Little Wonder Cafe: Growth Opportunities, Funding & Business Plan

This report provides a comprehensive growth plan for Little Wonder Cafe, a London-based business. It evaluates growth opportunities using Porter's generic strategies and PESTLE analysis, identifying cost leadership as a key strategy. The report explores growth options using the Ansoff Matrix, including market penetration, market development, product development, and diversification, recommending market development for Little Wonder Cafe. It also discusses potential funding sources like bank loans and crowdfunding, outlining their merits and demerits. Furthermore, the report includes a designed business plan for the organization's growth and examines the benefits and drawbacks of succession options for small businesses. Desklib provides access to this and other solved assignments for students.

Planning for growth

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1- Evaluation of growth opportunities in context with Little Wonder Cafe..............................1
P2- Opportunities for growth in the help of Ansoff growth vector matrix..................................4
TASK 2............................................................................................................................................5
P3- The potential source of funding along with their merits and demerits..................................5
TASK 3............................................................................................................................................7
P4- Designing of a business plan for growth of the organisation................................................7
TASK 4 .........................................................................................................................................11
P5- Benefits and drawbacks of succession option for small businesses....................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Growth planning is a strategic plan which enables the business to implement useful
actions for the expansion of business organisation. The ultimate objective of growth planning is
to achieve high profits and sustainability of the business in action. The planning for growth
allows organisations to make necessary prioritisation of their resources for acquiring good
response from their customers in exchange for goods and services. Successful implementation of
a strategic growth plan allows the business to manifest potential outcomes by fostering
productivity among its employees. This report highlights the growth plan strategies of Little
Wonder Cafe, located in London. This report covers the business tools adopted by the Little
Wonder Cafe and its various aspects such as growth opportunities, materialistic approaches etc.
The discussion also revolves around the various pathways through which this business
organisation gained international recognition.
MAIN BODY
P1- Evaluation of growth opportunities in context with Little Wonder Cafe
Porter generic strategy is defined as the framework which helps a business organisation
identify its growth opportunities for their expansion. These strategies will enable Little Wonder
cafe to gain competitive advantage by executing these operations. The demonstration of these
strategies will facilitate expansion of business organisation. Some of strategies of the Porters
model is demonstrated below:
Cost Leadership: For development of the business strategy, it is crucial for the
organisation to minimise their costs for sustainability of the firm for a longer period of time. For
Little wonder cafe, the mentioned strategies will ensure that the business is in the right place and
there is scope for minimising the price of the products offered, to help gain competitive
advantage over other businesses in the market (Zanjani and et. al., 2020).
Differentiation: These strategies ensure that a business focus more on the differentiation
of their identities among other firms. The service differentiation of Little wonder cafe includes
providing an additional edge which is analysed based on comparing the output produced by rival
firms.
Cost focus: The main focus of this particular business strategy is to concentrate on
minimising the price of the product or service offered. By using this business strategy, Little
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wonder cafe can gain recognition in this particular marketing segment. The decline in the prices
influence a huge base of customers.
Differentiated focus: This strategy of the market segment involves the preparation of a
particular offer which is different from the discounts or offers of rival firms. The Little wonder
cafe should ensure the development of a marketing strategy which will enable the business to
entail opportunities for further growth.
The most effective strategy for profitability of the Little wonder cafe is cost leadership
strategy. This segment of the strategy ensures surety of the customer as price of the product or
service is reduced. This enables the business to enhance their market value and gather customer
attention. The use of this strategy will ensure the business to acquire high market share as
compared to their competitor (Agoas, 2020). The cost leadership strategy will ensure that the
business has competitive advantage by lowering the cost of the products and services offered at
the little wonder cafe. There are various factors that influence this strategy such as business
efficiency, size, scope, scale and collective experience in the marketplace. For example, in
relation with the little wonder cafe, they can make more money by selling inexpensive, making
them a low-priced alternative to Starbucks.
PESTLE ANALYSIS
Pestle analysis is defined as a framework of certain macro-environmental factors which
are used in the environmental scanning of strategic management. This analysis is used in
different situations for guiding professionals to make strategic decisions. This analysis employs
examination of several external factors which impact the performance of the organisation
(Podobnik, 2020). The implementation of this model of analysis will help the Little wonder cafe
to access various market opportunities and identify the threats in the business environment.
