Planning for Growth

This assignment focuses on the key considerations for evaluating growth opportunities, evaluation using Ansoff's growth vector matrix, potential sources of funding, and developing a business plan for scaling up a small coffee shop's business.

PLANNING FOR GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P 1 considerations for evaluating growth opportunities..............................................................1
P 2 Evaluation of opportunities for growth applying Ansoff’s growth vector matrix.................2
LO 2.................................................................................................................................................3
P3 potential sources of funding available to businesses..............................................................3
LO 3.................................................................................................................................................5
P 4 Business plan.........................................................................................................................5
LO 4...............................................................................................................................................10
P 5 Exit or succession options for a small business...................................................................10
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Growth and development are one of the most important things that are required to be
focused on by the organizations (Altinay and et.al., 2016). Especially for SME's planning for
growth is extremely important as it helps them to expand their business. In order to expand
business or for the growth of the business there are various things that are required to be planned
by the business organizations. This assignment will focus on a small to medium size business
that is planning to expand their business. Coffee Spot is a small coffee shop in London which is
planning to expand their business further. This assignment will lay emphasis on key
considerations that Coffee Spot should consider when evaluating growth opportunities and
possible risks associated with their business, methods through which organist can access funding
and when these types of funding can be used by them, and lastly an in-depth business plan will
be developed for scaling up Coffee Spot's business.
LO 1
P 1 considerations for evaluating growth opportunities
In order to evaluate key considerations for growth opportunities Porters generic strategies
and PESTLE analysis can be used.
Porters generic strategies:
It helps an organization to analyse ways in which they can peruse competitive advantage
within the chosen market (Sen, Ozturk and Vayvay, 2016). There are four types of generic
strategies that can be used by Coffee Spot organization such as: Cost leadership strategy: Using this strategy organization focus on becoming low cost
producer in the industry in which they operate. Coffee Spot can use this strategy can
focus on providing the lowest cost products and services to their customers in order to
enhance their overall profit. Differentiation: Using this strategy organization focus on making their products or
services more attractive as compared to their competitors products and services (Foroudi
and et.al., 2017). Coffee Spot can use this strategy as a growth opportunity but for this to
focus on few things such as: good research, ability to develop high quality products and
services, effective sales and marketing. This strategy can help Coffee Spot to gain
competitive advantage over their competitors and enhance their customer base.
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 Cost focus: It is one of the most suitable strategy that can be used by Coffee Spot as in
this strategy organization can focus on low cost advantage in just one or a small market
segment. If the product is acceptable to the customers of chosen segment then it can help
them to introduce that product to large market segment.
 Differentiation focus: Using this strategy Coffee Spot can focus on seeking differentiation
in its target market.
PESTLE: it can help Coffee Spot to link competitive advantage with growth opportunities.
Political: Political factors can help in analysing government stability and laws that are applicable
to the organization (Schwab, Gold and Reiner, 2019). Analysis of this factor can help Coffee
Spot to analyse laws that are favourable to their organization and can support them to grow
within the market in which they operate.
Economic: these factors can affect overall revenue, economy state and profit of the organization.
Analysis of social factors can help Coffee Spot to analyse labour cost, inflation rate etc. that can
affect their organization expenditure, profit, revenue etc.
Social: It is important for Coffee Spot to focus on lifestyle choices of their customers, customers
buying trend as their overall profitability and revenue depends upon their customers buying trend
and their choices.
Technological: Usage of advance technology can help Coffee Spot to gain competitive advantage
and provide much faster and better service to their customers which can further help them to
enhance their business.
Legal: Nowadays health and safety laws for organizations and their products is increasing that
are important for organizations to focus on. Adhering these laws can also help Coffee Spot to
handle their products demand, and facilitate their business in a much better manner.
Environmental: Today a greater number of customers are becoming eco-friendly and prefer eco-
friendly products that are healthy to be consumed. Providing such kind of products to the
customers can help Coffee Spot to enhance their customer base.
