Planning For Growth

This report examines the growth opportunities for Nisa, a retail company in the UK. It includes a PESTLE analysis, an evaluation of growth opportunities using Ansoff's model, a discussion of funding sources, a business plan for introducing organic juices, and an overview of succession and exit options for small businesses. The report provides valuable insights for small businesses seeking to expand and thrive in a competitive market.

Planning For Growth

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
P1 Key considerations to evaluate growth opportunities in retail sector...............................1
P2 Evaluation of growth opportunities...................................................................................2
P3 Sources of funding available to businesses.......................................................................4
P4. Business Plan....................................................................................................................5
P5 Succession or exit options for small businesses................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Retail sector is considered to be an important industry of an economy as it provides
citizens with simple access to groceries, foods and daily utilities. It is affected by some factors in
external environment which affect their functioning to a great level. These factors can facilitate
in flourishing in small businesses with information about environment before setting up their
business. Report has been conducted in context of Nisa which is a retail company with reference
to which study of growth opportunities for small business enterprises will be conducted. Also,
their types of funding, business plan to conduct day to day activities and succession or exit
options available to small trades will be discussed. Further, brief PESTLE analysis is done on
retail sector of the economy for evaluating its growth prospect with the help of Ansoff's Model.
MAIN BODY
P1 Key considerations to evaluate growth opportunities in retail sector
To find out growth opportunities analysis of external factors is to be done, so following is
the PESTLE analysis of retail sector in economy:
Political factors: These factors mainly affect the types of products that a retail store can
sell as well as conditions of operating those stores (Aubrey and Judge, 2012). Every country has
different laws to accept different kinds of products in stores, so it is necessary to learn about
those products, which are accepted under business law.
Economic factors: Economic growth of a country may affect the retail stores, such as
GDP rise in country's economy encourages high number of customers for buying products from
those retail stores. This also attracts investors to the retail sectors because of potential profits.
Social factors: Effect of these factors is mainly because of customers, as consumers in
today's generation prefer to do shopping in bulk. This factor has replaced the retail sector in
several branches and chain stores, to stock in several types of commodities under one roof in
place of one single commodity. Retailers had to carry out research process to find out taste and
preference of consumers in order to facilitate them.
Technological factors: In this modern era of technologies, retail stores should provide
technological services in their systems. This can be updating of machines to the latest
technologies available or by providing Wi-Fi services to their customers.
1

Environmental factors: Location of retail store in an area affects the number of
customers. An easy accessibility is preferred by everyone with suitable climactic condition that
can support transportation.
Legal factors: Any retail store must have to meet legal or legislative conditions before
setting up of new store in retail sector. This includes taxation laws as well as laws to govern
relationship of suppliers and distributors of variety of products to the retailer (Brinckmann,
Grichnik and Kapsa, 2010).
Porter's Generic Strategies describes how a retail sector company get competitive
advantage in its chosen market scope across world. This can be explained briefly by following
points:
Cost Leadership: This strategy involves the company's winning market share by getting
attention of cost-conscious or price-sensible consumers. This target is achieved by implementing
the lowest prices of the products in retail industry (Lusch and Vargo, 2014). It provides
competitive advantage in market as customers are price sensitive, which means that want to
spend less money and buy quality products.
Differentiation strategy: Where the market segment is not price sensitive, it is
competitive in nature. This strategy is suitable to target consumer segment and attract them with
differentiated range of products than competitors. It facilitates in establishing a different image in
the mind sets of customers and becomes their first choice among available rivals. It leads to
serve break-even point of a company in a market.
Focus strategies: This strategy is suitable for small companies like retail sector or those
who want to avoid their competition with bigger companies. In this, company focuses on few
targets in the market with specialised needs (McDonald and Wilson, 2016). In this, segmentation
is done in order to select a target market and products are made in accordance to their choices
and demands.
Above is the PESTLE analysis to analyse the external factors of the business environment
and further stated Porter's model which represents the strategies from which a small company
can grow and face market competition (Fox and Sethuraman, 2010). This information is
presented on the basis of retail sector in context of Nisa a small company which deals in retail
products.
2

