Small Business Development & Challenges

This assignment examines various aspects of small business development, drawing upon academic research and practical examples. It delves into topics such as entrepreneurship education, the role of networks in innovation, and the influence of social factors on startup intentions. The assignment also highlights the challenges faced by small businesses, including financial structure, integration of technologies like ERP systems, and adapting to a changing economic landscape. Real-world case studies provide insights into successful strategies employed by small businesses.

Small Business
Enterprise

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Producing a profile of the selected small business enterprise..........................................1
1.2 Comparative analysis of Lantana Cafe.............................................................................2
TASK 2............................................................................................................................................3
2.1 Appropriate actions in order to overcome the weaknesses .............................................3
2.2 Ways of strengthening and maintaining the performance level of employees.................4
2.3 Areas for business expansion...........................................................................................4
TASK 3............................................................................................................................................6
3.1 Assessment of existing business objectives and plans.....................................................6
3.2 Business plans..................................................................................................................6
3.3 Action plan.......................................................................................................................7
TASK 4............................................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
For any developed or developing economy, small business enterprises (SBE's) are an
important factor. With the day by day changing economies, entrepreneurs devote their time and
energy along with ideas to build their respective SBEs to further contribute in economy of nation
as well. In typical situations such as economic recession SBE's have successfully proven their
importance. No matter whatever the situation is, these organizations continue to grow and further
assist in creation of job opportunities. The report mainly throws light upon the processes
involved in running a small business. Furthermore, the reviewing and improvement methods of
such business have also been considered. The small business enterprise that has been taken into
consideration is Lantana Cafe which is situated in London, UK. It offers brunch, breakfast and
lunch to the people. At a small business level this cafe has achieved great success and is known
as one of the best cafes in London.
TASK 1
1.1 Producing a profile of the selected small business enterprise
Small business enterprise have proven to be quite beneficial in situations of recession
faced by nation. So, opening of small business in such a situation is very beneficial. Such
organizations have helped the economy of nation to enhance even in situations of recession. To
have a better understanding of business involved in existing segment, it will be appropriate to
have a real life example. To serve this purpose selected SBE is Lantana Cafe.
Following are given the profile, strengths and weaknesses of Lantana Cafe:
Profile:
Name and Address Lantana Cafe, 13 Charlotte St, Fitzrovia, London WIT ISN
Phone [phone]
Email [e-mail]
www.lantanacafe.co.uk
Cuisine Cafe, gluten free options, vegetarian friendly, vegan options
Meals Lunch, breakfast, brunch
Annual revenue estimate 248783
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Location type Single location
Employees 10
The mission and vision of Lantana Cafe are as follows: Mission: The main purpose of this organization is to serve their customers quality and
food which is hygienic too. They are very much friendly towards children. Furthermore,
they aim to provide a very comfortable environment to their customers which is healthy
as well. They offer much enhanced delivery options.
 Vision: The vision of Lantana Cafe is to serve as one of the best enterprise in UK and
create a branded and healthy environment. Further, its vision is to avail as best provider
of breakfast in whole UK.
Strengths: the main strengths are that it serves the best breakfast in the region and is also well
known for its coffee. Use of digital-services such as digital payments and availability of free Wi-
Fi is also an asset for it.
Weakness: Due to overload, workers sometimes become impatient. The complimentary dishes
that are served in Cafe are not of good quality as reviewed by customers.
Main competitors: One of the main competitor of Lantana Cafe is Cafe Portrait.
Market Segments: Lantana Cafe majorly lays its focus upon young customers. The
segmentation of psycho-graphic category because Lantana gives more preferences to the needs &
requirements of customers.
Organizational structure: Lantana Cafe follows functional structure where each level of Cafe is
grouped according to their roles assigned.
1.2 Comparative analysis of Lantana Cafe
To know the performance level of enterprise a knowledge of non-financial and financial
data is important. The following data of Lanatana Cafe would assist in measuring the
performance level of it.
