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

This report discusses the key considerations for SMEs when evaluating growth opportunities, various funding methods, and how to develop a business plan for scaling up a business. The report includes a case study of Cafe Pod, a cafe and bakery product or services provider headquartered in the UK. It also covers Porter's Generic Strategies, Ansoff Matrix, and different funding methods such as bank loans, angel investors, and crowdfunding.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
LO1 Analyse the key considerations SMEs should consider when evaluating growth
opportunities................................................................................................................................3
LO2 Assess the various methods through which organizations access funding and when to use
different types of funding. ..........................................................................................................6
LO3 Develop a business plan (including financials) and communicate how you intend scaling
up a business...............................................................................................................................9
LO4 Assess the various ways a small business owner can exit the business and the
implications of each option.......................................................................................................13
CONCLUSION .............................................................................................................................14

INTRODUCTION
In today's world, it is very crucial for an organisation to make a plan in their company
which will help them to operate their business activities effectively and efficiently. Planning is
very important for an organisation as it will assist the clear information to employees of the
company regarding their specific work. It is very important for the mangers of the company to
examine the threats and opportunities occurs in the business. Due to this they can make a
appropriate strategy which can help them to overcome that threats and get the best from the
opportunities. Furthermore, the chosen organization in this report is CAFEPOD which is a cafe
and bakery product or services provider headquartered in United kingdom. It is a subsidiary of
big cup little ltd and it was founded the year 2011. The management of this company uses special
quality of coffee beans and provide various types of coffees which helps them to build a strong
market image in the mind of their customers. Later on this project report will include evaluation
which can be done by an organisation in order to examine their growth opportunities (Morison,
2020).
MAIN BODY
LO1 Analyse the key considerations SMEs should consider when evaluating growth
opportunities
Competitive advantage
When a company maximises profits in comparison to the average profit made by another
company in the same industry, it causes competition in the market, and the company that gains
the edge also has a competitive advantage.-
 When a company can offer the same product or service as its competitors at a lower price,
they obtain a cost advantage in their market.
 When the product or service's delivery is good as compare to the competitors, they n it
will help an organisation to gain a differentiation advantage.
Furthermore, CAFEPOD is attempting to make the most effective and efficient use of the
resources and capabilities which are available in their organisation. They can obtain a specific
competitive advantage as a result of this, which will automatically change their company's brand
image into a positive one and increase the considered worth of their product or services in the
minds of their customers. In comparison to other bakeries in their area, the management of

CAFEPOD currently has the ability and capability to deliver high-value products and services to
their target customer (Baschat, 2018).
Porters Generic Strategies
Porter generic is systematic framework in which four marketing strategies are involved. It
also assists CAFEPOD management in determining whether their existing position in their
market field is above or below average. CAFEPOD is a highly specialised bakery or cafeteria
focused on offering effective and efficient baking services. As a result, Porter generic strategies
for CAFEPOD have been established, which can assist companies in efficiently targeting the
desired market and gaining competitive sustainability. Below the porter's generic has been
discussed in relation to CAFEPOD.:-
 Cost Leadership: This technique enables CAFEPOD's management to target markets
with high consumer demand and aim to produce products or services at a low cost. As a
result, it focuses on lowering the cost of CAFEPOD products and services. The use of
this strategy results in CAFEPOD exceeding its competitors in the market.
 Differentiation: This method allows an organisation to target a market with strong
customer demand and give them items or services with different characteristics, i.e.
products or services that promote the products due to their superior quality. CAFEPOD
must conduct appropriate market research in order to analyse current trends and situations
in the environment, innovation, and the ability to maintain and supply high quality
products or services when implementing this approach. CAFEPOD must offer such
unique products or services to the effective market which can help to maintain the
position in the market.
 Focus: This method is further divided into two parts: cost and distinction. The
approaches focus on gaining an advantage by lowering costs, whereas the former
differentiates the product in the segment. This last strategy is what builds CAFEPOD's
reputation and loyalty. CAFEPOD must therefore focus on the competency level before
adapting the method

