Planning for Growth: Evaluating Opportunities, Funding, and Business Plan

This document discusses the planning for growth in a small food manufacturing organization, Ella's Kitchen. It covers evaluating growth opportunities, different sources of funding, and effective business planning. The document also includes a case study of Ella's Kitchen and its strategies for growth.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
Evaluating growth opportunities.................................................................................................1
LO2..................................................................................................................................................4
Different sources of funding.......................................................................................................4
LO3..................................................................................................................................................6
Effective Business plan...............................................................................................................6
LO4..................................................................................................................................................7
Various options to exiting a business..........................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Planning for growth refers to set of business activities which enables enterprisers to grow
and expand their business units in different locations (Planning for growth, 2020). These are
strategic course of actions which permits business owners to utilise their scarce and limited
resources in a better way to perform their business functions differently from its competitors.
Business growth is an essential aspect for any organisation but it brings some changes within
business models, plans and strategies.
Ella's Kitchen is a flourish and small food manufacturing organisation in UK. Company deals in
making and selling of organic and toddler baby food. Sold out products in different supermarkets
and stores in UK as well as overseas. Firm is an existing member of Organic Trade Board and
has 62 employees in total. This report exhibits detailed information regarding regarding various
various key growth drivers in order to determine growth opportunities for given organisation. It
justify different product and market expansion strategies with help of Ansoff Model. Further, it
explains various source of funding by which business owner can raise their capital for purpose of
growth expansion. Lastly, it explores exit and succession options and represent new business
plan for growth development.
LO1
Evaluating growth opportunities.
There are number of growth opportunities are available for small and medium enterprises
in order expand their business and for product development. There are different factors that
prevailed in external environment which must be consider by small business owners in order to
formulate and implement their growth strategies effectively and efficiently. In addition to these
factors there are five major business growth drivers that required to be consider by every
organisation before planning out for growth expansion (Keough, 2015).
.
1. Strategy: it is one of the main driver for growth expansion as strategy define as business
plan or master plan based on innovative ideas that enables firm to start fast growing
business units with purpose of growth expansion. In context of Ella's kitchen, currently
company is producing baby food products for infants and toddler customer base. For

market share expansion company adopt product expansion strategy in order to enlarge its
customer base and profits.
2. People and Operations: People refer to how many number of skilled employees are
present in organisation. Whereas, operations define current production process is being
used by company to produce its products (Park and LaFrombois, 2019). In case of Ella's
Kitchen, company required to enlarge its staff and employee more skilled people who
bring fresh innovative ideas for providing exclusive product range to its customers. In
Addition to this, company required to opt latest and advance version of technology in
order to manufacture products it will reduce cost and increase quality.
3. Infrastructure: this key driver refers to the internal facilities that an organisation has at
workplace. Infrastructure include proper inventory storage, floor spacing, ventilation,
distribution system, supply chain so on (Coulson and et. al., 2015). For growth
expansion, Ella's kitchen required to maintain effective level of infrastructure in order to
avoid unnecessary obstacles and delay in delivery system. Also, company can enlarge its
distribution and supply chain network so that it can provide its products to market on
time.
4. Funding: No business can grow without proper capital or funds. Funding is also a main
key driver through which company can raise its capital and invest in various other units
in order to expand its brand name (Crow, 2015). There are various sources of funds to
choose from. Presently, Ella's kitchen is at its small scale organisation and wants to
enlarge its business for that company can arrange its funds from external source of
finance such as bank loan, venture capital, lease financing etc.
5. Risk and Reporting: Risk is refer to uncertainty that might affect overall result of strategy
and growth. In case of Ella's Kitchen, it is important for firm to assess all these risks
factors before applying strategies. Also, company required to prepare proper report of
evaluation in order to formulate more better strategies and policies for future. In addition
to this, company can formulate mitigate strategy or backup plan in case of failure of
applied strategy.
Ansoff's Growth Matrix Model
This framework refers to product and market growth model which explains various
business strategies and practices in order to grow with help of introducing existing and new