Table 1: Profit earned by Lantana Cafe in past 5 years
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Year PAT (Profit after
tax @ 20%)
Lantana
PBT(Profit
before tax)
Lantana
PAT(Profit after
tax)
Cafe Portrait
PBT(Profit
before tax)
Cafe Portrait
2016 559 670 449 576
2015 474 584 368 480
2014 452 575 348 467
2013 438 568 343 455
2012 422 532 323 435
The above table also shows that profits earned before implementation of tax rates were
high for Lanatana as compared to Cafe Portrait. Even after imposing the tax rates at 20 %,
Lanatana seemed to earn more profits than Cafe Portrait. However, a little bit reduction was
observed in profits when 20% tax rates were imposed in accordance with both Lanatana and
Cafe Portrait. From the table mentioned above one thing is very clear and that is the overall
functioning of Lanatana is very good. Cafe Portrait is one of the competitors of Lanatana and is
not even near to the profits made by Lantana.
Table 2: Sales done by Cafe Portrait and Lanatana Cafe in five years
Year Cafe Portrait Lanatana Cafe
2016 440 338
2015 420 334
2014 396 289
2013 298 227
2012 256 198
Above are mentioned some of the sales figures which show that how much sales was
there recorded in the years from 2012 to 2016. So it is very clear that since 2012, Lanatana Cafe
has been making continuous growth till now. Table 2 makes it clear that Lantana Cafe is doing
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very well in the field of sales. In addition, Lanatana Cafe is better in attracting and in retaining
customers than Cafe Portrait
Table 3: analysis of employee performance level in 2016
Year ending 2016 Cafe Portrait Lantana Cafe
Offers in Job 15.00% 11.00%
Absenteeism 16 days 12 days
Turnover rate of staff 7.50% 6.50%
Satisfaction in job 89.00% 75.00%
In the year 2016, Lanatana Cafe offered jobs at 19% which is far more than Cafe Portrait.
So employees were definitely attracted towards Lanatana Cafe in terms of job offers.
Furthermore, the turnover rate of Lanatana was also lower than Cafe Portrait. This shows that
employees were satisfied with the facilities and environment, they used to get at Lanatana Cafe.
Also, employees were fully satisfied with their assigned roles at Lanatana Cafe. Table 3 makes it
clear that Lanatana Cafe successfully understands the needs of customers and accordingly
satisfying them.
From all the tables enlisted above it is very much clear that Lanatana Cafe is
comparatively better than Cafe Portrait.
TASK 2
2.1 Appropriate actions in order to overcome the weaknesses
Every small or big organization has some or other weaknesses. Management is
responsible for the way of understanding it and accordingly come forward with appropriate
solutions for overcoming weaknesses. The following actions could be undertaken by Lantana
Cafe:
 Highly skilled employees should be hired.
 Proper arrangements should be done for customers who prefer peaceful environment.
 Samples of warning can be used along with instructions for distribution to employees.
 Training should be given to employees to control their impatient behaviour.
 More focus should be done over their main dishes rather than the complimentary dishes.
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There are two weaknesses in accordance with Lanatana Cafe. One was impatience of
employees due to workload and other were poor quality of complimentary dishes. SO to
overcome this, the skills possessed within their employees should be very high. If cafe hires
highly skilled employees then, these will be able to handle multiple tasks at a time and workload
would not be treated like a major problem. Also, certain impatient workers shall be given
spiritual training so that they are able to control their impatient behaviour. In order to treat the
complimentary dish issue, best solution will be their exclusion. Major focus shall be given to
main dishes rather than complimentary one. Rather, variety should be introduced within the main
dishes.
2.2 Ways of strengthening and maintaining the performance level of employees
The main aim of most of the organizations is to attract new customers. This is very much
essential for the organization to enhance its growth. With reference to this context, below are
listed some ways which Lantana Cafe should follow for strengthening their performances: Training: Employees shall be given proper training from experts so that they will be able
to enhance their performance level. To provide better services to customers, all sorts of
tools should be given to employees to ensure proper service to their customers. Not
giving proper tools to employees will make them give excuses to customers. Customer satisfaction surveys: Surveys should be conducted by cafe to identify the
needs of customers. This will further help the Cafe in improving their services as per the
needs of customers. Maintaining good cash flow: For its proper maintenance, an overall budget shall be
formulated by cafe. Then, the final results after budget shall be monitored. Alternatives
shall also be planned beforehand. Time management should be there, so, billing shall be
done as quickly as possible. Furthermore, time-to-time policies shall be planned.
