Laynes Espresso: Growth Planning and Funding Strategies Report

This report provides a detailed business plan for Laynes Espresso, a small cafe in Leeds, focusing on strategies for growth and expansion. It begins by applying Porter's generic strategies (cost leadership, differentiation, and focus) to analyze the company's competitive position and evaluate growth opportunities, considering political, economic, social, and technological factors. The report then utilizes the Ansoff matrix to explore various growth strategies, including market penetration, market development, product development, and diversification, assessing the effectiveness of each for Laynes Espresso. Finally, the report discusses various funding sources available to the business, such as personal savings, bank loans, and retained earnings, outlining the advantages and disadvantages of each. The analysis aims to provide Laynes Espresso with a strategic roadmap for sustainable growth and financial stability in a competitive market.

PLANNING FOR
GROWTH

INTRODUCTION
Business plan is the strategic planning of firm that help entity in understanding the actual
condition of market (Ward, 2016). Present study is based on Laynes Espresso, it is the small size
café of Leeds. Current assignment will apply porter’s generic strategies in context to Laynes
Espresso. Furthermore, Ansoff matrix will be applied to the business to determine various
growth strategies and will describe the effectiveness of different strategies for the firm. In
addition, report will discuss funding to business alone with their advantage and disadvantage.
Assignment will prepare business plan.
LO 1
P1 Key consideration for evaluating growth opportunities
Growth and development is considered as one of the most common goal of each business.
Each enterprise aims to generate more revenues. Laynes Espresso is the small size café that
offers amazing coffee products to consumers. It is essential for the firm to consider various
aspects for evaluating its growth (Cassidy, 2016). Porter’s generic strategies helps in analysing
competitive position of business unit. These are explained as below:
Figure 1: porter's generic strategies
(Source: Porter's generic strategies, 2019)
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Cost leadership: it is the strategy that must be taken into consideration by Laynes Espresso in
order to evaluate the success of the firm. Company wants to serve to wide range of consumers,
hence if it offers products at lower rates then it would be able to attract new consumers towards
the enterprise. Low cost producer always gets advantage of low operational cost hence it can
generate more profit. But it may create problem for Laynes Espresso if other competitive entities
also reduce their cost of items (Fernández and et.al., 2016).
Differentiation: It is the strategy in which firm emphases more on product development and
offering goods and services to buyers as per their need. This create value for the customers and
they get valuable products against their paid money. As organisation is offering unique goods to
their buyers hence it can sell items to them at premium prices. This strategy would be better for
Laynes Espresso because it will be able to satisfy its consumers and would be able to raise its
brand image in this industry.
Focus strategy: This is the type of tactics which emphases more on narrow segment and try to
get cost advantage or differentiation benefit. This strategy would be better for the company as it
will help in raising loyalty of consumers and making them positive towards the brand (Birkin,
Clarke and Clarke, 2017). As it emphases on narrow market hence bargaining power of suppliers
gets reduced which gives advantage to Laynes Espresso. Furthermore, differentiation focus is the
great tactic in which entity can focus more on niche market, this tactic would be better for
Laynes Espresso because it will help in establishing itself in such competitive market. Specialist
expertise would help in offering quality products to buyers which may make them a high
demanding firm (Hilber, 2016).
In order to identify growth opportunities in the market Laynes Espresso has to conduct PEST
analyses. This would be better in measuring the condition of external market.
 Political factor: Company has to ensure whether political condition of country is good or
not, if there is stability of government then it may help in conducting operations smoothly
but if there is instable government then it may create problems for the Laynes Espresso.
Hence entity has to evaluating the political condition and accordingly has to make its
strategy to expand into particular market (Dale and et.al., 2016).
 Economic factor: This is another important aspect of consideration in which Laynes
Espresso has to ensure the condition of economy of the nation. If it wants to grow in
particular market, then company has to ensure whether there is good employment rate or
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not. Demand price curve is highly depended upon the economic condition of region. If
price gets increased then demand may get affected, in such condition firm has to set its
prices effectively so that it can make balance between demand and supply.
