Business Growth and Funding Strategies for Yum-Tum Restaurant Report

This report provides a detailed analysis of Yum-Tum Restaurant's growth strategies, focusing on its bid for a government contract as a food supplier. It begins with an introduction to the importance of business planning and sets the context for the Yum-Tum Restaurant case study. The report then delves into key considerations for evaluating growth opportunities, including competitive and external environmental analyses using Porter's generic strategies. It explores the Ansoff Matrix to evaluate market growth opportunities, recommending market development as a suitable strategy for the restaurant. The report further assesses potential funding sources, such as bank loans, venture capital, and crowdfunding, to support the company's expansion. It also includes the design of a business plan for growth and concludes with an overview of exit or succession options for small businesses. The report is well-structured, referencing relevant theories and models to provide a comprehensive view of business growth and financial planning, making it a valuable resource for students studying business development.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Key considerations for evaluating growth opportunities..................................................1
P2 Evaluate opportunities for growth ....................................................................................3
TASK 2............................................................................................................................................5
P3 Assess potential sources funding available for companies...............................................5
TASK 3............................................................................................................................................7
P4 Design a business plan for growth....................................................................................7
TASK 4..........................................................................................................................................10
P5 Exit or succession options for small businesses..............................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
An adequate planning for obtaining high growth and success help managers to achieve
their business goals in a minimal time period. In this competitive era, it is essential for
companies to make an appropriate plan or policies for exploring their business areas as well as
increasing financial capability. Along with this, business plan provides a pathway to employees
as they can work accordingly; it represents that management have clear understanding of all
aspect of business and demonstrate their commitment to future development (Eddleston and et.
al., 2013). The present assignment is based upon Yum-Tum Restaurant which provides food
facility to people and situated in Queen's street of UK. Company is going to made bid of
£200,000 in government contract that is “Food Supplier network”. Apart from this the report is
going to describe key considerations for measuring growth. It will describe potential sources of
funding available for business to achieve firm's goals and objectives.
TASK 1
P1 Key considerations for evaluating growth opportunities
While formulating plans for achieving future market growth and success it is essential for
companies to evaluate growth opportunities. It helps them to identify in which area company can
explore its business and gain high competitive edge. Although, growth contains several risk but
right strategy can deliver stability, long term profits and security to business. Yum-Tum
restaurant is one of the famous fast food provider in Queen's street and has entered into a
contract named “Food Supplier Network” for this purpose managers of company are required to
determine its market competitiveness and external environment thus to make future plans
accordingly. There is discussed key considerations required for determining growth opportunities
for the company.
Competitive analysis -
A competitive analysis enables whole business to better understand the competitive
landscape in which firm is operating. It informs value proposition by which company will
perform effectively among its competitors. In addition to this, competitive analysis enable
company to make strategic decisions and gain high competitive edge (Mahmoudi and et. al.,
2013). Yum-Tum Restaurant is analysing its competitive position through Porter's generic
strategy.
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Porter's generic strategy (An introduction to Porter’s Generic Strategies, 2015): Cost leadership – This strategy refers to being a leader in context cost of a specific
industry and market. In cost leadership strategy, firms target a broad market and offer
products at lowest possible price. If Yum-Tum Restaurant acquire this strategy while
working for that contract, then it needs to serve its products at lowest possible price. For
adopting cost leadership strategy, company require to reduce cost of material and labour
to provide products at reasonable prices. Differentiation strategy – Here, firms are required to target broad market where is high
demand of products. In differentiation strategy, manager produces goods and services
which have unique features than other brands (Valler, Phelps and Wood, 2012). With this
strategy, Yum-Tum Restaurant needs to provide delicious and unique food items having
high quality. It also requires effective marketing, research & development activities,
innovation etc. all these are required high costs and time which cannot be bearable by
small businesses.
 Focus strategy – It involves cost and differentiation focus, firms target a niche market
where is little competition. Focus strategy forces firms to follow lowest possible prices
and qualitative goods in niche market. In this strategy, Yum-Tum can choose to target a
clear niche market, understand its dynamics and deliver products which are unique or
innovative in nature to a small group of people.
From the all above strategies, Yum-Tum Restaurant has acquired focus strategy in order
to gain high competitive edge among all food suppliers of UK. By using that strategy, company
is enable to serve customers in effective manner; it built strong brand image between customers.
It creates specific market segment less attractive to rivals. Focus strategy allows company to add
something extra in their food items and make its delicious as a result of serving only that in niche
market.
External environmental analysis
Political factors – It involves laws, regulations, tax rates, VAT rates, import-export
policy etc. The political condition of UK is flexible as while starting their business individuals
are not required to follow strict laws and policies (Kraaijenbrink, Ratinho and Groen, 2011).
Economic factors – Economic factors include – interest rates, inflation rate, bank rates,
poverty, foreign direct investment, disposable income of people, education level etc. UK is one
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of the effectively developed economy which have increasing GDP rate. Along this, there is
inflation and growth situation which help executive of Yum-Tum have adequate number of
customers. This help them to enhance sales and generate good amount of profit from business to
sustain their position in market.