 Bench-marking: This will prove out to be of great help in analysing the quality standards
of Lanatana's policies, services, products, strategies and many more.
2.3 Areas for business expansion
Lantana cafe can expand its business both in terms of products and geographic locations.
The company needs to form various plans and strategies for expanding its business (Wang and
Altinay, 2012). It needs to take into account following:
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1. PESTLE Analysis – It includes analysis of following factors: Political factors such as tax policy, infrastructure and various regulations impact the cited
organisation. Economic factors include rate of inflation, labour cost, growth rate that influence the
organisational processes. Social factors are related to culture, education, income distribution and other
demographic factors that needs to be taken into consideration while deciding areas for
expansion (Draycott and Rae, 2011). Technological factors: Emerging technologies greatly influence the functions of the cited
firm. Legal factors: The laws and regulations of the area where company is planning to expand
needs to be complied.
 Environmental factors: Lantana cafe would also consider various environmental factors
that would affect its expansion.
2. Ansoff Matrix Market penetration: The cited firm can expand in the existing market by using new and
improved marketing techniques and developing different pricing strategies. Market development: Lantana cafe can expand its business in different geographic
locations and new market segments i.e. more new restaurants can be opened in different
locations (Nga and Shamuganathan, 2010). This can be done by conducting market
research and formulating effective marketing strategies. Product development: New products can be introduced in the same target market, this
ensures customer satisfaction.
 Diversification: It means involving in a different business which is currently not operated
by the cited firm.
Expansion strategies
The cited firm can use the following expansion strategies: Franchising: It can open more new outlets by giving franchisee rights to other investors
who will operate in the name of the firm (Van Der Wijst, 2012).
 Joint ventures: The cited firm can also enter into joint venture agreement with other party
to expand its business.
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TASK 3
3.1 Assessment of existing business objectives and plans
The main objective of any business is to earn profits by enhancing the sales of their
products in their markets. The main aim of Lantana cafe is to earn profits, ensure customer
satisfaction by providing effective and timely services and growth and expansion of business by
surviving in the market and developing strategies to face the tough competition.
For measuring performance of any organisation, certain indicators of performance are
used such as feedback of customers, financial outcomes. The key performance indicators of
restaurant business are operating profit, total revenue, customer satisfaction, efficiency and
market share (Smallbone, Welter and Egorov, 2010). The KPIs are linked with the goals and
objectives of the cited firm and they vary as per business focus and objectives.
One of the major KPI of Lantana cafe is customer feedback as it is essential to change or
develop strategies of the organisation. It ensures that customer grievances are solved in effective
and timely manner. Another important performance indicator is related to financial outcomes
that includes profit before and after tax, total revenue, growth rate in terms of profit etc.
The main limitation of the KPI of the cited organisation is that these are not measured in
a proper manner so it becomes difficult to make improvements for the future.
With the help of effective plan and objectives, Lantana cafe can make successful
operations. In this way, they have to implement plan with assessment procedures. It includes
following elements to obtain effective outcomes: Assessment of objectives as per the enterprise performance: In respect to Lantana cafe,
proper maintenance of their outcomes and performance needs to be done. This could
further be achieved by consistently assessing their performance. Thus, they could easily
measure employee performance by focussing on assessment of balance sheet, profits and
loss accounts and many other elements. Make changes for ascertain objectives and goals: In this step, positive and negative
impacts will be identified from business performance at workplace. Thus, organization
will achieve their targets and assess loopholes of the company in systematic way
regarding their business. It also gets developed by monitoring development objectives of
the enterprise to analysis outcomes and performance.
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 Impact of changes on business performance: It is important to make necessary
modifications within the business environment of an organization. In this aspect, by
effective aid from modified changes, the company can formulate their policies and rules
towards Lantana cafe.
3.2 Business plans
Main objectives of the chosen firm is established new bars in different areas of the
market. Therefore, they can implement performances and outcomes in successful manner. In
order to compare the past performances, the organisation need to expand their business in new
areas so that profitability will be enhanced in successful manner. In respect to make business
plan in Lantana cafe, following elements are included to target the people:
Adopt the latest technology: In respect to evaluates performances of the organisation,
plan need to be change as per the customer demand. Therefore, Lantana cafe need to establish
their operations with the latest technology. It assists to deliver effective products and services at
workplace.