Political factors: This factor influences the stability of the business on the basis of a
political segment of the country which is acknowledged by the governmental configuration. In
the United Kingdom, political instability is observed due to the effect of Brexit and their negative
impact on the companies of the country. Brexit is characterized by the separation of the UK from
the European Union, highly impacting the firms. Considering the little wonder cafe, the majority
of the raw materials are sourced from the European Union which was negatively impacted
because of the Brexit decision (Torrellas Darvas, 2020). Due to these factors, the organisation is
unable to manage the changes further impacting their competitive advantage.
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Economic factors: The economic factors of the country include inflation rates,
employment rates, foreign exchange, etc. which are associated with the financial situation of the
country. The employment rate in the UK is very high because of the per capita income which has
a positive effect on the organisation's well-being. The little wonder cafe deals with clients all
from different clients all around the world which makes it necessary for them to provide a wider
service in the marketplace. The little wonder cafe is well benefited in terms of the economic
factor which enables the organisation to enhance their creativity and achieve competitive
advantage in various dynamic situations.
Social factor: Social factors include the taste and preference of the customer in the
marketplace. The customers in the UK are often attracted to new offers and discounts to live up-
to the expectations of their lifestyle (Fadel, 2021). Introducing new offers and discounts at the
little wonder cafe will ensure that customer demands are prioritized and fulfilled. The added
advantage is that this will ensure the organisation to sustain their competitiveness in the market
and acquire multiple growth opportunities.
Technological factors: This factor is mostly associated with the use of advanced
technology in the business organisation for enhancing the sales. Nowadays, people in the UK are
attracted with technological advancements and by implementation of technology, the little
wonder cafe can enhance their customer base which will sustain the position of the business in
the market place. The most important factor is technology which will enable the little wonder
cafe to gain competitive edge based on the implementation of these strategies.
Legal factors: This factor is associated with the applicability of laws and regulations
which are supposed to be implemented by the business to avoid any legal complications. These
legal interruptions and issues can negatively impact the successful operation of the business. In
reference to little wonder cafe, the implementation of safety acts ensure high efficiency of the
firm (Steriopoulos, Goh and Harkison, 2022). The legislative operations of the little wonder cafe
will contribute to the sustainability of the organisation compared to its rival firms not complying
by the legislative standards of the country.
Environmental factors: This factor ensures that the organisation ensures proper
protection of environment by the organisation. The laws in the UK strictly comply by rules
which ensure protecting the environment. In context with the little wonder cafe, the residue
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produced after harvesting of beans used by them for production of coffee harms the environment.
This can negatively impact the reputation of the environment.
P2- Opportunities for growth in the help of Ansoff growth vector matrix
Ansoff growth vector matrix is a framework of strategies which are implemented and
executed by the organisation to help in their growth, increase their market approach and
achieving their business goals (Ismail, 2020). Using these strategies, a business can increase its
market share by introducing a product or service based on the demands of the customer. In order
to help little wonder cafe maintain their business operations, certain strategies should be
implemented which are as follows:
Market penetration: This particular strategy helps in increasing the sales and enhance the
profit aspect of the business in the competitive market. The strategy of market penetration is
known to be less risky compared to other strategic options. For the little wonder cafe, market
penetration will help in increasing sales of existing products without introduction of any new
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Illustration 1: Ansoff Matrix

product. The promotion of sales is done through advertisements, templates, posters and price
cutting to attract the targeted group of customers.
Market development: This strategy includes the use of increased promotion of sales of
the existing products within a particular city. The organisation will be able to expand its market
share and reach various cities by development of an appropriate marketing strategy. Before, the
inauguration of any new venture, it is necessary to analyse the market of a particular area to
access the needs of the customers (Mohammed, 2018). It provides the organisation with a visual
about the profit aspect of organisation at the preferred location. As in the case of the little wonder
cafe, developing a visionary data will ensure that the cafe is attracting more and more customers
right from the beginning.
Product development: Appropriate development of product or service by the little
wonder cafe will ensure customer satisfaction. For this to successfully happen, the organisation
should employ extensive research before launching the product in the market. This research will
be helpful in analysing the demands and needs of customers with respect to the product being
launched. The little wonder cafe should analyse the needs of the customers and make necessary
modifications in their services to fulfil the demand.
