Planning for Growth: Opportunities, Funding, and Exit Strategies for Small Businesses

This article discusses planning for growth in small businesses, using The Little One coffee shop as an example. It covers key considerations for growth opportunities, Ansoff's growth vector matrix, Porter's generic strategic model, and sources of funding. It also explores exit and succession options for small businesses.

Planning for growth

CONTENTS
INTRODUCTION......................................................................................................................1
PART – 1 (INVESTING IN THE FUTURE)............................................................................1
Key considerations for analysis of the opportunities of growth.............................................1
Opportunities for growth through Ansoff’s growth vector matrix.........................................4
Appraising detailed choices and pathways for growth...........................................................5
Sources of funding obtainable to businesses along with their advantages and disadvantages
................................................................................................................................................5
Choosing suitable source of funding......................................................................................6
A business plan for growth with financial data......................................................................6
PART – 2 (DEVELOPING AN EXIT PLAN)..........................................................................8
Assessment of exit or succession options along with the advantages and disadvantages......8
Comparation as well as opposing different exit options........................................................9
CONCLUSION........................................................................................................................10
REFERENCES.........................................................................................................................11

INTRODUCTION
Talking in regards with planning for growth, it is being referred as the strategic
activity of the business which allows an individual to develop plan as well as monitor the
growth in the context of revenue. Further, it enables the business to distribute limited number
of resources with the sole purpose to have alterations within the firm by digital evolution and
providing differentiated services for their clients. for evolving and nourishing within the
competitive atmosphere, the firm is required to create an effectual by which they can achieve
the success in the marketplace. For understanding the concept of planning for growth, The
Little One coffee shop of London is being taken into consideration. The report will focus on
growth opportunities along with the sources of fundings and will make plan for growth for
the firm. Further, succession and exit options for this small business will also be discussed.
PART – 1 (INVESTING IN THE FUTURE)
Key considerations for analysis of the opportunities of growth
It is not easy for the small and medium business to grab and catch the appropriate
prospects in this competitive market. in this context, it is important on the part of the
management to plan strategies for the business as per their existence as well as maintain the
current position so that advantages can be attained from the market (Burton, 2021). The Little
One coffee shop is a small business which have a smaller number of workers however they
make sure that they have effective approaches along with plan in place for furnishing their
services. For this, they need to take some factors into account and they are being explained in
the subsequent section:
Competitive Advantages
Competitive advantage is being defined as the situation which enables the firm to
offer services or products of same value at lesser prices in a more desired manner. In other
words, it signifies that the organization along with the other coffee shops aims to produce
similar products and services at decreased prices effectively. it is important on the part of the
management to develop plan and strategies so that The Little Coffee shop can achieve an
edge over the other rivalries firms operating in the market. Different framework that should
be taken into account by the coffee shop while planning competitive advantages are as
follows:
 Resources – It is very much important that the coffee shop should examine the quality
of their goods and facilities (Soni, 2020). With this, the firm will be able to have
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better position in the marketplace and can satisfy their customers appropriately.
Further, skilled, efficient and well-informed workers should be present for ensuring
effective functioning.
 Capabilities – The Little One coffee shop operates in a very competitive and complex
industry and thus, it becomes essential on the part of the firm to emphasize on
evolution of the good quality merchandise for having competitiveness in the market.
Further, the coffee shop should also pay attention on their employees, innovative
menu, ambience, easy payments, soothing environment and so forth.
 Core competencies – They are being defined as the USP by which the firm can
augment their number of sales and share in the market (Eddleston, 2019). There are
different core competencies that the coffee shop should emphasize like, affordability,
accessible location, high quality coffee and other products, a community to share in
the coffee drinking experience, variety of choices and many more.
Porter’s generic strategic model
It is being regarded as a crucial tool for identifying the core competencies of the
company. Porter generic model will support The Little One coffee shop in identifying the
factors that can provide than an edge over their rivalries. The case company in the present
project is offering enhanced quality coffee and other products and services to their customers.
The firm desires to achieve more growth and thus, for attaining this growth there are four
important strategies that is cost leadership, differentiation leadership, cost focus and
differentiation focus which can be considered by the firm. These are as follows:
 Cost leadership – Cost leadership strategy will support the coffee shop in having a
unique position in the market by offering services and products at affordable rates. it
is important that The Little One should make use of such methods and techniques for
performing market evaluation so that their needs and demands can be acknowledged
(Soni, 2020). In addition to this, for this it is important they must maintain the quality
and prices should be low for attracting more and more clients.
