Sources of Finance and Business Growth Strategies

This assignment requires students to analyze various sources of finance available to SMEs, including external and internal financing options. The Ansoff growth market model is also introduced as a framework for understanding different business growth strategies. Students are expected to apply this knowledge to real-world scenarios, making connections between the theoretical models and practical applications in business development.

PLANNING FOR GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Analyse key consideration for evaluating growth opportunities and the digital impacts on
the organisation...........................................................................................................................1
P2. Evaluate the opportunities for growth applying Ansoff’s growth Vector Matrix................3
TASK 2............................................................................................................................................6
P3 Assess the potential sources of funding for the businesses and their drawbacks..................6
TASK 3............................................................................................................................................7
P4 Design Business plan that includes financial information and strategic objectives. ............7
TASK 4............................................................................................................................................9
P5 Assess exit or succession option for explaining the benefits and drawbacks........................9
CONCLUSION..............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Planning and growth, both are the essential term in the company. Planning determines the
growth factors in future times. It is the strategic business activity which takes business into
further expansion. Owner of the business takes planning and growth steps for further expansion.
New growth has given new opportunities as well as products and services to the customers. This
present report is based on planning and growth of small scale enterprises. Nisa Retail company
will be taken into consideration for the study. It is an independent retailer which provides
grocery items to public. Furthermore, it will discuss about SME growth opportunities, besides
digital impacts on small scale enterprises. In this report, Ansoffs and Vector matrix will define
the growth factor. Furthermore, there are many sources through which company arrange their
funding. Besides this, it will generate business plan of the company. Moreover, the report
elucidates that digital technology is very important to enhance the business growth and
opportunities. Moreover, these new techniques give huge impact on the business.
TASK 1
P1 Analyse key consideration for evaluating growth opportunities and the digital impacts on the
organisation.
Growth is the main essential point in the organisation. It is the key to success through
which company enhances its productivity and opportunities. Competitive growth is the term
which create new products and services at lower price. The company needs to analyse the
customer needs and wants and then provide services accordingly. This term of condition make
entity stronger and compatible(Aithal, 2016). Nisa is the leading grocery store in UK which
provide grocery items. However, grocery items are the most usable items on daily basis. It
includes some factors which affects company growth like product services and company brand
image in the market. Also, competitive advantage is very important to analyse the external and
internal environment of the company. There are different models which helps company to
determine the actual position in the market. It is the term which makes better environment.
Besides this, internal environment also plays a very important role to measure the actual
performance of the company(Bernstein, 2015). The best method to analyse the business
opportunities is PESTLE model; it is the effective model to analyse the external opportunities
and growth as well as help to minimise the risk factor.
PESTLE Analysis
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Political: Political factor helps small scale industries to enhancement. These factors include rates
discrimination ratio, population etc. If population factor is increased SME get more customers
and profit revenue. SME is the small based company which needs some support of political
factors which help them in growth(Climent Barba, and et.al., 2016).
Economic: These factors impact on SME in terms of demand and supply. Government gives
many services and benefits to small scale business through which Nisa can easily sell their
products. Economic factors include inflation rates, interest rates etc. Generally, small scale
enterprises do not take any big loans and debts so, these factors impact low on the business.
Social: Nisa is the grocery store which provides daily routine products and services. This
entrepreneur does not need to promote their services very much. So, this also helps in generating
opportunity to grab more new customers. They also provide product at low prices to attract more
new customers.
Technological: It is the most important factor which gives new opportunity and growth to Nisa
company. It also makes new quality of services for their customers. Digital technologies are the
latest techniques through which company can enhance their business opportunities.
Legal: Legal factors help SME to follow the proper rules and regulations so that they can protect
their business activity appropriately.
Environmental: This is another factor which helps company to determine the existing demands
and needs of the customers so that accordingly, Nisa fulfil their all needs and wants.
Competitive advantage means to innovate new techniques and products for expanding the
business opportunities(Corsatea, Giaccaria and Arántegui, 2014). Small-scale enterprises need to
adopt digital technologies to maintain their position stronger as these new techniques provide
various benefits to the small-scale enterprises. Like, this gives better customer services, more
customer attraction and sales revenue. Furthermore, this makes environment more competitive.
