Business Exit Strategies for Small and Medium-Sized Firms

This assignment provides an in-depth analysis of business exit strategies for small and medium-sized firms. It explores various methods such as liquidation, selling out, and more, highlighting their benefits and drawbacks. The report also discusses the importance of conducting competitive analysis, PESTEL, and Ansoff growth matrix to ensure business growth and success. A business plan is constructed by entrepreneurs to define background, mission, vision, objectives, strengths, opportunities, and financial information to achieve goals and targets.

Planning For Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 ...........................................................................................................................................1
P2 ...........................................................................................................................................5
TASK 2............................................................................................................................................7
P3 ...........................................................................................................................................7
TASK 3............................................................................................................................................9
P4 ...........................................................................................................................................9
TASK 4..........................................................................................................................................11
P5 .........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning plays essential part in small and medium-sized organisation in success and
growth of business functions. For this, entrepreneur need to asses different factors while framing
policies that make different functions according to which their conditions currently working in
competitive market (Valler, Phelps and Wood, 2012). This report is give an emphasis on
HORSEL it is a small scale organisation which give research and evaluation services to other
companies for problem solving and make them function smoothly. Company is applying for
government contract, for which entrepreneur require to have £300,000 of money for bidding
process, but firm has only £20,000 and unexpended amount is to be taken from other online
sources. This report defines different fundamental circumstances and make an emphasis on
Ansoff matrix that is used by business person to evaluate development possibility. There are
Various actual sources which are assess by individual by having sufficient assets for making
appropriate program for business enterprise. Along this, there are different sequence and exit
options are given which are recognised by an entrepreneur for making adequate conclusion for
the development of the business concern.
TASK 1
P1
Businessperson evaluate different components and market conditions to execute activities
and sustain position and reputation in market. For this, it is essential that rival brands are
acknowledged by superior to design system and utilise resources efficiently. Along this, latest
technologies such as IT cloud, artificial intelligence and digital testing adopted by organisation to
implement innovative ideas in system. HORSEL is research consultancy firm which require to
utilise funds properly to achieve growth tactic. It is necessary that appropriate plan is formulated
and followed by entrepreneur to accomplish adequate results and targets timely. Collaboration,
competitive analysis and innovation are various tactics which are assess by manager is explained
below:
Competitive advantages: This aspect defines that businessperson require to utilise
resources properly to conduct the business action impressively. It is primary term in which small
and medium firm to design system to verbalise quality unit and different services in marketplace
in respect to competitors. SME's require to have sufficient resources such as funds, equipments
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and manpower which are used efficiently by top personnel to sustain position of firm in market.
Besides this, management of HORSEL even need to frame USP to provide core competence for
firm (Levy, 2016). Company require to have skilled and competent members which provide
appropriate consultancy services and solutions to other firms to make them operate properly. IT
cloud, artificial intelligence and digital testing are various software which help management to
construct core competencies in respect to rival firms.
Porter's Generic to identify competitive analysis : This framework was formulated by
Professor Michael Porter in 1980 which defines different procedures that are used by
organisation to construct appropriate position in market. It is essential that entrepreneur of
HORSEL uses this model to anticipate advantage and target to formulate policies and make
system function accordingly. These are four tactics which are used by entrepreneur of HORSEL
to consider two components that is cost and differentiation for constructing competitive
advantage is descried below:
(Porter's Generic Competitive Strategies, 2016)
Cost leadership:This process defines small and large firms to be have shortage of
finances that are used comely. It is necessary that appropriate techniques and equipments are
used by companies to provide products and services at reasonable rates. HORSEL conducts
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Illustration 1: Porter's Generic Competitive Strategies

research and provide consultancy services to other firms. For becoming cost leader in their
industry, superior require to examine all sources for formulating cost advantage.
Differentiation leadership: It is another strategy which specifies that companies require
to provide unique products and services to establish appropriate position in market. Management
responsibility is to consider and assess different attributes that are essential for consumers to be
present in items and services for fulfilment of their demands and needs. In HORSEL,
businessperson require to have skilled and competent staff to conduct research and provide
appropriate consultancy and solutions to clients to overcome problems, thereby make system
function effectively.
