Small Business Growth Strategies

This assignment delves into the various growth strategies employed by small businesses. It examines how firms conduct market analysis to identify opportunities, explore different funding options such as venture capital and angel investors, and consider international expansion as a path for growth. The task requires an understanding of key concepts like the Ansoff matrix and BCG Growth-Share matrix, and their application in formulating effective growth strategies.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Key consideration for evaluating growth opportunities.........................................................1
P2 Ansoff's growth matrix for evaluating growth opportunities.................................................2
LO 2.................................................................................................................................................3
P3 Potential sources of funding...................................................................................................3
LO 3.................................................................................................................................................6
P4 Design business plan..............................................................................................................6
LO 4.................................................................................................................................................9
P5 Succession option available for small business......................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Market expansion is the main objective of small business. This enlargement gives them
opportunities to enhance their revenues and sustain in the market for longer duration. Each firm
tries to build tactical plan so that they can enter into new market (Gielnik, Zacher and Schmitt,
2017). Present study is based on Southern Business Technologies Ltd. It is a small sized firm that
operates in communication industry; Company provides telecommunication services to its
consumers. It has employed 72 employees who work for accomplishing objectives of entity.
Current assignment will discuss key consideration for evaluating growth opportunities
with reference to Southern Business Technologies Ltd. Furthermore, it will apply Ansoff's
Growth Matrix Model by acknowledging chosen firm. Report will assess potential sources of
funding available to business. In addition, it will design business plan that will include financial
information for scaling up a business.
LO 1
P1 Key consideration for evaluating growth opportunities
There are many small businesses which have huge potential to grow well. These small
firms always try to retain in market for longer duration. Thus, they utilize their resources well to
satisfy consumers. There are various factors that need to be considered while evaluating growth
opportunities of a company (Ward, 2016). These elements help a business in identifying growth
options for enterprise. The main aim of Southern Business Technologies Ltd is to enter into new
market and enhance profitability of entity. Key considerations for evaluating growth
opportunities of Southern Business Technologies Ltd are described as below:
Resource Utilization
Southern Business Technologies Ltd is a small sized firm that has limited financial,
technical and human resources. However, company is utilizing its resources well. This helps the
firm in managing its operations well. Employees are key assets of business; entity provides them
rewards in order to motivate them. That is why skilled workers are working in an organization
since longer duration. Staff turnover rate in Southern Business Technologies Ltd is less.
Furthermore, it monitors it’s all transactions time to time that aid in identifying unnecessary
expenditure (Love and Roper, 2015). By this way, an enterprise makes decision of reducing cost.
This factor can help Southern Business Technologies Ltd in growing well and expanding its
business into new country significantly.
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Capabilities and Core Competences
Southern Business Technologies Ltd has a strong reputation in market This brand image
can help it in attracting new buyers and gaining their attention. Entity has capability to conduct
effective market research and identifying needs of consumers. This supported an organization in
providing satisfactory telecommunication services to consumers (Hanson and Lasley, 2016).
These capabilities will help entity in entering into new market and providing satisfactory
products to consumers.
Portfolio Strategies
Portfolio strategies of Southern Business Technologies Ltd are quite effective. Dogs are
products which have low market share with low growth. Question marks are such services of
business that grows rapidly but generate less cash to business. Stars are such products which
have strong market share and generate huge cash in a firm. Cash cows are another type of
products that has low growth and high market share (Mathias, Williams and Smith, 2015).
Southern Business Technologies Ltd gives more time to star products because this helps entity in
gaining more returns and generates high profit in business.
Figure 1BCG matrix
(Source: BCG Growth-share matrix, 2018)
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Product Development
Company concentrates on developing products, earlier it was providing 2G services but
later on it started offering 3G services because it was market demand. This helped in attracting
more buyers and providing them satisfactory products and services. Southern Business
Technologies Ltd always tries to provide satisfactory goods and services as per needs of
consumers (Arregle and et.al, 2015). This aids business in managing operations and enhancing
satisfactory level of buyers.
