Report on Ella's Kitchen: SME Management and Growth Strategy

This report provides a comprehensive analysis of Ella's Kitchen, a medium-sized UK-based SME specializing in healthy food products for babies and children. It delves into the company's background, including its founder Paul Lindley, the start-up process, and its current market position. The report identifies key challenges faced by the SME, such as attracting new customers, maintaining profitability, securing finance, and managing global expansion. An external environment analysis is conducted using the PESTLE framework, assessing political, economic, social, technological, environmental, and legal factors influencing the business. Furthermore, the report highlights government support measures available to SMEs in the UK. The report concludes with recommendations for Ella's Kitchen to overcome its challenges and achieve sustainable growth, including non-financial benefits, social media marketing, sustainable approaches, digital platform entry, and economical training programs.

RUNNING HEAD: SMALL BUSINESS MANAGEMENT
MANAGEMENT

SMALL BUSINESS MANAGEMENT 1
Ella’s Kitchen is a medium sized company based in United Kingdom. It offers healthy eating
products to the babies and children with an aim of solving the concern of the parents of
young children. It offers multiple benefits to its human resource like offering gym service and
maternal leaves. The entrepreneur named Paul Lindley was of highly ambitious nature. The
entrepreneur relied on two year market research to come up with an enterprise. At present,
Ella’s Kitchen experiences fine demand for its products in UK and global market.
The SME acknowledges multiple challenges of raising fund, attracting new customers,
increasing revenue, competitive edge, and ineffective use of technology, global expansion
and rising cost. The application of PESTLE framework states that the SME experiences fine
business environment in UK.
The UK government has undertaken multiple measures to support the SME and it includes
GOV.UK website, National Business Support Helpline, Financial support, Growth hub, and
Intellectual Property Office.
It is recommended that organization should offer non-financial benefit and opt for social
media marketing, sustainable approaches, market entry via digital platform, and economical
training programs to fulfill the challenges.

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Contents
Introduction................................................................................................................................3
Findings......................................................................................................................................3
Company overview....................................................................................................................3
Nature of the entrepreneur......................................................................................................3
Start-up process......................................................................................................................4
Challenges..............................................................................................................................4
External environment analysis...............................................................................................5
PESTLE Analysis...................................................................................................................5
Government support measures...............................................................................................7
Conclusion..................................................................................................................................8
Recommendations......................................................................................................................9
Bibliography.............................................................................................................................13
Appendix..................................................................................................................................15

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Introduction
The report focuses on the concept of ‘Managing Small and Medium Business Enterprise. A
SME is a company with limited number of employees (Bridge & Neill, 2012). According to
UK’s company’s Act 2006, a medium business is referred as company with a turnover of 50
million and employees of around 50-249 (employees). Business management refers to
provide insight considering business functioning. It involves developing the usage of
managerial skills to accomplish the goals (Vitez, 2020). There is a continuous rise in the
small business operations. The increasing number of SME is also raising the economy of the
country (Storey, 2016).
Focusing on report structure, the initial section includes the key challenges faced by SME
business enterprises. The next section comprise of external environment analysis with the
application of PESTLE model. It also emphasizes on multiple initiatives and measures
adopted by the legal bodies in support of SME. The succeeding part also comprises the
practical recommendations for improvement in SME. The key purpose of the report is to
analyse the SME operating in United Kingdom.
Findings
Company overview
Ella’s Kitchen is a UK based medium business enterprise offering organic and healthy food
to babies and kids. It was founded in the year 2004 and aims to grow children by providing
tasty, healthy lacking sugar, salt, additives and concentrates. It was founded by Paul Lindley
and it is one of the best small companies of United Kingdom. Its employee strength counts to
80 and it earns revenue of around £80 million (Holtaway, 2018). It offers high number of
benefits but still faces the problem of staff turnover (24%). It offers free gym and sport
facilities to all its employees. It offers health insurance, maternity leaves, and profit related
payment to its human resource (Best companies, 2019).
Nature of the entrepreneur
Paul Lindley was a highly ambitious individual and attains a clear goal and purpose in mind.
He is a multitasker as he is also writer of ‘The huge power of thinking like a toddler’. He
attains multiple qualities of an entrepreneur as he

