Unit 42: Planning for Growth

Planning for Growth

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Business plan...............................................................................................................................3
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Financial resources form the backbone of any business development and expansion
opportunity. The following report evaluates the different alternative sources of fund available to
SMEs and also attempts to determine suitable exit or succession strategies for the management of
SMEs with the help of critical evaluation.
TASK
Business plan.
Business plan is a detailed written document that provides information about the goals and
objectives of a business organisation and the manner in which the organisation plans to achieve
these goals and objectives in a fixed timeframe with the help of its promotional and marketing
strategies (Finch, 2013).
SMART Analysis is an effective tool used for planning and attaining the goals of an
organisation. According to this tool, every goal of a business organisation should be SMART i.e.
specific (clear and precise requirements), measurable (elements for monitoring the progress and
attainment), achievable (with a reasonable efforts and inputs), realistic (taking into account the
skills, resources and competencies of the organisation) and timely (within a pre-determined
timeframe) (Bjerke and Renger, 2017).
The business plan for the management of Marshfield Bakery is being demonstrated as follows:
Executive Summary:
The following business plan provides information about the mission and vision of
Marshfield Bakery and takes into account the existing products and services that are being
offered by the organisation to determine a strategic growth opportunity based on key trends and
factors in the external environment of the organisation. The business plan also determines the
sources of funds which will be utilised for investing into the business growth opportunity and
provides a detailed financial information to assess the profitability and the viability of investing
into business growth opportunity.
Company Summary:
Marshfield Bakery Limited is a medium-sized business organisation which was founded
in the year 2005 and the company has its registered office in Chippenham, Gloucestershire,

United Kingdom. The company employs more than 80 people and the turnover of the company
in the year 2019 was £6.83M (Key data, 2019).
Products:
Marshfield Bakery provides a wide range of bakery products that are home-manufactured
with promising quality. The products offered by the business organisation include cookies,
handmade cakes, biscuits, snack bars and a range of other seasonal products as well that are
distributed throughout many areas in the United Kingdom.
Market Analysis Summary:
Based on the analysis of market trends and the factors in the external environment of
Marshfield Bakery, it can be summarised that there are many growth opportunities that can be
considered by the management of the company. It includes making use of technological
developments, offering new innovated products and expanding to different markets domestically.
Technology has disrupted operations in every industry and with the help of using digital
marketing technology, the management of Marshfield Bakery can promote the sales of the
company. It has also been observed that consumers’ preference for healthy and nutritional
products is increasing that presents a business growth opportunity for the company. Brexit has
opened an opportunity for the organisation to offer its products more extensively in different
market areas domestically for growth and development of the business.
Strategy and Implementation:
1. Using social media tools such as Instagram and Facebook to generate more leads digitally
and increase brand awareness: To increase the number of leads generated digitally by 12% in the next 12 months with
the help of social media marketing and social networking websites such as Instagram and
Facebook.
2. Due to a decrease in the cost of capital, the management of the company can offer additional
discounts to attract more customers and increase customer base: To increase the lead conversion ratio for both online and offline sales by 25% in the
period of next 18 months using tools of sales promotion such as discounts on first-
purchase, cashback offers and customer referral bonus.

3. The management of Marshfield Bakery have the strategic option to offer existing products and
services in new market areas which were earlier being dominated by other European companies
to increase sales and revenue: To increase sales by opening new stores in new market areas by 12% in the period of
next 12 months.
4. A range of new products can be offered by the management of Marshfield Bakery considering
the consumer preference for healthy eating and nutritional products such as nutritional snack
bars or oatmeal cookies: To increase the sales of the company by 5% with the help of making additional sales in
new innovated products that also promote healthy eating habits among United Kingdom.
Financial Plan:
For making investments into the above mentioned strategis for business growth and
development, financial requirements worth £20,000 are expected that will be used for different
activities such as R&D costs, marketing and sales promotion expenditure, product development
costs etcetera. A loan worth £10,000 for a period of five years will be taken from the bank and
retained earnings worth £10,000 will be used for meeting the financial requirements of the
business growth opportunity. A detailed financial plan is being presented as follows:
Marshfield Bakery Ltd.:
Financial Plan:
INVESTMENT (in £)
Research and product development
costs:
4,000
Production equipment costs: 8,000
Marketing and promotions expenditure: 5,000
Training and development: 3,000
Total cost of the project: 20,000
Depreciation to be waived off annually 4,000 per

for a period of 5 years: annum
Sources of funds:
Retained Earnings: 10,000
Term Loans for 5 years: 10,000
Total 20,000
(Rate of Interest 4% per annum)
Revenue and Costs for the project 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR
Sales 10,000 12,000 15,000 18,000 20,000
cost of sales (50%) 5,000 6,000 7,500 9,000 10,000
gross profit (50%) 5,000 6,000 7,500 9,000 10,000
fixed overhead costs 2,350 2,350 2,350 2,350 2,350
interest payment 400 320 240 160 80
Depreciation (as above) 4,000 4,000 4,000 4,000 4,000
Profit Before Tax (PBT): -1,750 -670 910 2,190 3,570
Tax (20% of net profit) 0 0 182 438 714
Profit After Tax (PAT): -1750 -670 728 1,752 2,856

Amount of cash generated
(PAT+Depreciation)
2,250 3,330 4,728 5,752 6,856
Break-even Analysis:
Break-even refers to the point of sales where the company occurs no loss and no profit
which implies the point where fixed costs can be recovered through sales margin. The break-
even point for Marshfield Bakery is calculated as under:
Break-even point = Fixed Costs / Gross Profit Margin
= 2350/50%
= 4,700.
Hence, at a sale of £4,700, the organisation Marshfield Bakery will be at a break-even situation.
CONCLUSION
Hence, it can be concluded that different sources of funds such as bank loans, angel
business investment etcetera can be considered by the management of SMEs based on the
organisational needs and requirements. The management of SMEs can also choose among
different exit or succession strategies such as Merger and Acquisition or Liquidation that suits
the vision and values of the organisation.

REFERENCES
Books and Journals
Abraham, F. and Schmukler, S.L., 2017. Addressing the SME finance problem. World Bank
Research and Policy Briefs, (120333).
Asrarhaghighi, E., Rahman, A.A., Sambasivan, M. and Mohamed, Z.A., 2013. Diversification
strategy and performance studies: Results, measures, and sampling design. Journal of
Advanced Management Science. 1(1). pp.12-18.
Berthon, P.R., Pitt, L.F., Plangger, K. and Shapiro, D., 2012. Marketing meets Web 2.0, social
media, and creative consumers: Implications for international marketing
strategy. Business horizons. 55(3). pp.261-271.
Bi, R., Davison, R.M. and Smyrnios, K.X., 2017. E-business and fast growth SMEs. Small
Business Economics. 48(3). pp.559-576.
Bjerke, M.B. and Renger, R., 2017. Being smart about writing SMART objectives. Evaluation
and program planning. 61. pp.125-127.
Brown, R., Liñares-Zegarra, J. and Wilson, J.O., 2019. The (potential) impact of Brexit on UK
SMEs: regional evidence and public policy implications. Regional Studies. 53(5). pp.761-
770.
Cassia, L. and Minola, T., 2012. Hyper‐growth of SMEs. International Journal of
Entrepreneurial Behavior & Research.
Online
Key data. 2019. [Online]. Available thru<https://suite.endole.co.uk/insight/company/05331534-
marshfield-bakery-limited>