Growth and Exit Report

Growth and exit report
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Table of Contents
Introduction......................................................................................................................................3
Task 2...............................................................................................................................................3
Different methods of funding available to business....................................................................3
Task 3...............................................................................................................................................6
Business plan for growth.............................................................................................................6
Task 4 ............................................................................................................................................10
Succession Plan.........................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................14
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Introduction
Business is established with an aim to grow, expand and make it big. For sustainable
growth, it is very important that enough sources of funding is available to it. Along with
availability of funding, certain factors like payback period, viability and feasibility of the source
of funding available must also be assessed (Bose., 2017). This report is aimed at assessing
various sources of funding that are available to Ella's Kitchen. It is a British company that
manufactures organic baby and toddler food. It was established in 2006 and has its headquarters
at Oxfordshire, UK. This report discusses various sources of funding available to it and viability
of those options based on payback period. Based on the sources of funding available to it, a
business plan has been drawn up below with an aim to plan for business growth. In the final part
of the project, succession strategies have been discussed and recommendations have been
suggested for their appropriate implementation.
Task 2
Different methods of funding available to business
Finance is very important for an organisation to have smooth business operations and
plan for growth and expansion. Source, nature and amount of funding is dependent on the reason
for which business is raising finance and the cost and payback. For example, if company wants a
reasonable amount for satisfying its short-term working capital needs, it can go for credit
margins and bank overdrafts but if the company wants to raise a large capital for long term
investment, it should go for sources like venture capital, angel investors, loans from government,
banks, financial institutions, etc (Christensen, Bartman and Van Bever, 2016). This report is
aimed at discussing financing options for long term investments that are aimed at funding at
growth plan of the company. It is assumed that company has been looking for a source to finance
£50 million. Below mentioned are the sources of funding that Ella's Kitchen can exercise:
 Loan from banks and financial institutions – These are the most common forms of
funding that are available to the companies. These are easily available to companies and
are most of the time drives on the relationships between company and financiers. It is
based on repayment period, cost of debt and lien attached. It is assumed that had
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company is able to secure a business loan and will invest it in expanding its existing
products in new market, it would be earning below mentioned amounts:
Year Cash flows in millions
Annual Cash Flow Cumulative Cash Flows
0 -50 -50
1 20 -30
2 25 -5
3 30 25
Payback period = Initial amount of money borrowed / Annual earnings by investing borrowed
amount
Payback period = 2 + 5/30 = 2 + 0.17 = 2.17 years
Advantages – Loans from banks and financial institutions provide the option of negotiations on
the repayment period, rate of interest and securities attached (Du and Li, 2019). Company has a
good credit rating in the market and therefore, has an upper-hand in negotiating credit terms with
financiers. Also, there would be no change in the ownership structure of the company as
financiers are external party and are only concerned with repayment of their own money.
Disadvantages – Biggest disadvantage is that they have a fixed repayment period and finance
cost which makes an additional burden over the revenues and assets of the company and in any
unfortunate case, company defaults on repayment, will have negative impact over the sound
track and excellent credit rating of the company. Also, an external party would have right over
the attached property of the company.
 Government loans, grants and subsidies – Government agencies provide finances,
subsidies and grants to the business organisations. They are at much relaxed terms and
conditions however, it is not easy to obtain government funds. Government usually funds
companies which are in urgent requirement of money and are not able to procure either
because of their location constraints or market constraints (Mazzucato and Parris, 2015).
Since, company is has stable finances, it is unlikely to earn grant or subsidy and the loan
amount is also not expected to be full amount it requires. It is assumed that government is
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