Managing Small and Medium Sized Enterprises

This report discusses the background of Little Bay Restaurant, the nature of the entrepreneur behind the venture, the SME start-up processes, the business concept and competitive advantage sources, the current level of demand and the competitive environment, the growth and development of the business to date, the challenges of managing and running the business, the SME's current growth and development strategy, and government support measures available. It provides insights into managing small and medium sized enterprises.

Managing Small and Medium
Sized Enterprises

Table of Contents
INTRODUCTION...........................................................................................................................3
Background of Little Bay Restaurant..........................................................................................3
FINDINGS ......................................................................................................................................3
The nature of the entrepreneur behind the venture.....................................................................3
The SME start-up processes........................................................................................................4
The business concept and any sources of competitive advantage...............................................4
The current level of demand and the competitive environment..................................................5
The growth and development of the business to date.................................................................6
The challenges of managing and running the business...............................................................7
The SME's current growth and development strategy................................................................7
Government support measures that are available to assist business to overcome the challenges
faced............................................................................................................................................8
CONCLUSION................................................................................................................................9
RECOMMENDATIONS.................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Small and Medium enterprises are defined as those businesses or firms in which the
number of workforces falls below definite limits. These are independent, non-subsidiary
companies which employ less than 250 employees. Managing small and medium firms in proper
way will help in ensuring their growth and success (Ali and Babiker, 2017). This report is based
on Little Bay Restaurant which offers best quality food and services to people of London and
Brighton. The first restaurant was opened in year 1992 by Peter Ilic in Kilburn, London. This
project covers background of the enterprise and entrepreneur along with the small and medium
business start-up process, the concept of business and competitive advantage sources. Apart from
this, information about development and growth of business and the challenges face by SME's in
managing and running business are discussed. Moreover, it discusses about current development
and growth strategy of enterprise and the government support measures which are available to
overcome the challenges faced by firm. At last, a brief conclusion is provided on the basis of
entire report and recommendations are given on future growth and development of SME.
Background of Little Bay Restaurant
Little Bay is the modern European restaurant group in London which serving up high
quality food and services to people. In London's NW6, the Little Bay Kilburn restaurant is
situated between Maida Vale and centres of West Hampstead, near Finchley road. For over 30
years, the restaurant is offering best food and services to people and provide them greater value
for the money they pay (Cojoacă, 2017). It provides unique atmosphere to guests along with
range of tasty and exciting European dishes. Since it opened its first restaurant 30 years ago, the
group “Little Bay” has grown to be a quirky modern restaurant group in London and Belgrade.
The restaurant offers starters, main menu, desserts, special menu, organic drinks, cocktails etc. to
customers.
FINDINGS
The nature of the entrepreneur behind the venture
Peter Ilic is the founder of Little Bay restaurants who is known for his unique restaurants.
Little Bay is a group of restaurant chains in London and Brighton. This is a privately held

restaurant group whose headquarters is located in London (Stanciu, 2015). It is a quirky modern
European restaurant which offers high quality food and service to people. The restaurant always
strives for offering excellent dining experience to people and provide them value for which they
pay. All the restaurants of group are open until 12 AM in order to enable customers to enjoy their
adventure in Little Bay (Skolud and et. al., 2016).
The SME start-up processes
Peter Ilic arrived in England in mid of 70's and spent three years in having training at
catering college in Yugoslavia. Peter started worked at Claridge's at the position of commis chef.
He also worked in number of renowned kitchens in London and then started his first restaurant
named as 'the Lantern' on Malvern road in year 1982 in North West London. Soon afterwards,
Ilic opened two another restaurant La Cloche and the Pigeon. After getting success, he opened
his fourth restaurant in year 1984, from where the concept ‘Pay what you think it’s worth’ was
introduced. Across the Little Bay Restaurants, Peter Ilic has always maintained the similar ethos
– to administer best quality European food with French touch at fantastic prices (About Little
Bay Restaurant, 2020). Little Bay restaurants are well known for their bohemian, extravagant,
unique and relaxed style. After running four successful restaurants in London, the owner decided
to provide his home nation with some bountiful experience. Since the initial restaurant launched
30 years ago, Peter Ilic has started 4 more Little Bay restaurants which are located in Croydon
(1998), Farringdon opened in year 2002, Battersea (2003) and in Brighton in year 2011 (About
Our Little Bay Restaurants, 2020).
The business concept and any sources of competitive advantage
The first Little Bay restaurant was opened by Peter Ilic in early 1990's in Kilburn. The
basic concept behind creating this business is to offer original and new experience to people for
dine out in London and serving modern French and European cuisine with great value in its
trademark opulent. The restaurant also aims to provide relaxed surroundings to people of London
as well as visitors who come to London. It has unique blend of art, music and cuisine mesmerize
people to come and visit the restaurant. Providing people with high quality food at nominal
prices and give them value for money is one of the sources of competitive advantage for