Focus: This strategy is part of generic matrix which defines that management of small
and medium firms require to make decisions about competitive scope within sector. It is essential
that top personnel chooses a particular segment or more to conduct business accordingly. These
are two focus which are selected by organisation in according to their capabilities are stated
beneath:
Cost focus: It is efficient tactic which specifies that organisation require to construct
competitive advantage in respect to their target segment. HORSEL is small firm which require to
fix appropriate prices for grabbing attention of people. It is necessary that different ranges are set
by to personnel to establish appropriate position and share in market (Beatley, 2014).
Differentiation focus: This is another strategy which defines that management design
products and offer services which are completely different from rival firms. It is essential that
premium prices are set to attract large number of people by providing appropriate quality items.
HORSEL is small firm which have talented staff and use advanced technologies to provide
consultancy and adequate solutions to clients opted out of a niche market.
PESTLE analysis: It is an appropriate technique which is used by businessperson to
linkage of competitive advantage with growth opportunities. This help them to make changes in
system according to situations prevailing in market. It is essential that management assess
competencies and availability of resources to utilise growth opportunities. Entrepreneur of
HORSEL conducts Pestle analysis which is stated beneath:
Political factor: Government formulate policies and provide license to organisation to
make them function legally. Entrepreneur of HORSEL require to register firm and frame
different laws and strategies for authorities. This help company to execute operations effectively
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and sustain its position in market (Barbour and Deakin, 2012). In UK, government and Crown
commercial services launch various schemes and invest money for giving opportunity to SME's
to enlarge business to provide products and services to people.
Economic factor: This tactic comprises different components which changes due to
changes in conditions of market and country. Interest rate, inflation, exchange rate, growth,
employment are different elements which affect on functioning of system. These are different
changes which entrepreneur of HORSEL consider to implement changes in system in according
to availability of funds. In UK, market has inflation and growth which help entrepreneur to
expand business and have good number of clients for enhancing their sales and profit.
Social factor: It defines a process that provide different variety of products and services
to people. It is essential that businessperson of HORSEL to implement appropriate technologies
such as artificial intelligence, IT cloud, digital testing and so on in system to provide research
consultancy services to other companies, thereby overcome their problems and issues. UK has
large number of firms which faces different issues and problems, for which they require to get
support from other companies.
Technological factor: This tactic specifies business firm need to exercise appropriate
instruments and techniques to provide different types of services to consumers. It is necessary
that small and medium-sized organisation utilises resources efficiently. For this, HORSEL need
to use modern technologies and software to provide appropriate facilities and solutions to clients.
IT cloud, artificial intelligence and digital testing are various software which help management
to enlarge business and provide appropriate services to clients.
Environmental factor: It is another aspect which management require to consider while
designing system is affect on climatic conditions. Entrepreneur of HORSEL uses advanced
technologies which help them to provide research and consultancy services to clients. This help
superior to conduct research for other firms and give them appropriate solutions about usage of
natural resources efficiently. Along this, manager even provide suggestions to clients about
benefits of technology to provide quality products and services which are not harmful and
dangerous for health of people.
Legal factor: This tactic defines that government have formulated various act and laws
for protecting rights of employees. It is essential that management of HORSEL provide proper
treatment, working environment, duties and compensation to members to have skilled and
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competent staff in firm (Chapin, 2012). This help company to have skilled and competent
members which retain for longer time. Thus, management is able to expand business and open
new branches to increase customer base and sales volume.
Impact of digital technology: HORSEL is research consultancy firm which require to
have adequate techniques and equipments implemented in system to provide quality services to
clients. In this, digital technology plays essential role and support entrepreneur to have large
market reach and customer base. Along this, it also benefits management to utilise funds
efficiently and sustain its position in market in according to rival firms.
