Sources of Funding for Business Growth Opportunities

This assignment provides a comprehensive overview of the Ansoff matrix, a tool used to analyze business growth strategies. It also delves into different sources of funding, including private equity, family exit routes, technology shocks, and asset prices. The assignment is based on various academic papers and online resources, offering insights into identifying and leveraging these resources for business success.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P 1 Analyse key considerations for evaluating growth opportunities.........................................1
P 2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.................2
LO2..................................................................................................................................................4
P 3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................4
LO3..................................................................................................................................................6
P 4. Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business............................................................................................6
LO4 .................................................................................................................................................9
P 5. Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
A strategic business activity that allow business owners to plan and stalk organic growth
in their revenues is called refers to growth planning. Allocation of limited resources have been
allowed to businesses, towards a centralised effort to get adjusted to new changes in the industry
operated by digital interference.
Superdry fashion retailer is a UK brand which deals in clothing of both men's and
women's wear. Its products are the combination of vintage Americana styling with Japanese
inspired graphics. The company has seen a lift in international market due to the Brexit vote. The
aim of this report is to analyse key considerations for evaluating growth opportunities by
applying Anoff's growth matrix. Apart from this, it will cover potential sources of funding which
are available to businesses. Further, it will design a business plan for growth and assess exit
options for a business.
LO1
P 1 Analyse key considerations for evaluating growth opportunities.
Whether an entrepreneur is setting up a new small business or buying an active company,
he need to take into consideration key factors for evaluating growth opportunities (). It is
essential for him to determine whether the business project they have decided to launch is
executable or not. Here are some factors to view while deciding whether an idea it worth
adopting:
 Market size: This factor is considered to be the most crucial factor when assessing a
business opportunity. Accessing potentiality of market is essential for an entrepreneur for
the products or services he wishes to sell. Market should be clearly defined by
organisation in order to evaluate opportunity. For example, Superdry should examine
whether its fashionable items are suitable for that particular market or not.
 Cost benefited consideration: An entrepreneur must evaluate that the opportunity should
be beneficial to share-owner. Company should view expected returns against the
expected cost in order to make sure that the benefits are greater than cost. For example,
Superdry company must review that whether its new project is rewarding and
advantageous to the investors or not (Douay and Jayaram, 2015).
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 Personnel, training and management: Before establishing a start-up, it is necessary to
consider human resource, training and management factor which are required to operate a
business. For example; Superdry must look at the ability of labour, cost of hiring and
providing training to them.
 Financial viability: While a company looking at the viability of a new business project,
evaluation of financial possibility is also very important. For example, Superdry must
evaluate requirement of capital investment, break even analysis and expected profitability
of the business.
 Competition: This factor is considered as a threat to a business, which are operating on
same location with similar products. Hence, it is crucial for Superdry to know its
competitors before launching its project in order to consider opportunities as this will
allow them to have reasonable market (McKenzie, 2017).
 Legal consideration: The new thought for business must consider legal framework before
establishing new company. Therefore, Superdry should start its idea through licence and
must follow all regulative rules to keep itself protective.
Hence, there are many ways to evaluate growth opportunities, but nothing can compared
to the efficiency of technology. It has been determined that digital technology is available for all
businesses which help owners to address daily challenges.
P 2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Ansoff’s growth vector model is highly used for strategic marketing planning where it is
implemented to view at opportunities to expand revenue for a business by creating new products
and services or else by entering into new markets. It is one of the most important model which is
widely used as it focus on growth (The Anoff Matric, 2018).
 Market penetration: It is considered as the first area in this model, which is adopted by
a company when they already have a product with a known market and requires a growth
strategy within the existing market. Organisations can showcase their entire product
portfolio or may create new marketing strategy to encourage market. As Superdry is a
newly launched company, so this strategy is not useful for it at this point, hence, they can
adopt this later (Gold, Morillo and Nakamya, 2015).
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 Market development: It is considered as the second strategy for growth, which is used
when an entity targets a new market with existing product. Here companies try to sell
more of the existing goods to different places considering elements of marketing mix, and
market segmentation. Firms can target different places to sell its services such as; internet
can be the best way to raise its revenue due to increase in demand of online purchasing.
Hence, this strategy is also not applicable for Superdry because its products are new to
the market (Loderer, Stulz and Waelchli, 2016).
 Product development: This strategy for evaluating opportunity is used when an
organisation already has a good market share in the existing merchandise and might want
to launch new product for growth. Product development growth expansion strategy is
required when a company has customer base. Therefore, the strategy can't be
implemented by Superdry as it is a newly launched business project.
 Diversification: The strategy of diversification is applied when the company is
introducing a new product in completely new market. However, this is considered as the
unsafe strategy out of other four, because the company is entering into an unknown
market. It attains growth by developing fresh products for entirely new market.