P 2 Evaluation of opportunities for growth applying Ansoff’s growth vector matrix
Evaluation of growth opportunities for Coffee Spot can be done with the help of Ansoff
growth vector matrix (Gielnik, Zacher and Schmitt, 2017). It is important for small business
organizations to find new ways through which they can enhance their customer base and increase
their profitability. Ansoff’s growth vector matrix is also known as product/ market expansion
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Grid and on the basis of product and market Grid this matrix helps in explaining four strategies
that are: market penetration, product development, market development and diversification. It is
mostly used by organizations to analyse and plan their growth strategies.
 Market Penetration: this strategy focuses on increasing sales of existing product within an
existing market. It is least risky strategy that can be used by Coffee Spot as this strategy will
help them to leverage their existing capabilities and resources. Market penetration can be
done by small and medium enterprises with the help of following ways: in order to attract
new customers, organization can decrease their product process (Morris, Soleimanof and
White, 2020). They can focus on enhancing their promotion and distribution efforts.
 Product Development: this strategy focuses on introducing new product to an existing
market. If an organization’s main strength is their customers rather than their product then
they can focus on developing new products for their current customer base. This strategy can
also be used by Coffee Spot as they mainly rely on their existing customer base and for this
strategy they can invest in R & D or can partnership other firms so that they can create better
products with additional resources.
 Market Development: this strategy focuses on entering a new market using existing products.
Coffee Spot can use advance technologies to analyse whether customers of new chosen
market are profitable or not and on the basis of this Coffee Spot can introduce their existing
products to the new chosen market.
 Diversification: this strategy focuses on entering into a new market by introducing new
products. It is one of the riskiest strategies that can be used by a small business-like Coffee
Spot. It is also known as suicide cell within this matrix as if the business succeed then it can
provide high return but if it fails then increase loss or other business risk for the organization.
LO 2
P3 potential sources of funding available to businesses
The coffee spot have the major level of offering an organic and gourmet coffee to the
potentials costumers on the London street. The business is trying to have average run of the mill
coffees which have the major offering more that just coffee. The coffee spot is trying to have the
environmental which is considerer to be growing music sense. Sources of fund are considered to
be important to have increase in level of operations along with long working capital. It is nor
possible for an entrepreneur to have the establishment of business without having no investments
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into business market (Blackburn, 2017.). Therefore, it is needed to have the proper level of
evaluation's for over all funding which is important for business to be establish.
Some sources of finance-
Bank loan- Thus is considered to be the common sources of finances that can be arranges
for the small business. This is funds that can be borrowed by company from the bank to have
definition period along with some around of interest to be charge. The coffee spot have raise
loans from the bank as it is considered to be secures alongside with destructible in tax.
Benefit and drawbacks
It is generally to have lower rates which is compare to another financial resources. There
are regulars level of payments to instalment to have increase in the company credit score. On the
other hand business will have audibility to pay monthly instalments as otherwise the banks will
have right to seize business. There is requirement of to level of regulation which needed to be
fulfil by company to have proper enchantments.
Overdraft- this is facilitation towards the enterprise over to have the payments in term of
business over the current account which is having the variability expedience the current cash
balance. This helps the business to have acquirement of the funds for short period. This is
having proper level of appropriation regardless rapid and flexible requirement of account
withdrawn any time.
Benefits and drawbacks
In these interests will be charges on only the amount which so considered to be
overdraws. This is considered to flexible along with analysing in quickly manner. On the other
hand the credit score are damages along with asking banks payment which is done for
repayments of overdraft amount anytime.
Crowding- these funds are actually raised throughout social media along with online.
This is about the people to have the proper level of investigations regarding the money with
exchanges of service along with equity (Cowling, Liu and Zhang, 2016). This will help the
company to raise the capitals longways with investments in this enterprise to have proper
evolutionist. But is will not be considered to be effective as there is high level of risk along with
legals formalities which are involved.
