Unit 42: Canvas Cafe - Growth Opportunities and Exit Strategy Report

This report examines the growth strategies, funding options, and exit strategies for The Canvas Cafe, a vegan cafe and event space in London. The analysis begins with an introduction to SMEs and the importance of planning for growth. It then analyzes key considerations for evaluating growth opportunities using the VRIO model and PESTLE analysis, followed by an evaluation of growth opportunities applying Ansoff's Growth Vector Matrix. The report assesses potential sources of funding, discussing the benefits and drawbacks of each. A business plan for growth, including financial information and strategic objectives, is designed. Finally, exit or succession options are assessed, explaining the benefits and drawbacks of each, concluding with a summary of the findings and recommendations.

Investing in the future and
developing an exit plan

Table of Contents
Introduction......................................................................................................................................3
TASK 1............................................................................................................................................3
Analyse Key considerations for evaluating growth opportunities and justify these
considerations within The Canvas Cafe......................................................................................3
Evaluate the opportunities for growth applying Ansoff's growth Vector Matrix.......................5
TASK 2............................................................................................................................................7
Assess the Potential sources of Funding available to business and discuss benefits and
drawbacks of each source............................................................................................................7
TASK 3..........................................................................................................................................10
Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business...........................................................................................................10
TASK 4..........................................................................................................................................12
Assess exit or succession options for a small business explaining the benefits and drawbacks
of each.......................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

Introduction
SMEs refers to Small and Medium sized Enterprise, it is a business in which employee
are fewer than a limit (Rauch, Dallasega and Unterhofer, 2019). In UK 99% of businesses are
small and medium sized business. There are three types of SME Business they are Micro SME,
Small SME, Medium sized SME. The Micro business perform functioning of activities with less
than 10 employees and have less than turnover of €2 million. Small businesses re working with
less than 50 employees and have turnover less than €10 million. The Medium size business have
less than 250 employees and their turnover must be less than €50 million. These are the strength
of employees to qualify SME. The growth of SME is important as it creates a lot of employment
opportunities for people. Planning helps the business to identify their goals. The Chosen
organisation for this project is The Canvas Cafe which is situated in London, UK. It is a Vegan
Cafe and an event space which supports the positive social change through innovative projects in
area. The Cafe is a mobilisation Hub that opens a gate for people to show their creativity and
passion in projects. The Canvas Cafe host 60 community events such as yoga session, mental
health drop session and environmental workshops. This project consists growth opportunities,
sources for funding available in business, a plan for business growth, exit and succession plan for
small business.
TASK 1
Analyse Key considerations for evaluating growth opportunities and justify these considerations
within The Canvas Cafe.
For analysing the growth opportunities there are several factors such as resources,
capabilities, core competencies, innovating capabilities for new product of Organisation. The
resources, capabilities and core competencies of The Canvas Cafe is that they offer 100% Vegan
food which makes them competitive in the market. They serve the foods without harming
animals. In UK there are few cafe which serves 100% Vegan foods to the customers. The Canvas
Cafe have a capability to compete with its competitors as they perform the activities of Charity in
which they provide foods to homeless people which makes them unique from other Cafe and
with the help of this they can gain the competitive advantage in Market. They consumes wastage
of food and make effectively use for the peoples who need the food. For promoting their
business they can go through with advertisement in which they can create an awareness among

the customers to reduce wastage of food and help to distribute food to people who have no food
to eat. With the help of this advertisement through social media or ads in television they can gain
the loyalty of customers and attract more customers towards the Shop. To assess the resources,
capabilities and Core competencies VRIO model is suitable model to evaluate growth
opportunities.
VRIO Analysis
VRIO Model is generally conducted to analyse internal environment of organisation. The
analysis consist resources and capabilities of firm to lookout whether they can compete with their
resources or not for sustaining competitive advantage (Spina and Spina, 2020). VRIO refers to
valuable, rare, inimitable and organisable. It is a resource based view model that ascertains
Cafe's Internal characteristics and its performance.
Illustration 1: VRIO Analysis
§§
(Source: VRIO Analysis, 2021)
For analysing the growth opportunities The Canvas Cafe must conduct VRIO analysis-
Valuable-
The most valuable resources for The Canvas Cafe is their employees as they are the one
who leads business without them they cannot run their business smoothly. The employees are
key element of any organisation. The Canvas Cafe ensures that their employee must feel happy
with the services offered by the Cafe. It is the responsibility of cafe owner to fulfil the
requirements and needs of their workers as they are more valuable for the business.
Rare-

