Planning for Growth: Key Considerations, Funding Methods, and Business Plan

This document provides insights on planning for growth in a bakery business. It covers key considerations for growth opportunities, different funding methods and their benefits and drawbacks, and how to create a business plan. It also discusses market penetration, market development, product development, and diversification. The document explores various funding options like peer-to-peer lending, angel funding, bank loans, crowd-sourced funding, and venture finance. Additionally, it includes the executive summary and objectives of My Baker.

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION A.....................................................................................................................................3
TASK 1: Key Considerations for Growth Opportunities............................................................3
Different Methods for Funding- Benefits and Drawbacks.........................................................6
TASK 2: Business plan ...............................................................................................................9
SECTION B ..................................................................................................................................13
TASK 1: Business Exit Strategies.............................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Every business whether small or big have many strategic plans for planning for growth.
Creating a strategic plan plays a major role which helps in preparing a realistic vision for future
of any business and in maximizing the potential for successful business growth. 'My Baker' is a
small, passionate micro bakery newly opened bakery in London which deals with many bakery
products like cakes, cupcakes, cookies etc. and wants to expand its business in all aspects
(McLean, 2018).
This report will lay emphasis on the considerable factors of its growth opportunities and the
various funding methods and its sources along with the drawbacks of each. The research will be
followed by presenting a business plan and the scaling for its growth. The report will also discuss
the benefits and drawbacks of all the options of exit or succession. It will be finalized by
explaining the options to support the implementation of various strategies for the growth of a
small bakery.
SECTION A
TASK 1: Key Considerations for Growth Opportunities
Bakery Products is becoming the most demanding food in all parts of UK. There is a high
potential for business growth in dealing with bakery products (Derkanosova and et.al., 2020). In
UK, the Small-Medium enterprises are striving hard for the growth in the business of bakery
products (Plant, 2018). There are many recommendations to be kept in mind while evaluating the
growth opportunities. Porters Generic Model will be used by My Baker to understand the factors
competitive environment it will be facing which are as follows:
Cost Leadership
This means the bakery is maximizing the sales by reducing the prices of the products and
services. The firm can achieve high productivity, increase the use of technology and utilize the
advantage of greater bargaining power (Pavlogeorgatos and Kokkinou, 2017) . It offers little
differentiation which is accepted by more number of customers.
Cost Focus

This also aims at lower cost products but within a particular market area. The product
will remain basic but the prices will be high which will attract fewer customers (Sheereen, 2018).
This aims at making a profit.
Differentiation Focus
My bakers can take the advantage of this by introducing a new product which will be
different from the competitors who are attracting large number of people.
Differentiation leadership
The target of the company becomes larger. It takes the competitive advantages across the
whole industry.
My Bakers must use the Cost Focus as it is new in the industry and aims at earning more profit.
Pestle Analysis
There is a need for My Baker to gain the competitive advantage with growth
opportunities but along with that it must be aware of where the particular opportunity can be
used in the environment for business expansion as well. To analyse this, My baker uses Pestle
analysis to evaluate the effects of the environment on the bakery which is as follows :
 Political: The country's political views alter the products, or even the overall brand perception
because the social market in one country cannot be same as the other operating countries. For
example if the bakery is promoting via Facebook but it is banned suddenly in other country then
it will be of no use. So, political factors must be kept in mind while dealing with bakery
products.
 Economic: These factors effect the financial stability of the bakery. If the country is not
financially stable, then the people will not prefer high price products (Viegas and et.al., 2020).
So, the bakers must provide products of lower prices than the competitors which will attract
more number of customers.
 Social: The bakery must analyse that which strategy is socially acceptable which will create new
opportunities. For example if the person demand for more cakes, the bakery must provide wide
range of varieties of cakes.

 Technological: Digital marketing plays a major role in this which involves all the technologies
used by the bakery whether mobile, tablets or any such gadgets. They must ensure that their
websites are accessible and presentable to everyone. This will help to know the behaviour of the
customers.
 Legal: The strategies and policies of the bakery must follow the laws because if any product is
not acceptable legally, it can hurt the brand image which risks its progress. The online marketing
should also be under the norms and regulations.
 Environmental: The bakery 'My Baker' should be aware of all the environmental issues and
should make the customers aware of the same. It must pack and deliver the products in
biodegradable bags instead of polythene's bags.
So, above mentioned factors mus be kept in mind while dealing and promoting the bakery
products and services to improve the brand image as well as its performance.
Pathways of Ansoff's Growth Matrix
The Ansoff's Growth matrix gives the bakery owner the opportunity to better determine
the type of growth and also helps to keep an eye on the bakery's growth. It consists of 4 different
categories represented in a tabular form in which the columns refer to products and services and
the rows reflect the markets. Following are the 4 pathways which are analysed by My Baker's :
Market Penetration
It is a good strategy for a bakery's growth which is achieved by taking more number of
new customers and also by increasing sales through existing customers. Reducing the prices and
training for sales play important role in this.
Market Development
It is the strategy to expand the existing products in a larger geographical area. This needs
more marketing efforts and investment. This helps in growth of the bakery but with some risks.
Product Development
It is applies when a new product is established in the bakery (Chen, 2020). It can be done
by introducing a totally new product or by producing a variant to the existing product. For the
implementation of this strategy, the bakers must analyse the customer's feedback to know their
demands.
Diversification