Diversification: This strategy is known to be very risky as this strategy suggests
introduction of a new product or service by the organisation. The little wonder cafe will
introduce a new product in the market based on this strategy of diversification. Establishing the
market will require appropriate research about the demands of the customer base. Therefore,
making a product according to the needs of people living in a particular geographical area will
ensure growth and profitability of the business organisation (Escobar and et. al., 2018).
However, the little wonder cafe has adopted the strategy of market development where the enter
the market with an existing product.
TASK 2
P3- The potential source of funding along with their merits and demerits
Funding is a process of availing money for starting and running of a business
organisation. Funds are necessary for an organisation for expansion of the business venture,
introduction of an additional service and for the development of the organisation. The little
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wonder cafe is required to effectively manage the marketing aspect of the business in terms of
advertising the operation. Various sources of funds are discussed below:
Bank loans: The most preferred source of funds are banks. Banks give out loans to both
start-ups and well established organisation on their own respective terms and conditions. Bank
will give loan to the little wonder cafe on the basis of their reputation and after assessing the
reason for taking the loan regarding the investment of money (BENCZE and ALSOP, 2019).
However, there are various merits and demerits of taking loans which are discussed below:
Advantages Disadvantages
 Banks are available throughout every
locality in the UK. Therefore, little
wonder cafe can apply for a loan at any
given point, time or place.
 These loans will allow the business to
expand their organisation without any
difficulties.
 The process of apply for a loan is
extremely lengthy.
 High rates of interests will create
burden on the little wonder cafe.
Crowd-funding: This variety of source of funding is less preferred by the organisation
because the main source of funding is done by the general public. The public do not demand any
equity in return and are not called as investors. Some of the merits and demerits of crowd
funding are:
Advantages Disadvantages
 The minimum time required to raise
funds is generally huge as compared to
the time required to establish a loyal
customer base (Williams, 2022).
 For the little wonder cafe, public
interest will be enumerated which can
cause the business to perform better.
 It is a complex process where a lot of
convincing is required to initiate the
process of funding money.
 The risk of failure is very high as
compared to the success of the
company.
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Angel investor: Angel investors are those which offer funds to small start up businesses
exchange for equity. Angel investor funds a startup business and demands a small percentage of
ownership from them for them to make their own investments. These investors also offer
guidance and experience to these business ventures for establishment of a successful
organisation. Some of the advantages and disadvantages of angel investors are:
Advantages Disadvantages
 The little wonder cafe can establish a
professional relationship with its owner
for their benefit.
 The guidance and experience offered
by angel investors can help in the
expansion of the business.
 This source of funding is cheaper and
in case of business failure, there is no
requirement to return money.
 The complete control of the business is
often interfered by angel investors.
 The terms and conditions of the
investors can slow the process funding
(Mussolino and et. al., 2019).
 The average amounts are often less
than the investment capital.
TASK 3
P4- Designing of a business plan for growth of the organisation
The development of a business plan is crucial for starting a business. Planning is defined
as the process of construction of a schedule or map which includes the steps required to be
followed in order to achieve the defined target of the business. The little wonder cafe should
analyse the demands of the customers in the local geographical areas and produce a business
plan accordingly.
Executive summary: Implementation of a successful business plan is extremely
important for the growth and efficiency of the organisation. The little wonder cafe should invest
their funds wisely focusing more on meeting the demands of the customer. This will enhance the
overall sale of the products and services offered by the cafe.
Organisational overview: The highlights of little wonder cafe include serving a variety
of food items and beverages at a reasonable price along with good ambience. Therefore, the
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organisation should focus on price reducing offers and introduction of new flavours to enhance
customer base (Heinonen and Ljunggren, 2018).
Mission and vision of company: The main vision of the company includes serving the
customers with authentic food items. The targeted group of customers are college, university
going students who can maintain a heavy crowd in the cafe. The main aim of the cafe's owner is
expand their business in multiple cities.
Values and ethics of organisation: The implementation of ethics is ensured by the
working staff and the managers to provide quality product and services to the customers. Good
professional relationships are established with the customers and employees. It is proven that
good ambience and working environment will retain employees for a longer period of time and
ensure efficiency in their work.
Objective:
 To establish a good report in the UK market.
 To enhance the profit aspect.
 To increase the market share and become a leading cafe.
 To service authentic flavours to customers.