P2
Businessperson evaluate chances of enlarging business to sustain its position in
marketplace. It is primary term that provide variety of products and services for small and
medium enterprises to use the resources properly and attract large number of people to enhance
sales volume. Ansoff growth matrix is model used by entrepreneur of HORSEL to examine
growth opportunities and make changes in system to provide innovative and creative items and
services to clients (Eddleston and et. al., 2013).
Ansoff's growth vector matrix: It had developed in the year 1957 by H. Ignor Ansoff.
This model helps businessperson to construct appropriate strategic marketing plan for
organisation to make it function in according to market conditions. There are four constituents
which are part of this matrix that had stated beneath:
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Illustration 2: Ansoff Model
(Source: Ansoff Matrix, 2015) Market penetration: This is a first element of matrix that specifies an organisation need
to enlarge existing products and services to increase its portfolio to attract large number
of people. HORSEL is research consultancy firm which uses this strategy to target and
grab attention of large number of clients by promoting and advertising information about
their services and simultaneously reducing prices of services offered. Product development: It is another part of matrix which defined that businessperson
require to launch new items and services to target its present market and attain growth.
For this, market research is right method utilized by head personnel of HORSEL to have
close and absolute content close to requirements of people and competitor's offering.
Research and development is team constructed by management to make changes in
system and technologies to such as IT cloud, artificial intelligence and digital testing to
provide consultancy services and solutions to other firms (Grover, Bokalo and Greenway,
2014). Market development: It is stage of matrix that explains that firms need to expand
business and increase market reach. This helps top personnel to target large amount of
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customers that increase the sales profit and gross sales . Businessperson of HORSEL
have option to enlarge business and enter into new market to increase client base. It is a
small firm that utilised effective resource to establish and preserve its place in
marketplace in respect to rival firms.
 Product diversification: This is end part of matrix which specifies the companies need to
provide various assortment of items and work in respect to requirements and primary
demand of the people. In an organisation, businessperson do effective market study to
assess rival firms and need of customers (Keough, 2015). HORSEL is research
consultancy firm which require transformation in technology to provide appropriate
services to other companies. Company can diversify their services by providing
marketing and promotional services to existing clientèle of the business so as to achieve
better results. .
TASK 2
P3
Each organisation whether it is small, medium or large scale enterprises, finance plays
essential part. Businessperson require to have sufficient capital to organise appropriate business
operations for organisation. It is essential that different sources of funding are acknowledged by
them to select best techniques which grant them money at appropriate rate and time period.
Investing decision making: Entrepreneur of HORSEL uses different techniques such as
pay back period and net present value to have accurate information about selecting appropriate
sources of finance. These are two tactics which are used by top personnel are stated beneath:
Net present value: This process is also known as discounted cash flow method. This
technique of capital budgeting which consider time value of money and base for acceptance and
rejection of a proposed project. For computing this, cash inflow and outflow difference is found
which is NPV and deciding element for project (Li, Mobin and Keyser, 2016).
Pay back period: This is another tool in which recovery time of investment is
acknowledged by firms for wither accepting or reject project. Businessperson select project in
according to initial cost and payback period to select best project which are beneficial for
company.
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HORSEL is SME which is entering into government contract for “Research and
evaluation services in relation to problem solving of other enterprises ” and making bid for same.
Entrepreneur require £300,000 of money for bidding process, but firm has only £20,000. Along
with this the overall bid of whole contract is £80000. thus company needs to borrow rest money
from various sources such as:
Sources of finance: These are different tools which are used by businessperson to have
sufficient money for conducting operations effectively. These are different sources of funds
which are used by company is expressed below:
Bank loan: It is cost-effective process utilised by organisation to raise funds by taking
help from business enterprise institution. Bank has adequate money which an individual taken on
lend for definite time period and are in rigid interest charge. There are three forms of loan which
are given below-
short term (2 to 3 years), medium term (3 to 5 years) and long term (above 5 years). Benefits: Bank loan is adequate instrument to organisation in which all entrepreneurs
have to pay the tax that is deductible. This yield them encouragement to get appropriate
benefits from government to arrange funds for execution of activities effectively
(Mitchelmore and Rowley, 2013).