This strategy is planned by introducing a totally new product in completely new market
which results in numerous risks. This enables the bakers of My Baker to develop new customer
groups along with the increased sales but according to their willingness to take risks.
So, My Baker must follow the Market Development as it needs much marketing effort but it
helps in the rapid growth of the bakery. The bakery is newly opened so it will adapt the ways
which will increase the sales and the overall progress of the bakery.
Different Methods for Funding- Benefits and Drawbacks
Starting or growing of any bakery needs money for various purposes related to it. There
are a lot many sources which we can use for financing. Mainly, it is classified into short- term
and long-term financing. Short-term financing can be from the own pockets of bakery owners
and long-term financing can be from banks. Long-term and Short-term financing are further
classified into 4 categories which has their own advantages and disadvantages as follows :
Peer to Peer lending
This involves lending of money directly without any financial body as a mediator.
 Advantages: It offers investors with higher returns, more accessible and provided at low rate of
interest.
 Disadvantages: It provides risk of credit, legislation and no protection of government.

Angel Funding
Wealthy individuals play the role of angel investors as a source of financing for starting
or expanding business of a small bakery (López and et.al., 2018). These are not always possible
because it too has some benefits and drawbacks which are as follows :
 Advantages: It can be proved better as well-heeled investors can finance a large part of the
needs and the owner can get back to the business as the finances are in one hands.
 Disadvantages: It takes a lot of efforts. Along with this, the investors also interfere in the
decision-making process of bakery because they have an enough say in it (Viegas and et.al.,
2020). So, the owner is dependent on the saying of the investors and can not take decisions on
his own.

Funds from Banks
The process of funding with bank loan is much easier process as compared to taking it
from potential venture capitalists.
 Advantages: This method is easy and requires fewer efforts and the owner does not need to
depend on the bank before taking any decisions.
 Disadvantages: Banks need to see the details of the cash investment for the bakery before loan
approving. It also charges interest and timely repayment of the loan.
Crowd-Sourced Funding
This type of funding involves soliciting funding from a thousand of small investors
(Gonçalves and et.al., 2017). The small contribution from small investors equals to the total
amount of investment done by a large investor. It also has some pros and cons which are as
follows :
 Advantages: It can actually be fun to get a funding campaign in gear. The owner doesn't need to
depend on the one investor and need not listen to him before taking any step.
 Disadvantages: Funders may expect a quick return. If in case, the owner is not able to return it
on time, then it can create public failure for the bakery.
Venture Finance
These are provided by the investors to the companies who want to grow rapidly. (Kyyaly,
Lawand and Khatib, 2017). It also has some merits and demerits which are as follows :
 Advantages: It helps in providing business expertize, additional resources and build stronger
connections.
 Disadvantages: It reduces the control of owner and involves the investors in decision-making.
Over Draft
This can be in a limit by borrowing with the help of bank account.
 Advantages: It is flexible, arranged quickly and no charge for paying earlier.
 Disadvantages: It charge for delaying in payment, bank can ask for repayment anytime, variable
interest rates etc.

According to the above research, the 'My Baker' must do the funding process with the bank by
taking loan. It will charge the interest but the investment will be legal and the banks do not
dominate the owners to listen to them in taking any decisions of bakery.
TASK 2: Business plan
Executive summary of My baker
My Baker is a bakery operating in UK which works with the finest artisanal bakers and
deliver across London and Birmingham within 24-48 hours. It can be loosely described as a
quick bakery that provides a wide range of items such as cakes, pastries which can be customised
with add ons. The main attraction is variety in cakes for multiple occasions like birthdays,
weddings, corporate events etc. Its taste and variety is a major highlight. It emphasizes on
handmade gourmet desserts in ambient yet simple atmosphere in low cost which is imbibed in
the company's vision and mission. It primarily operates online but is creating an offline presence
as well. With an understanding of difficulties in establishing and expanding a new business, My
baker has planned to become cash flow positive on a monthly basis. The financial plan is
conservative with a focus on diverse revenue streams, cash flow and prudence in considering
risk. (Brill, 2017)
Mission statement:
To cater consumers with variety of flavours, nourishment and personalization by
blending art and ambience at low cost.
Vision:
To sharpen the edge of low cost supply of designed baked items across UK.