 Differentiation leadership – This strategy specifies that the products and services
being offered by The Little One cannot be compared to the other competitors within
the market. Since, the coffee shop is providing high quality products and services, this
will help in captivating large pool of clients. Through utilizing this strategy, the coffee
shop will be able to achieve a competitive position in the market.
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 Differentiation focus – In this, the main focus of the company is on offering
differentiated products and services in its niche target market.
 Cost focus – Under the cost focus strategy, the company pays attention on the niche
market and provides goods and facilities at lowest possible prices (Hilmersson and
et.al., 2021).
PESTLE analysis
It is also an important tool for evaluating the macro-environmental analysis of the
coffee shop and will help the firm in linking the competitive advantage with the opportunities
for growth. Explanation is as follows:
Political
The business of the coffee is highly relied
on international trade. Presently, there are
different trade agreements which makes
sure success of the coffee industry. But, the
uncertain trade situations like involving US
and China, UK and Europe might impact
the coffee industry (Betcherman, 2015)
Economic
The income of the consumers is growing
with the growth of the economy of UK and
this will benefit the coffee industry. The
purchasing power of the people is increasing
and thus, they are more likely to consume
coffee
Social
People of UK are becoming more health
conscious and thus, making healthy choices
is trending in the recent years. Another
prominent social-cultural trend is fair trade.
There is a greater demand of fir trade
practices by the consumers, therefore this
factor should be taken into consideration
Technological
Genetic engineering is rising at the fast pace
in the present world of coffee industry.
Consumers are demanding genetically
engineered products. Further, there are
different equipment, machines and coffee
makers are developed these days which
should be used for making coffee
Legal
Coffee falls under the category of food and
drink regulations of UK and there are range
of laws which should be considered as they
impact the overall functioning of the
company.
Environmental
Currently, the world is coming across with
different environmental issues and thus,
more sustainable practices should be used
such as using coffee beans being grown
from sustainable farming, recyclable cups
and plates etc. (Moore, 2014)
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From the evaluation being conducted and market condition, it can be stated that the
cost leadership strategy will be more suitable for the coffee shop. In order to make use of this
strategy, it is crucial for the firm to focus on offering high quality products of coffee and
other products and services to the customers. moreover, The Little One coffee shop is also
required to maintain the prices of the products quite low for having a competitive advantage
in the market.
Opportunities for growth through Ansoff’s growth vector matrix
Ansoff matrix is one of the effective and beneficial models which is being utilized by
the firms at the time of searching for the best growth option or strategy. Further, Ansoff
growth vector matrix is the most utilized tool through which the firm can determine different
prospects to augments their profit margins and sales (Loredana, 2017). Moreover, with this,
The Little One coffee shop will be in a position to determine the current positions of their
potential goods and market. the coffee shop can carry out analysis by this matrix for knowing
their existing position and making strategies accordingly. The illustration of the model is
being done below:
 Market penetration – It is being defined as the strategy in which the firm desires to
grow in the existing market with their current products and services. It signifies that
they wish to augment their existing market scenario. The Little One coffee shop can
do this by augmenting awareness of their coffee products to the clients, increasing
promotion and reducing prices.
 Market development – It is being defined as the strategy in which the firm desires to
grow in the new market with their existing goods and facilities. Market development
strategy is very crucial and mostly utilized as there are high chances of growth
because of the new market. The Little One coffee shop can use this approach if they
desire to enter into new markets.
 Product development – It is being defined as the strategy in which the firm desires to
grow in the present market with new products and services. It simple involves
extension of the variety of products and facilities in their existing marketplace. The
coffee shop can utilize this approach by innovating some of the coffee products like
introducing some new flavour (Pervan, Curak and Pavic Kramaric, 2018).
 Diversification – It is being defined as the strategy in which the firm desires to grow
in entirely new market with entirely different products and services. It is quite risky as
both the products along with the market are new and the firm does not have any prior
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experience of the same. This can be utilized by the coffee shop when they desire to
target new market with new products.
From the analysis, it can be stated that the small coffee shop can make use of product
development strategy where they can offer new products in their prevailing market. They can
provide new variants of coffee such as cinnamon, turmeric, low fat etc.
