Best Impressions Limited
Best Impressions Limited (BIL) is a private company that provides logo design to businesses. It was founded seven years ago by Karan Shaw and Barron Herauf, both graphic designers. Both Karan and Barron believe in creating more than just brand identities. They seek to provide their customers with visual expressions that stand the test of time, enabling clients to engage and connect with their own customers more effectively. They have meticulously built a strong reputation for innovative design and are supported by a team of talented employees.
BIL is based in Toronto and its main customer base is in Canada. BIL started a website with e-commerce last year and has been flooded with enquiries and customer orders ever since. Its website hosting company has been insisting on the use of encryption and SSL certificates, but Barron, who handles these issues, has been putting them off, as he doesnt believe that they add value to the business. He does know about the importance of security on the website, so he has ensured that the hosting company include a note about security (given in Exhibit 1) on the website, where customers can access it.
Although the website contains general information about past projects, BIL utilizes social media through a weekly blog that details the latest projects taken on and features some of the noteworthy logos created in the past. The blog provides information from past clients, including discussions about client expectations, descriptions of the design, and pricing and strategic client information, which the owners think potential clients would find useful. While client confidentiality is maintained, the customer is often identifiable by the logos provided in the blog. The use of social media has enabled the company to attract clients globally. Due to a lack of concrete information, Barron estimates that the Internet-based revenue from international customers is almost 25% of total revenue.
The two owners are always busy developing new ideas and testing prototypes, and do not have the time or inclination to be involved in the financial management. They focus on the design aspects of the logos and set contract prices based on an estimated cost plus 20%. Earlier this year, they accepted three contracts that barely provided sufficient revenue to cover the expenses, since they did not factor in all of these expenses when negotiating the contract price. Expenses vary significantly depending on the complexity of the logo.
BIL has some problems in meeting its obligations. More particularly, there have been delays in paying invoices due to some unanticipated cash-flow shortages, which has resulted in finance charges being levied by the vendor. Karan is not particularly concerned