Benefits and drawbacks
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This is successful is crowd funded approach along with proper level of attention the
good level attention of social media which can provide proper assistances over growth. Theirs is
proper pitching of business crowding should be valueless in marketing firm.
Peer to peer lending is considered to be financial innovation which have connects with borrowers
with the one who area searching for unsecured loans form the investors along with higher level
of return. This allows individuals to lend and borrow certain amount of money without any
financial institutions.
Benefits and drawbacks
As the sources gave the not level of requirement of collaterals enquiry along with no
monthly repayments in which there is requirement for interest to be paid. It is considered to
level of risky as compressed other debt financing. On the other hand it has the more level of
coelenterate over the business along with take more times to have finding appropriate level of
investors.
After evaluating all the sources of financiering in appropriate manner, it has been seemed
that the coffee shop would prefer the perfect level of banks loan as it is Turing out to be more
level of secure. The banks loan is estimated to have the low level of bank interest around a
member of increase in credit score on which month repayments can be done. This will be helpful
in making company more level of productiveness to grater extents.
LO 3
P 4 Business plan
EXECUTIVE SUMMARY
The coffee spot have the major level of offering an organic and gourmet coffee to the
potentials costumers on the London street. The business is trying to have average run of the mill
coffees which have the major offering more that just coffee. The coffee spot is trying to have the
environmental which is considerer to be growing music sense. The business is trying to offer
quality of product which is made of organics fair trade coffee beans. The company is trying to
target the potential coffee and music lover with 'spot happiness'.
Company overview
Coffee spot will be the restaurant located in posh area of London which is offering
varsity of choices in coffee among the customers. Coffee and tea of all sorts will be offered. The
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choices of coffee will range from espresso to latte, from regular flavour to raspberry-mocha. The
teas will range from English to flavoured varieties (Ghani, and et.al, 2017). The business have
the realization that there is need for organic gourmet coffees with platform of budding artist to
have dematerialisation of adequate skills for turning out environment into relaxing coffee shop.
Vision
To be one of the best organics' coffee restaurants which provide comfortable and friendly
atmospheres where the customer have better quality of services along with entertainment at
reasonable price.
Mission
Coffee spot want to provide the most stimulating level of coffer restaurants experiences to
customer by providence the excellent interior spaces for consuming organics coffee along with
enjoying nature and culture.
Objectives
 To maintain high quality of organist and gourmet coffees along with services.
 To have assurance over providing comfortableness atmosphere.
 To increase the sales by 20% in every quarter
 To increase the profit by 15% in every quarter.
Product and services
Coffee beverages
Americano
 Latte
 Espresso Cappuccino
Coffee Products
Coffee beans
Coffee grindersFrench presses
Pastries
Muffins
CakesCookies
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Marketing analysis
SWOT
Strength
As the coffee spot is offering a wide varsity of organics coffee products which is considered to
be appeals for coffee lover to enjoy with (Chambers and Humble, 2017). The shop is providing
drastically attractive and relaxing environment which budding singer artist in order to different
form competitors to sudden extent.
Weaknesses
The company is facing composition from traditional competitors as it is turning out to be
difficult to sizeable porticoes form respective market. There are lacks of resource in locality as to
expands and compare to competitors.
Opportunities
The increase in stardom and craze for live music in London market, there is expectation that
accompany will be successful in taking comparative advantages. As there is more level of
university presents near the coffee shop location which will attarct large number of youth
towards the shop.
Threat
The price of organic and gourmet coffee bean are increasing which is turning out to be the threat
for business for certain extents. The prices of coffee bean have been rises at peak in last two
years. At the present scenario, there is no level of expectation that the price will move in which
directions and what will be impacts on business (Dale, 2019).
Market segmentation
Segmentation
Demographic - age 18-55 years
Incomes- $20,000 and $100,000 per year.
Targeting
The coffee spot will be targeting the potential level of customer who are Coffee lover, enjoyable,
music lover along with having major level of interest in live performance.