Appraising detailed choices and pathways for growth
The choice that the firm is expected to take should be subject to different assessment
which are being done by the company. Before using any of the methodology connected with
the growth, it is essential to grasp the differed risk associated with those options. For
instance, the Little One coffee shop is executing their functions and operations very well in
the current market. Besides, with this the firm is having a decent base of steadfast clients
which is one of the best qualities of the association (). Consequently, it tends to be credited
that the firm ought to accentuate towards product development strategy. At the hour of
utilizing this methodology, the coffee shop is likewise expected to focus on socio-cultural
components of UK. Then again, on the off chance if The Little One coffee shop utilizes
diversification approach than it could produce differed sort of risk for the association since
the firm will go into altogether new market with new products. Moreover, for this technique,
it is critical for the company to focus on assessing different elements of plausible business
sectors. Besides, on the off chance that the coffee shop will focus market development
technique than they are expected to emphasize on utilizing productive and valuable pricing
plus advertising methodologies. These systems will uphold the firm in stepping in the new
market effectively.
Sources of funding obtainable to businesses along with their advantages and disadvantages
Different sources of funding available for the small coffee shop are being explained
underneath:
 Bank loans – It is the easiest and famous sources of funding which is utilized by
almost all large- and small-scale companies. in this, the business can avail the funds
from the bank and financial institution for a stipulated time period for a fixe rate of
interest. It needs to be given back in instalments (Bhattacharya and Londhe, 2018).
The advantages of this source include easy accessibility and funds can be returned
back in instalments. However, it sometimes has higher interest rates.
 Crowdfunding – This involves raising the funds from the social networks. It is very
beneficial for the coffee shop as they can attract large pool of people towards their
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coffee shop and can gain good attention. On the other hand, it is riskier because if the
company fails in getting the funds, then the overall value of the firm in the market
will be impacted.
 Government funding – This is the method in which the government provides funding
to small and medium business for growth and expansion because they are adding
value to the economy through creation of employment and contributing in the
economic growth of the country. Property, food, loans and commodity can be availed
by the government. However, it is not easy for the small business to get approvals and
eligibility for the same (Bird, 2019).
Choosing suitable source of funding
At the point when The Little One coffee shop is anticipating to develop their business
than it is pivotal for them to focus on using appropriate funding sources. There is assortment
of techniques for financing present for the firm but picking the best reasonable one is
essential. As, the sales of the organization is very great and is likewise having great picture
on the lookout, it will help in creating a more noteworthy number of benefits without any
problem. Taking into account this, it can be credited that the organization will be in a
situation to reimburse the sum effectively and subsequently, bank loan ought to be chosen for
getting reserves. Advance needs to be taken from banks as they offer funds at lower rate of
revenue. Moreover, crowd financing is additionally the best technique as it gives better
learning experiences to the business (Cruz and Nordqvist, 2017). Accordingly, the small
coffee shop ought to go for these choices.
A business plan for growth with financial data
Executive summary
The business plan is being prepared for The Little One coffee shop of London. The
firm is planning for growth and is adopting the product development strategy wherein they
are planning to offer different new variants of coffee to the clients such as cinnamon,
turmeric, low fat etc. at lower possible price. The plan will encompass the objectives,
marketing strategies, pricing, competition, resources, operational plan and financial budgets
of the firm.
Vision and mission
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The key vision of the coffee shop is to provide new variants of coffee to the customers
at lower prices with maintenance of best quality. Further, the mission of the coffee shop is to
satisfy their customers and achieve success
Objectives and goals
 Increasing the overall sales of the coffee shop by 35% at end of one year (Müller,
Drouin and Sankaran, 2019)
 Introducing five new products in the existing markets in the coming years Increasing the satisfaction and loyalty of the clients by 20% in one year
Stakeholders
Some of the important stakeholders of the coffee shop are owner, employees, chef, waiters,
clients, suppliers, investors, government and financial institution. These internal and external
stakeholders are quite crucial for the firm.
Capital funding
The capital funding required by The Little One coffee shop for developing new
products is £5000. Further, these funds will be obtained by the company through bank loans
and crowd funding (Chapin, 2021).
Operational plan
The coffee shop has decided to adopt cost leadership strategy after evaluating the
market along with its competitiveness. The Little One coffee shop is planning to provide new
products of coffee in their present market and thus, they will need different skilled and
informed workers and effective strategies to achieve this objective.
Resource plan
Different resources will be needed to achieve this plan like equipment and machines
for making new variants of coffee, materials, skilled and knowledgeable employees and so
forth. There will be requirements of intangible resources as well such as market trends, taste
and preferences of the clients and other knowledge of the competitors.