products in new or current target markets (Birkin, M., Clarke, G. and Clarke, M., 2017). This
particular framework is helpful in strategy formulation stage of planning process. This helps firm
to determine suitable growth strategy and how apply same in marketing activity. There are four
different strategies in product/market Expansion Grid.
1. Market Penetration: this particular strategy is helpful when company wants to expand
its business sales in same target market with existing products. This can be done by
penetrating market by providing attractive discount offers, reducing current rates to
persuade and attract more customers. Moreover, with help of aggressive promotion
activities and cultivating strong distribution network or collaborating with successful
rival in same market (Jabeen, Faisal and Katsioloudes, 2017). Under this strategy, Ella's
kitchen can make use of aggressive promotional activities to promote its products to
larger audience through providing special schemes like refund and rebate strategies to
guarantee quality, offer free samples as well as sales coupon to raise its sales. Moreover,
company can make use of celebrities as brand ambassadors which helps in raising brand
awareness. All these tactics helps in increasing its customer base and enhance overall
productivity of organisation.
2. Product Development: under this strategy, company introduce and develop fresh as
well as new product within existing market. This type of strategy is adopted when
company has accurate and proper knowledge of requirements of current target market and
has potential to fulfil new demands by offering innovative solutions (Sarin, M., 2019).
This can be done through investing research and development programs, acquisition of
competitor product strategy in order to generate better products. In such strategy, Ella's
kitchen can develop a new product in form of flash-frozen food packets which involve
portioned, chopped, pure organic ingredients to satisfy instant requirement of nutrition in
babies. Also, firm can innovate cold pressed fruits and vegetable purees in attractive tub
packaging.
3. Market Development: under this strategy, firm try to enter in new target market with its
existing product portfolio. Organisation can expand their business units by tapping new
geographies, customer segment and other regions. This strategy is successful for growth
expansion when organisation has advanced technology that can be optimised in new
market, customer segment required to be profitable (Crow, L.H., 2015). This strategy

help business owners to reach out new consumer base or expand business across
overseas through targeting new areas. With help of this strategy Ella's kitchen can expand
its business through tapping out the target market of Africa and solving problem of
malnutrition in babies by its organic products.
4. Diversification: this strategy is one of the riskiest activity as under this company enters
in a new market by launching or introducing new product. There are type of
diversification: related and unrelated. Related diversification used when firm produce
product which are identical to current product portfolio. Unrelated diversification exists
when firm produce product that is purely separated from its existing offering. In such
strategy company needs to gain knowledge regarding perception as well as requirements
of new customer base and market (Dang and et. al., 2015). Ella's kitchen can make use of
related diversification strategy in which company can launch organic diet food products
for youth in order to satisfy demand of youngsters to be healthy and fit.
From above analysis, it can be concluded that Ella's kitchen can select product
development strategy in which company can produce or develop frozen food pouches of fruit and
vegetables purees in order to fulfil instant requirements of existing customers base.
LO2
Different sources of funding.
Sources of funding refers to various ways through which small organisation owners and
enterprisers can raise their capital in order to invest in different projects and for growth
expansion. There are two kind of sources by which company can raise its funds internal and
external (Abolhasani, S. and et. al., 2016).
Internal sources refers to process of raising funds from current assets. Inflow of cash is
generated through regular day to day business activities. As name suggested, internal sources of
finance are generated internally within organisation unlike loan or venture capital. These sources
include personal savings, retained profits, owner's investments, selling of assets, reducing
working capital etc.
Benefits: Internal sources are beneficial for small business owners as it allows them to
have a full control over functioning of business. It enhance planning process of overall
organisation as funds are available on time. This provide benefit to owner in form of cost

reduction as it do not generate any kind of borrowings in terms of interest payment. It improvise
overall value of company by eliminating affect of outsiders over operations of firm (Lines, B.C.
and et. al., 2015).
Drawback: Internal sources have some adverse impact over operating budget of
organisation. Owner required to consider how much capital is going to required to grow
successfully as they make use of internal sources due to which fluctuation occur in total capita
structure or budget. As result, there may less cash is left out to manage day to day expenses. If
business owner make use of these sources then it result in limited growth of business. These
source generate no or few tax benefits for firm.
External sources define as generating flow of funds from outsides sources including
private and financial institutions. These sources of finance refers to alignment of capital or cash
flow from outside of business premises. These include bank loan, bank overdrafts, lease
financing, venture capital, equity shares, crowd funding, business angels etc.
 Bank loan is a long term type of finance for start-up business. Financial institution
provide bank loan facility for fixed period of time at rate of interest against some
collateral to required party (Olesen, K. and Carter, H., 2018). Benefits of bank loan is that
it is temporary in nature as once enterpriser repay whole amount of loan then there is no
more involvement of bank authority left over business operations. Interest of bank loan is
tax deductible which makes easier for business owner to budget and plan for monthly
loan payments. Drawback of bank loan is that interest rate for small business and start-
ups are pretty high as compare to large organisation.
 Venture capital refers to form of private equity as well as source of fund in which
outside investors invest in risky ventures or start-ups that have high growth and long term
return potential. This investment is done by well known investors, investment banks and
financial institution. Venture capital is beneficial for small start-up owners as they get
valuable guidance and expertise from venture capitalists in formulating strategies,
technical assistance for better success and returns (Rua, França and Ortiz, 2018).
Disadvantage of such source is that owner lost all their control over business functions
and decisions due to share ownership with investors.
From above analysis, Ella's Kitchen required to consider external sources of finance in
order to expand its business and development of new products. These sources helps in

