Little Wonder Café: Growth Strategies, Funding, and Exit Options

This report provides a comprehensive analysis of growth planning for Little Wonder Café, a small café in London. It evaluates growth opportunities, considering factors such as revenue, competition, and target customers. Analytical frameworks like SWOT analysis, growth share matrix, and Porter's five forces are applied to identify competitive advantages. The report explores specific growth pathways using Ansoff's growth matrix, focusing on market penetration, market development, product development, and diversification. It also examines various funding methods, including retained earnings, debt capital, and equity capital, evaluating their benefits and drawbacks. A detailed business plan is presented, outlining the company's mission, vision, product offerings (including new vegan options), and situational analysis. Finally, the report discusses exit and succession options, comparing and contrasting different strategies for the business's future.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1 The key considerations and growth opportunities...................................................................3
P1 Evaluation of growth opportunities........................................................................................3
M1 Range of analytical frameworks............................................................................................3
D1 Specific options and pathways for growth.............................................................................4
P2 Ansoff’s growth matrix..........................................................................................................4
LO2 Methods of funding and types of funding...............................................................................5
P3 Potential sources of funding its benefits and drawbacks........................................................5
M2 Evaluation of sources............................................................................................................6
D2 Evaluation of the source which is to be adopted...................................................................6
LO3 Business plan for the organisation...........................................................................................6
BUSINESS PLAN.......................................................................................................................6
LO4 Ways to exit the business......................................................................................................12
P5 Exit and succession options..................................................................................................12
M4 Comparing and contrasting the options...............................................................................12
D4 Critical evaluation of exit and succession options...............................................................13
CONCLUSION..............................................................................................................................13
REFERENCES................................................................................................................................1

INTRODUCTION
To grow the business a proper set of plans are to be made. As clear goals and targets
increases the scope of growth as well as the increase its revenue and customer satisfaction. As
proper strategies are to be made and followed to grow the business. Little wonder café is a small
café which is into food and beverages industry. As being a small enterprise it uses various
strategies to grow its customer base and revenue as well. In future the company is planning to
increase its food products on the basis of the customers need. In this report it is analysed that
how the growth opportunities are grabbed and what are the frameworks that can be used. Will
analyse the sources of funding available their benefits as well as their drawbacks. Lastly will
design a business plan for the grow of the company including the financial information.
LO1 The key considerations and growth opportunities.
P1 Evaluation of growth opportunities
Growth is essential for every business. Goals or objectives set by business needs to be in
the direction of growth. While evaluating growth Little Wonder Café needs to take into
consideration some factors –
Revenue from new source – Increased revenue is a direct source of growth. If Little Wonder
Café increases its revenue it can invest it into new project leading the company towards growth.
Competition – It is very important for the company to give a good and healthy competition to its
rivals. Growth can be increased by having a edge over our rivals.
Search for target customer – Before expanding into any field or even if does not intends to
expand the company should always search for its perfect customer (Meng, 2021). Customer is
the king of any business. They can either make it or break any business.
Differentiation from others – The company should always have some differences from its
competitors. In case the company is having any USP it can create attention of market. It helps
company to gain a lot of market share. The company can work in the direction of its USP and
can make it work like its strength.
M1 Range of analytical frameworks
There are various options available for Little Wonder Café to have a competitive advantage over
its rivals like –
SWOT analysis – Under this option company analyzes its strength, weakness, opportunities,
threats. Strength are the strong points of the company in which it has benefit. Weaknesses are the

weak points on which company has to work (Teoli, Sanvictores and An, 2019). Opportunities are
the chances available to the company which it can use it in order to gain competitive advantage.
Threats are dangers for which company needs to find solution.
Growth share matrix – Company will identify and classify its products into four categories-
Star – Products with high growth and market share (Dawes, 2018). It is a good source of
investment.
Question marks – Products with high growth but low market share.
Cash cows – Products with low growth but high market share (Cleberg, 2019).
Pets – Products with low growth as well as low market share.
Porter’s five forces – Five factors need to be considered –
a) Bargaining power of supplies
b) Bargaining power of buyers
c) Intensity of rivalry
d) threat of new entrants
e) threat of substitutes.
D1 Specific options and pathways for growth
The company needs to be cautious while selecting the pathway for increasing growth
opportunities. Company can use porter five forces to evaluate different five factors. In SWOT
analysis company needs to be proactive in order to grab every opportunity and needs to be
reactive in order to face threats. Company needs to classify its products properly under four
categories – star, question marks, cash cows, pets.
P2 Ansoff’s growth matrix
Ansoff matrix is the matrix used by business in evaluating for the new opportunities.
Little Wonder Café can look for new opportunities. This matrix shows whether the company
should make new product or enter into new market. Under this matrix company has four
strategies under which it creates a combination of existing products or new products and existing
market or new market. This matrix shows four categories of growth opportunities –
Market Penetration – Under this strategy company focuses on increasing customer base by
selling existing products only. The company does not intends to make new product or enter into
new market. Existing customers loyalty needs to be improved by focusing on after sales services
or company can also give discount to regular customer.