Therefore, Superdry can adapt to this strategy for growth opportunities. However, the
strategy can be considered as a rational choice if the high risk is reimbursed by the
opportunity of a high rate of return. Other advantage for Superdry applying
diversification strategy, includes the likeliness to gain niche in an attractive industry and
the depletion of overall business unsystematic risk. Further, there are two types of
diversification; one is related and other is unrelated (Hussain, Khattak and Latif, 2014).
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Further, for more growth option, company can adopt Porter's Framework for profitability of a
business. Its five forces involve competitive rivalry, threat of new entrance, threat of substitutes,
bargaining powers of buyers and bargaining powers of suppliers (Kogan and Papanikolaou,
2014.).
LO2
P 3. Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
Entrepreneurs who decide to start a business get confused on the best source of funding
required for their start-up. There are many options available which can be chosen by companies.
Based on scenario, Superdry business project has only £20,000 to invest into business and it
requires £300,000 (Keough, 2015). Hence, it needs to borrow the remaining balance from the
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Illustration 1: Anoff Matrix
(Source: Hanlon, 2018)

given sources of funding. Additionally, the benefits and drawbacks of each source will be helpful
to choose an ideal one. Personal savings: It is the first place to look for money i.e. own savings. This may
include profit sharing or early retirement funds, or even cash value insurance policies. It
has been determined that many entrepreneurs invest in their businesses themselves. They
make use of personal debt such as mortgage or credit cards. For example, Superdry's
owner may sell his assets such as second hand home products to generate cash.
Pros:
1. It gives a sense of satisfaction in the mind of entrepreneur that he is using his own cash to
invest in the business (Kreer, Mauer and Brettel, 2015).
2. Personal financing enables entrepreneur to have much more control over business rather
than other options.
Cons:
1. Its drawback is that, if the business fails all the hard work that has been put into through
savings goes waste. Family and friends: Superdry entrepreneur can make a request to their friends or family
members to support him with funds for investing in business. It has been determined that
this type of financial support has more to do with the relationship itself, rather than the
appraisal of a viable business plan.
Pros:
1. This funding source is considered as the fastest process with flexibility in payment
methods.
Cons:
1. Disadvantage is that, friends and families provide finance without examining the viability
of a business plan. Crowd Funding: This source of financing in business is done by borrowing little amount
of capital from numerous people, usually through internet. The newly launching project
can make use of the vast networks such as, colleagues, friends or social platform.
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Pros:
1. Has a probability of business expansion by getting many investors who can help in
raising capital.
Cons:
1. It has been determined that it requires both time and commitment before results may be
realised. Angel investors: These types of capitalist supply finance in exchange for share of equity
in the business. Superdry can search for local angels online or may communicate with
chamber of commerce (Loredana, 2016).
Pros:
1. One of the major advantage angel investors can offer is valuable advice and direction to
move forward.
2. Provides versatile business terms.
Cons:
1. Entrepreneur may be enforced to give up control of his business to some extent.
Based on the above discussion, it is justified that angel investors, and personal saving will
be the best suitable for entrepreneur for borrowing finance to invest in its new project. Because
of their advantages such as angel capitalist provide suggestions as well as guidance to move
ahead and personal financing is very satisfactory. Hence, proves that these sources will be best
for the company.
LO3
P 4. Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business.
1. Executive summary
The new idea, which is about to launch with the name of Superdry deals in clothing. The
idea is to design fashionable and trendy clothes for both men's and women's wear. The firm is
about to launch at Cheltenham, Gloucestershire, England. The chairman of it is Peter Bamford
and the CEO is Euan Sutherland. According to the owners, this new project will be successful
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because its clothes are a combination of vintage Americana styling and Japanese graphics and it
also concentrates on high quality products. They are classified by quality material, reliable
vintage washes, unique detailing, and tailored fits with different styling. The owner desires to
have up to 500 stores across the country by the year 2025. They have also establishes their
website, named Superdry.com which promises to deliver great customer services and trouble free
returns.
Mission: Their mission is to inspire and connect with their clients to put their best selves forward
every day. They want to be UK's leading small business enterprise retailer devoted to deliver
desirable brand name with particular values.
Vision: To dress the world.
Objective: To provide a platform for UK designers and brands to display and sell their designs in
Superdry stores.
2. Business description
The brand is more than just clothing, it is considered as a life style. The company is a sole
proprietorship company. It has started doing advertisements for promotion and actively engage
in celebrity endorsement. Its unique detailing and typical hand drawn graphics set it different
from other clothing brands. It includes, from casual hoodies and t-shirts to jackets and shorts. It
also offers free UK delivery when people will spend £30 or more (Ruan, Cohen and Lee, 2018).
strategic business objective
The strategic objective of marketing plan is to provide a place where designers can sell
their designs to consumers.
3. Business environment analysis
It has been determined that environmental analysis is considered as a strategic tool. It
refers to a process to evaluate external and internal business environment. As the market is
facing certain changes in different factors such as; political, economic, social, technological,
legal and ecological, are beyond control. All these factors must be examined thoroughly by
Superdry to enter and keep its existence in the market.