Evaluating business outcomes: With the help of evaluating the business performances,
plan could be design that assist to accomplish objectives of Lantana cafe. Main aim of the
selected business is to carry operations and functions with implement new stores and bars. Thus,
plan is need to be implemented through evaluating outcomes.
Revising structure: In respect to revise the structure, the chosen business have to develop their
performances which assist to frame productivity with implement new services. Hence, demand
could be meet with business changes and maintains the performances.
Change in budgeting: In this way, budgeting has been prepared through developing
changes at workplace. Therefore, budgeting is required to assess the business target and
performances in successful manner.
Future growth forecasting: Future growth forecasting has been evaluating with
implementing of present results. In this way, future expansion has been done through carrying
new things within the business environment of Lantana cafe.
Lantana cafe constantly tries to revise its business plans and make changes for the growth
of business by using different techniques like forecasting, budgeting and comparing with past
performance reports. The cited organisation should offer high quality food to its customers and
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give directions to the staff for providing the same (Al-Dajani and Marlow, 2010). The company
can also adopt new marketing strategies to attract more customers and widen its customer base in
new market segments. To achieve objectives and goals, Lantana cafe need to concentrate on
various elements such as adopting of new technology. In this way, they can easily make changes
according to customer requirements. As results they will easily develop market and profitability
at workplace to show positive environment. In this way, the company can also demonstrate
benefits to provide services quickly at workplace.
The current business plan of Lantana:-
The current revenue of Lantana Cafe is about $248,783 USD. So, the current plan is to
raise revenues from $248,783 to approximately $485,786. Therefore, for the maintenance of 58%
profit margins, it is expected to observe net growth from $120,000 towards $145,000 within the
time span of approximately 3 years.
So, on the basis of current business plan, following objectives formulated are:-
 Selection by local-restaurant guide as one of the best coffee bars.
 To turn in the profits from the beginning month of operation.
 To maintain 58% margin in gross.
Objectives that have not been achieved and revising the set of objectives:-
After the time span of 3 years Lantana has not been able to maintain its 58% gross
margin because the preferences of localities have changed. They are trying to offer the same
varieties of coffee again. Sales have been facing a gradual decrease because less varities are
available and customers usually get bored b y seeing the same variety. This has directly impacted
their gross margin and gradually decreased from 58% to 50% gross margin.
So, the revised list of objectives can be formulated as follows:-
 To introduce multiple varieties as per the choice of customers arriving at Cafe.
 To enhance the gross margin from 50% to approximately above 60%.
Comparing to the past performance, these new revised objectives will further assist in
enhancing the efficiency of Cafe to deliver their customers with quality coffee. Furthermore,
comparing to early maintained 58% gross, this 60% gross-margin will assist in building up of
developed small business enterprise.
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3.3 Action plan
In respect to meet with objectives, following action plan is needed at workplace:
Activities Resources and
responsibilities
Time frame
To enhance capabilities of
Multi task
These skills are develops
through taking directions from
mentor
2 Months
To increase capabilities of
problem solving
These skills are enhanced
through taking coaching and
advise from director
3 Months
To enhance capabilities of
presentation
These skills are develops
through take part from
management games.
2 ½ Months
To implement the changes in the cited organisation effectively, an action plan is
developed. The first and foremost plan is to have vigilant and supportive staff that ensures
excellent services are provided to the customers and their feedback are considered and changes
made to ensure satisfaction. The company can also use new technologies such as replacement of
old bar code with new equipment, free Wi-Fi can be made available to attract more customers,
their feedback can be taken through social media (Mason, 2015). Moreover, new and more
effective marketing strategies are required to be developed in order to attract new customers in
new target segments. For this proper market segmentation, targeting and positioning is to be
done. Lantana cafe can provide various offers and discounts like combo packages etc. that would
help to attract more customers and retain the old ones. The company should also focus on some
cost cutting measures so that unnecessary costs can be reduced and help in earning more profits
to the company. All these plans should be implemented in a proper manner to ensure that the
organisational goals are achieved. For achieving efficiency in work, following SMART
objectives could be developed. The resources have also been allocated along with the set
timeframes and responsible authority.