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1. Paul Lindley is a risk taker as he has come up with a new business idea of offering
organic baby food.
2. He is patient as he not rushed to achieve success for Ella’s Kitchen.
3. He attains an ambitious personality as lays continuous efforts to make the company
reach to greater heights of success.
Start-up process
The business was initiated by setting a clear mission of childhood obesity and diabetes. The
business is named after his beloved daughter named ‘Ella’. He is highly passionate about
kid’s health and well-being and often faces problem to weaning his daughter. He faces
struggle to provide healthy, tasty and nutritious food for his daughter. He has consider this as
challenge and taken an initiative to solve the problem of parents different corner of world. He
has developed healthy and convenient food to initiate healthy eating practices in children’s.
He has reached the market for two long years to launch the business in the market. He has
worked with dieticians, experts in food regulation, and specialist in children health. Later, he
has developed attractive, colourful, and convenient pouch pack for customer
(Talentedladiesclub, 2020).
Challenges
1. Attract new customers: One of the key challenges of SME is to gain the attention of
new customers. Likewise, this challenge is also experience by small business
enterprise in United Kingdom. This is because a high number of strong brands are
already present in the market and the customers are showing their preference for
them. This is because it allows the customers to maintain their lifestyle and perceived
as more trustworthy. They developed the usage of effective marketing to attract
customers for their product and service in the competitive market (Talentedladiesclub,
2020).
2. Maintain profit: The SME faces difficulty to earn consistent profit in the market
(Barrow et al., 2011).
3. Recruiting skilled and retaining valuable employees: The employees feel less
appreciated for their performance and salary plays a vital role in this situation. In the
presence of unstable profit and growth, the small businesses are unable to provide

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high pay to their valuable employees. Therefore, these employees lack motivation and
it results in employee termination (Agwu & Emeti, 2014).
4. Secure finance: The SME does not have strong presence in the market and one of
their major concerns is to have an access to finance (Bridge et al., 2012).
5. Increasing revenue: They faces struggle to maintain and sustain growth for business
enterprise. About 59% of small business enterprise has acknowledged this problem.
6. Lack of online presence: The small business only developed their business profile and
experience challenge to develop digital presence (Willmett, 2019).
7. Global expansion: The SME faces high problem to expand their business activities in
international with fewer resources (Carter & Evans, 2012).
8. Competitive edge: They face concern to make their business stand out in the market.
Therefore, low or fewer competitive advantages directly raise their competition from
their rivals (Bennett, 2014).
9. Ineffective use of technology: With the rise in technological advancement. There is
availability of large number of upgraded automation and machineries to assist the
business organization in manufacturing of products or providing services.
10. Rising cost: It is one of a general challenge faced by small business enterprise but it
has a high impact on the business (Wang & Chugh, 2015).
External environment analysis
External Environment Analysis refers to evaluating the factors prevailing in the external
environment laying an impact on business operations. A business operates in an environment
and it is essential to analyse the environment to safeguard from business failure. It is highly
beneficial for successful business operations as it helps the business enterprise to gain
information considering strengths, weaknesses, opportunities, and threats. It helps to fully
utilize the opportunities and developing strategies to minimize the threats impacting the
business. It assists in achieving the objectives and forecasting the future to develop plans
(Indris & Primiana, 2015).
PESTLE Analysis
PESTLE Analysis is a management tool to analyse the external environment of a business
enterprise. It takes into account six factors and it includes Political, Economic, Social,
Technological, Environmental, and Legal factors. All these factors lay a direct and indirect
impact on the functioning of business (Perera, 2017). Below is the external environment
analysis of small business in United Kingdom.

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Political Factor: It emphasizes on multiple factors like government integrity, tax policies,
trade restrictions, labour law and corruption level and government policies relating with the
political environment of the country. A high degree of government integrity prevails in
United Kingdom. The government provides business freedom to enterprise to easily conduct
business operations without facing restrictions. The corporate tax rate marked at 20% for
business enterprises (Heritage, 2019). The government offers high degree of support and
therefore it helps the businessman to operate their SME.
Economic Factor: It includes factors responsible for economic growth of the country and it
includes Per Capita Income, Gross Domestic Product, Inflation Rate, Unemployment level,
and of the country. The GDP and PCI are marked at $2.9 trillion (with a growth rate of 1.8%)
and $44118. The unemployment and inflation rate are 4.3% and 2.7% of United Kingdom.
The fine GDP of the country states that economic growth prevails in the country. The PCI
depicts that people have adequate income to easily avail product and services. The low
inflation rate also safeguards from facing any risk associated with economic instability. It
provides a fine economic environment to SME and develops a motivating force among others
individuals to initiate their own business in United Kingdom.
Social Factor: It takes into account factors such as lifestyle, buying habits, population
density and health consciousness and buying habits. The population of United Kingdom is
66.1 million. The high strength of UK population is sensitive to price and follower of
unhealthy life style (Bbc, 2018). The high price sensitivity among the customers lays a direct
impact on the small business enterprise. They face difficulty in setting high price to their
product and services. Therefore, they have to undertake measures to cut down cost to sell
products at low price to attract a high strength of customers. The rising population of the
country is offering opportunity to the small business as they have an access to increase
number of customers.
Figure 1: Level of Price Sensitivity