GROWTH OPTIONS
Ansoff Matrix
Ansoff matrix is a type of systematic framework or strategy stage that assists a company
in developing an effective planning process in order to establish a strong market position and
increase market share. This approach can assist them in examining and evaluating the best
strategy that an organisation should use in their organisation. It can help the company to capture
new market share by incorporating several theories contained in this approach. Ansoff matrix is
discussed below in the case of Cafe pod.:-
Market Penetration
This strategy states that, an organization has aim or target to enhance the market share by
increasing the sale of existing product or services in the market where they are dealing in the
present time. In case of CAFEPOD, the organisation take the help of social media platforms to
to enhance its existing services and increase by providing more information and creating
awareness in the mind of their customers. CAFEPOD will be able to choose the direct sales
policy and even create the mobile application for customers which allows them to make a
purchase of product in a very easy way. Using catalogues will help attract consumers to services.
Therefore, this strategy is less risky as compare to other strategies of Ansoff matrix (Kroen,
2020).
Product Development
According to this strategy, the commercial enterprise is attempting to deliver fresh and
unique products in their existing market. It is more risky than the previous strategy because if the
new items offered by the company are not well appreciated by clients, the company will suffer a
significant revenue loss. CAFEPOD may provide features such as segmentation charts to keep
the distance during a pandemic, which will be extremely useful during social distancing
restrictions. CAFEPOD's market share will expand due to modern experimentation with baby
carrier trends in their cafeteria. Furthermore, the management of this company can provide home
delivery services to their consumers, which will help them attract more people to their business.
Zero contact delivery is an important service that they can use to keep a strong position in the
minds of their clients.
Market Development
The market development approach focuses on expanding existing product lines into new

markets. This puts the company's stability in new market areas at risk. CAFEPOD supplies meals
to the apartments as part of this plan since it does not want to limit its bakery services to just
physical purchase clients. Furthermore, CAFEPOD's management used market segmentation to
target different demographics. Customers have also been attracted by membership programmes
and promotions. The corporation uses its existing products or services to capture a new market
base under this Ansoff Matrix strategy. This has a higher level of risk since a firm must develop a
new strategy that includes the appropriate marketing and manufacturing procedures to fulfil the
needs and wants of the new market with their products and services (Zafar and Akhtar, 2020).
Diversification
This strategy focuses on expanding into new markets by introducing new items. When an
organization enters a market it is inexperienced with, due to this the risk associated with this
strategy is higher . CAFEPOD can also expand its bakery offerings by opening a cooking school
or collaborating with nearby restaurants. As a result, CAFEPOD's structure must be strong in
order for its new products to succeed in the new market.
LO2 Assess the various methods through which organizations access funding and when to use
different types of funding.
Funds are essential to start a company, and a shortage of funds might create challenges.
As a result, several strategies for raising money for the organisation might be adopted. There are
two ways to get money:-
 Equity Financing: This money is raised by investors who purchase stock in the
company.
 Debt Financing: Bank loan and repaying the amount with the interest is one of most
used method of getting monetary funds.
Some common sources of financing business are as follows:-
Bank loans and overdrafts
It is the most popular method of commercial financing. The entrepreneur frequently
borrows money from a bank for a set period of time, with the knowledge that they have to return
the amount with the interest on a set period of time.. The entrepreneur is also required to keep
security for the bank loan. Another option is to use an overdraft service to withdraw money from
an account that is short of cash. In comparison to taking loans from other entity, the bank loan