P2 Evaluation of growth opportunities
Growth opportunities for Nisa can be explained through Ansoff's Growth Vector matrix.
Ansoff Matrix is a strategic tool of planning that provides a blueprint to retail store holders or
small businesses. There are four options in this tool which are Market Penetration, Market
Development, Product Development and Diversification. Only three are considered in terms of
small businesses i.e. Diversification is not considered in a tool for small business holders.
Market penetration: In this strategy, Ansoff suggested small business holders to
promote their existing products into current markets of the economy. In easy words, this tool
tries to increase market share of existing products in present market scenario. According to this
tool, Nisa should increase market share of its existing products in their retail stores in current
markets in order to meet competition with competitors in the market. This will result in growth
of its business in local markets (Kalamova, Kaminker and Johnstone, 2011).
With the help of this strategy, company can either develop more effective marketing
plans and strategies and promotion schemes or by lowering down prices of products, take over
on any rival in the same market, etc. These strategies and plans will help in attracting maximum
number of customers towards the existing products if Nisa and provide it opportunity to grow in
the competitive market. Company can leverage existing resources and capabilities in the existing
marketplace for creating opportunities to raise market share, if challengers reach capacity limits.
Market Development: In this type of strategies, firm tries to enter into new markets for
Diversification and growth of business with existing range of products. This can be achieved by
investing in different consumer segments, buyers of good in an industry which was earlier sold to
households only, entering into foreign on countries market (Hughes, 2017). Nisa can use this
strategy in order to grow their business in terms of diversification and expansion of stores. It can
be implemented on retail stores only when company uses a unique product technology, benefits
scale of economies if output is increased, it can maximize number of buyers that can make huge
profit. New market will give better and new opportunities for business to develop with increasing
competition. Company can enter into international markets and merge itself with other leading
companies to set their base of launching new products into these markets. This can help in
growth of company across the world and to build itself as big company rather than being a small
one (Aubrey and Judge, 2012).
3

By adopting this strategy, the Nisa can enter into new market. it would help the company
in targeting new audience towards the business. In this regard, if corer competencies of company
related to products particularly, so that market development strategy is good strategy for the firm
in attracting new customers towards it. Through which, it would be able to grab the opportunity
of improving the profitability and sales of itself.
Product Development: This strategy guides a firm to develop and make new products
for consumers in the existing markets to diversify its range of products. Growth prospectus
increases with such type of strategies. To introduce new products in the market, Nisa or any
other retail sector small business need to carry out some research and development schemes of
additional products, permission to produce someone else's product, etc. By introducing new
products to market, growth rate can easily be increased by any small business in retail sector.
New products as well as advanced technologies should be brought into the market in order to
compete against competitors (Serrasqueiro, Maçãs Nunes and Leitão, 2011). Company should
develop new products with the use of latest technologies for efficient and effective production.
In this regard, by launching new products in the existing market, if strength of company
is related to their specific consumers instead of particular product itself. Thus, Nisa would be
able to improve its ability to attract new customers and grab the opportunity of growth in the
market for the purpose of improving profitability and sustainability of the business.
In this regard, Nisa can focus on product development strategy develop new products in
existing marketplace to attract customers towards the products. Through which, they can grab
opportunities for growth of business in retail industry. For that, they can update available
technologies to the latest one for marketing of new products. They can open their new stores in
any other country or market segment in order to expand their business.
P3 Sources of funding available to businesses
Often, it is very difficult for any business to arrange sources of finance. There are two
types of funding that a small business holder can take help from. Internal sources of finance are
arranged within the organisation and external are those which are provided by any outsider.
Internal sources: The term itself denotes that the funding sources are arranged within
the organisation. Following are the types of internal sources:
4

Retained Earnings: These are end product of a running business that is why they are
called as the internal source of finance. Left over profits are termed as retained earnings. These
can be calculated by applying simple formula i.e. Retained earnings=Net profits-Dividend/
drawings. Merits of retained earnings are; nobody can ask for their payment as they are long-
term finance; Secondly, there is no problem of dilution of control and ownership of business as
there are no equity share that are to be issued; Thirdly, no fixed obligations of interest; Fourth, it
is cost effective. Demerits of internal sourcing are; on a broader perspective there are no
disadvantages of retained earnings (Shaw, 2016). As they are generated internally and not free
for company because they are the funds which belongs to shareholders and cost of these is equal
to cost of equity.
Sale of assets: Whenever a business sell its assets and the gained cash is used in the
funding of capital needs of business, it is termed as internal source of finance. Merits of these
type of financing are; firstly, it can be a short term or long term financing depend upon the type
of assets that are sold. Secondly, it is a good concept of keeping an eye on assets register and to
find out assets that are not in use now. Demerits of this type of internal financing can be
concluded as; when the assets are sold before their useful life, there is a loss of capital due to
selling of asset at scrap value.
Reduction or controlling of working capital: This can be achieved either by speeding up
the process of account receivables or by exceeding the cycle of account payables. Merits are;
savings on cost of interest, management of working capital gets efficient, bank charges can be
saved. Demerits are; Risk of bankruptcy increases by reducing working capital to a very low
level.
External Sources: It means arrangement of capital from outside the business. Small
businesses generally need short term finance to conduct their day to day activities smoothly
because long term finances are available to only big companies who can issues their share and
debenture in market (Storey and Greene, 2010). Following are some short term finances that can
be used by retail sector or Nisa:
Bank overdraft: Small business need finance for their day to day needs which arises due
to delay in their collection and payments. To solve that problem any business can opt for bank
overdraft as a short term finance.
5