Objectives of the company
Expand physical and online presence outside London with delivery by the third year of
business. The primary objective for the business will be to expand its operation outside London
by establishing stores and provide efficient customer service. The finances, customer taste and
preferences have to be kept in mind while conducting the market research. The online presence
has to be expanded by updation of current website which will now include delivery options to the
other areas surrounding the two stores. (Birnbaum and De Wispelaere, 2020) All its products
have to be made available for these areas with fast delivery system and customer grievance
redressal. The bakery has to maintain its standard and brand when serving across these areas.
Company Summary
My baker started operating in 2008 in Birmingham and focussed on the new trend of
online retailing to grow its operations. Currently the bakery serves across London and
Birmingham to customers in need of a variety of items such as cakes for wedding purposes,
birthdays, corporate events etc. It is a virtual order delivering bakery which combines art and
flavours to appeal its customers. The primary operations include serving customers with artistic
cakes and pastries for special occasion via their online shop. The orders are then given to expert
bakers who skilfully create customized items and the delivery is done to the operational areas
with 24 to 48 hours. (Sakata, Shiraishi and Okada 2019) It has a proper payment and ordering
system called Bespoke. The company is now looking forward to expanding its online reach
outside London and also plans to open a retail store to expand its physical presence.
Products: My Baker will offer a wide range of bakery items and variety of customizable cakes.
All the products will be handmade from scratch and delivered by its network of talented
independent bakers across UK. The catalogue will include: Wedding cakes, Birthday cakes, keep
it classic option, cupcakes, Anniversary, Our favourite option, tall cakes, drip cakes, Baby
shower cakes, Halal cakes, options such as Nut free, Gluten free, dairy free, halal, vegan, egg
free etc. In addition to the products, the bakery will also offer creation of bespoke cupcakes or
cakes for an event that customer is having. They might also offer seasonal treats, breakfast and
happy hour canapés - both sweet and savoury - with a selection of gluten-free and vegan options.

Market segmentation
The expansion plan of the bakery needs basic research and identification of the market
for its products. Market segmentation will help the bakery to define and better understand its
target and ideal customers. (Verhoeven and Johnson, 2017) Market segmentation can be done in
various ways. Demographic segmentation refers to the categorization of audiences on the basis
on observable people difference like age, gender, marital status, family size, education level,
occupation, race, religion, income and nationality. The bakery has to decide its target customers
accordingly like providing halal cakes for the Muslim customers and setting its prices according
to the average income levels of people. Behavioural segmentation is based on customer's
behaviours regarding the product like online shopping habits, actions taken on a website, benefits
sought for the purchase, usage rate and loyalty. The bakery has to evaluate how people are using
the internet and what attracts them to a brand the most. This can be done by tacking actions and
using analytical tools. This will show them the type of cakes that are preferred by customers
which can be basic or attractive according to the occasion. Geographic segmentation is done by
splitting up the market based on the location. It is usually done by identifying the users based on
their state, county and zip-code and identify them on the basis of population density, urban and
sub-urban etc. MY Baker has to carefully use this method to identify in which all locations it
could expand its reach. (Ramdani and el.al., 2018)
Psycho-graphic segmentation deals with mental and emotional characteristics and may not be
easy to attribute. Whole demographics provide basic facts about who and what, psycho graphics
give insights into why people decide to buy or not buy a product. Some examples are traits,
lifestyles, values, beliefs, interests and attitude. People with a belief that tall cakes are most
suitable for wedding celebrations might expect to receive product information on the same if
they click on wedding cakes in the catalogue. Therefore, keeping all these segments in mind, the
target customer and region for expansion of the bakery should be decided. (Okkonen and
Pasanen 2017)
Options for funding
Finance is a major concern in order to grow any business. Various funding methods that
can be used by My baker are: Owners investment- My bakers can use bootstrapping as the