maintaining and allocating firm's resources in better way in order to invest in different projects.
Although, external source of finance will provide wide range of business finance solutions. With
help of these sources company can utilise its financial resources for diversified purposes as well
as it enables firm to invest in different growth projects. External financier will provide useful
expert advise which can enhance operations and help in resolving problem.
LO3
Effective Business plan.
Ella's Kitchen is a growing small food manufacturing organisation situated in
Oxrfordshire, UK. Company is indulged in making and selling of organic baby food products. It
is one of first brand who introduced pouches into baby food market and its product contain no
harmful chemical or preservatives, additives but only natural ingredients. Currently, company is
planning for introducing new product of instant frozen puree of fruits and vegetables in its
existing market in order to its growth expansion as well as increasing its customer loyalty
towards its brand products.
Vision: Ella's kitchen is to generate eco-friendly farming practices in order to provide natural and
quality food to its customers and contribute in environmental betterment.
Mission: Ella's kitchen mission is to improve children's lives by developing healthy relationship
between food and children.
Smart Objectives:
 To increase profits by 25%
 To increase customer share by 10%
STP Process
 Segmentation: it is a process of dividing entire market into small segments on basis of
similar products needs and same characteristics with purpose of choosing appropriate
target market. In order to acquire different and competitive edge position in market Ella's
kitchen divides its market on basis of geographic, demographic, psycho-graphic and
behavioural segmentation.
 Targeting: it is a process of selecting suitable market segments. Ella's Kitchen target its
market on basis of age which including infants (0-5) and babies (5-8). Also. It targets
according to social stratification that involve upper, middle and upper class people.

 Positioning: It refers to perception of consumer regarding brand or product and it is a
process of developing brand image or identity of product. By launching frozen instant
food puree Ella's kitchen desire to positioned itself as best pure organic food provider
across world.
Budgetary Information
Evaluation and Control: After developing and launching new product in target market
company management required to conduct survey for purpose of getting reviews and feedback
regarding product. This enables Ella's kitchen to evaluate its product performance and measure
how much it is succeeded in term of achieving smart objectives. Through this company can
modify its product feature according to requirement and review of customers.
LO4
Various options to exiting a business.
Business exit strategies refers to small enterpriser's plan to exit from current business
practices by selling its company ownership to another organisation or investors. These plans
enables a business owner to mitigate or liquidate their shares in an organisation (Tian, L., 2016).
These plans are utilize when business is not much successful and generate higher losses for
enterpriser. Moreover, this strategy is used by venture capitalist with purpose of taking out its
invested cash from non profitable projects. Exit strategy include an essential element called

business valuation by which business owners are able to analyse their company's financial so that
they can determine fair value of their business. There are number of exit options such as winding
up, liquidation, selling up business in open market, merger and acquisition, initial public offering
etc.
1. Liquidation: this strategy include winding up of company and selling out all assets. It is
a process of closing down non profitable business units and sell out all assets at lower
costs. It one of most common method related to getting out of a business. If Ella's
Kitchen failed in success of its new business unit of instant frozen food then it is a
suitable exit option for firm to wind up that particular business unit (Whelpton, P.K.,
Campbell, A.A. and Patterson, J.E., 2015). Advantage of Liquidation is that it is simple
and quick strategy as compare to others. It is not a complex process to transfer power or
negotiating with price. Drawback of this strategy is that it provide lower return on
investment to business owner. Further, owner has to sell out its assets at very low cost.
2. Selling out Business in open market: this is also one of popular exit strategy for small
business owners. It is a process of selling out business ownership openly in market in
terms of bidding or auction. Ella's kitchen is a flourish brand in market so if any of its
business unit is not able to produce revenue then company can opt this exit strategy.
Benefits of this strategy are it brings attractive buyers and potential organisations at one
place quickly. Also, it generates high value of assets and goodwill as well as bring higher
returns for owners. Drawback of this exist strategy is that it is difficult to determine
value of business and selling rate might be lower then expected.

CONCLUSION
As per research report demonstrated conclusion can be framed as business growth is an
essential aspect for any organisation in order to gain long term success and competitive
advantage in target market. To expand its business in different location company required to
analyse macro and micro environment where organisation operates its operations. This analysis
done through pestel analysis model which enables business owner to formulate its growth
strategy in order to conquer several opportunities. Moreover, it helps in determining suitable
growth expansion strategies which enables organisation to formulate better business plan. Also,
this aspects contains various exit options which has their own pros and cons. These helps small
enterprisers to wind up or sell out those business units which are less successful and generating
loss for owner.

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Online
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