Trade Credit: It is a type of credit given by creditors or stock suppliers to business. Time
Period depends upon the credit relations between business and suppliers.
Factoring in debt: It is method in which a business sells its account receivables or
debtors on a discount. The buyer of these debts collects money from debtors of business and
charge some nominal amount for rendering this service.
Merits/ demerits of external financing: Merits to this are; there is an opportunity for
businesses to increase their working capital, flexibility in use of funds and demerits can be
shortlisted as; such loans carries risk and uncertainty as well as cost of interests, most loans have
limited credit limits, etc.
The above mention types of funding methods can be used by Nisa in their retail sector
small business, to meet daily requirements of finance (Storey 2017).
P4. Business Plan
Overview of Business Plan
Nisa is a retail company which is regarded to be wholesaler of brand as well as groceries
that currently operates in UK. It is planning to introduce organic fresh juice which contains aloe
vera as an important ingredient.
Aim: To introduce healthy organic juices in market.
Objectives
 To increase he sales of product by 5 percent within 4 months.
 To formulate effective strategies for promotion. To design efficient distributive channel for facilitating sales.
Marketing Strategies
For promotion, company will promote through advertisements on televisions and radio.
Apart from that, social media techniques will be used for promoting product on social media
platforms. The pricing strategies which would be used for this will be penetrative strategy as it
would lead to target youth segment who are health conscious and buys those organic products
which are affordable (Tan and Waheed, 2011).
Investment Securing
Funding is considered to be an important aspect for introducing any new products as it
requires financial support that is raised through various internal or external sources. The funds
6

will be raised through banks in the form of loans. It is opted because the interest rate provide is
very low.
Competitors Analysis
There are various competitors of Nisa such as Sainsbury, Marks and Spencer that are
regarded as a retail firms who have a strong base of customers and high shares in market
(Williams and Shaw, 2013). They follow penetrating as well as skimming pricing strategies that
leads to target consumers of every section.
Financial Plan
Particulars Year 1 Year 2 Year 3
Sales Revenue 95000 96000 97000
Opening cash balance 10000 24500 38395
Total cash accessible 105000 120500 135395
Expenditures
Cash Spent on
operations 5000 6000 6500
Advertising expenses 7000 6400 6500
Salaries and Wages 5000 6005 6507
Office supplies 3000 3100 3000
Legal expense 5000 4600 4600
Charges by bank 1000 1000 1200
Miscellaneous
expenses 3000 3000 3210
7

Withdrawals by firm 6500 6000 6500
Equipment bought 45000 46000 40550
Total payments 80500 82105
Ending cash balance 24500 38395 56828
P5 Succession or exit options for small businesses
Business exit planning is a series of financial and logistical planning of who will take
over business after the death, retirement, or disability to present owner of a business. This plan
usually includes agreement of buying and selling of property secured with a life insurance policy
(Zacharakis, Spinelli and Timmons, 2011). It is important to make a succession plan to clear the
views of public and members that who will take over the business, preventing any type of
disputes between two or more potential parties. There are 5 common ways of transferring
ownership of businesses.
1. Selling business to co-owner: If a business is founded in partnership,
consideration of co-owner as a potential successor is very obvious. As most of the
partnership deeds are created on an agreement that, in case of any untimely death
of the partner, the remaining owner would agree to buy their firm. An agreement
of buying and selling of business reduces the burden of any unexpected transition
for their family members, and business simultaneously, as well as it ensures that
the fair compensation is given to them.
2. Passing the business to an Heir: This is one of the most popular options
available to business holders having their children and family members working
in the business. Then the question arises that who will take over the business, if
business holder have just one family member than it is quite easy to take decision
of succession (Succession & Exit Planning for Business Owners, 2018). But, if
there are more than one, then owner of the organization will need to provide
proper details of and instructions on who will take over the business and how
other heirs will be compensated.
8