has a low interest rate.
Benefits
 It assists in the development and maintenance of a good credit rating, which attracts
investors.
 Fixed-rate loans make it easier for a firm to raise funds, and they are usually tax-
deductible.
 The entrepreneur is under no obligation after the bank loan is repaid..
Drawbacks
 The interest is usually high, and the capital raised is sometimes insufficient for the
company.
 One of the primary disadvantages is that acquiring authorized loans is the most
challenging task unless the business records are small and valuable collateral is provided.
The paperwork and procedures for obtaining bank loans are too lengthy.
 If the employer fails to pay the amount due, including interest, personal property is
seized.
Angel investors:
Angel investors are wealthy individuals who focus on financing small and start-up
businesses in exchange for a share of the company. These angel investors have a business net
worth and the patience to gain profits over a longer period of time. It is critical for businesses to
obtain long-term funding. These people are retired executives with a wide range of experience.
All of these experiences can benefit a firm since angel investors participate in the management of
a company by making suggestions for improvement. These individuals not only contribute funds
to businesses, but they also provide crucial networks and relationships that help organisations to
attain future growth (Colenutt, 2020).
Benefits
 Angel investors provide businesses with market knowledge, which is critical for them to
compete. They also offer advice to businesses on how to use smart business strategies to
gain a competitive advantage.
 Angel investors provide businesses with valuable contacts that enable them to function
more effectively in the market and make their jobs easier. Accountants, investment

bankers, lawyers, and other experts can be among these contacts. It also connects
businesses to other networks, that helps them to expand their operations.
Drawbacks
 One of the disadvantages of getting funding from angel investors is that an individual
will lose control over the company. Angel investors receive equity in exchange for a
share in the company that causes them problems. As a result, these investors are
becoming shareholders in the company's management.
 Angel investors also demand a return on their investment, which has a significant impact
on the firm's profitability because businesses have to split profits with them. It does not
give enough funds for the business owner.
Crowd funding:
Crowd funding is a type of financing for companies that involves a large number of
people contributing a small amount of money. It is raising revenue for the business using social
media platforms and many other ways in which an individual is capable to attract with the
public. It is a big network of people with the aim of raising capital for a business that includes
both investors and entrepreneurs on the same platform. Businesses can increase their chain of
investors, including owners, investors, relatives, and others, by using this source of funding.
Benefits:
 Businesses that raise funds through crowd funding may secure marketing and publicity.
Businesses must promote their products and services to the large number of people who
use that platform. It is critical in order to raise product awareness and, as a result, it will
automatically increase their sales.
 It is a source of funds that allows business owner to raise money quickly. Because of this
source, organizations can easily raise large sums of money in a short period of time,
allowing them to take advantage of commercial opportunities. It also gives businesses the
chance to be first in line for that opportunity.
Drawbacks

• Using crowd funding to raise funds for a business has a negative impact on the company's
image. It also creates a negative image of the organisation in the minds of customers,
breaking their trust.
• Because it does not demand return of investment, investors choose to invest in business.
Based on the above mentioned debate, it is suggested that Café Pod adopt angel investors in
order to raise funds for their firm. These investors provide money to businesses on favourable
terms. They also contribute their business experience, talents, and information. They also provide
a network and business contacts to help them with future opportunities (.Mazzarol and Reboud,
2020).
LO3 Develop a business plan (including financials) and communicate how you intend scaling up
a business
The marketing plan helps in the formulation of policies and strategies for effective
marketing inside the company. The business plan also helps in resource allocation and directs the
corporation toward its objectives. Café pod provides catering services and has expanded their
services which includes lunches to the nearby hostels.. Cafe-pod has established a strong
foundation with its services and wants to expand their business. Similarly, the administration of
Cafe-pod has devised a strategy for achieving its objectives. The following are some ways for
increasing sales and revenue which can be adopted by the management of Cafepod: :-
 Management should correctly target the most effective audience present in their region.
 They should deliver a differentiated product in comparison to other competitors in their
market field.
Mission
Cafepod's major goal goal is to provide high-quality, hygienic products and services,
which will help them establish a strong brand image in the minds of their clients.
Vision
Cafe-pod is is trying to collaborating with hostels to offer lunch specials, with the goal of
becoming the best-selected catering and food service provider with the highest quality standards,
through continuous improvement and effective use of current resources and capacities, while
praising commitments made to customers and shareholders.
Executive summary
Cafe-pod is thinking about forming a partnership with hostels to provide lunch meals.