Social factors – While developing any product or service it is essential for companies to
consider customers' beliefs, values, morale and interest level. In this modern era, needs and
wants of customers' are changing rapidly thus it is essential for Yum-Tum to produce products
accordingly.
Technological factors – In present scenario, technology is changing at fast pace. Every
small and large business is tend towards adopting new and innovative technologies just to
produce in more effective and efficient manner (Grover, Bokalo and Greenway, 2014).
By considering external environmental analysis, Yum-Tum Restaurant is enable to get
better market opportunities and easily explore its business areas as well. As the economic
condition of UK is effective that is people have disposable income in good amount; it represent
they are enable to acquire luxurious products and services.
P2 Evaluate opportunities for growth
In this over dynamic environment, firms are required to identify growth opportunities by
which they can explore their business. Growth plans help small firms to increase business to
enhance sales and profitability.
In this relation, the firm can acquire Ansoff Matrix; it’s a great strategy which aids Yum-
Tum Restaurant to determine market growth opportunities. It is also known as Product/Market
grid which represent four aspects, such as – market penetration, product development, market
development and diversification. Along with this, Ansoff Matrix highlights potential risks related
with growth strategy which may expose firm to move from one section to another. It is a
strategic marketing tool which links company's marketing strategy with its general strategic
direction (Chapin, 2012). There is briefly defined four quadrants of Ansoff Matrix, such are
stated as under -
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(Source: The Ansoff Model, 2018) Market penetration – In the first quadrant of Ansoff matrix, companies perform in their
current target market with its existing products or services. Market penetration strategy is
less risky as it leverages existing resources or capabilities of firms. As if Yum-Tum
acquire the strategy it is needed to organise effective training and development
programmes so as to more and more get know about it. Product development – The another section of Ansoff Matrix relies upon developing or
generating new products and adding extra features in existing products or services of the
company in order to attain or retain for long term period. Product development strategy
supports Yum-Tum to increase its market share; in this strategy firm will produce
products related with specific customers' needs or wants. Market development – According to this strategy, firms enter into new market in order to
increase their market presence and get high competitive edge. Market development
strategy enable companies to determine new markets in which firms can easily supply
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Illustration 1: Ansoff Matrix

their products or services. Additionally, before entering into markets it is essential for
SMEs to conduct a market research thus to recognise their trends and demands.
 Diversification - This strategy focuses on reaching new markets with new products. In
diversification strategy, firms get moved into new markets with their new products to get
high competitive in other market areas. The strategy is highly risky for small businesses
as they don't have idea about customers' needs and wants in such markets (Ziari and et.
al., 2012). Diversification can be either related or unrelated. In which Related
Diversification is when organisation stays within a market they have familiarity with
whereas Unrelated Diversification is when organisation moves into a market or industry
they have no experience with. This is considered a high risk strategy.
From all these growth opportunities, Yum-Tum Restaurant should acquire market
development strategy. According the case study, the firm is entering into a contract of supplying
food stuff to internal catering functions of universities. It helps in raising market area of the
company and help it in providing high competitive edge.
TASK 2
P3 Assess potential sources funding available for companies
Finance plays role in managing business operations in systematic manner. In order to
accomplish their working activities, small business require high funds or capital and for this they
determine various sources of funds. According to the current scenario, Yum-Tum Restaurant is
entering into a contract, named “Food Supplier network” ; in which firm will work as a partner to
supply food stuffs. Amount of bid is £200,000 but Yum-Tum has available only £20000; thus it
has decided to acquire remaining amount from different sources of funds. There is given certain
potential sources of finance which are stated as under -
Bank Loans – It is one of most common option from available sources of funds for small
business to raise their capital or funds. Banks are always accessible as they are used
contentiously for withdrawing money and deposit savings (Todes, 2012).
Advantages -
 Small businesses take loans from banks which gives them relief from tax, as percentage
of profits which is used to repay loan is exempted by government.
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 Bank renders loans at lower rates as well as in flexible manner, there is no threat of
insecurity. by which, people can easily trust on bank loans.
Disadvantages
 The process of bank loan requires verification of all credentials and details about the
company before sanctioning a loan that is too lengthy process.
 Most of the bank prefer only existing and effectively running business, as they have good
financial position and credit history. This is not possible with small business and there are
chances of failure in payment of loan.
Venture capital – It is a way of financing a start-up business in exchange for an equity
stake in the firm. Venture Capitalists are gambling which returns from their successful
investments will outweigh investment lost in failed ventures (Mitchelmore and Rowley, 2013).
Advantages
 As VC is a not a loan scheme thus there is no requirement of repaying schedule; it means
business owners does not require to return the cost of doing business.
 VC firms are very easy to locate because they are documented in business directories.
 Venture capitalists generally have broadened industrial connections thus they are unable
to provide expert advice to small business; it turn outs such firms get good advice or
guidance to start their business and gain high competitive edge.
