Planning for Growth: A Business Report on Growth Strategies for SMEs

This report, prepared as a consultancy report for small and medium enterprises (SMEs) by Deloitte, provides a comprehensive analysis of business growth strategies. It begins with an introduction to the importance of planning for growth in the context of changing economic scenarios, such as Brexit...Read More

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Key consideration for evaluation of growth opportunities.........................................................3
Evaluation of growth opportunity with Ansoff's matrix.............................................................4
Potential sources of funding........................................................................................................4
TASK 2............................................................................................................................................4
Detailed business plan.................................................................................................................4
TASK 3............................................................................................................................................8
Critical evaluation of exit or succession options for small business and making a decision of
appropriate courses of action......................................................................................................8
CONCLUSION................................................................................................................................8
REFERNCE.....................................................................................................................................8

INTRODUCTION
Planning for growth is a business activity where management of organisational plans is
used for business growth. With the changing scenario of Brexit small and business organisations
are impacted in a positive or negative way. The key considerations is for making effective use of
available resources with these small business organisations (Tsatsoula, 2018). In this report
suggestion is being made to various small & medium enterprises by Deloitte. In the present
report there is role of consultant working in Deloitte suggesting various aspects required for
planning for growth. consideration of growth opportunities and sources of funds. Along with this
a business plan is prepared for overall growth of organisation lastly there is discussion of exit
options for small business.
TASK 1
Key consideration for evaluation of growth opportunities
All business have to make identification of opportunities which can help a business in
planning their actions and formulation of strategies. For their there is a need for organisation to
make a internal analysis of situation where there is consideration of resources, core competencies
and capabilities. Considering the external environment organisation have to focus on different
external environmental factors. Porter's Generic model is the model that is suggested by Deloitte
to SMEs, which would help them in gaining opportunities and these are mentioned below:
Porter's Generic Strategies: This model is advised by Deloitte is because, it is very
helpful for SMEs to determine most suitable strategy for having a sustainable advantage.
Different small and medium level companies can take cost benefits by lowering of cost and
offering products. Some of the strategies are discussed below:
 Cost leadership: What Deloitte has suggested is that with the help of this strategy SMEs
could effectively enhance their market share by offering low cost products to their
customers. This strategy is adopted by enhancing economies of scale technology up-
gradations. Through this, SMEs would become able to reduce of per unit cost.
 Differentiation Leadership: This is the strategy which aims to provide unique products
to their customer by introducing various differentiation features in their products. It is
mentioned by Deloitte is that it is necessary for SMEs to meet specific customer

requirements of through offering some different and unique product to their customers
then it can help them in increasing price of their product.
 Focus: Another strategy given or suggested by Deloitte which is required to be followed
by SMEs as it will enhance or adopt focus on any one strategy that can be cost focus or
differentiation focus. Cost focus strategy is focussed on lowering of cost for taking cost
advantage by considering sample part of market. On the other hand differentiation focus
strategy is focused on specific needs of customers (Tsatsoula, 2018).
Based on above analysis it is said that SMEs required to focus on use of differentiation
focus strategy as it consists of unique shape, size and taste of products offered by these
organisations as it is also unique in nature as well delivered in the market. This differentiation
focus strategy helps them in increasing their prices and this leads to increase in overall profit
percentage.
PESTLE Analysis:
PESTLE analysis is a tool which is used by various business organisation in making
detailed analysis of various factors present in the external environment. Such analysis is very
helpful in developing an understanding of positive and negative impact of these factors further
use in planning of strategies for adoption of new business process. This is being considered as
one of the crucial model, which is suggested by Deloitte to small scale organisations so that they
could analyse the external environment. This model is described underneath:
Political factor: Political factor is related to degree of government intervention present in a
economy of a country in which a particular SMEs are functioning. It includes political stability,
foreign trade policies, labour laws, trade restrictions etc. these factors impose a impact on how
business is done by various organisation and their response to changing legislations of market.
Positive impact: There has been minimum legislation of government on various small
and business enterprises as government believes that development of such type of enterprises is
very helpful in overall development of the economy. It is suggested by Deloitte that it will help
in effective functioning of SMEs without any restrictions & maintenance by government
regulations.
Negative impact: changes taking place in UK's economy such as events of BREXIT has
a very negative impact on the monetary flow or liquidation with people. This has a negative

