Our Guest, Inc.

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"BE OUR GUEST, INC." Be Our Guest Inc., a Boston based company, is a rapidly growing equipment rental company with substantial seasonality in its revenues and profits. In the spring of 1998, the senior management team is reviewing its financial plans in preparation for a meeting with the company's bank. The case provides an opportunity to forecast financial needs and consider the appropriate structure and amount of bank borrowing. � For years the company has been renting party supplies and furniture to caterers, event planners and hotels, it has also managed to grow gradually in a very volatile and seasonal business. The founder, Stephen Lizio and co-owners Al Lovata and Simone Williamson found it difficult to fund daily operations…show more content…
They may have to do that since the company's predicament indicates partly that "the bank doesn't understand Be Our Guest's business"�. Exhibit 2 shows a list of what the company cannot do in terms of the loans it has with State Street. All of these covenants, like prohibiting two consecutive quarters of net losses and not incur a net loss for any fiscal year, suggest further that Be Our Guest may need to find another lender who will not be as strict with its terms.� Reducing the big increases in owners' pay is another way Be Our Guest can improve its cash position. Ultimately, the company must devise a plan for funding its growth long term. While refinanced bank loans for now may be adequate to finance the company, it should consider raising funds, from selling equity for example. Proceeds from such a deal might be invested in a business that generates revenue during Be Our Guest's slow seasons and eases the firm's reliance on credit for working capital. The company "needs a game plan". Such an outline will forecast its financial needs and how to achieve them. It also would help Be Our Guest's principals decide to what extent they even want their business to expand. The owners say that they want to grow, but that is not necessarily always a good thing. With growth bigger problems will occur, bigger challenges will need to be faced, but at the same time bigger profits might be in place

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