Léa and Tom's Tote Bag Stall: Does the Plan Break Even?
Léa and Tom are 16 and are planning their Junior Cycle enterprise project. They intend to print custom designs onto cotton tote bags and sell them at a weekend market. They have €500 saved between them.
Confirmed costs: a stall costs €60 per day and the market runs on Saturday and Sunday; public liability insurance for the eight-week period costs €120; a second-hand heat press costs €180; blank bags cost €4.20 each and printing consumables €0.60 per bag; unsold bags can be returned to the supplier for a 50% refund, but only in packs of ten. They plan to charge €12 per bag.
In a survey of 60 shoppers, 25 said they would 'probably' buy at €12 and 9 said they 'definitely' would. Léa's cousin sold at the same market last year and averaged 18 bags per weekend. The market runs for six weekends before the project deadline.
1. Calculate the fixed costs, the contribution per bag and the break-even volume for the project. Then estimate profit or loss at the cousin's sales rate, and assess how much weight the survey should carry.
Read the worked answer
Fixed costs over the project:
- Stall: 12 days × €60 = €720
- Insurance: €120
- Heat press: €180
- Total fixed costs = €1,020
Variable cost per bag: €4.20 + €0.60 = €4.80
Contribution per bag: €12.00 − €4.80 = €7.20
Break-even: €1,020 ÷ €7.20 = 141.7, so 142 bags - about 24 per weekend, 12 a day.
At the cousin's rate: 18 × 6 = 108 bags. Profit = (108 × €7.20) − €1,020 = €777.60 − €1,020 = a loss of €242.40.
So the plan as designed loses money at a realistic sales volume. It needs 34 more bags than the cousin's average just to get to zero.
How much should the survey count? Very little as evidence of volume. It tells them about interest, not about footfall: 9 'definitely' out of 60 says nothing unless they know how many people walk past the stall each day. It is also affected by hypothetical bias - people say yes to be encouraging when no money changes hands. The cousin's actual till is far better evidence than 60 opinions, and it says 18.
One mitigating factor: unsold bags can go back for €2.10 each (50% of €4.20), which softens the downside - but only in packs of ten, so the last few are a total loss. That reduces the loss but does not rescue the plan.
The €500 savings cover a €242 loss, so the project is feasible - it is just not viable as a business.
2. Recommend two specific changes that would make the project viable, supporting each with recalculated figures. Then identify the single biggest risk and how they should manage it.
Read the worked answer
Change 1 - raise the price to €15. Contribution becomes €15.00 − €4.80 = €10.20. Break-even = €1,020 ÷ €10.20 = 100 bags (about 17 per weekend - below the cousin's 18). At 108 bags, profit = (108 × €10.20) − €1,020 = €1,101.60 − €1,020 = +€81.60. The risk is that demand falls at the higher price; the survey cannot tell them, so they should test €15 for the first weekend and watch the conversion rate before printing more stock.
Change 2 - cut fixed costs by sharing the stall. Two pairs sharing one stall halves the stall fee to €360. If they borrow the school's heat press instead of buying one, fixed costs become €360 + €120 = €480. Break-even at €12 = €480 ÷ €7.20 = 67 bags - roughly 11 a weekend, a margin of safety of 41 bags against the cousin's 18/weekend. Even at a €12 price with no press purchase, the project is comfortably viable.
Biggest risk: overstocking. Bags have to be ordered before they know demand, and the supplier only refunds in packs of ten. Ordering 180 bags and selling 108 leaves 72 unsold: 70 can be returned for 70 × €2.10 = €147, but two are a dead loss, and the cash is tied up for weeks.
Management: order in stages - 120 bags for the first three weekends, then reorder only if they are selling above 20 per weekend. Take pre-orders (deposit paid) so production follows demand rather than hope. And keep a simple weekly tally of bags sold per hour of trading, which is the only reliable demand data they will get.
Judgement: with a shared stall and a €15 price, the project breaks even at about 11 sales a weekend. A plan that only breaks even at the optimistic end of the evidence is a plan to lose money - build the margin in first.