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
| |||
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.
1) What was the percentage increase in the dog grooming industry between 2005 and 2006. (4 marks)
2) To what extent would carrying out primary and secondary market research guarantee the success of Dial a Dog Wash? Justify your view. (15 marks)