restaurant (Parkin, Fielder and Ashby, 2016). The specialities of Little Bay restaurant include
food, wine, dining, restaurant, weddings, parties and events which are also the source of its
competitive edge. Along with the tables and chairs, the restaurant has balconies and booths
which flame up the imagination of people and is adore by the couples who are looking for candle
lit dinner in a romantic and an excellent setting.
The current level of demand and the competitive environment
In order to analyse the current level of demand and the competitive environment in
restaurant industry, porter's five force analysis is the most appropriate framework. It consists of
five forces which helps in understanding the industry dynamics (Nowotarski and Paslawski,
2015). These forces are discussed below in context of restaurant:
Threat of new entrants: In restaurant industry, starting a new restaurant is needs huge
investment to enter in the sector. Apart from this, economies of scale, operating and fixed cost
also needs to be taken into consideration. As the Little Bay restaurant working in the industry for
30 years and gain high popularity in market, the threat of new entrant is moderate for restaurant.
Although, the restaurant falls under small medium enterprise, still it is difficult for new entrant to
enter into the market and gain popularity.
Threat of substitutes: There are various restaurants operating in restaurant industry in
United Kingdom which makes it easy for consumers to switch to another restaurant. Low cost of
switching is the other factor due to which it becomes easy for consumer to shift their loyalty to
another brand (O’Connor and Kelly, 2017). So, the threat of substitute is high for Little Bay
restaurant as if the expectations of consumers are not getting fulfil then, there are high chances
that consumers can switch to another brand.
Bargaining power of customers: As in restaurant industry, there are numerous
restaurants operating in London. Since buyers has the power to impact pricing decisions of firm,
the restaurant sector is impacted by switching behaviour and choice of buyers. So, the bargaining
power of consumers is high as large number of restaurants are operating in market and the
switching cost is also low which enables buyers to impose their demands easily on Little Bay
restaurant.
Bargaining power of suppliers: In restaurant industry, the suppliers includes those firms
or individuals that offers raw material to restaurants. The influence that supplier can have on

buying decision of restaurants is determined by the number of suppliers available in the industry.
The restaurants which are operating at small scale creates high power of supplier due to limited
order generated by them (Ludmila and Stanislava, 2015). In context of Little Bay restaurant, the
power of suppliers is low as there are large number of suppliers available in market of United
Kingdom which offers food products to restaurant.
Threat of rivalry within the industry: In restaurant industry, large number of competitors
available which makes the competition intense in the sector. They strive to keep large number of
shares in market than the competitors. So, for Little Bay restaurant, the threat of rivalry is high
within the industry. The food giants are having higher budget for product innovation and
marketing which enable to maintain an advantage over smaller counterparts. This makes the
force strong for Little Bay restaurant.
As per the above analysis, it is analysed that Little Bay restaurant experiences the
influence of extrinsic forces at varying intensities, on the basis of variations in market (Javaid
and Iqbal, 2017). As the restaurant is offering high quality food and services at fantastic prices
and unique and relaxed environment of its restaurant for consumers increases the demand of
consumers to visit the restaurant.
The growth and development of the business to date
The first Little Bay restaurant was opened in Kilburn in early 1990's by Peter Ilic. The
restaurant in Kilburn is sandwiched between Maida vale and west Hempstead which are the
vibrant areas of London. It is located near Finchley road and was popular instantly with the local
community resided in Camden in West London. After getting popularity of this restaurant, Peter
Ilic had decided to open another chain in South Croydon in year 1998. After having heard the
success of its first restaurant, people or customers flocked to the new restaurant of group. Soon,
the restaurant had developed a loyal consumer base. In the city of London, the first restaurant in
Central London was started on Farringdon road in year 2002 in Clerkenwell (About Little Bay
Restaurants, 2020). As the restaurant is close to the offices located nearby King's cross and greys
inn road, it proved ideal for office parties and long lunch breaks. After that, another restaurant
opened in London in Battersea area which is located near chap ham junction in year 2003. As all
the other restaurants of group get high success and popularity in London, its customers grew to
love its new restaurant. The restaurant in Battersea when suffered fire damage in year 2010,

