Comprehensive Report: Growth Planning and Financial Analysis for Cafe

This report provides a comprehensive analysis of growth planning for Change Please Coffee Cafe, a social enterprise. It begins by evaluating growth opportunities and competitive advantages using tools such as Porter's generic strategies, PEST analysis, and the GE McKinsey Matrix. The report...Read More

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1 ................................................................................................................................................1
P1 Key considerations for evaluating growth opportunities and competitive advantages..........1
P2 Evaluation the opportunities for growth by applying Ansoff growth vector matrix..............3
LO 2.................................................................................................................................................4
P3 Potential source of funding available to businesses by discussing benefits and drawbacks. .4
LO 3.................................................................................................................................................6
P4 Business plan for growth that includes financial informations and strategic objectives........6
LO 4.................................................................................................................................................7
P5 Assessment of succession or exit options for a small business explaining benefits and
drawbacks....................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Growth planning is a strategic business activity that make managers of the company able
to plan and track organic growth. This present study is based on change Please coffee cafe that
is a social enterprise and get an award for the best social enterprises. This report is going to show
different evaluation of external factors for small and medium size businesses. The main aim of
the company to use all strategies and models is to reduce negative impacts of factors and increase
positive impacts for being in a competition (Wu, 2015). There are different sources of funding
and finance by which this cafe can get various opportunities and make financial and investment
decisions. Further it will also discuss about business plan for growth which includes financial
informations and strategic objectives.
PART 1
P1 Key considerations for evaluating growth opportunities and competitive advantages
There are several factors that can affect small and medium size businesses, so it is
important for them to consider all factors in order to become in a competition and for becoming
the market leader. There are various external and competitive factors that is essential for small
and medium size organization and Change Please Coffee cafe. With the help of Porter's generic
strategy it can evaluate all factors:
Cost leadership: This is the strategy of taking competitive advantages by becoming the
lowest cost producer in the same industry. The main aim of becoming a low cost leaders is to
increase sales and profitability. By focusing on this strategy, Change Please coffee company
can increase its market shares.
Cost focus: In this type of strategy there is a requirement to focus on a narrow segment
and in that segment try to achieve a cost advantages and differentiation. By focusing on a narrow
market, Change Please company can get competitive advantages by offering the lowest possible
price (Wynn, 2017).
Differentiation focus: In this strategy, companies require to more focus on development
of products and services. For making this strategy successful, the company requires involving
unique features in their products and services in order to make their products different from their
competitors. Change Please company can easily attract and increase a wider range of customers
towards their products.
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Differentiation leadership: In this strategy, the company requires targeting larger
markets with the main aim of achieving competitive advantages. In this strategy, the company
requires to target a broad market with having high demand. It is also required to include some
unique features in products and services for making products more attractive than comparable
products which are being offered by competitors.
With the help of PEST analysis also Change Please coffee can identify all external
factors:
Political: It includes several factors such as tax rates, employment laws that can hev
impacts on the operations of the company in positive and in a negative manner. Political stability
and unsuitability of the country in which the company wants to operate also can impact on
performance level of this company. Instability can create riots and conflicts which can decrease
customers demands (Barba and et.al., 2016).
Economic: It includes local currency exchange rates, taxation levels and economic
environment in different markets. Rising labour and operational cost can increase the overall cost
of the company which can have impact on its profitability. So it is important for Change please
coffee company to consider this factor.
Social: It includes consumer preferences, changes in lifestyle of population and changing
values among population. People are getting more aware and health conscious, so they want only
healthy food products and drinks. So it is also important for the company to focus on satisfying
customers needs.
Technological: Technological factors also have great impacts on the companies in this
industry. There are several companies who are more focusing in technologies and invest in
technologies in order to get competitive advantages. By more focusing in technologies, Change
please company can attract wider range of customers (Wicker and et.al., 2015).
GE McKinsey Matrix
It is an effective tool that can help small and medium size businesses by offering a
systematic approach for the multi business corporation to prioritize investments among its
functional business unit. It has some factors that can affect market attractiveness and need to be
considered by Change please coffee cafe like market size, competition level, demand
variability, pricing trends, market profitability trends etc.