3. Selling business to key employee of the firm: When business holder don't have
a co-owner or a family member working in the organization, then the business can
be sold to a key employee of the firm. Employee should be chosen on the basis of
his experience, business knowledge, and respect by other staffs. To maintain
quality of the business and business products after the succession, a key employee
is more reliable than anyone outside of business. It also includes a buy-sell
agreement in which employee agrees to purchase business.
4. Selling business to any outside party: When there is no such successor left to
take over on business then it is so obvious to sell business to an outside party. To
build willingness of business on the mind of any party is little complicated,
depending upon the type of business enterprise. As our concern is about retail
sector, it would be easy to sell their business to any outside party. As there will be
no need for re-market of product, rebrand. So solution to this is that, preparations
should be done in advance for selling business.
5. Selling share back to the company: The final option available to any business
with multiple owners. Stock redemption plan is a process where business owner
purchases life insurance of each of the co-owners. So when owner dies, the
company uses life insurance, proceeds to buy the business from the deceased
owner. It is not common in context of small business.
Nisa retail store can use any of the suitable business succession or exit plan for future
planning of business. Some plans that are useful to Nisa are; selling business to outside party,
passing to heir, selling business to key employee of the firm (Succession Planning vs. Exit
Planning, 2018.). Anyone of these business can be used by Nisa or any retail sector small
business in order to execute succession or exit plans.
CONCLUSION
The concluded report is a complete analysis of functioning of Nisa as a retail sector and a
small business enterprise in UK which deals in grocery products. Moreover, PESTLE analysis is
also done to examine and evaluate external factors of the business for smooth growth of the
company. There is a brief information of internal and external methods of funding in a small
business and a business plan by which Nisa can enable growth and expansion of its business in
9

retail sector. It is concluded that Nisa can use Ansoff's model of growth strategies except
diversification, to grow their business in this competitive world. Exit or success option in small
business of retail sectors also mentioned briefly in the report. Nisa can use any of the mentioned
succession plan for its business, except plan of selling share back to company.
10

REFERENCES
Book and Journal
Aubrey, C. and Judge, D., 2012. Re-imagine retail: Why store innovation is key to a brand's
growth in the ‘new normal’, digitally-connected and transparent world. Journal of brand
strategy, 1(1), pp.31-39.
Brinckmann, J., Grichnik, D. and Kapsa, D., 2010. Should entrepreneurs plan or just storm the
castle? A meta-analysis on contextual factors impacting the business planning–
performance relationship in small firms. Journal of business Venturing, 25(1), pp.24-40.
Fox, E. J. and Sethuraman, R., 2010. Retail competition. In Retailing in the 21st Century (pp.
239-254). Springer, Berlin, Heidelberg.
Hughes, A. M., 2017. The 24 Essential Database Marketing Techniques. Database Marketing
Institute.
Kalamova, M., Kaminker, C. and Johnstone, N., 2011. Sources of finance, investment policies
and plant entry in the renewable energy sector.
Lusch, R. F. and Vargo, S. L., 2014. The service-dominant logic of marketing: Dialog, debate,
and directions. Routledge.
McDonald, M. and Wilson, H., 2016. Marketing Plans: How to prepare them, how to profit from
them. John Wiley & Sons.
Serrasqueiro, Z., Maçãs Nunes, P. and Leitão, J., 2011. Sources of finance for R&D investment:
Empirical evidence from Portuguese SMEs using dynamic estimators. Innovation, 13(2),
pp.187-206.
Shaw, S., 2016. Airline marketing and management. Routledge.
Storey, D. J. and Greene, F. J., 2010. Small business and entrepreneurship. Financial Times
Prentice Hall.
Storey, D., 2017. Six steps to heaven: Evaluating the impact of public policies to support small
businesses in developed economies. The Blackwell handbook of entrepreneurship. pp.176-
193.
11

Tan, T. H. and Waheed, A., 2011. Herzberg's motivation-hygiene theory and job satisfaction in
the Malaysian retail sector: The mediating effect of love of money.
Williams, A. M. and Shaw, G., 2013. From lifestyle consumption to lifestyle production:
Changing patterns of tourism entrepreneurship. In Small firms in tourism (pp. 109-124).
Routledge.
Zacharakis, A., Spinelli, S. and Timmons, J. A., 2011. Business plans that work: A guide for
small business. New York, NY: McGraw-Hill.
Online
Succession & Exit Planning for Business Owners. 2018. [Online]. Available
Through<https://www.caycon.com/exit-planning>
Succession Planning vs. Exit Planning. 2018. [Online]. Available
Through<https://forecastadvisors.com/exit-planning/succession-planning-vs-exit-
planning/>
12

13

14