Sarah is an aspiring entrepreneur looking to create a new business. So far, she has written the following business idea in her business plan.

Acacia Hair Salon

Acacia is a boutique luxury hair salon located in the heart of Mosman, Sydney. The salon specialises in colour services and offers an extensive service menu including foils, balayage and haircuts. The salon offers clients a luxury bespoke experience, providing a peaceful space to unwind and rejuvenate from the stressors of everyday life. Acacia is not simply a place to have a quick haircut but a peaceful space to unwind from daily life in a luxurious salon space. This status appeal will be achieved through a bespoke interior space, high-end colouring services, and an unparalleled customer service experience including complementary beverages during appointments. Acacia is proudly partnered with the social enterprise Sustainable Salons. Through this partnership, 95% of salon waste will be diverted from landfill and repurposed sustainably. Acacia is located within Mosmans Military Road shopping strip, which ensures consistent foot traffic past the salon. Furthermore, residents of this suburb featured with the high-income profile may be more willing to use a high-quality luxury service to reinforce their social prestige.

Required:

a) Discuss how Sarah applied Product and Place of the 4Ps of marketing in her business plan.

b) Help Sarah apply Pricing of the 4Ps of marketing. In your answer, indicate what Acacias market positioning is according to Sarahs business plan? Justify how your pricing is consistent with Acacias market positioning.

c) Help Sarah identify one low-cost way to test her market assumptions. Explain this opportunity testing plan in detail. E.g., how to recruit participants? How to execute the opportunity testing plan?

d) Provide TWO comments on Sarahs capital requirements for Acacia below to help Sarah improve her projection in capital requirements. List TWO funding sources to help Sarah construct a funding plan.

Capital Requirements
Annual Shop Rent	48 000	Insurance	2 734
Furniture	3 800	Refurbishment and Fit-Out	12 000
Equipment	2 070	Signage and Branding	4 000
Supplies	39 668	Marketing	1 000
Technology	1 950	Inventory	2 400
		Total	117 622

Note: Shop Rent is based on similar retail properties on Military Rd (RealCommercial, 2022). Furniture refers to wash basins, chairs, mirrors and reception desk, pricing is sourced from AMR Hair and Beauty Supplies. Equipment refers to scissors, styling tools, hairdryers, towels, colour mixing bowls and aprons, pricing is sourced from Hairhouse. Supplies refer to shampoo, conditioner, colour, treatment and foils, pricing is sourced from National Salon Supplies. Inventory refers to hair products for direct sales to customers, pricing is sourced from Davines. Technology refers to iPad and phone for bookings and payment, pricing is sourced from JB Hi-Fi.

e) Help Sarah uses the information for capital requirements and funding plan (your answer in part d) to construct Acacias balance sheet, classifying relevant items under the categories of current assets, non current assets, current liabilities, non current liabilities and shareholders equity. List TWO other balance sheet items you think are necessary to the business. Explain the reason.

f) Sarah has made the Year 1 revenue projection for Acacia:

Sales revenue is based on the average client spend in the Australian hair industry of $142 (Kitomba, 2021) with a markup of 15% on this totalling $163 per client.

Approximately six clients can be seen per day, per stylist. Two stylists work five days per week, and the owner sees clients three days per week. 50% attendance is projected in the first year.

Year 1 revenue projection: $163 per client (6 5 2) clients per week for two stylists 52 weeks per year 50% attendance + $163 per client (6 3) clients per week for the owner 52 weeks per year 50% attendance = $330 564.

Is Sarahs Year 1 revenue projection too optimistic? Explain. Revise her Year 1 revenue projection based on your assumption.