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PART 1
P2 Evaluation the opportunities for growth by applying Ansoff growth vector matrix
In order to analyse growth opportunities, it is important for small and medium size businesses
and for change please coffee cafe to evaluate opportunities for growth. With the help of Ansoff
growth matrix, it can be possible for the company and cafe to adopt different ways:
Market penetration: Market penetration is an effective strategy that can be good for
those companies who have an existing product with a known market but needs to make more
growth. Change please coffee cafe is London based social enterprise that adapts different and
attractive ways of doing and performing things. So it can also focus on this strategy. This
strategy is less complex than market development and diversification. In this strategy, the
company does not require launching new products and also not require new market. It needs to
develop its existing products and sell them into existing markets. In this context, Change please
coffee company requires to make innovation in their existing products and target a market.
Product development: In this strategy, the company requires to introduce its new
products into existing markets. The focus in this strategy should be on products rather than
customers and market. This strategy can be suitable when the company wants to differentiate
their products for being in a competition. In this context there is a requirement for the company
to think about a new product which it wants to develop into its existing market like fast food,
dairy products etc.
Market development: In the marketing development growth strategy, the company
requires to sell its existing products into new markets. By adopting new products dimension, new
distribution channels and different pricing policies it can attract wider range of customers &
create new market segment. The focus of the company in this strategy should be on market rather
than products because the main aim of this strategy is to attract more customers and increase
sales. In this context, Change Please coffee need to target a new market rather than its existing
market in order to sell their existing products and attract a large number of customers.
Diversification: It is also a growth strategy which can be adopted by small and medium
size company in order to get more advantages and being in a competition. It is a quite complex
than other strategies. In this diversification strategy, the company need to develop and launch its
new products into new markets. It is also a risky strategy. It can be adopted by only those
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companies who have a clear idea about what it wants and expect to achieve from the strategy &
an honest assessment of the risks.
Change please coffee cafe should adopt and focus on market development strategy with
the main aim of growth development. By adopting this strategy, it can focus on new market and
attract wider range of customers and makes its business more successful. The main aim of
Change Please coffee cafe is to give employment and help the homeless off the streets. It has
won the UK heat of the Chivas Venture, an award for the best social enterprises. So by focusing
on market development strategy it can take growth in this industry.
Part 1
P3 Potential source of funding available to businesses by discussing benefits and drawbacks
There are various sources of funding by which small and medium size businesses can
take finance in order to take growth. By analysing and identifying benefits and drawbacks of
each source of finance, Change please coffee cafe make an effective decision about investment
and finance.
Investment decision-making
Small and medium size business and Change Please coffee cafe need to make decisions
for expansion of business & investment. There are some methods to analyse the profitability of a
project.
Net present value: This method is being used by companies in capital budgeting. For
taking and calculating this value between there is a requirement of finding the difference
between present value of cash inflows and outflows over a period. If the NPV is positive then
only the project is being accepted. On the other hand project is rejected if NPV is negative.
Payback period: Payback period can be defined as an amount of time to recover the cost
of an investment. It is one of the best and simplest investment appraisal techniques. It takes
initial inflows into account & ignore the cash flows after the point at which the initial investment
is recovered. Change Please coffee cafe can use net present value of financial appraisal for
taking investment decision (Lash, Kaufman and Hernán, 2018).
Sources of finance for growth:
Bank loans: Bank loans is the main source of finance for small and medium size
businesses that is provided at a cost which is generally interest on the owed amount. They can
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apply other changes also and it all depends upon the type of loan. It is a medium term financial
source which are required for a period of more than 1 year and less than 5 years.
Advantages
 After getting qualified bank loan source is quick.
 There is no need to give up control of business.
Disadvantages
 It requires a lot of documentation that can be time-consuming for the company.
 There are various option and the wrong selection can hurt the business.
Crowdfunding
It is other type and source of funding a business by taking small amounts of capital from
a variety and large number of people through internet. The company can make the best use of
their friends, colleagues and family via different social platforms that can help them in attracting
new investors.
Advantages
 It has the ability of making a pool of investors & expand a business that can help the
company in raising funds.
Disadvantages
 This source requires a lot of time & dedication for getting results.
Venture finance
Venture financier are investors that put in a considerable amount of money in the
exchange for equity in business. They take their money back when the company is being
acquired by another company and goes public. This type of financial source give money only to
those companies who have potential of providing good returns on their investments (Crépey and
et.al., 2017).