Market development – Company can also enter into new market for selling its existing products
like it can open its new branches or can expand its existing operations in some new geographical
location. Proper evaluation must be done before going into new location.
Product development – Company can introduce new product according to the changes in the
market. It can do so in order to adapt with the changes in the market. Company needs to do so in
order to retain its existing customers.
Diversification – If company wants to expand it can introduce new product in new market or
place. This is the biggest growth opportunities as it is a source of increasing growth on a large
scale. Globalization is a very good way of diversification.
LO2 Methods of funding and types of funding.
P3 Potential sources of funding its benefits and drawbacks
Companies have to raise capital to invest it further. There are major sources which can be used
by the company these are as follows: Retained earnings – It is the most basic source of fund it is the accumulated profit of the
company which can be used to pay dividend. It can be used by the company to invest in new
project or expand the business in the existing market. It do not dilute the ownership. Its benefit is
that it is flexible as the management can use as per their discretion. Its drawback is that there is
loss of value for shareholders. Debt capital- In this the company borrow money from outside either from banks, public
or other lenders as well. There are many financial institutions which lend money at lower rate. It
main advantage is that the interest expense is allowed as tax deduction. But the cons is that the
company is obliged to repay the money which is borrowed even in case of bankcruptcy. Equity Capital- The company can raise capital by issuing its share to the public. The
public companies can make the offering to the public to raise capital to invest in the market. In
this the manager is responsible for the stake of the shareholders and the company has to focus on
the wealth maximisation of the shareholders (Katabi and Dimoso, 2018). The benefit is that there
is no liability to repay. But there is no tax benefit given.

M2 Evaluation of sources
As it can be seen that there are several methods which are available with the company.
They all have advantages as well as disadvantages. Based on various factors of the company it
should wisely choose the source of financing (Sources of funding, 2015 to 2022). As Little
wonder café is a small enterprise so the most suitable method will be retained earnings as the
company is earning good profits so these earnings can be used to invest in the market and new
products. It help to increase the customer base. The company can even use debt capital but being
small and earning less profit. It will increase its cost of capital so in long run it can go for debt
but in short run it is not viable.
D2 Evaluation of the source which is to be adopted
As from the above it can be seen that the company should adopt retain earning as a
source of finance or otherwise it can use debt funds. But the equity capital cannot be used as it is
a small company so it cannot do public issue. As with the help of retain earnings their would be
no such obligation to pay the money to anyone. The disadvantage of debt capital is that the
interest is to be paid irrespective of the revenue earn by the company. So it should currently do
investment on the basis of the retain earnings of the company (Błach, Wieczorek-Kosmala and
Trzęsiok, 2020). Apart from this the manager of Little wonder café has to invest the personal
savings as well in the company and have to take the risk. This will help the company to grow as
the finance will be available at the less interest rate and without the issue of repayment. Even
small amount of loan can be taken from friends and relatives as well in the form of debt and
some part equity. As there is less risk of paying sometimes they are convinced and they trust
more than that of the stranger so easily invest in the company.
LO3 Business plan for the organisation
BUSINESS PLAN
Company overview: Little wonder cafe is a London based small sized cafe situated in United
Kingdom. It started few years back in the Hornsey road. It is a small cafe with customer base of
young people. It is well-known for its products such as English breakfast, chickpea salad,
sandwiches etc. So far the cafe has managed to generate good revenues and raise profits in good
proportion.