However, the management intends to extend its services while keeping quality in mind and
shareholders' interests in mind (Xiao and Xie, 2021).
Marketing objectives
The company's principal goal is already established in the mission and vision statements.
Thus, the Cafepod's goals for new services are as follows:-
 The company's goal is to grow slowly and improve with its resources and capabilities.
 Attract clients in order to establish long-term relationships and increase the percentage of
sales by lowering expenses.
Financial objectives
Financial objectives must be met in order for the company's budgets to be maintained. These are
as follows:
• The primary goal is to maximise revenues by utilising resources efficiently.
• Achieve an annual growth rate of 10% or more over the length of an eight-year period.
Reduce the company's variable operating costs by decreasing the use of unnecessary utilities. As
these are costs that depend on the monetary fund’s present in the company.

Strategic objectives for scaling up a business
Strategic plans will enable the organisation to understand its market position and
establish policy to tackle challenges in a changing environment. The strategic framework enables
the market plan to be sustainable in the face of ever-changing situations (Hackworth, 2018).
Product Development
During a pandemic, the café pod management can provide services such as separation
tables that keep people apart, which will come in handy during social distancing restrictions.
Furthermore, Cafepod's try to offer such kind of products and services, which meets modern
client expectations, due to this it is very easy for them to achieve the organisational goals. New

services may be added by management, such as online dinner reservations, snack availability,
and long desserts produced with high-quality ingredients.
LO4 Assess the various ways a small business owner can exit the business and the implications
of each option
Café Pod's firm has had a variety of losses, and in order to overcome them, they must
choose an exit or succession strategy. This company should implement an exit strategy that
would enable them to recover from their losses. The following are some of the methods utilised
by organizations to exit their operations:
Merger and acquisition: It is a method of exiting a firm in which a company sells its assets to
another company. To make more money, another organisation can expand its operations to the
foreign market.
 Advantage: The benefit of considering this manner of exiting business is that it gives
Café Pod complete discretion over the price to be negotiated. It also enables companies to
raise prices in the marketplace.
 Disadvantage: The disadvantage of using this strategy is that it requires more time and
money from the firm. Entrepreneurs must first identify a good business to apply this
strategy.
Winding up: It is a marketing strategy used by businesses to sell their goods and services. In this
case, the company sells all of its assets in order to repay its debt and pay off all creditors and
investors (Moallemi and Malekpour, 2018).
 Advantage: The benefit of utilising this strategy in business is that it allows them to
easily wind up their operations. It also eliminates the requirement to find specific
business buyers because diverse assets can be sold to different buyers.
 Disadvantage: The disadvantage of utilizing this strategy in business is that it prevents a
person from obtaining accurate business values.
Selling in open market: It is another way of exiting a business, and in this case Café pod's
selection of this technique allows them to sell all of their assets in an open market auction.
 Advantage: The advantage of utilizing this strategy in business is that it allows them to
obtain higher company values.

 Disadvantage: The disadvantage of utilising this strategy in the Café pod business is that
it cost the company money to conduct the auction.
Basis of the discussion, it has being concluded that the Café Pod business should use the winding
up technique to quit the business. It is one of the methods by which a company must sell all of its
properties and assets in order to pay off its debt. Based on the money obtained through this
strategy, the business repays its creditors and also needs to pay off various stakeholders, leaving
extra funds for the entrepreneur (Acheampong, 2018).
CONCLUSION
From above mentioned project report, it can be concluded that planning is one of
important component for business as it allows business to plan different activities in business that
helps them to overcome of threat and also to take advantage of opportunities occur in
marketplace. In order to get growth and other opportunities in business, they need to adopt
growth strategies. Business can also adopt Porter’s generic strategies, Ansoff growth matrix and
other models. On basis of these strategies, business can also get competitive advantage in
business which is important. There are also different source funds available in business like bank
loan, angel investors, crowd funding and many more. On basis of use of these sources, business
can also invest on different activities. These sources of funds have its own advantage and
disadvantage for firm. There is also different problem faced by an organisation and in order to
overcome of it, they need to develop a marketing plan. On basis of it, business can redesign its
marketing activities that allow them to get growth and opportunities in marketplace. If business
face continuous loss, then it is important for them to adopt success and exit options. These
options also have its own advantage and disadvantage and should be adopted by firm on basis of
its situation.
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