Advantages
 This is the best source because they provide mentorship & expertize in order to develop a
business.
Disadvantages
 They force to company to give up a large chunk of their business because of significant
amount of funding provided.
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PART 1
P4 Business plan for growth that includes financial informations and strategic objectives
Executive summary
This plan is going to cover and show about company's stakeholders, financial conditions,
market analysis and its importance. It will also cover and show marketing strategy which is being
followed by the company. The importance of segmentation and targetting customers and market
and SWOT analysis.
The main aim of making business plan is to take growth as it includes all financial
informations of the company from where it takes money and finance and where it invests. There
are some objectives of Change please coffee cafe which make them able to perform all
functions. It sales and offers Coffee for helping the homeless off the street take positive message.
Company description
Promoters & shareholders
It has a big housing group that has a single homeless project. It is staffed by homeless to
help the homeless. They all work for those people who want to work with them. Its trainees
baristas & beneficiaries are being trained by coffee industry professionals.
Products & services
In the context of products and services it provides coffee and want to give opportunities
to homeless. It has number of UK coffee outlets that creates 100,000 jobs. It gives support to
homeless people. It serves coffee to Londoners from a mobile cart.
SWOT analysis
Strengths
 The main strength of this company is it
provides coffee to Londoners from a
mobile cart.
 It gives employment opportunities to
homeless people.
Weaknesses
 It has weakness as it has small local
economy.
 Inexperienced employees pool
Opportunities Threats
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 The main opportunities which it can
take is to become market leaders
because people do not have to go
anywhere.
 It has big threat of competitors like
Starbucks and cafeteria.
Market analysis
Target market
It does not have a specific target market but it wants to provide services to homeless
people. The main aim of targetting homeless people is to increase their living standard.
Competitive advantages
There are several entrepreneurial strategies which make this company able to accomplish
their objectives and vision. In the context of marketing and niche marketing it focuses and target
a portion of a market. It focuses on a niche by addressing a need for products & Services by
customers which is not being addressed by mainstream providers. Creating a niche market
provide various opportunities to Change Please coffee company. It reduces competition level,
reduces resources and establish a toehold.
The main advantages which it can take in the context of competition is to increase
customers experience. It is stated that, Change Please coffee company is increasing demands of
people and creating over 100,00 jobs. It also provides training tom homeless in order to make
them able to provide services & to be Baristas.
Benefits to clients
It provides several benefits to customers as it provides and serves coffee by carts and on
wheels which saves customers time. It provides and support homeless people in providing them
employment. It also helps the company in increasing sales and increasing customers services &
experience as well.
Marketing strategy
Vision and mission statement of this social corporation is to handle homelessness by
selling and offering the qualitative coffee. For that they operate mobile coffee vans that are
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available for hire for events, festivals and for corporate functions. They also want to give
employment opportunities to disable people (Hopp and et.al., 2018).
This company and cafe is being run on the hills and vans by vocational staff & service
users. It also wants to provide various vocational skills, Barista skills and provide emotional
support their recovery to homeless. It has various opportunities and feel proud because it works
with the West London NHS trust in order to provide coffee for such an incredible. It makes all
people able to increase their skills that can make a difference in their lives.
Segmentation & targetting
In order to segmentation and targetting for increasing sales it more focuses on demographic
segmentation. According to this segmentation it wants to provide its services to 15-40 years of
people.
Revenue sources
It is stated that this company venture secure and have got financial help through UK charity
Comic relief and virgin start up loans.
Sales strategy
In the context of sales strategy this company sales and offers coffee to Londoners
directly. It also provides its customers opportunities to join them with homeless people if they
are interested. It also takes help of Website in order to sale and promote its services.
Pricing
Its 100% of profits go towards helping to reduce homelessness. There is no specific
pricing strategy of this company.
Marketing & communication strategy
In the context of marketing strategy this company bring their vans to events in order to
keep everyone happy & caffeinated. It is the main marketing strategy as it promotes its services
by words of mouth. It also provides its services at their street side coffee vans, at their coffee
bars and within offices. It does public relations marketing strategy because it meets 100s of
people daily so there is no need to advertising and direct marketing.
Staffing and operations
Management
In the context of funding and management it will use purchasing a coffee chart. The main aim is
to make all people able to provide sustainable employment. It staffed with homeless people.