Porter’s five model helps in identifying external factors that impact on overall success of
business unit. This includes five major factors that impact on business unit.
 Competitors: Power of competitors is high and they can influence overall functioning of
business. Southern business technologies Ltd is small size firm and it can get affected
with competitor’s strategies. Vodafone, EE limited etc. are big competitors of company
(Mason and Brown, 2014).
 Bargaining power of buyers: customers are key element of any business; they can
influence overall operation of business unit. Southern Business Technologies Lt always
concentrates on providing satisfactory goods and services to consumers. However, there
are many big firms that offer 4G services due to which clients are moving towards these
entities (Carter and et.al, 2015).
 Bargaining power of suppliers: Power of suppliers in mobile telecommunication
industry is very high. This enhances cost of business and sometimes impact on products
quality.
 Threats of new entrants: This is another major factor that impacts on overall business
functioning. Telecommunication industry is vast and there are many big firms which are
performing really well. In such condition, it is very difficult for new firm to enter into this
market and get success thus; threat of new entrance is very low.
 Threats of substitutes: Power of substitute products is moderate. Southern Business
Technologies Ltd does not get much affected by substitute products because it is giving
tough competition to other firms. Consumers have trust on this brand and they buy its
services (He and et.al, 2015).
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P2 Ansoff's growth matrix for evaluating growth opportunities
Each small business must take support of effective strategies that can support them in
growing well and sustaining in the market for longer duration.
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Market Penetration
It is the type of strategy in which firms is selling products in existing market. This helps
entity in raising its market share and sustaining in existing market for longer duration. In this
type of strategy, entity does not make changes in existing products; it tries to enhance its selling
in current market (Yamakawa, Peng and Deeds, 2015). By this way, Southern Business
Technologies Ltd will be able to maintain its market share, which helps in growing well in the
market. The main agenda of cited firm is to enhance its revenues and provide high quality
products to consumers. It has strong reputation in the market; if it concentrates on enhancing
sales volume in existing market then it would be beneficial in raising its profit and satisfying
existing buyers.
Market Development
It is another type of growth strategy that concentrates on developing market. There are
many companies which perform well in their home ground but if they develop their market then
it would be better for them in enhancing their profit and sustaining in the market for longer
duration. It has skilled employees that support business in providing satisfactory services to
consumers. Southern Business Technologies Ltd can take support of geographical segmentation
(Vorley, Fearne and Ray, 2016). This will be beneficial for company and will help in entering
into new geographical areas. As entity is planning to enter into new location, which might be
risky for cited firm because in new market, competition will be high and needs of consumers
would be different. Company will have to conduct appropriate market research so that it can
identify requirement of consumers and can provide them goods and services as per their
requirements. Southern Business Technologies Ltd is performing well in London but if it enters
into Indian market then it might enhances risk of business. First, it will have to spent huge
amount in expansion. This will impact negatively on overall success of business unit to great
extent (Gielnik, Zacher and Schmitt, 2017).
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Figure 2Ansoff matrix
(Source: Ansoff matrix, 2017)
Product Development
It is another growth strategy that can be considered as strength of business. In this
strategy, a company works to develop products, so that more consumers take interest and buy its
products. This would be a great growth opportunity for Southern Business Technologies Ltd and
will help in satisfying needs of buyers. There are many people who like to use 4G services. This
entity develops its products by implementing innovative ideas then it would be better for
business in generating high profit and getting success in new market (Love and Roper, 2015).
This can help in increasing its revenues and sustaining in the market for longer duration. Product
development would be appropriate growth strategy for Southern business technologies Ltd and it
will help entity in increasing its market share and sustaining in market for longer duration.
Diversification
It is another growth opportunity for Southern Business Technologies Ltd because this
will help in developing products and market. Entity can utilize its resources well in order to enter
into new market and attract more consumers towards the brand (Mathias, Williams and Smith,
2015). . It is generally applies in the company when entity is planning to promote new product in
new market. It is quite risky because it might be possible that new firm get failed to sustain in the
market for longer duration.
