Business (AS & A Level) · May / June 2022 · Paper 21 · Question 1

Priya’s Bookshop (PB) Priya lives in town R which is situated in beautiful countryside with nice walks nearby. Many tourists visit town R. The town’s council would like town R to become branded as a ‘booktown’, a town with many bookshops selling new and used books. The council announced a new financial scheme offering grants to attract entrepreneurs willing to open a bookshop. Priya applied for a grant to start up Priya’s Bookshop (PB). Part of her grant application included a cash flow forecast, shown in Table 1.1. Table 1.1: Cash flow forecast, first three months of trading ($000) Month 1 Month 2 Month 3 Cash in: Owner’s capital 15 0 0 Grant 20 0 0 Revenue 4 6 11 Cash out: Initial set up costs 20 0 0 Utilities (power, water etc) 0 0 2 Employee costs 1 1 3 Purchases 6 3 4 Marketing 10 5 4 Opening balance 0 2 –1 Closing balance 2 –1 X Priya’s grant application was successful and she opened PB well aware of the need for both cash and profit. Priya now wants to raise awareness of PB in town R. Priya did some market research and decided to use market segmentation. This will help her to decide on the promotional methods she could use for her bookshop. See Table 1.2. Table 1.2: Age and gender of residents in town R Age group (years) Percentage of residents in age group Percentage of age group who are female 0–15 19% 50% 16–64 63% 55% 65+ 18% 60% 5 10 15 20 25 30

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