money will not include the stock holdings. Funding from investors is a one the best options as
wealthy individuals target to expand a new business by becoming angel investors. Another
option is funding from the banks which is a much easier process as compared to taking a loan
from venture capitalists. (Santamaria ,2018) Other options include crowd-source funding and
Internal Project Funding. My baker should search for Angel investors by showing their potential
productivity. Investors should invest in My bakers because of its variety and customizing option
in products. It operates online and has a wide reach and connections across London. The pros of
expansion are addition of Customers who are in need of such skilful bakery with fast delivery.
Financial Statement of the company for the year ending 2019
Total Liabilities £1.07 m
Cash in Bank £867.72 k
Turnover £6.7 m
Total Assets £2.51 m
Net Assets £1.44 m
Employees £145
Debt Ratio 42.68%
Recommendations for business
There are various ways in which company can ease the process of expansion and boost its
sales. For starters, conducting a thorough market research of the nearby areas using various tools
and getting an idea of the market by PESTLE analysis and Porter's five forces. There should be
up-gradation of website and adding product changes for addressing the new target market. To
boost the sales the bakery has to get active on social media, improve its product display, do local
partnerships and tie-ups, contact the best bakers from hotel management and culinary institutes

to get registered with them, offering samples to the new areas of expansion to market its brand. It
should search for angel investors who can fund its operations in those areas and if they don't get
the funding, they should look for other options such as a bank loan.
SECTION B
TASK 1: Business Exit Strategies
An exit strategy in a business is a contingency plan that is implemented by an investor,
business owner, trader or a venture capitalist to renounce ownership or terminate a situation to
either minimize damage or maximize welfare. (França and et.al., 2017) This section briefly
evaluates various exit strategies and their pros and cons.
1. Lifestyle company exit
This strategy is followed mostly by private companies, sole proprietors and forward thinking
businessmen who will be basically drying out the business on a daily basis. It is executed by
keeping expenses at a minimum and pocket majority of profits rather that investing in the growth
of the business.
Pros:
 Pulling out the money whenever needed and immediate availability of funds.
Cons:
 The method of pulling out money may have negative tax consequences.
 Careless planning in the long term can exhaust funds required for future use.
2. The Liquidation

Liquidating is the exit strategy of closing the business and selling all the assets, typically at a
lower cost. In this process, any yields from the assets must be repaid to creditors. The balance
would be divided among the shareholders.
Pros:
 There are no negotiations involved.
 There is no issue with the transfer of control.
Cons:
 The market value of the assets is the maximum that can be received.
 Reputation, Client lists and other things of value is destroyed without any recovery.
3. Selling to a friendly buyer
It is an option for those who don't want to liquidate the business and preserve the intangible
values. They can sell the business to friends or family members who have the will to take over
and manage it.
Pros:
 Less due diligence required because of pre- existing familiarity.
 Buyer will probably preserve what's important to the seller about the business.
Cons:
 Attachment can lead to problems of financial dissatisfaction with each other.
 Relations can be in trouble if the buyer realizes the business is of no worth.
4. Mergers and Acquisitions
M&A's refer to the consolidation of companies or assets. They are suitable for all businesses.
Start- ups in particular want to sell their controlling interest to a bigger and more profitable
businesses. The business should be made to look attractive to acquisition candidates.
Pros:
 If the business is of strategic value to the Acquirer, they may pay handsomely.
 If there are multiple acquirers involved, a bidding war can help in maximising the price.
Cons:
 When the system and corporate cultures clash in a merged organization, acquisitions can
get messy.

 Acquisitions might have Non- compete Agreements.
5. The IPO
Initial Public Offerings is the procedure of selling shares of stock of a private company to Public.
This is the most lucrative strategy if properly executed.(Kumar, Lahiri and Dogan, 2018)
Pros:
 The stock price will become of a huge worth.
 Good publicity.
Cons:
 Harsh accounting and financial from the very beginning like entrepreneurs.
 Few Corporations will need a reorganization before going public.
 High Transaction costs.
My baker should adopt the succession strategy of Mergers and Acquisition. This strategy can
help the business to exit without facing monetary issues. The company is likely to be highly
valued because the buyer has an immediate need for the business. Multiple buyers may bed
against each other and this may lead to an increased value for MY Baker. There is also a scope
for negotiation and this may include things like keeping the name of the business or a higher
price. (Chang, 2016) My Baker has to represent itself as a successful and potential business in
order to attract investors but planning for different contingencies during early stages of exiting
plan is always necessary.
CONCLUSION
From the above report it can be concluded that for expansion of the company MY Baker,
various points have to be analysed and evaluated. For starters, The research of internal and
external environment has to be conducted to Pestle analysis and Porter's Generic strategies which
has given insights on how to move forward with the objective. Ansoff's growth matrix has
suggested suitable options for business growth. For funding options, the most suitable turned out
to be Angel investing and Bank loan. A business plan for My Bakers is designed for referring to

elements like company summary, company objectives, description of products, use of market
segmentation, and key recommendations for the business. A critical evaluation of various exit or
succession strategies was done with Mergers being the most suitable option in case of My Baker.
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