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Southern business technologies Ltd has strong reputation in the market and it always
concentrate on fulfilling needs of consumers. Thus, cited firm is required to take support of
market development. Company’s core competencies are its skilled employees and effective
market research strategies. Both these competencies will be beneficial in order to enter into new
market (Abbrey, Bagah and Wulifan, 2015). This will help in further expansion and expanding
business from existing market to other new market. By conducting market research entity will be
able to identify requirements of consumers. This will aid in providing satisfactory products and
services to consumers in new market.
There are other options through which Southern business technologies Ltd can grow well
in new market. Merger and acquisition and joint ventures are two main strategies for growth of
business (Chaudhry and et.al, 2014). If entity gets merge with large organization in the new
market then it will help the firm in dealing with international clients. This will enhance
profitability of company to great extent.
LO 2
P3 Potential sources of funding
Each firm is required funds in order to conduct its operations. In the absence of adequate
financial resources it would not be able to carry out business properly. Southern business
technologies Ltd is small size firm that has strong reputation in the market. Company always
concentrate on expanding its business and providing amazing telecommunication services to
consumers (Mazzarol, Clark and Reboud, 2014). The main agenda of cited firm is to expand its
business and enhance its profitability. There are various sources of funds that are available to
Southern business technologies Ltd. These are explained as below:
Self funding
It is considered as one of the easiest way to gather money in the organization. There are
many small size entities those which invest their own money in expansion. This is saving or
personal debt of owner. Owner always invest their own capital in order to generate profit in the
business (Smith and Brooks, 2018).
Benefit
 It is owner’s own capital thus; it helps in making effective control over liabilities. In this
type of fund individual needs not to pay interest to any creditor.
 All profit that are generated by person by investing own money go to entrepreneur.
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Disadvantage
 It business gets fail to generate money then it might impact on stability of owner to great
extent. There is risk of bankruptcy or personal debt.
 Limited financial resources might limit overall performance of organization in new
market (McGuirk, Lenihan and Hart, 2015).
Bank Loan
It is another kind of source of funds. In this type of sources individual can take loan from
financial institutions. This will help individual in getting adequate funds and meeting with the
growth needs of business. Banks check financial stability of company, their profit return and on
the bases of these elements they offer loan to entity. This loan amount helps in fulfilling long
term needs of business (Storey, 2016).
Benefit
 It is cost effective method because firm can get huge fund in easy monthly instalment.
This is easy for owner to repay bank loan.
 This gives tax benefit to business which helps in saving money as well.
Disadvantage
 It can increase long term liability of Southern business technologies Ltd because
company will have to pay monthly instalment (Smith and Brooks, 2018).
 Many financial institutes do not give unsecure loan, in such condition company will have
to mortgage their assets and if it fails to repay payment then bank can sell these assets in
order to recover their loan amount.
Sales of fixed assets
Southern business technologies Ltd can sales its fixed assets in order to collect amount so
that it can expand its business into new market. This is another easiest way to gather money and
fulfil growth requirements of business.
Benefit
 There is no economic cost is attached with this source of fund. As owner needs not to pay
interest to lender (Chaudhry and et.al, 2014).
 Owner needs not to share their ownership with any third person.
Disadvantage
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 Selling fixed assets can negatively impact on financial stability of business to great
extent.
Anger investors
It is another source of financial available to Southern business technologies Ltd. Entity
can motivate its investor to invest capital in business. This will help in fulfilling monitory needs
of business and by this way entrepreneur will be able to expand its business effectively. Investors
always invest their capital in the firm which are able to generate profit so that they can get high
return over their investment (The Advantages and Disadvantages of Venture Capital, 2018). This
helps them in gaining more profit. Southern business technologies Ltd has capability to generate
high revenues thus, investors can invest their capital in business.
Benefit
 Investors are professional persons; they look at capability of firm and then make
investment decision. They fulfil short term monitory needs of business.