 Social factor: Laynes Espresso will have to ensure needs of consumers and accordingly it
has to offer them coffee products. It can use reusable cups which may help in
contributing well towards environment and will raise image of firm in the mind of
consumers (Hunt and DeVries, 2019).
 Technology factor: This is another great consideration aspect, if entity uses advance
technologies then it would help in minimising its cost. Use of mobile applications would
gain attention of buyers and it will be able to raise its sales.
P2 Ansoff matrix
Ansoff matrix is the tool which help the marketer in analysing the way through which it can
grow in the market and can find new opportunities of development.
Market penetration
It is the tactic in which company can sale its existing products and services into existing
market. This is considered as most cost effective strategy that supports the firm in gaining
attention of local buyers. The main agenda of such tactics is to raise sales and raise satisfaction
level of buyers (Kepczynski and et.al., 201). As Laynes Espresso is operating in UK hence it is
well aware with needs of local buyers, if it offers them existing products then it would be able to
satisfy its customers and would be able to retain them in business for longer duration. It has
adequate resources and capabilities to serve to existing market hence it would not create problem
for Laynes Espresso and firm will be able to grow well in the market. This will give benefit to
the entity in increasing its market share. The main benefit of implementing this strategy is that
firm has knowledge of local market so it would be able to offer satisfactory goods to consumer’s
asper their requirements. Hence it would be easy to enhance satisfaction level of consumers and
it will help in making its position so strong in local market. But entity will be limited only to the
local market, it would not be able to gain global brand image.
Market development
It is another strategic direction that can be apply by Laynes Espresso in order to grow
well in the market, in this tactic enterprise can enter into new market. Market development
always support in reaching to new potential buyers and turning them into real consumers. By
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entering into new geographical location it would be able to raise its revenues (Achtenhagen,
Brunninge and Melin,2017). To some extent this strategy c may create risk for the firm because
it has no knowledge about that market and needs of their consumers hence it may create problem
and may increase its cost as well. The main benefit of this strategy is that it would help company
in gaining global brand image. But it will enhance risk of failure in Newmarket because firm has
no knowledge about the new market.
Product development
Laynes Espresso can develop its products and can increase range of products. It will
have to analyses needs of specific consumers and accordingly it would have to design new
products so that it can fulfil its consumers. This would defiantly give benefit to business unit
because it would be able to satisfy needs of mass audience hence it will rias company’s profit
and productivity as well. This strategy will give positive result as enterprise would be able to
target mass audience, as range of products will meet the needs of range of consumers. But it will
increase cost of firm as it is small size hence it would be difficult to manage such large number
of products.
Diversification
Firms can develop its products and market both, that means it can enter into new market
and can offer new products. Though high risk is associated with this strategy but if Laynes
Espresso gets success in satisfying needs of new consumers then it would be able to raise its
profitability and market to great extent (Porter's generic strategies, 2019). This would be
beneficial in attracting international consumers and the range of consumers hence profitability
will be increased. But risk of failure is also associated with this strategy.
LO 2
P3 funding sources for business
Laynes Espresso will require funds for further expansion and development, Various sources
of finance are available for Laynes Espresso, these are explained as below:
Personal saving
As it is small size café hence owner will have to spend own capital into the business. This
is quite simple process to get fund (Dale and et.al., 2016).
Advantage
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 The main benefit of personal saving is that owner of Laynes Espresso will have full
control over the business operations. As individual has not shared its ownership with any
third person hence it is quite easy to make decisions and run business as per own norms.
 As it is their own capital hence fund can be utilised easily without any restriction and
legal formalities.
Disadvantage
 If Laynes Espresso fails to make money then it may impact negative on the financial
condition of owner (Retained Earnings: Meaning, Features, Advantages and
Disadvantages, 2019).
 Through personal saving person may get limited fund and individual will not get expert
or valuable guidance which is very important for the growth of business unit.
Bank loan
This is another source of finance in which Laynes Espresso can take loan from any
financial institute. Bank gives fund to business for their development and expansion, the main
agenda of financial institutes to provide necessary financial support to the firms so that they can
grow well and pay interest on time. Bank measure the capability of entity and accordingly
sanction the loan amount.
