Growth Strategy & Funding: A Plan for New London Cafe (BTEC)

This report analyzes growth strategies for the New London Cafe, focusing on key considerations for evaluating growth opportunities using models like PESTLE and Porter's Generic Strategies. It evaluates growth opportunities through the Ansoff Matrix, explores funding sources with their advantages and disadvantages, and designs a business plan for growth, including financial information and strategic objectives. The report also discusses exit and succession options for small businesses, providing evaluations and recommendations relevant to the New London Cafe. The analysis considers factors like market penetration, product development, and diversification to provide a comprehensive growth strategy.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations? ...........................................................................................................................1
P2 Evaluate the opportunities for growth applying Ansoff model ?...........................................4
M1 Discuss the options for growth using a range of analytical framework?.............................5
D1 Critical evaluation of specific pathways to growth taking the risk into consideration?.......5
P3 Explain the potential funding sources available to the business and their advantages and
disadvantages ?............................................................................................................................5
M2 Evaluate potential sources of funding and justification for the adoption of the appropriate
source of fund?............................................................................................................................7
D2 Critically evaluate the potential sources of funding with justification argument for the
adoption of particular source ? ...................................................................................................7
P4 design business plan for growth that includes financial information and strategic
objectives ? .................................................................................................................................7
M3 Develop an appropriate business plan for growth and securing investment , setting out
strategic objectives, strategic and appropriate framework for achieving objectives ?................8
D3 present a depth business plan that demonstrates knowledge and understanding how to
apply and achieve business objectives ? ....................................................................................8
P5 Explain exit or succession options for small business with their advantages and
disadvantages?.............................................................................................................................9
M4 Evaluate the exit or succession options for a small business comparing the options and
making valid recommendations? ..............................................................................................10
D4 Provide critical evaluation of the exit or succession option for the small businesses and
decide the course of action appropriate with recommendations ? ..........................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
In today's world every person wants its business to grow and for growing the business a
proper planning is required in the business organisation. Planning focus on the revenue
generation or expansion and the actions needed to achieve the goals of the organisation. The
growth plan is basically a systematic record of determining for the future of the business (Ohm,
2017). Here the discussion is in the context of a New London Cafe. It provides the organic coffee
with classy vintage interior to its customers. It is situated in London. This report will include the
various topics such as key considerations for the growth opportunities, evaluation of the
opportunities for growth applying the ansoff matrix, potential sources of funding with its
advantages and disadvantages. Further it will include a business plan for growth that includes
financial information and strategic objectives and at last ii will cover the discussion on exit or
succession of the small businesses.
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations?
It is very important for the business organisations to grab the opportunities available in
the market and also consider the macro external factors while planning for the growth.
The 4 Types of Growth Opportunities Financial Growth - It is the one most individual that evaluates at the time of the career
development. Career Growth – Will not underrating the power of standing. Professional Growth - If they are serious about their task, employees will want to
enhance in their field of the area.
 Personal Growth – it involves the personal development of the business.
Here the evaluation is done on basis of few models in context of New London Cafe -
PESTLE ANALYSIS- It is a tool used to capture the macro picture for an industry
environment(Ashford, 2020). These include various factors that need to taken into consideration
while planning for the business growth and opportunities .
 Political – This determine the extent to which government policies can influence the
business organisations . Such factors include excise duty fiscal policy , tariffs
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 As the government has regulated the health safety measures in the food industry. The
New London cafe is providing the organic meals in order to meet this external factor and
for the growth of the business. Economical- It is the determination of the economy's performance that directly impacts
the organisation. These factors include inflation rate, foreign exchange rates economic
growth patterns etc. If the inflation rate increases in United Kingdom then it will affect
the cafe because the prices of the ingredients rises this will impact the rise in the menu of
the cafe and customer will not prefer with high prices and this can impact the business . Social- This focuses on identifying the emerging trends in the social environment. It
helps the marketers to understand the needs and wants of the customers. Such factors
include change in lifestyle, attitude , cultural trends, behaviour etc. As nowadays people
are more heath conscious so for this the cafe is providing the organic food and coffee for
its customers and this is impacting in a positive way to the cafe and increasing its sales. Technological- These factors determine the innovations in the technology which may
impact the business organisations(Cornish and Jha, 2017). Such factors include
automation, research and development etc. As nowadays technology is increasing day by
day . There are several other activities which need to be considered while the owner is
out of the city. The cafe owner can build the CCTV camera to have a look upon
employees and can have control over mobile phone . Environmental- This include the influence on the business organisations because of the
surrounding environment. Such factors are climate, weather change,natural disaster etc. it
is very important for the new London cafe to maintain the cleanliness in its cafe and try
to use the recycled material and proper food waste management policy. Also, it can
donate the leftover food to the needy people.
