Black Penny Coffee House Growth Plan: A Business Report

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Planning for Growth

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................2
P1, M1, D1 Analysing key consideration for evaluating growth opportunities.....................2
P2 Evaluating the opportunity for growth with Ansoff’s growth vector matrix....................4
TASK 2......................................................................................................................................7
P3, M2, D2 Assessing different source of funding with advantage and disadvantage..........7
TASK 3....................................................................................................................................10
P4, M3, D3 Designing business plan for Black Penny Coffee and Restaurant...................10
TASK 4....................................................................................................................................12
P5, M4, D4 Assessing exit or succession options for small business with its benefit and
drawbacks.............................................................................................................................12
CONCLUSION........................................................................................................................14
REFERENCES.........................................................................................................................15

INTRODUCTION
Planning for growth is the strategic plan of a business owner in order to increase the sales and
profit of its business through expanding the business operation. It is important to consider
various opportunities for growth in order to stay competitive at market place. In this regards,
the present report will highlight the plan for growth of Black penny Coffee House and
kitchen. Black Penny Coffee House and kitchen is based in London, UK. The report will
highlight its plan for growth of expanding business operations in new market. The report will
includes the opportunity for growth and evaluate it with Ansoff’s growth matrix. Further,
reports will include different sources to raise the fund for the business plan for growth.
Report has presented a complete business plan for Black Penny. At last, report will highlight
exit and succession option that are available for the small business owner.

TASK 1
P1, M1, D1 Analysing key consideration for evaluating growth opportunities
In hyper competitive business world, it is important for any firm to look for an opportunity
for growth and development. Planning for growth is the strategic plan of the business owner
to enhance its sales and revenue of goods and services. Black Penny is a small scale coffee
shop and restaurant in London, U.K. As the restaurant industry in UK in highly competitive,
the management has to search for the opportunity so that the sales and revenue can be
increased (Beauregard, 2015). In order to identify the opportunity of growth, management of
Black Penny restaurant has to consider various aspects of market which include:
Competitive advantage: It is important for an organisation to consider its core competence
which helps to gain competitive advantage over businesses in market. These core
competences are the resources and capabilities which will differentiate it from others firm.
Black Penny restaurant is famous for its excellent service and fresh coffee beans which helps
it in increasing its sales. These are the resources and capabilities of Black Penny that allow
the restaurant to achieve profitability and market share. Management can formulate the
strategy to exploit its resources and capabilities which helps it in gaining competitive
advantage and an opportunity to grow at market place.
Porter Generic strategy: The model suggest four strategies which restaurant can adopt in
order to gain competitive advantage. In this regards, following are the strategies:
Cost leadership: This strategy can be adopted in two ways, either by being a low cost
producer or through lower down price of products compare to others in industry. Cost
leadership strategy leads the firm to produce the products at lower manufacturing cost than
other competitors and offer the products at lowest price than other competitors in industry
(Diappi, 2017). Through adopting this strategy, firm can increase its market share and
achieve cost advantage with low price products and earned profit with reduced producing
cost.
Differentiation: In this strategy, organisation will offer superior quality of products and
services in comparison to other competitors which helps them in differentiating from other
firm in market. Black Penny through their customer service and food quality can attract the
customers in market and increase its sales.

Focus strategy: This strategy rests on the choice of a narrow competitive scope within an
industry. There are two focus strategies which restaurant can adopt, cost focus and
differentiation focus. In cost focus, organisation aims to attain the cost advantage in market.
On the other hand, differentiation focus strategy aims to attain differentiation of their product
or services in market.
As per the analysis of the ascertained strategies, the Benny restaurant is small organisation
and can be effective for the organisation to adopt the cost leadership strategy. This increases
cost of the services can be reduced and effective management of the operations can lead to
meet with the organisational profits. In order to have differentiation from the competitors,
menu of the restaurant can be revised and also range of food products can be added to the
menu range to gain the key competitive advantage. It also requires business to focus on the
competitive advantage that includes satisfaction of the customers in terms of receiving
excellent kind of services. Current customer base can be reached with focussing on the
marketing strategies. For example, messages and mails can be sent to such customers if
business undergoes any of the positive change in the organisation.
PESTEL: It is an analytical which helps the firm to identify external factors which can
impact on the business operations and performance and also allows the restaurant to grow its
operations and profitability. Some of these factors are:
Political: It includes government policies, stability and instability which can favour the
growth of restaurant. The political condition of UK is favourable for the SMEs which allow
Black Penny to expand their business operations.
Economical: Economic conditions of the UK are favourable and have suitable growth of
GDP and government also provides effective schemes and incentives for small business
expansion. On the other hand, stable conditions in economic conditions will not impact on
prices and operations of the organisation. In addition, negative impact can be observed in the
business when the country faces the conditions of the crisis.
Social: Socio-cultural factors include the taste and preferences of the customers, age
distribution, demographics, and health consciousness (Love and Roper, 2015). These factors
are important to consider as they have direct impact on the sales and growth of the business.