Advantage
 benefit of taking bank loan is that it gives flexibility to the business owner, as if the firm
is generating good amount of revenues and owner has necessary funds then individual
can repay the entire loan anytime (Ward, 2016).
 It is cost effective way to get huge funds, as Laynes Espresso is small size firm and it
requires huge amount for further development. Through this source it can meet with its
financial needs and can repay the loan amount in instalment. These monthly instalments
do not create financial burden on the business unit. Apart from this, banks charge low
interest rates from the small firms which saves money of company (Fernández and et.al.,
2016).
 Tax benefit is another great advantage of this source of finance, if Laynes Espresso takes
loan from the bank then entity may get benefit in tax.
Disadvantage
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 Bank gives loan after assessing the value of business, if legal documents are not
completed then financial institute will not provide loan to the company. Hence for small
business like Laynes Espresso it is quite difficult to get loan from bank (Birkin, Clarke
and Clarke, 2017).
 Laynes Espresso will have to bear the repayment burden, as bank charge some interest on
this amount and company will have to pay in regular monthly instalment which may
increase financial burden on business unit. Furthermore, it will reduce profit of the entity,
if it fails to repay it on time then bank will cease the property of Laynes Espresso.
Retained earning
It is the type of financial source in which company utilise portion of profit in further
development or growth of business unit. The main purpose of this funding option is to repay old
debts and expand business by purchasing new assets (Retained Earnings: Meaning, Features,
Advantages and Disadvantages, 2019).
Advantage
 This is cheaper source of finance because entity can get fund on no interest, firm needs
not to pay any kind of acquisition cost hence it does not create burden on business unit to
repay the amount.
 It is beneficial for Laynes Espresso because firm will be able to stabilised its entity.
 Hence Laynes Espresso uses own retained funds which helps in appreciating the capital
of organisation. This improves market share of the enterprise and create positive brand
image in the mind of investors and they also prefer to invest their fund into the business.
Disadvantage
 If owner or management do not have knowledge about fund utilisation, then it may affect
the economic condition of entire business which will affect its sustainability in the market
(Hunt and DeVries, 2019).
 As portion of profit is used in further expansion hence firm fails to give dividend to its
shareholder which raises dissatisfaction among them.
LO 3
P4 Business plan
Executive summary
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Business plan can be defined as written description of future strategies of the firm. Each
entity makes plan so that it can grow well in the future and can gain competitive advantage. This
business plan will include background of Laynes Espresso, its internal analyses, competitor
analyses and financial planning (Kepczynski and et.al., 2018).
Mission and objective
Mission of Laynes Espresso is to become the market leader in café industry. It wants to
increase sales of expresso coffee by 25% till the end of 2019. Furthermore, company aims to
raise its number of consumers till the end of 2019.
Company information
Laynes Espresso is the small size café that serve quality coffee items to consumers of
Leeds. It pays complete attention on quality of products and uses high quality ingredients so that
it can satisfy the needs of buyers. Recently company has started providing breakfast items to the
local population (Achtenhagen, Brunninge and Melin,2017).
Swot analyses
It is the technique which is used to evaluate the internal environmental condition of
business unit.
Strength
 It offers wide range of items to consumers as per their needs and preferences.
 It pays emphases on quality, that is why existing consumers of Laynes Espresso are
satisfied.
 It has amazing physical outlet which attracts people towards the firm.
Weakness
 As it is small size entity hence it has limited financial; resources. Due to weaker financial
position it faces difficulties to develop new products and enter into new market.
 Poor brand awareness it another weak point of Laynes Espresso, company spends less
amount in marketing hence less people know about its products and services (Cassidy,
2016).
Opportunities
 Globalisation can give opportunity to business unit and it can enter into new market
which will raise its global brand image.
 Technological advancement can help Laynes Espresso in developing its products.
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Threats
 High competition can create threat to the firm.
 Legal restriction create problem for Laynes Espresso in further expansion (Birkin, Clarke
and Clarke, 2017).