Market Analysis:
STP approach:
For establishment of a successful business, it is necessary to analyse the market segment
of the business for attract targeted group of customers. The targeted customers for the little
wonder cafe are college and university going students. STP approach enables the organisation to
grow and explore their potential in the market place (McKee and et. al., 2021). Some of the
factors of this approach are discussed as follow:
Segmentation: The little wonder cafe has segregated the market area on the basis of
demographical, geographical, physiological and behavioural aspects of the business plan. The
organisation is focused more on fulfilling the demands of its targeted customers and serving
them on the basis of the preferences of their customers.
Targeting: The targeted group of customers for this organisation are youth, adults and the
children. The targeted group of people should also include higher classes of people or
intermediate audience. In addition to that, the little wonder cafe should target intermediate
people.
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Positioning: The positioning of the little wonder cafe should be promoted by using social
media platforms and other advertisements, such as promotion on billboards etc. This will help in
securing the position of this business organisation in the marketplace (Mahto and et. al., 2021) .
Situational analysis:
SWOT analysis is preferred to access the different aspects of the business. This analysis
includes the assessment of the weaknesses, strengths, threats and opportunities of the business
operation. The need for development and modifications of policies can be rectified based on the
observations made by SWOT analysis. The results of SWOT analysis by the little wonder cafe
revealed the following points:
Strengths Weaknesses
 The motivation of staff members is a
great contributor in the business
organisation.
 The availability of coffee and authentic
food items make people excited about
visiting the cafe at least once in a
month.
 The ambience of the cafe is excellent
and aesthetic looking which attracts
more and more customers (Lindsey,
Mauck and Olsen, 2021).
 The market share of the little wonder
cafe is limited because of limited
customer reach.
 Considering the financial aspect, this
cafe has a weak reserve.
Opportunities Threats
 There is a great room for improvement
by establishing a good report with
customers will help the organisation
make more sales and profit.
 The business can expand their business
in a particular local are which will
bring more profit.
 The establishment of another food joint
in the same locality is a long term
threat to the little wonder cafe.
 There is a threat to the cafe where they
might face uncertain situations that are
associated with loss due to the lack of
financial reserve.
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Financial activities:
Financial activities are referred to as the process where the optimisation of funds takes
place for further future implications. It is crucial to keep a track of all the expenses to keep proof
of all the sales and profits achieved by the company. The tracking of all financial activities will
help the business analyse the profit or loss aspect of the company. Th financial data of the little
wonder cafe is mentioned below:
Particular 31/01/2019 ($) 31/01/2019 ($) 31/01/2019($)
Apply equipment
costing
15000 - -
Expenses in business
promotion
9000 8000 6000
Expenses in
commercialisation
6000 5600 5800
Collections 2000 4000 3000
Training charge 6500 8000 8500
Overall expenses 38500 25600 23300
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Risk plan: The little wonder cafe have some reserved funds to use in times of difficult
situations. Appropriate knowledge about risk management will help the business to deal with
difficult situations (Morano, 2020). An appropriate risk management plan includes risk
identification, risk analysation and risk mitigation.
TASK 4
P5- Benefits and drawbacks of succession option for small businesses
There are various exit options that have been adopted by the little wonder cafe in case of
failure of businesses. All the assets of the organisation are liquidated, also all the debts are paid
before the business is handed over to another organisation. The method used for succession of a
business are:
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Winding up: This is one particular exit option where the owner of the assets in an
organisation are distributed evenly along with all the liabilities (Alnashashibi and Bakker, 2019).
Merits and demerits of this particular exit option is given below:
Merits:
 The little wonder cafe will stop all its operations immediately without any
disputes.
 All the debts will be cleared which will reduce the burden on all the stakeholders.
 The owner of the firm can focus on investing in new core opportunities and the
remaining fund will be liquidated to contribute to the former cause (Zhang, 2021).
Demerits:
 A professional should be hired for binding up all the activities of the business
operation. This is done because the overall worth of the organisation will be
affected if the evaluation of these assets is not done by a professional.
 The particular business might have a separate legal entity to facilitate granting of
loans (Mečionytė and Žilinskij, 2021). Therefore, the liquidation of such loans
should be ensured. The sale of these assets have the potential to reduce the
possibilities for future business opportunities.
CONCLUSION
From the above report of the little wonder cafe, it can be concluded that effective
business planning and research aid in the efficiency of the organisation. It it crucial to select a
proper strategy for the growth of the little wonder cafe, considering the benefits and losses
which are important for the development of the business. Management of all the external and
internal factors will ensure the success or loss of the business organisation.
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