 Drawbacks: Bank loan even had definite demerit that decrease in value of firm, if
management didn't pay interest and money on time. Along this, as certain assets are kept
by organisation for security gets seized. This impacts on image and goodwill of company
in respect to rival firms.
Crowd funding: This is another technique in which people form group and collect money
which can be provided to particular individual or firm. In this, internet serve as medium for
constructing relations and communication between investors for making appropriate judgements
in respect to their money flow and spending. Benefits: This is fast tool which is used by individuals to take support of experts about
improving business ideas. Along this, feedback from borrower is taken to acknowledge
their requirements and use of money.
 Drawbacks: It is not legal process, as it has not required to follow government norms and
regulations. This affect on business functioning which makes it less popular for big
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organisation. Along this, borrower might not have patented business ideas which have
risk of getting stolen by other person (Moseley, 2013).
Angle investors: It is another tool used by firms is to take funds from other company
which is formed to provide money to gain adequate amount of return. This helps entrepreneur to
use this technique to enhance productivity and business activities. Benefits: Investors are talented and skilled staff which have complete knowledge about
business. They provide funds to provide support to other firms to enlarge activities for
their growth purpose.
 Drawbacks: Angle investors didn't follow government norms, thus they have fixed large
interest rate which affect on other business. Along this, they didn't give funds easily and
demands collateral security which is impossible for an entrepreneur.
For this organisation, Bank loan is the effective and appropriate source of funding
because most of the banks and financial institutions provide fund at low interest rate. So this can
be beneficial for the company.
TASK 3
P4
Business plan is written form which is formulated by entrepreneur to specify different
methods for aspect of firm, operation,feasibility, products and services, internal analysis and
financial information. Along this, changes in strategies and technologies are made by superior to
make growth and success with time.
Business plan of HORSEL:
It is written document which defining the nature of the business, the sales and marketing
strategy and the financial background which including a projected profit and loss statement. The
template of business plan include various component like company description, products and
services, Strategies, financial plan and others.
Company Description: HORSEL is small scale firm which conducts research and
consultancy services to different firms. This enterprise have skilled and competent people which
conduct business operations effectively. Along this, advanced technologies are implemented in
system to provide appropriate solutions and support to clients to help them overcome problems
properly. Company is engaged in bidding in research and evaluation services in relation to
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problem solving of other enterprises. For this, contract entrepreneur have only £20,000 for
investment. But, £300,000 is required for bid which require to be borrowed from other sources.
Mission and Vision: HORSEL mission is to provide appropriate solutions and support to
other firms in respect to different issues and problems which are faced to make system function
smoothly and systematic manner. (Todes, 2012).
Strategic objectives: In HORSEL, entrepreneur frame goals to design system and
conduct business operations effectively. It is essential that objectives is constituted in respect to
SMART tactic which defines that they should be specific, measurable, achievable, realistic and
time bound. This helps top personnel to provide appropriate facilities and services to clients to
accomplish targets within defined time.
Objectives:
 To implement advances technologies and software that is IT cloud, artificial intelligence
and digital testing to provide appropriate solutions to other firms so that an increase in
10% market share could be availed.
 To raise market share and section by taking funds or loan from different banks and
fulfilling contracts in upcoming one year.
Products and services: HORSEL provides research and consultancy services to different
firms to provide appropriate solutions and overcome problems which are faced in respect to
market conditions.
Internal analysis: It is an appropriate technique which help entrepreneur of HORSEL to
have adequate information about market conditions and system abilities. Strength helps
management to have data about capabilities of company which are used to utilise market
opportunities (Wu, 2015).
Strengths:
 In HORSEL, IT cloud, artificial intelligence, digital testing and various other software to
provide appropriate consultancy services and solutions to clients which are unmatchable
when compared with rivals.
 The skilled and competent workforce along with advanced technologies implemented in
system to provide quality services to clients.
Weaknesses:
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 HORSEL is small firm therefore lacks basic resources required to establish a competent
position in the market.