impact on present level of sales of different business firms that are performing at small or
medium level.
Economic factor: Economic factors poses a very significant impact on how organisations
performing at small or medium level are functioning and how much profits are they able to make
in the prevailing economic conditions. Various economic factors include exchange rates,
inflation, disposable income of people, interest rates and many such type of related factors
(Straub and Sperling, 2018).
Positive impact: What positive impact that Deloitte has mentioned is that taxation
policies in UK where SMEs are having maximum presence is liberal. It has lead to increase in
the amount of disposable income with people and target segment if customers. Which further
results in increase in spending and enhancement of sales for various organisation.
Negative impact: In case when the economic conditions are not favourable then it leads
to increase in interest rate and it results in decrease in purchasing power of people as overall cost
of borrowing money increase and people are not able to use for making enough purchases.
Social factor: Social factors included various demographic factors such as taste & preference of
customers, changing demands and many such related factors. These posses huge impact on
overall sales of a organisation. If it is talked about SMEs then positive and negative impact of
such social factor is discussed below:
Positive impact: In UK people have a very high standard of living, this has resulted in a
very attractive opportunity for this organisation to attract people by their innovative and
differentiated products which are offering taste and healthy nature at same time. It is the
responsibility of SMEs to make use of this opportunity in enhancement of their present sales by
making use of this differentiation.
Negative impact: The change in lifestyle, taste and preferences of customer affect UK
supermarket in negative manner. The increase in population is also one of the reason that
decrease sales or profit of the organisation.
Technological factor: The technology plays a very important role for success of any business
organisation. With the use of advanced technology the company can launch new or innovative
products as per customer needs and wants. Based on the information given by Deloitte, is that
there are some positive and negative impact given by technological factor among SMEs which is
mentioned below:

Positive Impact: The frequent technological advancement assists SMEs in launching a
new or innovative product according to the demand of customer thus it results in increasing
market share of different companies dealing at small level.
Negative Impact: Herein, the negative impact of technological advancement is that it
can increase the cost of a product which can be considered as a threat for SMEs.
Legal Factor: It is the process in which organisation considers all those significant factor related
to law that has to comply with. SMEs focuses on follow labour law that helps the company in
increasing motivation and satisfaction level of workers. The positive and negative impact on
SMEs are given below:
Positive Impact: The positive impact of following legal procedure is to increase brand
image if the organisation. If it is talked about SMEs, then they need to comply labour law that
helps in enhancing motivational level of workers. Also it assists in decreasing chances of legal
due processes (Schepker,And et. al., 2018).
Negative Impact: Any change in law affect SMEs in a negative manner. Due to
alteration in any law and regulation results in change the company policies and procedure that
can be considered as a negative impact for the company.
Environmental factor:The rules and regulations followed by company with purpose to protect
or defend environment. SMEs would require to adopt the Environment protection act which has
to be comply with for protection of environment. Some suggested advantages and disadvantages
of environmental factor on SMEs that are given by Deloitte are presented below:
Positive impact: The positive impact of using waste management strategies by SMEs is
to protect or defend the environment .
Negative impact: The change in environmental policies and climatic weather that result
in company alters their policies, procedure as well as rules and regulation can be considered as
the negative factor for SMEs, which is suggested by Deloitte (Schawel,. and Billing, 2018).
Evaluation of growth opportunity with Ansoff's matrix
Ansoff matrix can be used by the company to analyse marketing strategies or objective
of business. The growth of business depends on selling of existing product or new product in
the existing or new market. This matrix provides a structure that helps senior manager for future
growth or success of the company. The strategies that can be followed by Deloitte while
consulting with SMEs are mentioned below:

Market penetration: Market penetration signifies the successful selling of goods and
services in specific market. It emphasised on selling of existing product compared to target
market product of the organisation. It assists the company in increasing sales of company by
reducing cost of product in order to attract the customer. In context of Deloitte, the management
team emphasised on offering appropriate consultancy services related to needs of their clients
that are looking forward to expand their business considering the minimum risk. SME's should
use strategies which can cover large market area for there product because if they use these
approaches it will control the cost of there product.
Product Development: Product development refers to the alteration of existing product
in order to changes in its product design, packaging and labelling as well developing the new
product through branding and advertisement. The extended research is essential for identifying
wants or needs of the consumer. Suggestion given by Deloitte is that SMEs should focus more
on lunching of new product in existing market as it provides a set base for new product and give
it competitive advantage in long run (Roussanov and et. al., 2018).
Market Development: Herein, the main focus of organisation is marketing of existing
product in the new market. In other words,it can be described as the process in which company
can spread out their market into new area or region. Here the Deloitte suggested that the SMEs
should focus on the this market as they don't have enough capital investment and profitably and
chance failure are higher there.
Diversification:Hereby, the main focus of organisation is to increase its profitability as
well as expand its market share by selling new products in new market (Price, and Nelson, ,
2018). The amount of investment is quite high which can be considered as a risky strategy for
business organisation. There are two type of diversification is taken by company one is related
diversification where similar kind of goods provided by the company whereas in unrelated
diversification there is a difference between the existing and new products offered by an
organisation. According to Deloitte suggestion a SME should not focus on this point as risk
associated with this factor is higher and chance of success of new product in new market is very
low.
Considering above mentioned strategies, the product development is most suitable
strategy for SMEs Product development strategy helps in satisfying their customer by offering
them new product according to their wants. In addition to this, the manager focuses on

accelerating their sales by providing innovative or new products to customer but they should
also focus on risk associated with them.
Potential sources of funding
Investment decision making: Herein, the top level management have to decide that what
amount of money they have to invest in the organisation in order to grab the opportunities and
competitive advantages. It is suggested by Deloitte that SMEs emphasised on taking a decision
for future growth of the company which is based on purchase of there goods & services
Methods of financial appraisal :
The method of financial appraisal are adopted by organisation for the purpose of value of
money over time as well as various method can be used which are suggested by Deloitte for
taking investment decision are mentioned below:
Payback Period: It can be considered as the process in which quantity of time taken to
recover the monetary value of an investment. Deloitte suggested that SMEs Payback period
should be adopted by organisation for a particular project in order to refund the initial cost of
investment as it is measured in terms of months and years (Leick. and Lang, 2018).
Net present value: It is the subtraction of present value of cash outflow from present
value of cash inflow over the time interval. According to Deloitte the owner should emphasised
on analysing basic data and informations,business value, new ideas and cost that is affiliated to
cash flows.
Sources of finance for growth:
All organisation requires fund for executing day to day transaction or operations in order
to earn income (Kim, . And et. al., 2019). In discourse to Deloitte, the financial manager is
suggesting Small business on managing or performing their day to day operations or business
activities in an effective and efficient manner thus it helps in fulfilling their financial obligation
in the organisation. The sources of fund which is mentioned below:
Bank loan:It is amount of money that is borrowed by the company from bank or any
other financial institution on security basis. It is a legal agreement between the company and
bank in which principal amount is repaid with interest rate. As per Deloitte, the manager is
making suggestion to borrow money from bank in order to invest in assets for accelerating the