Disadvantage
 Owner of Southern business technologies Ltd will have to pay interest this will increase
liability of business.
 Southern business technologies Ltd will have to share their ownership with investors.
After that investors will have rights in business and they will be able to influence
business decisions (Abbrey, Bagah and Wulifan, 2015).
Venture capital
These are professional capitalists those which provide funds to small business at early
stage. But they always try to invest large amount in organization in order to get high return over
their investments. They get controlling and position interest in the firm.
Benefit
 Capitalist are expert business persons and have good understanding about market
condition. They provide finance to young business which supports in fulfilling their
financial needs.
 Venture capitalists are strongly connected with business communities. This connection
support entity in gaining benefit from community (Chaudhry and et.al, 2014).
Disadvantage
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 If Southern business technologies Ltd take support this financial source then owner will
have to share their ownership with capitalists. These capitalist will be able to influence
business decisions.
 If entity is unable to generate profit in new market then these investors can push for quick
exit from this market.
LO 3
P4 Design business plan
Business plan is considered as planning tool that helps organization in structuring firm and
deciding strategies for the growth of business unit (Smith and Brooks, 2018). It is the way of
guiding firm in right direction and implementing innovative ideas in effective manner. Business
plan for growth of Southern business technologies Ltd is designed as below:
Company overview
Southern business technologies Ltd is small size firm that operates its business in
telecommunication industry. Company treats its workers and always ensure to retain its skilled
staff members in business for longer duration. Recently entity has limited number of employees
but all they put their hard efforts in order to accomplish goal of organization (Abbrey, Bagah and
Wulifan, 2015).
Mission and vision
The main agenda of Southern business technologies Ltd is to enhance its profitability and
gain competitive advantage in the market. Its objective is to increase number of consumers and
enter into new market. Its vision is to provide high quality products and services to customers so
that they feel satisfied and retain in the firm for longer duration (How to Pick an Exit Strategy for
Your Small Business, 2018).
Situational analysis
Southern business technologies Ltd is small size firm but internal and external situation
of business help the manager in designing business plan for the growth of entity.
SWOT analysis
Strength
 Skilled staff members
 Product development strategies
 Effective utilization of resources
Weakness
 Limited financial resources
 Poor technological advancement
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Opportunities
 Globalization
 Development in technologies
Threats
 High competition
 Changing political conditions
PESTLE analysis
It is another effective model that assists in identifying external market situation of
company. There are many macro elements that can impact on overall performance of Southern
business technologies Ltd to great extent.
 Political factor: changes in political situation can impact on business unit. For that it
would be essential for Southern business technologies Ltd that to follow regulation of
new country in which it is planning to enter.
 Economic factor: It is another major element which affects overall working of business
unit. Company will have to concentrate on changes in economic values and accordingly it
will have to make plan so that it can run its business in new market successfully and can
sustain in the market for longer duration (Abbrey, Bagah and Wulifan, 2015).
 Social factor: It is another major component that affects overall business activities
significantly. Southern business technologies Ltd will have to consider social culture, life
style, choice, test of population of new market. This will help in identifying right people
for the business and entity will be able to offer them satisfactory products and services.
 Technological factor: It is another component that impact on external situation of
business (Chaudhry and et.al, 2014). Changes in technologies create pressure of Southern
business technologies Ltd and it becomes difficult for the firm to implement new
technologies. But if it takes support of advance technology then it would be better in
providing 4G services to consumers and make them feel happy.
 Legal factors: It is another element that needs to be considered by the cited and it will
have to follow all legal regulations of new country and industry so that it can sustain in
the market for longer duration.
 Environmental factors: Company will have to take care of atmosphere and have to fulfil
its corporate responsibilities (Mazzarol, Clark and Reboud, 2014).
Business opportunities
Southern business technologies Ltd will have opportunity to gain competitive advantage
in the market. It is performing well in its home market, if it enters into the new market then it
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would be beneficial for the company to enhance its revenues and gain competitive advantage in
the market.