 Legal- These are the certain laws that affect the business environment in a certain
country . Such factors include consumer law , lobar law , safety standards etc. The New
London Cafe should be aware of the law regarding safety measures , the regulatory
authorities can check the are area of the restaurant and the quality of food as well the
kitchen area and the staff and hygiene conditions . So this can affect the business if these
are not maintained can can charge a fine to the business.
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POSTERS GENERIC MODEL – It included three strategies that can be applied in the
products and services of the business organizations to identify the external factors and plan
according for the growth of the business. Cost leadership – this is used to gain the competitive advantage in the business
organisation(chindler, Kanai and Rwehumbiza, 2018). It is a strategy to use in such a
way that increase the sale and take way the competitor. New London cafe can adopt this
strategy by reducing the prices in the menu to attract customers and also to maintain the
profits . Differentiation strategy – This involves making the product or services different from the
other competitors. It totally depend on the nature of the industry (Ślusarczyk and et.al.,
2019). The cafe can differentiate it products by good research on the consumers
preferences . As it is providing organic food and coffee. The business can include the
organic burgers and pizza so that customers be willing to have such new and healthy food
with the taste of junk also. This can make an advantage to the business and will also
increase the sales for the organisation.
 Focus strategy - The organisations who follow focus strategy concentrate on particular
niche market . And try to understand the dynamic of the market and the customers needs .
If the New London cafe uses this strategy it will have to focus on the attracted offers to
attract customers . It can provide 10 percent off , or one free drinks on the meals to attract
the college students who prefer at low prices.
From the above discussion it is concluded that the New London cafe should use the
differentiation strategy in order top meet the objectives of the business . By using this strategy it
will be able to differentiate its products or services from its competition which will lead to
increase it sales.
Boston Consulting Group Matrix – This tool is used for the graphic representation for the
business organisation to examine different businesses in its portfolio on the basis of their related
market share. This is called four matrix which include dog, star, cash cow and question mark.
These are explained below Star – This represents business units having large market share in the fast growing
industry. This require huge investments to maintain their lead(Liu and et.al., 2019). By
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identifying the high rise in the organic food the New London cafe launched the organic
coffee and fast food in its business to capture the wide market. Cash cow- This represents business units having large market share but in slow growing
industry. They require little investments and generate cash that can be utilized further for
huge investments. After introducing the organic coffee still the business might face the
competition such as costa coffee , cafe coffee day . So its need to have innovation in its
product that can be a rich taste in its coffee. Question mark- This represents having low relative market share and located in high
growing industry. The impacts the small business as it has many other huge competitors
in market which makes it difficult to survive in the industry .
 Dog- This represents businesses having weak market share in low growth markets. They
neither generate cash nor require huge amount of investment . In context of new london
cafe their coffee lies in this category because there are several competitors selling the
coffee.
P2 Evaluate the opportunities for growth applying Ansoff model ?
The Ansoff model helps the marketers to identify the opportunities to grow revenue for
the business through developing new products and services The matrix included the four
quadrants explained below in context of New London Cafe : Market Penetration– It is a strategy used to sell more of the products and services to the
existing customers for the business organisations (Priya and Pandey, 2019). The New
London Cafe can adopt this strategy by decreasing the price or change the pricing
policies. It also can market its product by online delivering. The main benefit of this
strategy is that the company does not have to go to new market or target new customers
but its major disadvantage is that the company has to think of various strategies to
capture existing market with same offering. Market Development– This strategy involves that how can the business organisation
enter into new market with the existing products and services. This strategy can be
adopted by the New London cafe by operating its business in other countries as well
which will increase it sales and market share. Its benefit is that a new market is attracted
but its demerit is that the company has to arrange major funds to expand business in new
market.