Political factors need to be assess properly by Superdry to know government policies,
taxes laws, and other regulations. Further, economic forces such as inflation rate, fiscal policies,
interest rate, unemployment rates, foreign exchange etc., need to be assessed as it helps to set up
strategies in line with changes. Social factors affect the sales of products, they include cultural
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implications, demographics, educational level etc. New technologies greatly influence businesses
as these factors helps the company to stay updated with the changes (Thomas, Gandhi and
Susmita, 2016).
4. Competitive analysis
Firm can conduct competitive analysis by following these steps:
 Identify competitors: The first step is to identify rivals in the market. Understand their
strategies and keep an eye on their workings.
 Study And Compare: The next step after categorising competitors is to properly
examine their operations, pricing and marketing strategies. Further, it need to compare
promotional tools used by competitors with their own.
 Competitor’s market position: By knowing their positioning, Superdry entrepreneur
can start to get its products demand in that market. Find out areas for betterment: This is the last step which is very essential for an
organisation in order to have competitive advantage. After assessing competitive
analysis, they can acquire better understanding about their rivals and accordingly plan for
improvements (Weiss, Myers and Mauer, 2018).
5. Marketing plan
As Superdry is a clothing retailer company, which sells both men's and women's wear.
Based on its objective of providing a place where designers can sell their designs, it should focus
on place or location of its store. The location should be such that is easily available to youth
generation in order to see its growth. They should adapt demographic segmentation strategy to
divide their customers on the basis of age, gender, occupation etc (Feinstein, 2017).
6. Team management
It includes various people who encompasses the management team and ownership of the
company. The company must evaluate how many workers it needs to employee for operations
such as; sales department, delivery section, complaining section etc.
7. Financial projections
Marketing expenses £
Advertisement £11,00,000
Campaigning £500000
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Leaflets £350000
Total £19,50,000
LO4
P 5. Assess exit or succession options for a small business explaining the benefits and drawbacks
of each option.
Liquidation: This exit option also known as sell all the assets exit strategy. If Superdry is in the
position, it needs to spend some time to recreate their business so that it could be run by other.
Advantages:
 Simplicity It has been determined that the business can be wound up quickly.
Disadvantages: The values of second hand assets such as machines and equipment can be very low. The first claim on funds generated from sales of assets is of creditors.
Liquidation over time: In this strategy, owners withdraw most or all of the profits out of the
business over time, rather than refinancing them for growth.
Advantages: Its advantage is that the cost of liquidation is relatively low (Yin, 2016.).
Disadvantages:
 Extraction of the profits cut down the growth potential of the business. There are chances that other shareholder may raise objection unless they are equally
compensated.
Keep business in the family: It refers to offering your business to your family member and
making him as an owner. It has been determined that keeping your business in the family makes
sure that your inheritance lives on.
Advantages:
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 It can allow Superdry owner to keep a hand in the company in an advisory way
(Cornwall, Vang and Hartman, 2015).
Disadvantages: Members may be unskilled to take over the business.
Sell it to managers: Firm may sell its entire business to its current employees or managers which
may be interested in buying (White and Moody, 2015).
Advantages: Employees will be provided with an established business that they are familiar with,
hence, it will succeed.
Disadvantages: There are chances that workers may not be capable enough to handle the company.
Sell business in open market: This strategy is considered as the most important exit plan. Here
the selected company's owner can puts the business up for sale for a specific price.
Advantages: All assets and firm's goodwill can be integrated while valuing the business for sale, it
increases the return for owner.
Disadvantages:
 Valuation of business can be difficult and the selling amount may be much lower than as
expected (Seven Types of Funding Sources for your Start up, 2013).
CONCLUSION
The final conclusion derived from this report is that, Superdry products include Japanese
text, which are divine by the ordinary practice of placing decorative English text on items to
raise their fashion-ability. The first part of this report assessed various factors for consideration
to measure opportunities for growth such as market size, cost benefited consideration and
financial viability etc. Also, in second part is demonstrates that the firm needs to adopt
diversification strategy for its new project in order to expand their business. Further, in the third
section it is proved that the best sources for investment for them will be angel investors, and
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personal saving. In forth part it provides detailed business plan for Superdry including its
financial information as well objectives for scaling up. Lastly, there are various exit options are
discussed for Superdry including benefits and drawbacks of each option.
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REFERENCES
Books and Journals
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Gold, M. R., Morillo, C. A. and Nakamya, J., 2015. Sources of Funding. Circulation. 131.
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Loderer, C., Stulz, R. and Waelchli, U., 2016. Firm rigidities and the decline in growth
opportunities. Management Science, 63(9), pp.3000-3020.
Loredana, E. M., 2016. The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of
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McKenzie, D., 2017. Identifying and spurring high-growth entrepreneurship: Experimental
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