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Dial a Dog Wash

In June 2007 Paul Stamp set up a dog grooming business. He had always enjoyed working with animals and had been thinking about a business venture for some time. When the company he worked for closed suddenly, he used his redundancy money to buy the resources needed to set up the business.

He took advice from his local bank who had a small business adviser and she suggested that he needed to look at the pet grooming industry and carry out market research about competition and the costs of setting up in business. He had some idea about setting up a business and he carried a combination of primary and secondary research about the dog grooming industry. He discovered that the dog grooming industry was worth £35m in 2005 and this had grown to £40m in 2006. He also knew about the importance of producing a business plan which contained all the information needed to give his business a chance of succeeding.

Paul called his company Dial a Dog Wash and initially worked from home. He bought a van and went to customers homes to wash and groom the dogs. He advertised in the local paper and put fliers through houses letterboxes. The business started off well and in the first three months his sales were in line with the budget figures. In his business plan he had produced these budget figures:

Table 1 Dial a Dog Wash Budget Sales June – August 2007
June July August
Dog shampoos 20 25 40
Nail trimming 10 15 20
Cutting/grooming 15 20 30

After looking at what other companies charged Paul decided to charge £10 for a dog shampoo, £5.00 for nail trimming and £15 for cutting/grooming.

By the end of August, Paul started thinking that he wanted to have his own premises. The business was growing and he was hoping that for the rest of the year, sales would exceed his expectations. He also started to realise that as the business grew the pressure on him increased as well. He had to spend more time with customers, deal with suppliers and also complete the company finances. He had initially set up as a sole trader and was thinking about changing to a partnership so he had someone to help him with the business.
Question One

You are advised to spend no more than 20 minutes on this section

a) What is meant by the term primary market research? (2 marks)
field research which has first-hard information and relevant to the business which is new.
b) What is meant by the term sales budget? (2 marks)
a sales budget shows the planned income for a business over a set future time period

c) State two characteristics of a successful entrepreneur such as Paul Stamp
(1)Research the market information, (2)advertisement
d) Explain one reason why it was important for Paul Stamp to carry out secondary market research when setting up his business (4 marks)
because secondary research has a lot of exist information ,it will be to help he which new is better to get profit

e) Use information in the text and Table 1 to calculate Dial a Dog’s budget sales revenue for June, July and August (6 marks)
June is sales revenue=475,July=625,August=950

f) Calculate the percentage growth in the UK market for dog grooming sales between 2005 and 2006 (4 marks)
（40-35）/35*100%=14.3%

Total 20 marks


Turn over for the next question















Question Two

a) Analyse the possible factors that Paul Stamp should consider when looking for new premises for his business (10 marks)
he has to research about the market, such as location ,Is it good for this business, if somewhere is not rich, I think they won’t . also profit and cost. Does the city which you want to do the business how about the profit you could get, how is the cost could be high or low. demand . must be most important in your business that how many people will consume in the city. and labour ,how is the worker pay each hour. supplier is easy for supply to your business.
b) Paul was thinking of converting Dial a Dog Wash from a sole trader to a partnership. What advice would you give Paul to help him make a decision?
(15 marks)


c) To what extent would carrying out primary and secondary market research guarantee the success of Dial a Dog Wash (15 marks)

Total 40 marks
End of questions