Mission: Mission is the short term goal of the little wonder cafe which is to offer great food
menu with goodness of quality and best taste which make customer feel great about the cafe. It
being one of the best cafes in London, serving the customer where they derive ultimate food taste
and customer satisfaction is at really high.
Vision: Vision is the long term goal of the little wonder cafe which is to maximize the customer
retention and increase the market share. Cafe is looking forward to maximizing the profitability
by having more customers onboard. As it is trying to provide more inclusive choices for the food
in the cafe menu (Hanák and Grežo, 2020).
Product: This cafe is famous for the product offering of various salads, sandwiches, breakfast
menu, kids special burger, omelettes, cold sandwiches, hot sandwiches, coffee, pudding etc. little
wonder has kept a very nice menu which have diversified offerings for young people.
The new products in the menu of little wonder will be health centric. Vegan salad, vegan
sandwiches, vegan platter, vegan coffee, other vegan options under each food menu and sugar
free food option as well. The business plan is very much viable as it already has very profitable
food options in the menu and further launching all these food options in the menu will only
enhance the business of little wonder.
Situational analysis:
SWOT analysis: Let's use SWOT analysis to understand the shortcomings, capabilities of the
business, negative factors which exist as a threat and various opportunities for the business in
detail (Jukova and et.al., 2018).
Strengths
 Core competency of the cafe to keep up
the quality.
 Low cost offering of sugar free
products.
 Meeting the demand supply index.
 Expertise in fast service for dine in
customers.
Weaknesses
 Cafe does not have any expertise in
vegan and sugar free food option.
 Introducing the new menu to people
who have not been served by the cafe before is
a difficult task.
 Maintaining the taste balance in sugar
free products.
Opportunities
 Grabbing the large market share in the
Threats
 High competition in the cafe business

food sector.
 On boarding customers with healthy
eating habits and diabetes gives new brand
image of inclusivity in the market.
 Profit maximization potential of the
business plan.
in the market.
 Keeping low prices in long term may
be difficult.
 Not being able to grab the customers'
attention in short term can negatively impact
the new product line.
PESTEL analysis:
It is very important for a business to identify and analyse the external business
environment as the external factors like economical, political, social, technological, legal and
environmental can impact the business (Inkon, 2019). Let's understand the external business
environment with the help of PESTLE analysis.
Political factors  The political factors in the UK are
stable for now which offers good business
operational capability for now.
 The new product line is healthy and is
abiding the governmental norms, therefore
political factors are in favour.
Economical factors  Economic factors like high
unemployment rate, high inflation may result
in high cost of final products.
 Further the weak purchasing power of
the customers force cafe to keep the prices low.
Social factors  Recent shift in customer taste and
preference and lifestyle habits has developed a
market for the vegan and healthy choices.
 Hence, social factors are favourable.
Technological factors  Using technological advancement in
promoting the food menu and having more

customers onboard is an advantage.
 Improving the business processes like
delivery, online orders, billing etc.
Legal factors  Restaurants and food related laws are
getting very complex to abide by.
 Safety standards must be abided by to
keep good brand image.
Environmental factors  Bringing this food options will be a
good step towards the environment and it will
act in favour of the business of little wonder
cafe.
Competitive analysis-
Monocle's cafe Little wonder cafe Black rabbit cafe
Products The Best attraction is
sandwiches, on the go
food options.
Breakfast menu, bread,
sausage rolls, flaky
pastry, vegetable
filling etc.
Bakery items, coffee,
burgers, rolls, pizza
etc.
speciality Providing both on
shop and online
services.
Dine in, take away,
online delivery
available.
Both online and offline
services.
Service options Opens at 8 AM
And make all types of
products and services
available.
Opens at 8 am
provides only
breakfast and
beverages.
From 7 AM the stores
will be opened.
Takeaway and
delivery are available.

STP analysis: STP stands for segmentation, targeting and positioning. Each of these three terms
play a vital role in business plan as it incorporates the mission of the company to have more
customers (Barrow, Barrow and Brown, 2018). Let's analyse it.
segmentation The market will be divided on the basis of age group and lifestyle
choices. As cafe is trying to launch the new menu which can bring
customers from all age group onboard having specific choices of
vegan food and sugar free food. As older age group is looking for
vegan and sugar free options while dining out.
targetting Under the age group customers are targeted who belong to the older
age group and conscious of health choices they are making while
dining out. And those customers who are making lifestyle change by
adapting the vegan diet.
positioning The way cafe will put the new menu in the market will decide how it
is perceived by the customers. Highlighting the healthy lifestyle, low
cost and high quality will be the best way attract the customers
(Finch, 2022).
4Ps of marketing new product-
Product: The food options of the cafe will remain at the centre of the whole marketing aspect
(Sun and et.al., 2021). No matter how good your marketing plan or campaign is but it the taste,
quality of the food which will make customers come again and appreciate the cafe. Little wonder
is making an inclusive menu made with the tried and tested recipes.
Price: Little wonder is trying to adapt the cost leadership in the healthy food option market. As
keeping the reasonable prices will make even other people try the food options who are not even
under the category of healthy lifestyle.
Place: The facility of dining in, take out, and home delivery will remain available to serve the
customer with all possible channels. Place of sale is very important and in such competitive
times online medium is really powerful place to sale (Souto and Rodriguez-Lopez, 2021).