profit in return company repaid principal amount with interest rate within a particular time
period.
Advantage Disadvantage
Bank loan helps when a company needs money
for investing in assets and shares in order to
accelerate the future growth of company.
Herein, one of the main disadvantage of using
bank loan is it charges high interest rate which
is required by company to repay it in definite
time period.
Crowd funding:It is the process of funding in small quantity of money from large
number of people or institution via internet to finance their new business venture.
Advantage Disadvantage
The main advantage of using crowd funding by
small business is to raised small amount of
money from a number of persons or institution
via internet for financing small businesses.
Herein, the main disadvantage for small
business is it takes a huge of time or efforts to
run a business successfully.
Evaluate potential sources of funding:
On the basis of all above sources of fund bank loan is regarded as the most suitable
alternative for financing new business ventures by SME's by taking a loan from bank in return
repayment of principal amount with interest rate on pre decided time (Kemp, 2018).

TASK 2
Detailed business plan
Business plan is a document used for attainment of business objectives by organisation. It
is used in the given time frame so that laid objectives are achieved. Various financial projections
can be made by arrangement of funds. Different strategies can also be identified by use of this
business plan. Below discussed is a business plan that can be adopted by SME's in UK while
they are planning for a new product launch (Helmold, and et. al., 2020).
Executive summary: Organisations can plan for their business expansion by addition of
new products to their present product line. To achieve this there is a requirement to understand
the expectation & preferences of their customers. Based on this company has decide that they
will start a new product or service.
Vision & mission: Vision of organisation is related with their long term objective that
have to be achieved.
Mission of the organisation is what work has to be done to achieve overall vision. It is
recommended by Deloitte that vision and mission together help in achievement of organisational
objectives (Candelo, 2019.).
Objectives: Objective of this company is to increase sales by certain percentage or
launch a new product in coming period of six months. It will help in enhancement of present
market share as steps have to be taken for improving promotional strategies of the organisation.
Shareholder expectations: It is necessary for organisation to consider interest of
stakeholders so that sustainable growth is prevailing in small business organisations. For this
expectations of stakeholders have to be taken in consideration as discussed below:
 Employees: employees in organisation have to be motivated to keep overall organisation
more effective, different opportunities can be identified by small business. Such as new
product addition may need training to be provided to present workforce so that efficiency
& productivity of each employee can be increased (Brown And et. al., 2019).

 Shareholders: Interest of shareholders should be taken in consideration as they are the
ones who have invested money in the company. For increasing their satisfaction level
high returns have to be provided to all the shareholders (Branch, 2018) .
 Customers: Customers are one of very important shareholders in every organisation
Appropriate product development strategy must be used for increasing overall
satisfaction level of customer.
STP analysis: STP strategy can be used by marketing department in the organisation for
identification of target market which has to be catered by company. Based on this market
products have to be positioned in the external market. Small business have to effectively use this
strategy after identification of their target market.
 Segmentation: In this strategy whole market is divided in various groups or segments
based on similar characteristic which they are sharing. Such factors have to be considered
by SME's. This includes various behavioural characteristic of market and demographic
factors. Such as age group of children, perception of their guardians have to be
considered in this strategy (Barrow,. and et. al., 2018).
 Targeting: In this target market of the organisation is decided. In present scenario SME's
have to make decision regarding their target market based on their segmentation.
 Positioning: In this strategy efforts must be made by SME's to attain differentiated and
competitive position in the market in which they are having presence.
Financial Projection: For every business it is very necessary to consider total
requirement of funds for new launches to be done. Strategy of product development also requires
huge financial resources that can be required by SME's for undertaking all the functions that
require finance.

Monitoring and controlling: It is very necessary for every organisation that they must
ensure effective control on activities and functions which can to be undertaken in their future
course of business. It is important for keeping a track on performance. Monitoring is essential for
keeping a track on key performance indicators of a particular business plan by SME's. In present
case SME'S for keeping a track on different functions that have to be undertaken in the due
course of new product launch. Various key area are finance, optimum utilisation of other key
resources etc.
TASK 3
Critical evaluation of exit or succession options for small business and making a decision of
appropriate courses of action
Business require adequate amount of funds for having operating them in a effective
manner. If a organisation is not able to make adequate arrangement of funds then it may get
affected and they have to leave the market where they are operating. Various strategies that must
be adopted by SME's as suggested by Deloitte are discussed below:
Merger & Acquisition: This strategy is used by business for purchasing of another
business (Atwood, 2020). It carets a beneficial situation for both the business as both the
organisations can effectively conduct their business functions.
Benefits:
 There are several benefits of Merger such as increase in the present share of market.
 Mergers also very helpful in generation of tax benefits for a company and at same time
there is reduction in overall capital cost which leads to higher returns.
Demerits:

 Many times there can be instances where two Companies may not adjust with each other
and there can be occurrence of conflicts that affect overall functioning (Allen, 2018).
 A organisation may experience diseconomies of scale that is hard to coordinate and
communicate.
Liquidation: It is a strategy in which all the business assets are sold and business
operations come to a end. This strategy is suitable for smaller business and are depended on
individuals. It usually occurs where business realise that that are no more profitable and it is the
time for winding up of business.
Benefits:
 This Strategy is more flexible and goods can easily be sold by business and money can be
easily recovered from the market.
Demerits:
 Decision are taken very quickly that leads to a situation where return is low and it has a
impact on relation of organisation with various stakeholders. Brand image of a company
is also affected because of Liquidation (Adler, 2018).
Small business can adopt strategy of merger as a exit option whenever they are willing to
leave the market. This is a great option for organisation as this does not impose any negative
impact on their overall performance and also is very helpful in maintaining their present base of
customers by merging in another company.

CONCLUSION
It can be concluded from above report that planning of business activities is very
important for organisation in making a detailed analysis of external and internal environment as
it posses direct impact on operational function and profitability of business. For making a
detailed analysis of growth prospect for a business porter's generic strategies, Ansoff matrix can
be used for facilitation of future growth. It can also be concluded that appropriate business plan I
necessary for achievement of business objectives in a effective manner.

REFERNCE
Books & Journal
Adler, R.W., 2018. Strategic performance management: Accounting for organizational control.
Routledge.
Allen, P., 2018. Artist management for the music business. Routledge.
Atwood, C., 2020. Succession planning basics. American Society for Training and Development.
Barrow, C. and et. al., 2018. The Business Plan Workbook: A Step-By-Step Guide to Creating
and Developing a Successful Business. Kogan Page Publishers.
Branch, M., 2018. Comprehensive city planning: Introduction & explanation. Routledge.
Brown, G.W. And et. al., 2019. Do private equity funds manipulate reported returns?. Journal of
Financial Economics. 132(2). pp.267-297.
Candelo, E., 2019. Marketing Progress: A Never-Ending Story. In Marketing Innovations in the
Automotive Industry (pp. 67-78). Springer, Cham.
Helmold, M. and et. al., 2020. Tools for Negotiations. In Successful International Negotiations
(pp. 173-182). Springer, Cham.
Kemp, R.L., 2018. Strategic planning in local government. Routledge.
Kim, Y.S. And et. al., 2019. Business environmental analysis for textual data using data mining
and sentence-level classification. Industrial Management & Data Systems.
Leick, B. and Lang, T., 2018. Re-thinking non-core regions: planning strategies and practices
beyond growth.
Price, K.M. and Nelson, K.L., 2018. Planning effective instruction: Diversity responsive
methods and management. Cengage Learning.
Roussanov, N. and et. al., 2018. Marketing mutual funds (No. w25056). National Bureau of
Economic Research.
Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33).
Springer Gabler, Wiesbaden.
Schepker, D.J. And et. al., 2018. Planning for future leadership: Procedural rationality,
formalized succession processes, and CEO influence in CEO succession planning.
Academy of Management Journal. 61(2). pp.523-552.
Straub, S. and Sperling, M., 2018. Controlling und Businessplan.
Tsatsoula, E., 2018. Application of Ansoff's Matrix-Methodology: Marketing Growth Strategies
For Products.