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Source: (Statista, 2018)
Technological Factor: It focuses on elements such as level of infrastructure, innovation,
automation, data connectivity, and access to new technology prevailing in the country.
Globally, UK ranks third for technological advancement and innovation (Eltringham, 2019).
United Kingdom offers upgraded technology to the small business. Therefore, it acts as an
opportunity as it minimizes their dependence on human resource. The fine level of
technology motivates the businessman to come up with new and innovative business idea.
Therefore, technology has a major hand in increasing number of SME in United Kingdom.
Environmental Factor: It considers elements laying an impact on the natural environment of
the country. The United Kingdom attains low risk from natural disaster and therefore it
experiences fewer natural calamities. It offers fine climatic conditions to initiate business as it
has low risk associated with natural hazard.
Legal Factor: It regulates the laws affecting the business and their operations. The legal
body of United Kingdom lays high attention to safeguard the property rights of the
companies. The government also safeguard the consumer and employee rights concerning
business enterprises (Heritage, 2019). This will help the SME to easily initiate and operate
their business without having a fear of copying and imitation from other business enterprises.
Government support measures
The government have taken multiple initiatives to support the small business operating in the
country. Below is the description of all these approaches.
1. GOV.UK website: It is an online platform developed with an aim to provide
guidance to start a new business or run an existing SME. It offers information
associated with obligations, statutory rights and financial support. These functions are
performed via ‘Business finance and support finder’. It is an interactive tool and helps
the Small business enterprise to gain information considering government support.
The individuals are able to seek for financial support like grants, finance, loans and
non-monetary assistance including mentoring and consultancy. Additionally, people
engaged in small business enterprise also have an access to information on money, tax
and employment.
2. National Business Support Helpline: It is one of the key provisions offered by the
government in support of SME. Similar to above website, it also offers guidance and

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support to new and existing small business in a detailed manner. It is offered by
government employed experience Business Support Advisors. It is mainly availed via
free telephone for 60 minutes around considering the individual’s business needs
(Gov, 2020).
3. Growth hub: The government has developed local networks to offer business
support. One has to find suitable growth hub with the help of Growth hub finder and
currently there are around 38 growth hubs. The businessman can avail free support on
wide range of topics associated with business.
4. Financial support: There are multiple companies to offer financial support and ‘Start
Up Loans Company’ is one among them. It is a subsidiary of the British Business
Bank and it offers loans of upto £25000. However, there are multiple terms and
conditions to avail this financial support. The businessman has to be 18 years of age, a
resident of United Kingdom and many more. This is one of a successful scheme in
support of small business enterprises as it has helped more than 50000 business idea
to initiate their business (Jones, 2018).
5. Investment: This form of assistance is offered to business man initiating their
operations in economically disadvantaged and unemployed area. The support is given
by subsidised rent and rates to encourage the SME to start their business in specific
area. Therefore, location plays a key part to avail benefits.
6. Training: The government offers quality training via The National Apprenticeship
Service.
7. Tax Reliefs: The government offers financial support to the businessman by reducing
their tax liabilities. It includes capital allowance, creative industry tax relief, R&D tax
credit, Seed Enterprise Investment Scheme and many more (Axa, 2016).
8. Mentors ME: It is a form of online resource for business enterprise as it provides
access to more than 15000 trained volunteer business mentor.
9. Intellectual Property Office: It offers information on trademarks, patents and
copyright and therefore it helps the small business enterprise to safeguard their
product and service from imitation and copying (Jones, 2018).
Conclusion
The report summarizes the management of medium business enterprise named ‘Ella Kitchen’.
From the above discussion, it is acknowledged that it is a UK based company engaged in the