Disadvantages
 Venture capitalists takes stock in corporation, so this result in loss of control of business
person.
 The investment process of venture capitalists includes a negotiation and due diligence
period. It needed legal, operational and accounting assessments of the company through
external expertise which are quite costly and time consuming in nature.
Crowdfunding: This is an another funding technique in which large number of
individuals contribute small amount. All people connect with each other through internet and
make decisions about investment in business.
 Advantages – Effective crowdfunding projects can get large amount of attention on social
media sites which aids them to grow beyond the finance.
 Disadvantages - Failed projects risk damage to the reputation of the business and people
who have pledged money to them (Barbour and Deakin, 2012).
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TASK 3
P4 Design a business plan for growth
A business plan is a document defines a new business, its offering, how it will operate,
lead, managing finance, operations models and further details as well which are required to
success. Managers of small business organisations prepare a business plan as it will provide right
direction to employees to work in most efficient and effective manner. In context of Fordway
Solutions, a business plan is a fundamental tool that any small company needs to have in place
prior to beginning its operations; it intends how business achieve its goals.
There is given business plan of Yum-tum Restaurant -
Overview of the company – Yum-Tum restaurant is a new medium-sized restaurant
located in a trendy neighbourhood of Queen's street. It emphasis will be on organic and creative
ethnic food. An emphasis on organic ingredients is based on Yum-Tum's dedication to
sustainable development. Additionally, the restaurant procures local foods when possible,
reducing their dependence on fossil fuels used for transportation.
Mission and Vision of the company – Yum-Tum is a great place to eat, combining an
intriguing atmosphere with excellent, interesting food that is also very good for the people who
eat there (Schetke, Haase and Kötter, 2012).
Vision of Yum- Tum is to provide best and healthy food products to customers to create
brand image in market.
Mission statement of Yum- Tum is to gain fair profit for the owners and a rewarding
place to work for the employees.
Products and services of the company – Yum-tum restaurant offers great food in a social
environment; there has a large repertoire of ethnic ingredients and recipes. Ethnic recipes will be
used to provide the customers with a diverse, unusual menu. The management is also focusing
on healthy dishes, recognizing the trend within the restaurant industry for the demand for healthy
cuisine.
Situational analysis – It is can be done through by analysing internal and external factors that
may affect growth and success of business organisations. Below is given SWOT analysis of
Yum-tum Restaurant -
Strength Weaknesses
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 Good customer service
reputation/creative solutions.
 Quality products
 USP/ competitive edge.
 Strong team capability.
 The creation of a unique and innovative
fine dining atmosphere will
differentiate the firm from the
competition.
 It is offering a fine dining experience in
a cozy atmosphere. Recognised and trusted food chain
among existing users.
 Lack of funding to significantly expand
operations
 Limited manufacturing capacity
 Almost no marketing savvy
Opportunities
 Emerging market trends Globalisation has increased foreign
direct investments which will be
beneficial for small businesses.
Threats
 Healthy and safety laws of government.
 Economic recessions may shut down
many small industries.
 Political risks.
Target market segmentation – Owner of Yum-Tum Restaurant believes that the market
can be segmented into three distinct groups that it aims to target. The first group that will be
targeted is young happy customers which are growing at an annual rate of 8% with 150,000
potential customers. The another group is rich hippies who naturally desire organic foods as well
as ethnic cuisine. At last, the last group which is particularly interested in the menu's healthy
offerings is dieting women which number 350,000 in London.
Financial analysis – After this, managers of Yum-Tum Restaurant are required to
prepare financial statement which helps it to determine how much will be spend on different
working activities. Below is given Cash flow statement of the company.
Particulars Jan Feb March April May June
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Investment 50000 50000
Cash inflows:
Sales 8900 15000 16000 14000 18900 16500 89300
Credit sales 500 250 650 700 900 400 3400
Cash outflow:
Rent (Fixed) 600 600 600 600 600 600 3600
Salaries(Fixed) 1200 1200 1200 1200 1200 1200 7200
wages(fixed) 200 200 200 200 200 200 1200
Purchases(Vari
able) 3200 5200 1800 6300 4800 5000 26300
Miscellaneous(
Variable) 100 500 200 450 630 250 2130
Opening
balance 54100 61650 74300 80250 92620 362920
Total 54100 7550 12650 5950 12370 9650 102270
Closing
balance 54100 61650 74300 80250 92620 102270 465190
Allocation of resources – After this, managers are required to determine various
resources which help in accomplishing business activities and procedures. Several resources, i.e.
human, physical, technological and financial which aids management to do operations in best
possible manner (Li, Mobin and Keyser, 2016). As a food provider, it is essential for Yum-Tum
Restaurant to ensure about availability of workforce who is enable to make delicious and tasty
food items for customers.
Implication of the plan – At last, managers of the company consult the overall plan with
employees and make necessary modifications it is required. Afterwards, the plan gets
implemented within organisation and staff is ordered to work accordingly.
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