The Rare about The Canvas Cafe is that it doesn't harm animals to serve food for Human
beings. The Cafe not only offers food they also offer kindness and compassion to the people who
are in genuine need and also provide Home cooked meal for people who are homeless. The Cafe
offers 100% vegan foods to Customers.
Imitable-
The Canvas Cafe food recipe are Imitable which cannot be pursue by other Cafe. The
Cafe's valuable, rare and costly to imitate resources can achieve competitive edge in market. The
Canvas Cafe have to make their recipes imitable which cannot be copied by their competitors.
Organisable-
It is important to organise the resources to gain competitive advantages. The Cafe must
manage its process, policies, structure and culture to realise its potential for imitating resources
and capabilities.
PESTLE Analysis
Pestle analysis is conducted to analyse the environmental factors which can affect the
performance of Cafe (Griffiths, Fenton and Fletcher, 2019).
Political Factor-
The government create an impact on regulatory frameworks of Cafe, it includes
cleanliness of kitchen, storing standards, transporting produce and requirement of labours in
Cafe. They also ensure that customers didn't get poor quality nutrition.
Economical Factor-
Nowadays, people spend their money on luxuries as a result revenue of the Cafe get high
due to customers cook less and eat from outside.
Social Factor-
The Social factor can affect the Cafe negatively or positively as people are more health
conscious. They consider organic food instead of any junk food this might affect the menu of
Cafe as both type of customers get cater whether spicy or organic food. So, The Canvas Cafe can
increase their customer base by providing both type of food.
Technological Factor-
The new Technologies can create an impact on cafe, they have to take care of their
accounts and operation by using manual register. People are going towards online food delivery

platform so The Canvas Cafe have to tie up with Online food delivery platform so that they can
target large customer base.
Environmental Factor-
The Cafe's External and internal environment must be clean on regular basis and place
should be hassle free so that customer get attracted towards the cafe and can reach easily. The
Canvas Cafe must use recycled material and follow the food waste management policy.
Environmental factor could impacts the expansion and customer base of Cafe.
Legal Factor-
The Canvas Cafe have to follow the laws and they have to work under it the laws are
consumer protection laws, employment law, health and safety laws and patent laws. The cafe
should know what is legal and what is not legal while conducting business.
Evaluation:
VRIO Analysis is used to identify Resources, competencies and core competence of The
Canvas Cafe. Through this analysis it is identified that The Cafe has rare resources which makes
it different from its competitors. They offer Vegan product without harming animals. The Cafe
also serve foods to people who are Homeless. The Pestle analysis is used to identify the impacts
of External environment on The Canvas Cafe. From the analysis it is been concluded that they
have to focus on attracting customer so that the Cafe growth can increased. There are various
environmental issues which can create an impact on Outlet they have to work and maintain the
place so that customer feel safe and Healthy. The Political Factor can also influence The Canvas
Cafe as there are many protocols which they must follow for running their business successfully.
So, these analysis helps to find out the Competitive advantage and techniques to increase growth.
Evaluate the opportunities for growth applying Ansoff's growth Vector Matrix.
Ansoff Growth Vector Matrix
Ansoff's matrix is used for strategic planning where the company can apply this model to look
out the growth opportunities for Firm by developing new products or services (Van Hijfte,
2020). This Model is used to analyse and plan strategies for increasing profit and productivity of
The Canvas Cafe. Ansoff Growth Vector Matrix is also refers as product or market expansion
matrix. The matrix shows four strategies that helps The Canvas Cafe to increase their growth and
customer base so that they can compete with their competitors.