Competitors analyses
Laynes Espresso has many competitors such as Starbucks, carbibou coffee, cafe coffee
day etc. All these are big firms hence create huge pressure on the firm. Starbucks has 12500
coffee shops in the country whereas carbibou coffee has around 415 shops in more than 16
states. In the year 2008 Caribou coffee has spent approx. 2 million amount in marketing and has
generated return over it.
Figure 2: competitors analyses
(Source: Starbuck vs Caribou coffee, 2019)
Marketing planning
Marketing planning plays significant role in development of business unit.
 Product: Laynes Espresso will emphasis more its product quality and its packaging will
be good. It will ensure that it offers amazing expresso coffee that can satisfy young
people (Kepczynski and et.al., 2018).
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 Price: It will implement penetration pricing strategy this will be great tactic in order to
gain attention of mass audience. Because by this way most of the young buyers will come
to the coffee shop and they will spend their money to have such amazing product.
 Place: Direct distribution placing strategy will be implemented because by this way entity
will be able to deal with consumers directly.
 Promotion: Social media will be used to promote the brand, by this way Laynes Espresso
will be able to make close connection with buyers. This will aid in analysing their needs
and offering satisfactory good to buyers (Hunt and DeVries, 2019).
Financial planning
Enterprise will get fund from bank loan, this would be great source of finance because
this would fulfil its long term financial need and enterprise will be able to expand business across
the world by getting adequate finance.
Months Jan Feb march April May June
Cash inflow
sales 15000 15300 15606 15918.12 16236.48 16561.21
Total cash inflow 15000 15300 15606 15918.12 16236.48 16561.21
Total outflow
Marketing expenditures 3000 3000 3200 3000 3000 3500
rent 2000 2000 2000 2000 2000 2000
salaries 5000 5000 5000 5000 5000 5000
administration expenses 2000 2100 2000 2200 2000 2000
Total expenses 12000 12100 12200 12200 12000 12500
Net cash flow 3000 3200 3406 3718.12 4236.482 4061.212
LO 4
P5 Succession options for business
Organisation may get fail to sustain in market. Laynes Espresso is the small size company
and if it invests the amount in further expansion and it gets failed then company will have to face
huge difficulties. There are various succession strategies which can be implement by business
unit. These are explained as below:
Passing ownership to successor
If Laynes Espresso fails to generate necessary revenues in the market, then it may vcreate
problem for the firm hence it has option pass the ownership of the firm to its successor.
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Advantage
 It is beneficial option because it reduces involvement of third party in business hence
business owner will not have to involve other person into decisions making process
which may keep the confidential details safe (Achtenhagen, Brunninge and Melin,2017).
 It is beneficial for the organisation because it supports in maintaining own involvement
and giving their views for the future. Owner will get rights to share their views and
suggest the successor. This involvement will maintain its presence in the company which
is good thing about passing ownership to successor.
Disadvantage
 It is difficult for the business to give training to successor about how to run business.
 If it is pass to successor, then conflict chances can be increased. There is chances that
view point of successors is different from owner hence differences in views increase
changes of conflicts at workplace.
Liquidation
It is another exist strategy in which firm can close its coffee shop and can sell its assets. If
Laynes Espresso is unable to recover its cost, then it would be difficult to sustain in the market.
For example, if Laynes Espresso fails to generated revenue and it had taken loan for growth then
it will not be able to repay that loan amount. In such condition entity can sell its all assets and
can repay to creditors. Creditors can charge some interest or fees and can wind up the loan
(Kepczynski and et.al., 2018).
Advantage
 It is the simple and quick process of getting money and repay all the debt6s. Laynes
Espresso cannot run in market for longer duration if it is unable to get revenues. In such
condition liquidation will support in getting immediate money for the same.
 Halted of legal action is another great benefit of this strategy, as if it sells its assets then
not legal action will be taken against the firm. As owner will be able to get adequate
funds to clear it all debts hence it would help in minimising legal consequences which
would be beneficial for owner and firm both and brand image of firm will be maintained.
Disadvantage
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