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 Product Development– It is the growth strategy for the business organisation to introduce
new product or develop the existing one in the current ,market . This strategy can be
adopted by the cafe by introducing the vegan burgers and pizza as a fast food meal for its
customers. It also can include the flavour in the coffee which is preferred by the
consumers and can also make a rich taste in its organic coffee which will increase its
sales. The main advantage of this is that the company can attract the new market by
producing something which is in demand so that its sales are enhanced while its major
drawback is that there must be proper market research to be conducted before launching
new product otherwise it can turn out to be loss for the company.
 Diversification– This strategy involve how the business organisation can enter into new
market with the new products and services. This is the most risky strategy for the
organisations but if this strategy gets hit it gives greater benefits in the company(Yu ,and
at.al., 2018). New London cafe can use this strategy to diversify itself into food industry
by proving the breakfast meals that are vegan and also can introduce other type of coffee
with different technique. Its benefit is that a complete new segment of customer is
targeted which helps in making brand value but it is the riskiest strategy.
The best strategy that would be suggested for New London Cafe would be the market
development where the business will be able to grow more and capture more customers which
will increase the sales and it would be profitable for the business. It can expand its business into
different cities with mainlining the same quality in its products and services will increase the
reach of its customers.
Ansoff model advantages
It supports marketers to examine the risk will get engaged while moving in a certain direction.
Ansoff model disadvantages
It fails to present the market growth and diversification tactics that need dynamical variations to
everyday that operates the business
M1 Discuss the options for growth using a range of analytical framework?
The market development strategy is considered as less risky and more profitable
advantage to the business organisation. This is the growth opportunity for the small businesses to
expand and capture wide market share(Serrato and Ramirez, 2017). This will help the New
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London cafe to generate more cash flow and increase its revenue and also will create the brand
image and good customer base .
Also , maintaining the same quality in the products and services will mark as benchmark to the
business in other cities .
D1 Critical evaluation of specific pathways to growth taking the risk into consideration?
The strategy of diversification is also the good to adopt in the business but it will be more
risky for small businesses as it requires a well established brand name and a huge investment
which the small businesses cannot afford. It will also require a lot of modification and use of new
technology which will be not feasible for New London Cafe.
P3 Explain the potential funding sources available to the business and their advantages and
disadvantages ?
Every business requires the source of funding for its operations and also for the growth of
its company(Kim, T.Y.D. and Lee, 2020). There are various sources of funding available for
small business in which three of them are explained below:
Bank loans – This is the the most common source of funding that the small business can adopt
for their businesses. The bank provide loan to general public by charging some interest rate on
the principal amount and keeps a security. The people can easily get a loan from bank while
completing the legal documents and follow the paper work .
Advantages Flexibility – The bank loan does not provide set of rules as compared to the other sources
of funds. the person can spend the money wherever he/she feels that will be productive
for the business. Maintain control- The person does not have to give the equity for getting a loan from
bank. This is only when the the person pay backs the loan on time.
Disadvantages Collateral – The banks requires some kind of security for providing lean which is called
as collateral security . This is included any kind of asset of the person taking loan . Complicated – It is a bit time consuming as the bank requires a lot of paper work and
legal documents and the terms of the interest rates is quite complicated.
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Angel Investment – It is a company that provides funds for the start-ups businesses and in return
it requires ownership equity(Mugabe, 2019). They provide one time investment or an ongoing
capital injection to help the business move through the difficult early stages.
Advantages
 It is less risky than the debt financing. Unlike other loans it does not require to pay
invested capital in the case of business failure. These investors are not difficult to find because there are several companies and groups
who are providing funds to small businesses.
Disadvantages
 It has a loss of having a complete control over the business as a part of owner. The profits is being shared by the angel investor so it can lower down its profitability .
Venture capital – It is a form of private equity and a financing that investors provide the capital
for the small businesses and start-ups that are believe to have long term growth (Helwege and
Jindra, 2017).It comes from the well known investors , investment banks and any other financial
institutions.
Advantages
 The person can raise large amount of capital from such source and also for several times . When venture capital invests in the business it will do so for equity of the company.