Technology: It includes adaptation of the new technology in organisation which facilitates
the business operations and enhances the customer’s service in restaurant. Online payment
and self-order is the new technology which restaurant can adopt to provide better customers
experience.
Environmental: It includes factors such as doing business in an ethical and sustainable way,
attaining carbon foot-print target set by government. The consumers are demanding the
products from ethical and sustainable sources. In this regards, restaurant has to ensure to
minimise the wastage of food and full utilise the raw material.
Legal: This factor includes the laws and regulation such as health and safety, preparing
hygienic food, consumer’s right and laws etc. It is effective for the business to follow legal
policies that includes having patent and copyright over the strategies and process of
production. It also includes following policies and practices that will create the positive
workplace culture in the form of offering health and safety of workers, offering them
minimum wages, etc.
For achieving the success in the competitive market, it is effective for Benny restaurant to
consider the above explained external factors. It is necessary to take the advantage of
government incentives that helps to expand the business operations. In addition, more
workforces can be appointed by the organisation to improve the customer service and
economic benefits of UK can be appointed to expand the operations in the organisation.
P2 Evaluating the opportunity for growth with Ansoff’s growth vector matrix
It can be said that, Black Penny restaurant has several growth opportunities in market.
However, it is essential to evaluate these opportunities on the basis of core competences
which help it in gaining the competitive advantage at marketplace (Naini and Gill, 2017).
Restaurant also has to consider its financial resources and determine the opportunity which is
profitable for growth.
Ansoff’s matrix: Ansoff’s growth matrix is an essential tool which helps in determining the
growth strategy of organisation. As per this model, a firm can achieve growth either by
introducing new product or by entering a new market place. Moreover, there are four
quadrants in Ansoff’s matrix which are describes as follows:

Figure 1 Ansoff's growth matrix
(Source: corporatefinanceinstitute.com, 2018)
Market penetration: In this strategy, organisation sells its existing products in the same
market in order to attain the market share. With different marketing activity and strategy,
organisation can attract more customers and increases its sales. Restaurant can use its same
food and beverages products in same market areas by lowering its prices, start giving offers
to regular customers, combo’s and discounts. It is efficient to improve the long-term sales.
Product Development: In this strategy, restaurant can introduced new product line or make
changes in existing products to be offered in same market. Restaurant can start new ranges of
food and beverages to attract the customers and increases the sales. This is an effective
strategy in gaining the market share over other competitors. It requires effective market
research related to the changes in taste and food preferences of the customer and current
market trend in food industry.
Market development: It is the market expansion strategy where firm enters a new market
with existing product. It is an effective strategy to attract the new customers and increases the
sales. Market expansion can be done through either entering new geographic areas or by
targeting new customer segmentation (Argenti, 2018). Black Penny can adopt this strategy to

expand its operations in new market to attract more customers and increased the revenue. The
restaurant has to analyse the new market on certain criteria before entering the new market.
Diversification: It can be termed as the most risky but the success will lead to give more
profit than any other strategy. In this stratergy, firm enter in completely new market with a
new product. The restaurant can start a new product line as per the preference and demand of
the new market. There are two methods which can be employed to diversify a firm, by related
diversification or through un-related diversification. Related diversification is offering the
product synergic to the firm and unrelated is producing or offering completely new product.
It can be said that, Digital platform has served as an engine to innovation for the new product
development. Adaptation of new technology in restaurant is effective in attracting more
customers and increases the revenue. Black Penny has customer friendly and efficient
website which helps in expanding the network that helps in generating growth opportunity to
restaurant.
On the basis of analysis of the suitable growth option, it is effective for the Benny restaurant
to focus on the strategy of Market penetration as entering the new market would be risk as it
require huge capital and high resources. For improving the current business sales and
revenues, efforts of the business must be based on activities of marketing. For example,
social media can be used as the effective method to enhance the promotion of the restaurant
in the market. In addition, current customers can be targeted by sending mails and messages
to the customers about the modifications made in the business.
Black Penny restaurant should adopt the market development strategy in order to expand its
business operations for growth. Firm can enter the new market by offering its existing
products in food and beverages to attract more customers and maximise the profitability. In
order to mitigate the risk of the market development, firm has to analyse the new market
through different market analysis and competitive analysis (Clark, 2017). It will help the firm
to make effective strategies to use its core competences and gaining competitive advantage
over others.