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Smart objectives
 Specific: To introduce varieties in the coffee for attracting ample of customers.
 Measurable: To achieve growth margin up-to 60% to enhance Lanata's performance.
 Achievable: To expand the cafe branches in all sectors of London.
 Relevant: To build up the network profile for introducing advanced facilities. Time-bounded: To renovate the cafe within 6 months with all new facilities.
Allocation of resources
After setting time frame, the chosen business need to develop resources and outcomes
with allocation of resources. Thus, they have to concentrate on developing performance with
effective resources. In this way, Lantana cafe can easily make their results and performance
through allocation of resources.
Responsibilities: For achieving the smart objectives, responsibility shall be handed over to
managers as well as head of different departments.
Time frame and deadlines: As per the set smart objectives, time frame and decided deadlines for
it is maximum of 6 months. If Lantana is able to re-launch itself within the set deadline then, it
would be able to attract more number of customers and it will re-establish itself with all the
objectives achieved.
TASK 4
Covered in ppt
CONCLUSION
It can be summed up from the above report that a small business can be determined as
any business which have less than 250 employees and they are owned independently and
operated for profit. Businesses having 1 to 10 employees are known as micro business. As per
SWOT analysis of Lantana cafe, it can be inferred that the main strength of firm is flexibility and
innovation and major weakness is capital is very less and it lacks effective systems and
procedures. The firm has opportunity to expand its business in different market segments and
geography. It can be concluded that various factors as per PESTLE analysis – social, economic,
technological, political, legal and environmental needs to be considered for the expansion of
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business. Moreover, it can be analysed that the main objective of the cited organisation is to earn
profit and survive in intense competition which can be done by formulating different strategies
and plans.
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REFERENCES
Books and Journals
Ackermann, S. J. and Audretsch, D. B. eds., 2013. The economics of small firms: A European
challenge(Vol. 11). Springer Science & Business Media.
Al-Dajani, H. and Marlow, S., 2010. Impact of women’s home-based enterprise on family
dynamics: Evidence from Jordan. International Small Business Journal.
Burns, P., 2010. Entrepreneurship and Small Business: Start-up. Growth and Maturity. Palgrave
Macmillan.
Draycott, M. and Rae, D., 2011. Enterprise education in schools and the role of competency
frameworks. International Journal of Entrepreneurial Behavior & Research. 17(2).
pp.127-145.
Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
Gronum, S., and Verreynne, M. L. Kastelle, T., 2012. The role of networks in small and
medium‐sized enterprise innovation and firm performance. Journal of Small Business
Management. 50(2). pp.257-282.
Lamphere, L., Stepick, A. and Grenier, G. J., 2011. Newcomers in the Workplace: Immigrants
and the Restructuring of the US Economy. Temple University Press.
Malhotra, R. and Temponi, C., 2010. Critical decisions for ERP integration: Small business
issues. International Journal of Information Management. 30(1). pp.28-37.
Mason, C. M., 2015. Spatial variations in enterprise: the geography of new firm
formation. Deciphering the Enterprise Culture: Entrepreneurship, Petty Capitalism, and
the Restructuring of Britain.–1991,–Р, pp.74-107.
Nga, J. K. H. and Shamuganathan, G., 2010. The influence of personality traits and demographic
factors on social entrepreneurship start up intentions. Journal of business ethics. 95(2).
pp.259-282.
Schaper, M. T. and et.al., 2014. Entrepreneurship and small business.
Smallbone, D., Welter, F. and Egorov, I., 2010. Government and entrepreneurship in transition
economies: the case of small firms in business services in Ukraine. The Service Industries
Journal. 30(5). pp.655-670.
Van Der Wijst, D., 2012. Financial structure in small business: Theory, tests and
applications (Vol. 320). Springer Science & Business Media.
Wang, C. L. and Altinay, L., 2012. Social embeddedness, entrepreneurial orientation and firm
growth in ethnic minority small businesses in the UK. International Small Business
Journal. 30(1). pp.3-23.
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