Positioning
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The company is properly targeting the customer by positioning the coffee shop as the music
lover with 'spot happiness' (Hopp and et.al 2018 ). The business is trying to offer quality of
product which is made of organics fair trade coffee beans.
Marketing mix
Product - The company is trying to offer the variety or product of coffees as the whole
marketing strategy is dependent as in the customer liking and loving product. The product are
such as the major variety Coffee beverages, Coffee Products and Pastries
Price - The price of pricing will be such as the premium preciseness because of provisioner
organics products along with quality. The customer are targets who believe the quality to
important than price.
Place- The spot coffee is located in posh area of London street which is located near the places
of university.
Promotion- the spot coffee is trying to have he promotion through social media or internetwork
sites. As the company want top have relied in word of mouth publicity to greater Ernst.
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Budget
Particulars January February March April May June
Cash
inflows
Opening
cash inflow
4000 4100 5462 6886 8373 9924
Sales
revenue
6000 6120 6242.4 6367 6495 6624
Other
income
1500 1500 1500 1500 1500 1500
Total cash
inflows
11500 11720 13204.4 14753 16368 18048
Cash
outflows
Material 2100 918 936 955.0872 974 993
Labour 1800 1800 1800 1800 1800 1800
Other
expenses
1000 1040 1082 1125 1170 1217
Administrati
on expenses
2500 2500 2500 2500 2500 2500
Total cash
outflows
7400 6258 6317.96 6379.9512 6444.04750
4
6510.32562
528
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Particulars January February March April May June
Cash
deficit /
surplus or
closing cash
balance
4100 5462 6886 8374 9924 11538
Monitoring and controlling techniques
To have the proper level of evolutionist of business in order to calculate the deviation the
business will be proper monitoring through measurement of KPI and bench marketing in every
month to have proper control.
LO 4
P 5 Exit or succession options for a small business
Exit Strategy can be defined as a plan which is mainly executed by investors, traders,
business owners, venture capitalist in order to liquidate a certain position in financial assets or to
dispose-off tangible business assets to meet predetermined criteria (Estapé-Dubreuil, Ashta and
Hédou, 2016). It is important for each small business organization to have an exit strategy so that
they can have some control over their future. There are various kinds of Exit Strategies that can
be used by a small business. But there are seven main exit strategies that small business
organizations like Knights and Dukes Homes can choose from. Liquidation: In this exit strategy all the assets of the business are sold. It is one of the main
exit strategies that can be used by small business, especially those business that are
dependent upon performance of a single individual. Small business owners should focus on
retooling their business so that someone else would be interested in buying their business
(Woomer and et.al., 2017). Advantages: It is one of the simplest exit strategies that can be used by small business
organizations. Using this strategy business can easily and quickly wound up.
 Disadvantages: there are various kinds of disadvantages of this business such as: it has
lowest return on investment for the business owner. Only money that business owner gets
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from this strategy is sale from disposal of assets. Value of second hand business assets
can be quite low. Not only this fund collected from assets sales are first of all claimed by
creditors. Liquidation over time: In this strategy business owners try to extract almost all of the profit
overtime from the business before selling the business or closing it (Dalay and Fosfuri,
2019). It is a better option rather then reinvesting in the company for expansion. It is best
suitable option for business owners who want to maximize their current lifestyle aggressively
rather than expanding their business. Advantages: One of the main advantages of this strategy is that it helps in withdrawing
maximum cash on ongoing basis for person use.
 Disadvantages: But this strategy has its own disadvantages such as: Extracting profits can
reduce overall growth potential of the business and also reduces overall sale value for the
business. other shareholders of the business might haver issues in it and because of which
they can object until and unless they are similarly compensated. Keep business in the Family: Another one of the strategies that can be used by owners of
the small business is to keep business within the family and ensure that their legacy and
operate their business. Advantages: Main advantages of this strategy are: Can help in smooth transition by
grooming successors of the family. Business owner can keep their hand in the business
advisory capacity as well.