Illustration 2: Ansoff Matrix
(Source:Ansoff Matrix, 2021)
The four strategies of Ansoff matrix are analysed below-
 Market Penetration-
Market penetration Strategy means when The Canvas Cafe sell their existing product to
existing market. For increasing the customer base Cafe have to cut the prices, invest in
marketing, improve their distribution network and enhance their production capacity so that
more customers get attracted towards their product. With the help of this strategy the Cafe could
increase their market shares. The Canvas Cafe must know their food quality and their power to
compete which helps them to get current and potential strategic positioning in Market (Galavotti,
2019). The advantage which can be gained by The Canvas Cafe if they choose Market
penetration for increasing their growth is that it brings increase in sales by improving customer
base. There is also a disadvantage of Market penetration, The Canvas Cafe can face the initial
loss and difficulty also arises in case of price penetration.
 Product Development-
Product Development means developing a new product and selling it in existing market.
In this strategy The Canvas Cafe can develop new products it could be any food ingredient which
could attract more customers and must be unique. The Cafe can also make some changes in
existing food product which helps to provide better value to customers. For producing a new
product the cafe have to research on needs and requirements of customers. They can also form a

partnership with other Cafe to gain access in each others brand. The pros and cons of using
product development strategy is that they can create new product which helps in gaining more
revenues. The disadvantage which The Canvas Cafe can face is failure of product. Sometimes
the product may not give expected result and anticipate heavy loss due to poor performance of
product.
 Market development-
In this strategy The Canvas Cafe can enter new market with existing product. They can
target to different customer segment and expand their outlet in other local area. Market
Development Strategy helps to reach new customer base by locating their business in other local
area. This Strategy is Successful when they offers a food which is unique and innovative that
attracts customer to buy it. When the Canvas Cafe use this Strategy they can earn huge profit and
their growth can also be increased. Thus, this strategy helps The Cafe to improve its position in
the market. The advantage of Market development strategy is that the Cafe can gain new
customers which helps in increasing growth of Business. The Canvas Cafe can face a risk in
market development they need a huge investment for expanding their business if new location
doesn't pay off, the capital get wasted.
 Diversification-
Through this strategy, The Canvas Cafe can enter into new market with new product. For
implementing this strategy the Cafe have to take risk which helps them to gain profit. The
Diversification are of two types related and unrelated diversification. With the help of this
strategy The Canvas Cafe can enhance their profitability and productivity by tapping into new
location. Advantage of Diversification strategy is to get an opportunity for more return and it
also helps to minimise the risk of loss which can ascertained in other outlet. The disadvantage or
risk of using diversification strategy is that it reduces the quality of food when the Cafe diversify
their location with new product.
The Canvas Cafe must use Market Development strategy for increasing their growth, it
will be suitable for them to increase customer base and locate their business in new area. By
using this strategy the cafe can earn huge profit and improve their competitive position in the
market. With the help of market development strategy the Cafe can grow their business and
could reach to new customers in effective manner. If The Canvas Cafe implement the market

development strategy in successful manner they can gain the competitive advantage and their
profit margin also increased.
TASK 2
Assess the Potential sources of Funding available to business and discuss benefits and drawbacks
of each source.
Sources of Funding
Each and Every Business requires fund to run smooth functioning of activities for
achieving profit. Organisation needs sources of funding to enhance their growth. Generally fund
is taken to invest in the new project, it could be for short term or long term purpose (Feyzullaev
et. al., 2021). The various ways through which The Canvas Cafe can raise the funds are-
 Retained Earning-
Retained Earning is one of the method for raising the fund. Through this method The
Canvas Cafe can maximise their profit by selling their product higher then its actual cost. It is the
part of profits which is not distributed among shareholders as dividend. This profit is re-invested
as Retained Earning and paid as Dividend. These funds can be used to grow the business and
invest in producing new product. Retained earning is mentioned under balance sheet at the end of
each accounting period under shareholders equity section.
Benefits of Retained Profit
 Stability in Finance-
Retained Earning helps to strengthen the Financial position of The Canvas Cafe and give
them Financial stability. It is easily available Cafe doesn't need the help of owners and
shareholders in case of any urgency.
 Enhance share value-
Retained Earning helps to increase the share value of The Canvas Cafe. When the Cafe
use retained earning for meeting their financial requirement the cost of capital gets cheaper than
other sources of funding which helps in increasing value of share. The shareholders can grab this
opportunity to achieve higher return on investment rather than earning profit (Amira, Muzere and
Tsafack, 2021).
Drawbacks of Retained Earning
 Over capitalisation-