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creation of eating products for babies and kids. It is a unique business venture developed an
entrepreneur named Paul Lindley. It faces multiple challenges like attracting new customers,
maintain profit, cost cutting, to expand globally, recruit and retain talented employees,
business recognition and many more. It is evaluated that United Kingdom offers fine business
environment to the SME. It is realized that government has taken multiple approaches to help
the SME. Some of their initiatives are GOV.UK website, National Business Support
Helpline, Growth hub, financial support and tax relief. Hence, it concludes that fine business
environment and government support has a high role in growth of small business enterprises
in United Kingdom.
Recommendations
The small business has to undertake measures to excel and compete from strong brands to
develop strong customer base in United Kingdom.
The small business has to be proactive to attract customers. They have to attend networking
events to collaborate and promote the business. They should seek the help of right platform to
market their business. It is recommended that small business should opt for Facebook to gain
the attention of customers. They should develop business profile on this platform and contact
with potential customers. Additionally, they can also seek for marketing expert to gain the
desired result. Monthly, it will cost about 1533.50 pound to market business on Facebook.

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Figure 2: The top used social media platform in United Kingdom
Source: (Dea, 2019)
The SME enterprise should lay an initiative to minimize the cost, increase turnover, and
increase productivity and efficiency. Therefore, they should opt for remote working as it will
enable saving overhead cost. Additionally, it should undertake measures to boost its
employee productivity.
Employees are the drivers of the organization success and SME should avail the use of other
means to make its employees feel valued. In the presence of low or mediate profitability, the
small business should offer for non-monetary benefits. They should include them in the
decision making process, offer learning opportunities and many more. Additionally, they
should offer feedback, power, responsibility based on their knowledge and skills. They
should offer learning opportunities to its employees to maintain employee’s interest in the
organization. These minor steps will enable the SME to make its human resource feel
appreciated and retain them.
The UK government has taken multiple measures to financially help the SME. The small
business should raise their awareness and seek for ‘Start up Loan Company to avail financial
assistance of around £25000.

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The struggle to maintain growth can be solve by additional product and services in the
existing market as it will improve the number of potential customers. It will also minimize
the risk of business failure as loss from one product line will be optimized from profit from
another product. Therefore, it is suggested that small business should consider ‘Product
diversification’ strategy as it will lead to business growth. It will cost about 115012.50 pound
in the year 2020.
They should devote efforts to develop strong online presence as it will offer high benefits to
these small business. Social media is the appropriate channel for brand exposure. It will allow
the small business to raise their brand awareness and engage with larger audience. Therefore,
it should avail the proper usage of social media to attain desired results. The social media
marketing will cost about £100 per month to £10,000+ per month.
They should make the business entry in international market through digital platform. With
the passing years, a high strength of customers relies on digital platform to avail product and
service. Relying on online channel offers high opportunity to grow and earn high return.
Example: Amazon is a large ecommerce business enterprise and competing brick and mortar
organizations like Woolworths and Walmart. This example depicts that digital channel
provides a chance to earn high return. Therefore, it is recommended that small business
should opt for digital platform for global expansion as it will cut fixed cost of the business.
These business enterprises should emerge as a sustainable business organization in UK. It
will offer multiple pros to the small business. Firstly, it will help in fulfilling its corporate
social obligation towards the environment and society. It will also in minimizing the cost of
production involved in the business. Secondly, it will be easily able to seek support from
government. Thirdly, it will raise small business goodwill in the market. Therefore, all these
contribute in achieving competitive advantage and minimizing intensity of competition in the
industry. Example: The SME can opt for ‘Hybrid trucks’ as a sustainable approach in its
supply chain. Developing the use of hybrid trucks will cost more than 149 pound.
The SME should avail the potential usage of technology to gain better results. Therefore, it is
recommended that they should offer required training to the employees to minimize their
ambiguity associated with the technology usage and it will cost about 926.23 Pound per
employee.
The rising cost should be controlled through every possible means to raise profitability. The
small business should opt for ‘mentoring’ to provide training to new employees. It is an

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economical approach and helps in cutting cost involved in training. It will provide high
number of benefits. It will develop interpersonal relation between new and existing
employees and gave rise to a culture of belongings. It will help in improving the skills of
existing employees and developing new knowledge among the new candidates and there will
not be inclusion of additional cost as it does not involve availing the help of existing
employees.
Among all the recommendations, social media marketing and developing the use of hybrid
trucks is best suitable as they are economical in cost and they will yield high returns to the
organization.

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Appendix
The report involves the usage of company website, online sources, journal articles and books
to gain an insight about the management of SME.