Digital technologies also give new skills and training to the employees. Small scale firms need to
offer training sessions to provide training to the employees on new techniques that gives new
methods of working. It helps in enhancing the employee motivation and commitment level
towards the objectives. SME is very important to achieve the economy growth. In the
competitive market, businesses need to adopt new techniques to expand their growth and earn
more profit. Therefore, the application of the mentioned practices makes new business growth
for Nisa. It gives new opportunities and growth to the firm. These are the key factors which gives
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advantage to the small-scale businesses. Government also provide low interest rates and low tax
rates(Henderson, Selwyn and Aston, 2017). It provides flexibility for SME so that more
entrepreneur can be created. Apart from that to maintain its brand value, company needs to adopt
frequent changes in their services to attract customers. It makes new services and technologies
Internal analysis by SWOT
It is the another factor which helps to analyse the internal factors of the organisation
which helps to recognize company weaknesses, opportunity, threats and strength. Below is givinf
SWOT analysis of Nisa company.
Strength
 It has high growth rate in the market.
 It has major experienced business units. Monetary assistance provided
Weaknesses
 Future competitions
 Uncertain market.
 Future profitability.
Opportunity
 Global market.
 New acquisitions. Growing economy
Threat
 Interference of government policies.
 Technological problems.
 Increasing competition in the grocery
market.
P2. Evaluate the opportunities for growth applying Ansoff’s growth Vector Matrix.
To development in the competitive market comp[any needs to adopt some strategic plans
to overcome fro those issue. In present times, there are many external factors and competition
levels which affects the growth of SME. This business needs to expand its scale into large level
and they need to hire qualified employees that increase the value of company in the market. Nisa
company needs to enhance their business growth by applying some models. There are two
business models which helps in analysing the growth opportunities for the cited firm.
Ansoff Growth Matrix:
This is the model which helps to grow product and services of the company. In this
model, it defines that there are four ways to grow a business. It helps to guide entrepreneur to
focus on these things to grow the business opportunities. First is Current product or new
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products(Hussain, and et.al., 2013). And second one is current markets or new markets.
According to the Ansoff model of growth they mentioned four key factors mentioned below.
 Diversification: New services or products introduced in new market.
 New Product development plans: New products in current Market.
 Market development strategies: Current product and New market.
 Market Penetration planning: Current product and current Market
1.Diversification: This Ansoff model will give the option of New Products and New customers.
Diversification is the current demand of the customers they always want some different and
unique. Nisa needs to adopt new product development strategy to enhance the market
image(Khan, 2015). Entrepreneurs are the individuals who come up with their innovative ideas
in the market. There are three levels of diversification are given below:
 Diversification must be based on some logic which impacts on market directly and get
good results.
 SME needs to utilise current resources to make new product and services. Nisa needs to
adopt new better services for customer attraction which is unique and different.
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Illustration 1: Ansoff Growth Matrix Model
Source: Ansoff Growth Matrix – Four Ways
To Grow A Business.2011

 Another diversification terms to that company adopts that type of services which require
new resources and material.
Diversification involves heavy risk and uncertainties in terms of new product and services, like
weather accept or not. Diversification is the most risky term in Ansoffs model. It requires proper
research and development strategies(Manganello, Gerstner, Pergolino, Graham, Falisi and
Strogatz, 2017). In another term it is defined as suicide cell. Besides, after so many risks It
involves heavy successful development opportunities. It reduces the overall risk of external
factors which affects company growth indirectly. Besides, it gives heavy competition to other
companies.
2.New Product development plans: On the basis of product and development Nisa needs to
analyse the needs and wants of the customers. It makes new growth and opportunities which
helps company to make new services and products. Company can make their existing products
different and unique or replace existing products with new products. It helps to attract more
customers and sales revenue(Martín-Peña, Díaz-Garrido and Sánchez-López, 2014). Like Nisa
needs to provide those products which is very necessary for the consumers. It needs to adopt
some strategies which gives new product and services to accomplish the overall target of the
firm. New product may increase company brand value and customer purchasing power as well.
This Model of Ansoffs defines the importance of new technologies that company should adopt
new method of technology to enhance the company image in the market. New development of
product manse new competitive level in the market(Metzger, 2014).
3.Market development strategies: This is the third option of Ansoff model matrix which helps
to expand the opportunity growth for the company. Market development defines the new
segmentation development in which company needs to expand their business for growth purpose.
SME businesses needs to expand their businesses into new opportunities. It gives new strength
and market expansion. Nisa company should expand their market online to attract more new
customers. It makes company brand image and goodwill. Like company may give some seasonal
offers and discounts to attract customers. On the other side, new distribution channel. Like
through online with the help of digital technologies. It makes customer more happy and satisfied.
Nisa company my provide online store to attract more new customers. There are many tools of
online marketing through which customer can get any information like Search engine
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optimization it is the best method to find anything from internet. It helps SME to reduce the cost
of middle man(Oladele, Oloowokere and Akinruwa, 2014). SME can take many advantages
through digitalize services which gives huge benefits and growth ton the company. Furthermore,
for having market development Nisa also expand their business into new geographical areas. It
maybe open new stores in other countries to get good brand image. It gives more pressure to
competitors firms and build brand value for the company. Success depends on the selection of
market development strategies.
