Veronique is bored with her work in a large factory. As a creative person, she would like to leave and start up a flower shop. Veronique has asked about micro-finance and prepared a cash flow forecast. An extract is shown in Table 3.1. Veronique has also carried out some market research and found out that the demand for flowers is likely to be high during festivals. She thinks she has the right characteristics to be a successful entrepreneur. Table 3.1 Extract from the cash flow forecast for Veronique's flower shop for the first 3 months ($) | | Month 1 | Month 2 | Month 3 | |:---|:---|:---|:---| | Cash in | 500 | 1200 | 2000 | | Cash out | 1500 | 1400 | 1200 | | Net cash flow | (1000) | (200) | 800 | | Opening balance | 0 | (1000) | (1200) | | Closing balance | (1000) | (1200) | (400) |

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [2] Provides financial services/small loans to poor people not served by traditional banks
2. [1] Partial definition e.g. not given by big banks
3. [1] Help people who can't afford a (bank) loan
4. [1] Small loans to poor people
5. [1] New net cash flow in month 3: 300
6. [1] New closing balance in month 3: (900) or –900
7. [1] Lack of demand/economic downturn/seasonal demand
8. [1] Poor cash flow management/not prepared a cash flow forecast
9. [1] Unable to get a bank loan/overdraft
10. [1] High level of trade receivables/allowing customers (too much) credit
11. [1] Not able to purchase materials on credit/pay suppliers too soon
12. [1] Increase in/higher fixed costs or examples such as rent costs too high
13. [1] Increase in/higher variable costs or examples such as cost of wages too high
14. [1] High level of inventory/holding too much stock/buy too much stock
15. [1] Overtrading/expanding too quickly
16. [1] Unexpected changes e.g. machine breakdown/loss of key employees/ loss of key customer (allow only once)
17. [1] Inaccurate financial information
18. [1] Questionnaire [k]
19. [1] as provides up-to-date information/specific to her business [an]
20. [1] about trends for festivals [app]
21. [1] Interviews [k] to obtain in depth details/opinions [an] about different type of flowers [app]
22. [1] Online survey [k] as more likely to get responses/can reach out to more people [an]
23. [1] Focus group [k] as provides detailed information about consumer tastes/as allows for follow-up questions [an]
24. [1] Observation [k] as avoids interviewer bias [an]
25. [1] Test marketing [k] so the cost of any problem is limited to a smaller number of products [an]
26. [1] Government statistics [k] as being official would provide more accurate data [an]
27. [1] to help her improve her cash flow forecast [app]
28. [1] Online sources/internet research [k] which is low cost/readily available [an]
29. [1] which can be helpful for a new business [app]
30. [1] Market research agency reports [k]
31. [1] Trade associations/data from similar businesses/commercial data [k]
32. [1] New/unique ideas [k] to help gain sales/attract customers/maintain customer loyalty [an]
33. [1] Can open up new opportunities [k]
34. [1] Customers may not like the products [k]
35. [1] Risk taker [k] as needs to be able to make decisions that might fail [an] otherwise will not know whether an idea is good or not [an]
36. [1] Perseverance/determination [k] as will need to be prepared to keep going when faced with problems/issues that any new business is likely to have [an]
37. [1] Effective communicator [k] as will need to convince to supplies/finance providers/customers to provide supplies/finance/buy goods otherwise business will not succeed [an]
38. [1] Good decision-maker/management skills [k] as increases in costs/or reduction prices charged by rivals will require a response from the business [an] otherwise sales/profits may fall [an]
39. [1] Hard-working [k] as must be ready to do everything themselves [an]
40. [1] Optimistic [k]
41. [1] Self-confident [k]
42. [1] Independent [k]
43. Justification might include: Being creative can result in ideas that make a business stand out from its competitors [k] leading to increased sales [an]. But it is also important to be a risk taker [k] as they need to be willing to make decisions that might fail [an]. Creativity is important but not the most important characteristic. A creative but risk averse entrepreneur may miss the opportunity to be first to market [eval] so losing the chance to gain a competitive advantage so reducing their chances of success. [eval]