since then, it remained closed. As the popularity of Little Bay restaurants grew constantly
throughout the noughties, the customers started to request to start up new restaurants outside the
London. After receiving requests from the customers, the group opened its chain in Brighton,
East Sussex. The restaurant is visit by day trippers to Shoreham, Hove, Worthing and Brighton
for its food and exquisite décor and stay for regular live entertainment (El-Rafei and et. al.,
2017).
The challenges of managing and running the business
In order to analyse the challenges of managing and running a business, consideration of
PEST factors is helpful for Little Bay restaurant. It includes factors like political, economy,
social and technology which in context of restaurant are mentioned below:
Political factor: The business of a restaurant is greatly influenced by political factors. It
includes tax reforms, political stability/instability of country etc. Due to changes in tax reforms
and health regulations by UK government, it makes the activities of business more expensive. As
the health issues are increasing constantly, the tax rates on food products are increased and some
of the ingredients are banned which increases the cost of restaurant (Durst, Yip and Lee, 2015).
Economic factor: The increase in inflation rate in United Kingdom impacts the
operations of Little Bay restaurant and other small medium enterprises adversely. Increased
inflation rate affects the prices of ingredients. This results in increasing prices of menu and
people avoid to go out for dining and order from restaurant, which declines the sales and impacts
adversely on revenues and profitability of restaurant.
Social factor: The needs and preferences of people are changing very constantly which is
a big challenge for restaurants. As people are becoming more educated and aware more
regarding their health, they prefer to have organic food rather than junk food. This factor impacts
the menu of restaurant. So, meeting the expectations of customers regarding food choices is one
of the big challenges that Little Bay restaurant face.
Technology factor: It is the most dynamic force as technological changes and
advancements are very rapid that impacts the operations of business. Many restaurants use
information technology in their business for publicity (Chauma, 2017). They use technological
promotional tools and other technology like robotics which requires higher investment. As Little

Bay restaurant is a small medium enterprise, maintaining technology within firm is a big
challenge for it.
The SME's current growth and development strategy
In order to grow and sustain in market for longer term, it is very necessary for any small
and medium enterprise to introduce appropriate growth and development strategy in business.
These strategies help in ensuring their survival in market for long term (Winarno and
Wijijayanti, 2018). In order to develop and grow in market effectively, some current strategies of
Little Bay restaurant are mentioned below:
Focus on quality: The restaurant's main aim is to provide quality food to people in order
to attract them more towards restaurant. For maintaining the quality of food, the Little Bay
restaurant focus on complying with all the food standards and regulations made by government
and prepares food accordingly. It ensures that all the food products the restaurant is serving on
plate are of good quality and people like their taste (Van Scheers, Botha and van Scheers, 2018).
Fantastic food prices: The restaurant serves modern European food dishes to customers
with French touch at less prices than competitors. The organisation's strategy is to attract a
greater number of customers by offering them food at low prices. This strategy of restaurant
helps in attracting large group of customers towards it and generating higher sales.
Provide relaxed environment: The interior of restaurant is attractive that attracts people
more. It maintains exquisite décor and provide relaxing environment to people so that they love
to visit the restaurant again and again. Apart from this, the restaurant has balconies and booth
along with chairs and table which is adore by people. This strategy highly contributes in growth
and development of business.
Government support measures that are available to assist business to overcome the
challenges faced
There are various challenges faced by small and medium businesses in running its
operations effectively and successfully in current highly competitive market environment. In
order to gain competitive edge over rivals, it is very necessary to bring innovation, invest in
research and development etc. which needs adequate amount of finance. If firm do not have
appropriate funds then, it may face various challenges to ensure its sustainability (El-Rafei and