4.Market Penetration planning: In this model of Ansoffs Matrix wants to explain that
company needs to focus on selling activities(Pestle, and et.al., 2015). Like focus on the needs of
existing customers. And determine their competitors products who sell the same products at low
prices. Penetration strategy is defines that SME needs to adopt low prices to attract more
customers. It gives new market opportunities for getting good sales revenue. Nisa needs to
provide low prices products to attract customers satisfaction. Along with that it needs to
understand the customer needs and wants so that they get customer faith and loyalty. Besides,
company needs to promote promotional activities to expand there product sale. It gives more
effective working. Product promotion helps company to give more information to the customers.
This increase the product awareness and sales as well(Pestle, Crowley, and Weirauch, 2014).
The drawbacks of this model is if company already has high market share opportunity growth
may be limited. Apart from that company may face the heavy competition in the market. To
overcome from this effects Nisa needs to adopt high digital technologies to attract more new
customers opportunities. Apart from this, it involves heavy risk which affects the company
directly. Risk mitigation is the term which defines risk management. It helps to analyse the
external environment try to minimize the risk factors. For every organisation risk factor is
involved everywhere to reduce those factors company needs to make overcome plans for
uncertain events. Risk mitigation process involved analysing the risk factors. And try to reduce
them, risk mitigation process means proper implementation, planning and controlling process.
Nisa company also needs to analyse the external or internal factors through which company may
affect. It makes more reliable situations towards the company objectives.
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TASK 2
P3 Assess the potential sources of funding for the businesses and their drawbacks.
There are many sources of finance through which SME can take funds to run the
business. This institution always ready to help for businesses. There are some sources and their
advantages and drawbacks in related of SME given below:
 Personal Savings: SME is based on small scale. It may invest their own personal savings
in the business(Schramm, and et.al., 2014). It requires fewer funds as compare to large
businesses. Nisa needs to invest their own personal savings in the business purpose.
Personal sources make great source of income. In this source of funds require zero
amount of interest which is more flexible for the company(Shaw, 2016). But some times
due to large requirement those personal savings are not enough to be complete business
needs(Thijsen, Tong, and van Leer, 2014).
 Investors: investors are the most important sources of finance. Investors are the active
partners in the firm or may be silent partners who waiting their returns. This may give
huge amount of investments. Nisa may full fill their all requirements or expand their
business with the money. But on the other side investors are always analysed the
company position and future sustainability than take decision regarding the investments.
The drawback of these investors is owner loss their control on certain things. In that
situation Nisa need to make good efforts to make their investors happy.
 Bank Loans: It is the another source of funding. Many private and public institutions
who provide loans to the SME at low interest rates. Government of the country will give
extra benefits for SME developments. Generally they offer personal loans or line of credit
for small ventures. It helps company to operate its operation activities smoothly in
flexible manner. Apart from this, the major drawback of this source is that company need
to pay interest on loans. Furthermore, if payment will be due bank will charge high
amount from the business entity.
 Government Grants and loans: The US government provides many loan facilities to
help start-up companies and existing ventures. Government try to grow economy
expansion through which growth has been increased. It makes economy strong apart from
this new ventures get help to start their business easily. The main drawback of this
funding is this grants and loan are fixed for particular type of business.
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TASK 3
P4 Design Business plan that includes financial information and strategic objectives.
Business plan is the most important element in the business organisation. It makes
management more strong and effective. Apart from this, Nisa Company needs to make Business
plans to achieve the overall objectives. Business plans gives new ideas and innovative creation
for the Bitterman of the company growth. Business plans make new financial strategies and
performance level plans to sustain in the competitive market. Business plans involves goals and
objectives of the company(Khan, 2015). With the objectives it contains the proper planning and
execution plans as well. This business plans helps company to make new brand image and
market share. Continuous and new business plans gives more information and future
opportunities to the Nisa. Business plans includes some important components like objectives,
required resources, methods and techniques, resources, implementation strategies, controlling
plan execution etc. it includes several risk factor, such as changing environment, customer needs
and wants, political changes etc. there are the business plan for Nisa
 Research: In this first step of business plan is research, it defines that before making
business plan Nisa needs to do research and identified the problem on which they need to
make effective business plans. In this process entrepreneur collect all information for
further use.
 Determine the purpose: In this second process company needs to make their objectives
and plans for which they want to make new plans. Nisa needs to adopt digital
technologies for enhance their quality of services the main. So that business plans include
the main objective for which company works(Hussain, and et.al., 2013).