TASK 2
P3, M2, D2 Assessing different source of funding with advantage and disadvantage
In order to plan for growth and business expansion, financial resources are foremost essential
requirement. Having sufficient fund is important to execute different activities and operations
for growth appropriately. For small and medium businesses like Black Penny, it is very
difficult to find sources of fund in order to finance their business plan of growth. In this
regards, different sources of funding with their benefits and drawbacks for Black Penny
restaurant are described below:
Retained earnings: It is the part of the profit which business has retained for its future
business operations. As a small business, Black Penny can use its retained earnings for the
plan of growth. Using retained earning has both benefit and drawback.
Benefit and drawback: Using retained earnings to raise funds is simple and cost effective
method. Firm don’t have to pay any interest on the capital amount, if the firm has sufficient
retained earning they can face the ups and down of business as well (Gough, 2015). However,
this method is appropriate for the firm that have large amount of retained earnings.
Bank Loan: It is the most effective and common sources to raise funds. The commercial
banks and other financial institution provide long-term and short term loans to organisation
for their business operations. Banks provide funds to the organisation in different ways such
as overdraft, cash credits, term loan etc. Bank charges regular interest based on the loan
amount which can be repaid either in lump-sum or in instalment. However, raising funds
from bank loan has its own benefits and drawbacks:
Benefit and drawback: Bank loan is the easiest and simple method to raise fund. Interest
paid on the bank loan is tax deductible expenses. The long-term loan is suitable as firm need
not to pay any other amount than interest which helps in retaining profit. The drawbacks of
the bank loan can be its strict requirement of the collateral which is difficult to provide for
small businesses. The periodic payment can sometimes becomes burden as failure in
repayment of amount will results in seizing of assets.
Personal savings: It is one of the efficient options to raise funds for small businesses. For
small businesses like Black Penny, is the easiest and cost effective to invest the personal
savings in the business plan of growth (Haines, 2016). Personal savings can also be borrowed
funds from friends and family. This source has its own benefit and drawbacks.

Benefit and Drawbacks: It is effective method in which owner known how much money is
required to finance the different activities and operations of new business plan. Self-finance
allows the management to have control over the fund amount and expenses. There is no need
to repay the amount and can retain all the profit earned. However, using personal savings can
put financial strain on business and family. Failure of the business plan will left the owner
with no money.
Appropriate source of funding for Black Penny
To finance the new business plan of growth, Black penny restaurant can raise funds from
bank loan. It is cost effective method for the small businesses. It is efficient for the firm as
there is no interference of the bank in business operations and organisation has to pay only
regular interest which is also tax deductible expense.
Investment decision making: Once the restaurant gets the financial resources, it is essential
to take the investment decision. It is the decision which the investors or management of
organisation takes regarding the amount of funds to invest in the profitable opportunity.
There are two types of investment decision, long-term and short term (Gurran, Gallent and
Chiu, 2016). The decision of investing funds for the long term is capital budgeting. The
market expansion plan of Black Penny restaurant will require capital budgeting as it will
yield profit slowly.
There are various financial appraisal techniques which help in analysing the effectiveness of
business plan. The different financial appraisal techniques are as follows:
Pay-back period: It is the simplest way to find out the effectiveness of the business plan. It
simply refers to the amount of time a plan will takes to receive the cost of the investment.
Management of Black Penny can evaluate the payback period to identify the effectiveness of
the business plan.
Net present value: It is the difference between the present value of cash inflow and the
present value of cash outflow over a period of time. It is effective method used in investment
planning to analyse the profitability of the business plan. It is effective for the restaurant
management to analyse the NPV before investing in the new business plan.
Recommendation: Black Penny restaurant should utilise its core competencies like excellent
customer service and product quality to gain competitive advantage over other at
marketplace. Restaurant should use Ansoff’s growth matrix to analyse the best strategy to

expand its business operations. In order to expand the business in new market, restaurant
should evaluate different factors and make effective strategies effectively to expand its
business operation in new market.
It can be said that in order to finance the business plan of growth, Black Penny restaurant
should opt for bank loan to raise the funds. It is the efficient source of funding in comparison
to other sources. Despites for the drawback it is effective to raise fund from bank.

TASK 3
P4, M3, D3 Designing business plan for Black Penny Coffee and Restaurant
Business Plan
Introduction: Planning for growth is important to expand the business operations and
increasing the sales and overall profitability of firm at marketplace. Black Penny restaurant is
well known coffee house is London, UK. The restaurant is successfully operated in two
locations in London and is planning to open a new restaurant in Winchester. Black penny will
offer their existing food and beverages to attract the customers and increase the
organisation’s profitability.
Company description: Black Penny Coffee House and kitchen is based in London, UK. It
has two stores in London. The restaurant also offers the fining and catering facility.
Mission
 To increases the sales and satisfaction of customers from product and services.
 To offer the quality food and beverages to increase the market share of restaurant.
Vision
 To become leading Coffee house in restaurants industry by offering best services to
customers.
 To satisfy the stakeholders through ethical and sustainable business operations.
Market analysis: It involves the analysing and determining the factors related to the target
market which can affect the business performance. Market analysis can be done by following
manner:
Market Segmentation: It is the process through which the manager will divide the target
market of potential customers into different groups on the basis of certain criteria. The
criteria will set on the basis of needs, interest, and location. Restaurant will target the young
customers.
PESTEL analysis: This tool helps in analysing the factors which can impact the planning for
growth. It includes the factors such as political, economical and technological of new market
which helps the firm to enhance its business operations (Dimitrakopoulos, 2018).
Organisation needs to prepare strategies to overcome the negative impact of such factors. The