Technology plan
In regards with the technology, it can be said that The Little One coffee shop is also
making plans to offer these new variants of coffee online as well and thus, for this they will
need websites and network system. Further, for the delivery of the products they have
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collaborated with the food delivery companies. for enabling the clients to have contactless
interaction, the messaging platform will also be executed by the coffee shop (Abdullah,
2020).
Risk factors
There are three most crucial risk being involved in the product development and cost
leadership strategy that is financial, market and organizational risk.
Marketing plan
In regards with marketing of the new products the coffee shop will make use of
different advertising strategies such as social media marketing, mass media marketing and
email marketing. Social media platforms such as Facebook, Twitter and Instagram will be
used for promoting the new products (Kotler and Keller, 2015).
Time frame
Activities 1 month 2 months 3 months 4 months 5 months 6 months
Planning phase
Financial sourcing
Making arrangements
for technology and
other resources
Product marketing
Introducing the
product in the market
Financial information (Budget)
List of expenses Amount (£)
R&D 800
Product development 1500
Salary and wages of workers 700
Marketing and promotion 500
Administration 500
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Equipment and machineries 1000
Total 5000
PART – 2 (DEVELOPING AN EXIT PLAN)
Assessment of exit or succession options along with the advantages and disadvantages
In case, if the owner of the coffee shop is not getting the desired benefits and profits
from the company than there is a possibility that he or she might close the business. In such a
situation, there is a requirement of exit strategy (Hawkey, 2017). Some of them are being
elaborated below:
 Family succession – In this method, the owner of the small business is willing to keep
the business for longer period of time and thus, they transfer the whole business to
their successor after giving training to him or her. With this, owner remains in the
business for longer period of time. However, if skilled successor is not available, the
business can be lost completely.
 Selling shares to investors or management – This is the approach, in which the shares
of the firm are being sold to the investor, workers, management or the partners. Since,
they all know the business in a comprehensive way, they can operate the business
successfully. There are different benefits of this method such as owner can be
involved as mentor and business is never closed. However, there might be chances of
conflicts and this exit approach might impact the present customers.
 Merger or acquisition – This method allows the business to get merged or acquired by
the other firms have same kind of objectives (Cotei and Farhat, 2018). There are
different advantages of this exit options. Firstly, it is a good exit option as the owner
can take a break from the business. Secondly, it offers prospects for negotiating price
to the owners. On the other hand, there are different disadvantages of this option that
is it consumes lot of time because a lot of research is needed for finding suitable firm
to be merged or acquired. Along with this, the name of the business might be ceased
in case of merger as well as acquisition.
 Liquidation – This option is normally used by the owners of the business in the
situation of complete loss in business. further, this is option in which the business is
being sold to another company or individual. This method needs the owner to repay
all the debts and creditors. An effective plan is needed to be developed by the owners
prior executing this option (Johnson and et.al., 2018). One of the major benefits of
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this option is that the owner can have huge income from the sale of the business and
its owner also gets the opportunity related to negotiation of price. On contrary to this,
one of the major limitations of this option is that the return on investment might not
be as anticipated.
Comparation as well as opposing different exit options
In contrast with other exit plan family progression permits the maintenance of
business inside family for extensive stretch. Proprietor gets exchange power for setting cost
of business in the event of consolidation or procurement and liquidation. Yet, a similar power
isn't accessible with them in the event of selling of shares as they are to be sold at market
value. In the event of family progression, name of business will stay same while in other exit
choices there might be chances of discontinuance of business name (Christman, 2015). The
contribution of proprietor can be there in the event of family progression or offering shares to
workers or financial backers. In differentiating, there might be no contribution of proprietor
in the event of liquidation and procurement exit plans.
CONCLUSION
In the above section, a comprehensive plan for growth for the small and medium
business is being explained successfully. Various theories along with models like Porter’s
generic model, PESTLE analysis, Ansoff growth vector matrix have been applied on the case
company The Little One Coffee shop for determining the best growth prospect for the firm.
Based on the analysis of the report, it can be concluded that it is quite crucial for the firm to
pay attention on evaluation of varied factors in relation with internal and external business
atmosphere at the time of choosing the best growth prospect. Additionally, besides these
factors, competitive advantage is also need to be focused. Better decisions regarding funding
and exit strategy should be undertaken. It is suggested that all things need to be priorly for
having effective management of operations of the firm.
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