 Calculate: All the strategies choose for the business plan are now to be calculated and
make sure that it will be profitable for the company. In this process company needs to
make their financial plans to arrange all resources and requirements to full fill the overall
business objectives. Financial assumptions and requirement both are very important for
the company. Nisa needs to make proper financial strategies to raising the funds. It helps
company to make business plans more effectively.
 Draft: After the planning of financial resources, the next process of business plan is to
manage the all resources collectively perfect. In this next process of business plan is ton
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correct plans if it is required. Draft is the small part of the business plan which is checked
for modification.
 Revision and Proofread: After collecting all necessary data next plan is to revise all
implementation process. It needs to revise all plan and look for any ideas and check
weather it is required something or not. Business plan is must be proper and systematic to
get better results(Khan, 2015).
From the above discussion business plan of the comp[any needs to attractive and
innovative to pull more customers. Effective business plans gives new ideas and innovation
process to the company. Apart from that Nisa needs to make powerful strategic planning to full
fill the overall objectives of the company. Besides company needs to make financial strategies to
full fill their requirements. Finance manager needs to arrange funds from different financial
institution. Furthermore, it is very important to expand the business activities. Nisa needs to
adopt new business plans to new technologies and ideas. Furthermore, it gives new business
opportunities and brand image in front of the customers. Nisa needs to expand their business
through digital technologies for that they need to make proper business plan.
TASK 4
P5 Assess exit or succession option for explaining the benefits and drawbacks
Exit or succession planning option are the two factors through which company carry its
business further or close the business. When company earn good amount of money and profit
revenue they want to expand its business but on other side if they get low sales limited business
expansion in that case they will prefer to close the business. Some exit plans given below.
 Let it run Dry: SME industries have better option if they want close it business due to
have no earning. This strategy best for SME industries. Nisa may use this strategy to exit
from the market. In this first strategy of Exit defines that before closing the doors'
entrepreneur musty earn good about of money and profit revenue so that they easily close
the doors of the company(Henderson, Selwyn, and Aston, 2017).
 Sell your shares: it is the next strategy to exit from the market. According to this
strategy company may sell their company equity to the other person. Sometimes big
organisation purchase shares of small based companies. This method is benefited for
getting some funds for further investments or pay to their company creditors.
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 Liquidate: In this exit policies company sell everything at market and pay their
remaining debt. This is the most simple approach to exit the market. This process is
benefited for the company to address all liabilities of the companies and close the firm.
 Bankruptcy: in this system company fails to repay the debt to the creditors in such cases
company will become bankruptcy. In this process bank take over its money by
undertaking its property or assets.
 Buy in and out: In this process company may buy or give to others on the behalf of some
money or funds in order to reconcile their own loans and credits.
Reasons of Business failures.
 Leadership failures: Leadership is the most important key component in the business.
Leader gives new opportunity and plans to manage the work in more effective ways. But
having no leadership skills may lead to give high loss and ineffective working
environment to the company.
 Lack of new development: In the business it requires lots of innovation and new
strategies to attract their customers. Furthermore, if company having no new ideas and
development plans this may the reason of business failure. Enterpriser needs to adopt new
technologies and plans to enhance their market strength otherwise company has to close
their business doors. Due to having more competitions Small scale business lefts the
market. The main reason of failure is due to have new strategies and technologies.
 Lack of customer service: Customer is the king of the market without having good
attraction of customers company will not stable in the market Nisa needs to full fill the
demands of the customers in case otherwise company face many loses. Customer focus is
the most important thing to be determine to enhance the market value
 Unprofitable business model: Every company needs to make effective business plan for
the company. It requires proper planning and resources to achieve the overall target.
Sometimes having lack of resources and skilled employees company not making
profitable plans and policies through which company faces the problems and customer
dissatisfaction(Climent, Barba, and et.al., 2016). Business plans needs to accomplish the
customer needs to achieve the company objective. Otherwise, they suffer heavy loss in
the business.
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From the above discussion Nisa Needs to make new development plans and strategies to
overcome from these issue. SME industries are need to face many hurdles and risk factors due to
heavy competition in the market.
CONCLUSION
From the above report it was concluded about the planning for growth. New planning and
development opportunities expand the business market value. This report based on the planning
and growth of Nisa company, it has a grocery store in UK. This report discussed about the
Ansoff Matrix which helps company to expand their business opportunities. Apart from that, it
discussed about the exit and succession plans of the company. Nisa needs to adopt digital
technologies techniques to expand the business growth. These new techniques help to get the
attraction of customers and give high sales growth. Along with that Digital technologies gives
higher impact on small scale enterprises.
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