 Management find it difficult to arrange funds from different sources, as company didn't
have recognition in market.
Opportunities:
 HORSEL has large opportunity in which one is to expand business and enter into new
market segments i.e. Marketing to increase their product portfolio.
 Another opportunity for company is to increase market reach through e-commerce to
increase customer base to enhance sales volume and profitability.
Threats:
 HORSEL research and consultancy firm which have strong and famous rival firms in
same sector which threaten existence of the company. The fluctuation in the economic environment in the form of inflation and recession may
cause harm to this organisation. .
Financial information and strategic objectives for scaling up a business: Entrepreneur
used different funds which are used by both small scale and large scale enterprises . In HORSEL,
bank loan and crowdfunding are techniques which are used by businessperson to arrange funds
for executing business effectively (Ziari and et. al., 2012).
Total forecasted budget
Particular 31/12/15 (£) 31/12/16 (£) 31/12/17 (£)
Implementing
technology cost
15000 - -
Promotional expense 9000 8000 6000
Advertisement
expense
6000 5600 5800
Catalogues 2000 4000 3000
Training charges 6500 8000 8500
Total Cost 38500 25600 23300
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TASK 4
P5
Small business have small origin which organisation used effectively and efficiently . It is
necessary in which businessperson had adequate data for positive and negative results of
expansion.
Ways to provide succession of business: Entrepreneur of HORSEL require to have
complete information about different methods which are used to increase market position and
reputation. These are different tools which help company make growth are stated below:
Use of expertise knowledge: Businessperson take assistance from experts to identify
different techniques to enlarge business and make success. HORSEL is small scale firm which
have good knowledge gives appropriate support and help to entrepreneur in succession activities.
Internet sources: This is another method used by head personnel of HORSEL is use
internet to communicate information to large number of people about services that gain market
share in order to increase sales production and profit maximisation (Valler, Phelps and Wood,
2012). The internet tool along with social media such as Websites, Facebook and Instagram can
be best utilised so that improved market recognition could be availed. The drawback of this
approach is that it lacks ingenuity and reliability which could be availed otherwise.
Various ways to exit business: These are different methods which entrepreneur of
HORSEL uses to depart from industry to get amount back from firm.
Liquidation: This legal term defines that organisation have to pay all assets to establish
appropriate place in the competitive market. This also helps entrepreneur to construct appropriate
reputation and image in mind of customers to enhance their sales volume and profit. Benefits: It is adequate method which is used helps company to get funds from other
sources to sustain its position in market. Drawbacks: This tool have certain demerit which are conflict between members which
have different opinions and thoughts. All management people require to sign and give
their permission which affect on liquidation process.
Selling out of business: It is another tool which is used by small and medium firms is to
purchase a existing firm which have appropriate reputation and goodwill in market. This is
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appropriate tactic which helps entrepreneur to construct appropriate image by capturing a
popular and well known firm which already have position in market. Benefits: This helps small firm to draw ample amount of customers that are easily to
intensify gross sales and profits. Along with it, management will able to charge adequate
money in respect to acquired firm (Levy, 2016).
 Drawbacks: Their are certain demerit in acquisition which is related with influence on
reputation of firm. If acquired company didn't posses adequate image in market than this
also affect on reputation of another which decline in mind of buyers. Along this,
management also faces problem to capture and construct interest of buyers easily. This
impacts on sales volume and revenue of firm.
After analysing all ways of business exit, it can be find out that liquidation is appropriate
way because it helps individuals and business owners to develop effective reputation and image
in the mind of consumers to increase the profit and improve sales.
CONCLUSION
From the above report, it can be comprehended that businessperson of small and
medium-sized firms formulate plan for growth and success of firm. It is essential that top
personnel conducts competitive analysis and PESTEL and Ansoff growth matrix to acknowledge
business growth of firm. Along this, potential sources of funding and succession and exit plan
are anticipated to select best tools which are beneficial for company. Thus, business plan is
constructed by entrepreneur to define background, mission, vision, objectives, strengths,
opportunities and financial information to achieve goals and targets.
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