 Disadvantages: But this strategy has its own disadvantages such as: family members
might lack skills or knowledge that are required to run a business, old clients of the
organization might not accept changes in ownership or management (Doherty and et.al.,
2018). It can also lead to infighting among family members over ownership of the
organization. Sell business to employees or/ and managers: Owner of small business can sell their
business to current managers or employees of the organization as they might be interested in
buying their business. Advantages: Main advantages of this strategy are: this strategy can allow owner to keep
their share of business and also remain in advisory team of an organization. Employee
might feel enthusiastic and can establish the business as they might be familiar with the
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business. this can further increase motivational level of the employees and can also
increase loyalty among employees which can further help in increasing overall efficiency
and performance of the employees or managers of the business.
 Disadvantages: But this strategy has its own disadvantages such as: Employees might not
suitably qualify to take over the business. Clients might not accept new changes within
the ownership or management of the organization. Sell business in open market: One of the most common exit strategies used by owners of
small business is selling business in open market (Steiner, Steinkamp and Westermann,
2019). This strategy is mostly used when business owners are ready to retire and because of
which they put their business up for sale at a certain price. Advantages: Main advantages of this strategy are: when business is profitable, it can
easily help the owner to attract buyers that can further help them to see the business
quickly. Incorporation of goodwill and assets can help in increasing overall value of the
business which can further help in increasing overall return to the owner.
 Disadvantages: But this strategy has its own disadvantages such as: If a business is
marginally profitable then it can be a bit difficult and long process to find buyers of the
business. Business can be a bit difficult to value because of various reasons that can result
in lower selling price of the business than expected. Sell business to another business: Small business owners can focus on positioning their
business to a desirable acquisition as it can be quite profitable for them. This will help the
owner of small business to attract other business so that they can buy their business for
various reasons such as: expansion, buying out competition and many more. Advantages: Main advantages of this strategy are: Increasing competition within the
market cam motivate other business organizations to purchase their business which can
further help organization owners to maximize their profit and quickly sell their business.
 Disadvantages: But this strategy has its own disadvantages such as: If the purchaser is
only interested in reducing their competition then they can fold the small business
purchased by them which can increase risk of job loss for current employees of the small
business (Afrahi and Blackburn, 2019). this strategy can increase financial information or
customer information leakage as purchaser might only pretend to buy their business but
actually, they might be interested in getting financial information and customer list.
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 IPO or Initial public Offering: It is another suitable strategy for small business
organizations. Advantages: Main advantage of this strategy is that it can help the organization in taking
their company public which can be extremely profitable.
 Disadvantages: But this strategy has its own disadvantages such as: public is an
extremely long and costly process. Structure of IPO is extremely important as it can
become a barrier in withdrawing small business owner's capital as new shareholders
might be interested in viewing all the money raised by the IPO that can be used to expand
one's own business. Public companies need to maintain their reporting standards and
compliances.
These are some strategies that can be used by small business that fits their business and
goals. If Knights and Dukes Homes are only interested in money then selling their business in
open market is one of the best strategies for them. If they simply want to expand their business
for their legacy then they can focus on keeping their business within their family members
themselves or can focus on selling their business to their employees or managers themselves.
According to their current scenario Knights and Dukes Homes can focus on selling their business
to their employees in order to expand the business and for the success of the business.
CONCLUSION
From the above assignment it has been summarized that there are various growth
opportunities that can be considered by small and medium enterprises to grow, expand and gain
competitive advantages. There are various strategies or models that can help in evaluating
growth opportunities for SME organizations. It has been analysed that funding is one of the main
factor which is required to be focused on by the organizations for their growth. There are
different sources of funding available to businesses that can be used by them for business
expansion. Business plan is another important factor which is required to be considered for
scaling up a business. Developing a business plan can help an organization to develop strategic
objectives and plan financial information for growth of their organization. It has also been
analysed that there are various kinds of exit or succession strategies available that can be used by
the organizations they can be used by them to either success or exit from the market.
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REFERENCES
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