If Cafe will use retained earning more and more it will lead to over capitalisation. The
Canvas Cafe will have insufficient source of finance for increasing their growth.
 Low dividend-
Retained earning doesn't allow owner to enjoy the benefit of actual earning. It also
reduces the current rate of dividend which creates dissatisfaction and affect the market value of
shares.
 Bank Loans-
Mostly this source of funds are used by the Small and medium sized Businesses. The
Canvas Cafe can borrow money for certain period of time and repay the amount in an agreed
schedule. The benefits and drawbacks of bank loans are as follows-
Benefits
The benefits of bank loans are as follows-
 Low Interest Rates-
Banks offer low interest rates which is lower than other alternative financing options such
as venture funding, credit cards, etc.
 Unrestricted Fund-
Bank loans are unrestricted the Cafe can use the borrowed amount for whatever they
required as compare to venture capital and angel investments.
Drawbacks-
The Drawbacks of Bank loans are as outlined below-
 Long Process-
If The Canvas Cafe apply for bank loan they need to provide paperwork and have to visit
again and again to meet with loan officer for getting approval of loan.
 Tough to Qualify-
It is very difficult to obtain bank loan, The Canvas Cafe must have a substantial record or
any collateral such as equipments or Real estate.
Crowdfunding-
Crowdfunding is a modern method to raise fund for running small ventures. With the
help of Crowdfunding the small amount of money is collected from large sources (Chakraborty
and Swinney, 2021). Through Social media or web based programs The Canvas Cafe can raise
funds from various people.

Benefits of Crowdfunding
Crowdfunding is one of the successful method of raising funds by owner. The benefits of
crowdfunding are as follows-
 Easy way to raise funds-
Crowdfunding is easy way to raise funds, the owner have to search for investors who is
interested in Cafe. The Canvas Cafe have to contact to potential funders through various
locations. Crowdfunding is efficient and effective approach, owner have to use videos and
reward system to raise Fund on social media platform.
 Opportunity to refine new idea-
When The Canvas Cafe begins crowdfunding campaign they have to make sure that
investors must interfere in their business plan. This helps to improve the new idea and enable
Cafe to think whether new product will satisfy the needs of customer or not.
Drawbacks of Crowdfunding
There are several drawbacks of crowdfunding they are as follows-
 Fees-
The Crowdfunding platforms charges a fees for raising funds, the amount is minimum but
it reduces some percentage of amount which is getting through investors.
 Takes lot of time-
For raising fund through crowdfunding the Cafe need lots of time, money and efforts than
only the campaign will get successful. The Canvas Cafe needs to create videos which must be
convinced to investors and make persuasive content for selling their new product.
The most suitable method which The Canvas Cafe must use for raising funds is Bank
Loan as it is secured method at low interest rate. The cafe also have an evidence of raising fund
which they can use any time without any interference of Bank. Through bank Loan cafe can use
the money for expanding their business. They can take the loan and return the money at the given
time. It is one of the easiest method to collect money for business purpose. It is most suitable
because it is easiest and safe method for raising fund. The amount which will be provided by
bank in terms of loan will be at low interest. As comparison to crowdfunding and retained
earning, Bank loan is most appropriate method which can help the business to take money safely
under certain terms and condition.

TASK 3
Design a business plan for growth that includes financial information and strategic objectives for
scaling up a business.
Executive Summary
Growth is a key factor for businesses to lead and expand to new levels and earn best
through resources available to them in accordance to their business objectives (Masciocchi,
2019). In regards to a small business organisation a company needs to make growth plans for
attaining success and recognition in market. Hence, the business plan is for The Canvas Cafe
where the hospitality brand is planning to open another brand in London in a new market with
their same offerings. In the sections below varied areas are determined and examined for the
growth plan of opening another branch.
Company Description
The canvas Cafe is located in London, UK. The Cafe serves 100% vegetarian food, it is
also an event space in which innovative projects are conducted. The Canvas Cafe is Hub in
which people can come and show their creativity and talent. It also host 60 community events
such as mental health drop session, yoga session and environmental workshops. A place filled
with happiness and blissful food and love. The cafe offers best recipes of food with vegan
ingredients. A key purpose is to unite people with food and flavours they have never recognised
with the authenticity of British Culture. The objective of Cafe is to develop a new branch in
London and increase customer size by 5% an upcoming year. They are also looking forward to
increase their sales by 10% in the next 6 months of the launch of cafe.
SWOT Analysis
Strengths Weaknesses
 Vegan offerings
 Unique recipes
 Lack of marketing
 Lack of funds
Opportunities Threats
 Expansion in new local areas
 Innovative vegan recipes
 Increasing competition
 COVID-19 Pandemic
Product and Service Description