et. al., 2017). In order to a overcome these challenges, there are some support measures that
government provides to small and medium sized enterprises like Little Bay restaurant. Some of
the measures that may be available to assist Little Bay restaurant are mentioned below:
Innovating for growth: For a business, being able to effectively innovate is very
necessary. In this respect, to support the small firms, government is providing a chance to small
medium enterprise to claim up to 225% tax relief on the costs of research and development.
Apart from this, innovation vouchers of up to 5000 pounds and smart grants of up to 1,00,0000
pounds are provided by government (Five ways government is assisting SME growth, 2018).
This might help Little Bay restaurant to overcome the technological challenge face by it.
Recruiting for growth: This is another scheme of government that supports small
medium sized enterprises in overcoming the challenges. It is very difficult for the owners of
small business to know when, how and who to hire and amounts to the main challenge that firm
face in initial stage of development. For limiting the potential financial complexity, the legal
authority of United Kingdom has cut the hiring cost through 2000 pounds employment
allowance as well as provides grants worth 1500 pounds for the initial 10 apprentices the firm
takes on between 16 to 24 age.
CONCLUSION
As per the above-mentioned report, it has been concluded that in order to grow and
sustain in competitive market, it is very necessary for an organisation to analyse market and
competitive environment appropriately. Apart from this, there are various challenges that are
exist in business environment and are facing by small and medium sized enterprise. For
overcoming these challenges, various measures are provided by government like tax relieves on
research and development, providing employment allowance to firms etc. which may help
businesses in performing their operations effectively and successfully (Parkin, Fielder and
Ashby, 2016). Apart from this, for attaining growth and sustainability in market, the small and
medium enterprise should emphasize on providing customers with high quality food products
and services to customers in effective prises along with relaxed environment. It is also required
to bring constant innovations in their products and services.

RECOMMENDATIONS
As per the above analysis, it has been identified that for running business successfully,
there are factors that needs to be taken into consideration by small and medium sized businesses.
 From the analysis, it is recommended to Little Bay restaurant that it should emphasize on
introducing organic food in its menu as people now a days prefer to eat such food more.
 Apart from this, as the needs and preferences of consumers are changing very frequently,
restaurant should emphasize on analysing the market environment on continuous basis so
that if any change takes place in market, it can be aware of this. This helps restaurant in
fulfilling demands and meeting expectations of customers in better manner.
 At last, it is also recommended to company to follow all the laws and regulations made
by government so that business operations can be run smoothly and effectively.
 The restaurant should also provide training to its staff members on continuous basis so
that they enable to provide guests with effective services.
 Restaurant should provide employees with appropriate benefits and reward in order to
keep them satisfied and retain them within firm for longer term.
 It should maintain healthy workplace environment so that productivity of employees as
well as firm can be enhanced.
 It should provide adequate offers and discounts to customers in order to attract them more
towards the firm.
 Restaurant should engage in such practices that will be beneficial for environment as well
as society.
 It should make use of high end technology in restaurant so as to provide customers with
effective services.
 It should compliance with all the laws and legislations made by government as this helps
restaurant in running its business operations effectively and smoothly.

REFERENCES
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Online
About Our Little Bay Restaurants, 2020. [Online]. Available through:
<https://www.littlebay.co.uk/about/>

About Little Bay Restaurants, 2020. [Online]. Available through:
<https://www.linkedin.com/company/little-bay-restaurants>
About Little Bay Restaurant, 2020. [Online]. Available through: <https://www.littlebay.rs/en/>
Five ways government is assisting SME growth, 2018. [Online]. Available through:
<https://www.growthbusiness.co.uk/five-ways-government-is-assisting-sme-growth-
2475152/>