Zeena is a hairdresser who set up her own hairdressing and beauty salon as a sole trader two years ago. She advertises her business with leaflets. She employs two members of staff, Kyle and Cindy. Zeena is now looking for a new location to open a second salon.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

1. [1] Easy to set up/small amount of capital required/few legal formalities
2. [1] Sole trader can have complete control/own boss or e.g. can decide opening hours
3. [1] Can make decisions quickly
4. [1] Keeps all the profits
5. [1] No legal requirement to publish accounts/privacy
6. [1] Personal attention can be given to customers
7. [1] Yes - they are cheap/easy/quick to produce
8. [1] for a small business/sole trader
9. [1] as they may not be able to afford other advertising media
10. [1] can hand deliver them to target group/local people
11. [1] with relevant information/details
12. [1] kept for reference/long-lasting
13. [1] passed on to other people
14. [1] can easily be changed
15. [1] can use colour/eye catching/visual impact
16. [1] No - they might be treated as junk mail
17. [1] and the information is not read
18. [1] and then just thrown away
19. [1] pollutes the environment
20. [1] time-consuming to distribute
21. [1] no audio impact
22. [1] excludes illiterate readers
23. [1] better to use social media
24. [4] Note: maximum 1 mark for a different advertising media
25. [1] Customer should seek medical advice/obtain a medical report on her injury
26. [1] Take photographs of eyebrows/get evidence/find a witness
27. [1] Go to the salon/telephone salon to lodge complaint/see Zeena (Manager)
28. [1] Ask another member of staff to repeat the procedure
29. [1] Follow up complaint in writing
30. [1] Ask for refund
31. [1] Ask for compensation/pay for medical bills
32. [1] Contact solicitor
33. [1] Start legal action/sue if necessary
34. [1] Do nothing/forgive Cindy/complain to Cindy
35. [1] Do not visit the salon in future
36. [1] Tell family/friends not to visit/about what happened
37. [1] Write a bad review on social media/internet/local newspaper
38. [1] Report to a consumer protection agency
39. [4] Note: 0 marks for going to the police or not paying for the service or asking for a discount
40. [1] Close to market
41. [1] where there are customers
42. [1] Customer convenience
43. [1] e.g. located on ground floor / near car park / station
44. [1] Transport links
45. [1] better to be near good road/bus routes/ease of access
46. [1] Income levels
47. [1] a beauty salon in a prosperous area is likely to be more successful
48. [1] Competition
49. [1] difficult to break customer loyalty if there are similar salons in the area/affect market share/affect revenue
50. [1] Land space
51. [1] is there room for more expansion in the future/for parking?
52. [1] Labour
53. [1] to employ as salon staff
54. [1] Supply of skilled labour
55. [1] e.g. near a college doing hairdressing courses
56. [1] Personal factors
57. [1] e.g. near where Zeena lives
58. [1] Cost of new premises
59. [1] whether she can afford the rent/mortgage/is it in a low cost/affordable area
60. [1] Close to utilities
61. [1] e.g. electricity
62. [8] Level 3 (7-8) The candidate is able to offer a recommendation with a thorough evaluation of both hire purchase and leasing.
63. [8] Level 2 (5-6) Candidate offers a satisfactory analysis of either hire purchase or leasing, with or without a recommendation.
64. [8] Level 1 (1-4) Candidate demonstrates some knowledge and understanding of hire purchase or leasing of salon equipment for a sole trader.
65. [8] Level 0 (0) No creditable response.
66. [8] Hire purchase: Zeena would pay a relatively small deposit then she effectively rents/hires the equipment over a period, paying regular instalments, until she makes the final payment and becomes the owner of the equipment. Using HP, Zeena spreads payments which will help her cash flow and she can use the equipment while paying for it, however, the equipment may be repossessed if payments are not maintained. The equipment could be sold, even if it had not been paid for in full.
67. [8] Leasing: Zeena would pay a larger amount (deposit) on the first monthly payment followed by equal regular payments for the use of the equipment as if she actually did own it. At the end of the agreement period, she would have to give the equipment back to the leasing company or she may be given the option to buy at the end of the lease agreement period. The lease agreement may cover repairs and maintenance which would benefit Zeena as this reduces costs if the equipment breaks down. The equipment cannot be sold.
68. [8] Evaluation: The cost of leasing can be more expensive than HP so it would depend on how much cash Zeena has available now for a HP deposit. Zeena should also consider how quickly the equipment will become outdated because leasing would be better than if she was left owning out-of-date equipment of low/little value. However, if the equipment has a long lifespan, HP will mean that Zeena would have an asset to sell in the future.