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Training plan
In the training plan it trains exceptional people who happen to be homeless to be
barristas. The main aim of providing training is to make them able to get job & housing facilities
and to lift them out of homelessness. After providing training it performs monitoring and
controlling function in order to see changes and making changes.
Financial projections
The main aim of making business plan for Change please coffee is to test the feasibility
of business idea and also to give a secure funding. This social organization more focus on
collaboration in order to get some positive outcomes for service holder and stakeholders. Its
service users also make themselves beneficial by getting Barista training & to sell award-
winning coffee. There are several financial sources by whom it takes help for funding and
securing investments (Chambers and Humble, 2017). For presenting a business plan to investors
there is a requirement of including necessary components like management team, financial
projections, business concept, marketing plan etc.
Income statement
Cash flow
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Balance Sheet
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PART 2
P5 Assessment of succession or exit options for a small business explaining benefits and
drawbacks
Succession planning is a procedure for developing and identifying new things and leaders
that have the ability of replacing old leaders and things when they leave. For making an effective
succession or exit planning there is a requirement of defining vision and objectives of the
company to employees (Djordjevic and Cvetic, 2016). It involves several steps which includes:
Passing the business to a successor
It is the best option of successor and exit to pass the business to a family members and a
manager in the company.
Advantages
 It reduces the involvement of third party.
 It can give the right to maintain involvement & influence in the business.
Disadvantages
 It becomes difficult to train & identify the right and skilled successor.
Transferring ownership
In this type a group of employees and management team pool resources in order to acquire a part
of an organization. It is suitable and the best for those who want to preserve the corporate culture
of the business.
Advantages
 It protects business independence.
 It also rewards them for long term support for the company.
Disadvantages
 Limitation of access to capital.
 Failure in the purchase attempt can affect business morale.
Selling business to a third party
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It is other option of succession or exit. To sell small businesses to a third party. It has
several options to sell businesses such as:
Private equity: It means to sale shares to a financial investor.
Sale to another business: The sale and insurance of shares to another important operating
company. It is good for those who are looking for a clean exit with the highest possible value
(Shan, 2018).
CONCLUSION
From the above study it has been summarized that different methods and models of
analysing external factors helped small and medium size companies to take competitive
advantages by reducing risks. Analysis models of external factors included porter's generic
strategy, McKinsey model and pestle analysis. It has also shown about the importance of making
business plan that included all financial informations. Different sources of funding and
investment appraisal techniques also helped the company in developing their business and
making investment decision.
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REFERENCES
Books and journals
Wu, F., 2015. Planning for growth: Urban and regional planning in China. Routledge.
Wynn, M., 2017. Routledge Revivals: Planning and Urban Growth in Southern Europe (1984).
Routledge.
Wicker, P. and et.al., 2015. The effect of Porter’s generic strategies on organisational problems
of non-profit sports clubs. European Journal for Sport and Society. 12(3). pp.281-307.
Barba, F.C. and et.al., 2016. A technical evaluation, performance analysis and risk assessment of
multiple novel oxy-turbine power cycles with complete CO2 capture. Journal of cleaner
production. 133. pp.971-985.
Lash, T.L., Kaufman, J.S. and Hernán, M.A., 2018. Correspondence Between Results and Aims
of Funding Support in EPIDEMIOLOGY Articles.
Crépey, S. and et.al., 2017. When capital is a funding source: The XVA Anticipated
BSDEs. Preprint version available at https://math. maths. univ-evry. fr/crepey.
Chambers, I. and Humble, J., 2017. Developing a Plan for the Planet: A Business Plan for
Sustainable Living. Routledge.
Hopp, C. and et.al., 2018. Revisiting the influence of institutional forces on the written business
plan: a replication study. Management Review Quarterly. 68(4). pp.361-398.
Shan, H.D., 2018, June. Corporate Venture Capital and the Boundaries of the Firm: Evidence
from Machine Learning. In 2nd Emerging Trends in Entrepreneurial Finance
Conference.
Djordjevic, A. and Cvetic, T., 2016. A BUSINESS INTELLIGENCE APPROACH FOR
CHOOSING A OPTIMAL QUALITY SOLUTION. International Journal for Quality
Research. 10(2).
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