Promotion: Cafe will be promoted choosing both traditional and non-traditional methods. Flyers
in the residential areas, offices, newspaper, billboards, social media platforms, digital marketing
etc. will be used for introducing and promoting the product which becomes visible to everyone.
Budget for the new product-
Budget plan for brining new food options in the menu at little wonder.
Particulars Amount (in £)
Row material 2750
salary 4000
Marketing expenditures 2500
packaging 750
New equipments 5000
Administration expenditures 3000
Monitoring expenditures 3500
Total expenditures 21500
Monitoring: It is very important to monitor the business plan, as without monitoring it will be a
waste of resources and efforts (Masciocchi, 2020). A well articulated process is needed which
can effectively monitor the plan and measure the achievements. Following are the various key
performance indicators which are important for monitoring the success of the business plan.
 Revenue growth.
 Profit margin.
 Number of customers visited the cafe.
 Number of people inquired about the cafe.
 Demand graph of the cafe.
 Customer satisfaction measurement.
 Profit and revenue per client.

 Social media engagement of the customer.
Some benchmarks and standards must be set against which the performance of the
business plan can be measured. As without an appropriate monitoring it will be very difficult to
determine the success and failure or amendments into the plan. As many a time we need to
modify our plan according to business requirement and needs.
LO4 Ways to exit the business
P5 Exit and succession options
There are various exit strategies which can be used by the small enterprises. As Little wonder
café is a small enterprise so it can exit its business by considering various options. Which may
include liquidation, acquisition, third party sale. In case of Liquidation the ownership is
liquidated. It enables the owners to take investment decisions for long run as it is closing down
its business. In this the assets are sold, debts are paid off.
In case of mergers and acquisition the company combine with other company and make a
new company (Mihaylov and Zurbruegg, 2020). Or the existing company acquire the company
to increase customer base, revenue as well as the competition is reduced due to this. In this the
acquirees vision is more important as what is the future vision of the company which is
purchased or acquired by it.
In third party sale the company is sold to the external market or the open market. In this
more selling price can be considered. As on the basis of the company the money is given by the
third party. It helps the company to earn by selling to other and pay all its liabilities. If the
business is not working properly then it is better to sold it.
M4 Comparing and contrasting the options
Based on Ansoff’s growth matrix as well as on the basis of the exit option. Firstly the
condition of the company is to be viewed. As the products which the company is making is loss
making or require huge cost then those products should be closed. As Little wonder café is a
small enterprise so it should either sale to the third party or it can even liquidate its operation. As
it is earning good profit but in long run investment is required to increase the profit margin as
well as the customer base (Kaciak and et.al., 2021). So as it has less retained earnings to invest
so it should sale to third party. As it has good market share so it can get good selling price and
deal can be made on negotiated terms as well.

D4 Critical evaluation of exit and succession options
As it can be seen from the above report the company is still a small enterprise so it has to
do more investment to increase its revenue, reduce cost as well as to increase the customer base.
So based on the exit and succession strategies for exit the company should sale its business to the
third party as it can be sold at a good consideration (Barbiero, Popov and Wolski, 2020). As
already the company is earning good profit from the sales. But the company should even plan for
succession as it has good customer base. Even the manager can look into the business plan and
accordingly take the growth opportunities which are available in the market to increase its
customer base and revenue in the long run.
CONCLUSION
In this report it can be concluded that being the small enterprise it should consider certain
growth opportunities which can help to expand its business. As it should focus on the
competition, search the target customers so that it can accordingly target them. Due to which the
customer base as well as the needs of the customers can be fulfilled. Based on Ansoff’s growth
matrix it should evaluate its products and accordingly close those products which are loss
making for the company. It further concluded that it can use retain earnings to invest in the
business as debt is not that useful for it as interest is to be paid regularly. Based on the business
plan which is developed accordingly the decisions are to be taken. As the finances can be
managed properly and there is no extra cost. Lastly it can be concluded that there are various
ways which can be used by the company to exit or succeed. As the company can use succession
option as it is earning good profit.

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[Accessed 5 August 2022]
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