Values and Ethics
Southern business technologies Ltd will follow all ethical aspects for entering into new
market; it will follow legal regulation and will promote its brand in effective manner. There will
not be any kind of miscommunication with consumers that can create consequences to the firm.
Target market
Southern business technologies Ltd will target young people those who are between age
of 18 to30 year. They like to use advance telecommunication services. This would be appropriate
target market for telecommunication firm (Storey, 2016).
Growth strategies
In order to explore its business Southern business technologies Ltd will take support of
niche market. It will apply this strategy of addressing niche market. This will help in attracting
mass audience and will help in increasing revenues of organization.
Strategic objective of Southern business technologies Ltd for scaling up business is to
enhance profitability of firm and sustain in the market for longer duration (Chaudhry and et.al,
2014).
Financial information
It plays significant role in business plan; if company is able to present effective financial
plan to investors then it will help in increasing investment in the firm. This will help in fulfilling
funding needs of entity and it will be able to expand its business into new location successfully.
year 1 Year 2 Year 3
Cash inflow
Sales 86891 128000 147000
total cash inflow 86891 128000 147000
Cash outflow
direct cost of sales 6951 10240 11700
salaries to staff 15000 16000 16000
marketing
expenditures 1200 1200 1100
utility bills 100 150 200
rent 18000 18000 18000
insurance 1500 1500 1500
payroll tax 9468 10050 10800
total expenditures 52219 57140 59300
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Net profit 34672 70860 87700
The financial detail of business plan shows that Southern business technologies Ltd will
be able to generate revenues in coming years. Thus, this business plan will be appropriate and it
will enhance interest of investors to invest their money in the company. This will support in
entering into new location successfully and accomplishing its objectives (Abbrey, Bagah and
Wulifan, 2015).
LO 4
P5 Succession option available for small business
It is very important for enterprise that to create succession plan. There are chances that
entity may get failed to generate profit in new market. In such condition effective succession
strategy will help the firm in exit from the market successfully. Southern business technologies
Ltd is small size firm and have limited resource. It might be possible that cited firm get failed to
generate revenues in new location. There are many reason of failure such as changing political
condition, poor economic condition of country, technological changes, changing needs of
consumers etc (How to Pick an Exit Strategy for Your Small Business, 2018).
Passing business to successor is the great strategy of exist from market for Southern
business technologies Ltd. If owner is unable to run its business successfully and generate
necessary revenues so it would be better for the person to pass it to successor. Advantage of this
strategy would be that it will help in reducing third party involvement in the business.
Furthermore, it will help in maintaining involvement in business. If family members will run
further operation then current owner will be able to maintain their presence in organization. But
there are some drawbacks of this strategy (Chaudhry and et.al, 2014). One of the major issues
with passing business to successor is that it would be difficult for the owner to search for right
person who can run this business in new market successfully. It might be possible that potential
conflict get arise at work and at home as well.
Apart from this, Southern business technologies Ltd can also take support of transferring
ownership to third person. This is another good option available to business because other
business persons will be motivated to buy running firm. If entity transfer its ownership to third
person those who are working in location since longer duration (Abbrey, Bagah and Wulifan,
2015). Then these companies will have good knowledge of market condition and needs of
consumers. This would be better option for owner because individual will be able to get all
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invested capital by transferring its ownership. This will help in stabilising their existing financial
position. But there are some drawback of this option, it might be possible that new purchaser of
business do not give accurate amount that has been invested by entrepreneur to run operations in
new location (How to Pick an Exit Strategy for Your Small Business, 2018).
CONCLUSION
From the above report it can be concluded that there are many opportunities of growth for
small business. Effective planning can support these entities in expanding their business in new
location effectively. It is very important for entities that to take support of appropriate financial
sources that can enhance overall value of organization. Conducting market research and effective
communication with consumers can help small firm in getting more growing opportunities and
gaining competitive advantage.
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REFERENCES
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