There is no regular payments for the person
Disadvantages
 founder owner is reduced as the investor takes up the ownership and has the interference
in the business .
 The business is expected to scale and grow rapidly. This increases the pressure for
performing better.
From the above discussion it is evaluated that New London cafe can adopting bank loans
as it will help to raise funds in a quick and easy manner. With the help of this source the busienss
can function smoothly and with less interest rate.
M2 Evaluate potential sources of funding and justification for the adoption of the appropriate
source of fund?
There are different sources of funds which can help the small business in their operations
and other activities . Without financing the business organisations cannot function properly and it
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requires funds to grow it business (Borin, Donato and Sinapi, 2018). New London cafe can opt
for bank loan because it charges less interest whereas the other sources such as angel investor ,
venture capital requires the shares of profits and ownership of the business. So in this case the
bank loan option is more appropriate for the funding.
D2 Critically evaluate the potential sources of funding with justification argument for the
adoption of particular source ?
There are different kind of sources of funds available for small businesses in order to
functions its operations smoothly. Angel investment is one of the option where the quick
investment is made but there is interference of the investors in the business. The other option is
bank loan where there is less interest rate and with less formalities. The third option which is
available is the venture capital where the investor invests in large amount with long term goal
with requires the equity of the business(Подлевський, 2019).
So, the New London cafe can adopt bank loan as it only requires to pay monthly instalments with
less rate of interest.
P4 Design business plan for growth that includes financial information and strategic objectives ?
Here is the business plan for New London Cafe with the strategic objectives
Executive summary – New London Cafe is planning to expand its business by serving the
healthy food with a good experience. Below are the objectives and the strategic planning for
growth explained.
Business overview - The New London Cafe was established in 2011 with a motive of providing
healthy food. It serves the organic coffee and fast food but now wanted to innovate more in its
cafe by introducing new taste with a retro experience for its customer.
Mission- To provide organic food with not only healthy purpose but also but they enjoy the taste
and with the good vintage experience and environment.
Vision – To provide organic food with a good taste and include vegan burgers, pizza in its
products, also to create a brand value for its customers by maintaining the quality and taking care
of hygiene factors and expanding to different cities to increase its customer base.
Objectives
 To work ethically and practice environment friendliness using organic products To provide the organic coffee and with rich taste in it.
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Funding – It can finance its resources through bank loan which will be the easiest method for
such small business(Škara Ivković, 2017). The bank will provide loan for such business
investments.
Growth Strategy - The growth strategy for the business would be the market development to
expand its business in different cities and capture the wide range of customers. By adopting tis
strategy the business would be able to grow at faster pace and will be able to also create a brand
image for its organic products and services in this environment. It will relates to the business
sections and opportunities to maintain higher term of productivity and the profitability in the
business of the management.
Marketing strategy – Marketing mix is the tool used to promote the products of the business
organisation. It includes 4 P's such as: Product– New London cafe sells coffee and fast food with the better taste in the coffee
with adding flavours in it . Price- The business can use value based pricing strategy for its business in which the
prices can be according to the customers and also the products worth(Huff, 2018). Place– The business should be in such an area where there is crowd of the youngsters
which means nearby to the school colleges where the customers are easily reachable. Promotion– It can use the various promotional tool such as templates, advertisement,
word of mouth to products its products.
Budget
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M3 Develop an appropriate business plan for growth and securing investment, setting out
strategic objectives, strategic and appropriate framework for achieving objectives?
Business plan is the strategic framework which help in finding the growth opportunities
for the business organisation in order to create a value for the society and enhance the
profitability(Dokko and Jiang, 2017). The New London cafe prepares a business plan to expand
its operation in different cities to meet the objectives of the organisation.
D3 present a depth business plan that demonstrates knowledge and understanding how to apply
and achieve business objectives ?
Business plan plays an important role in order to make a brand image in the market.
There are various aspects covered in the plan which includes executive summary, business
overview, mission and vision, marketing mix, objectives, source of funding and a budget
structure
P5 Explain exit or succession options for small business with their advantages and
disadvantages?
Whenever there is start of any business plan there are both positive and negative of factor
of a business plan. Every business has risk without this the business cannot be successful. There
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is both exit and succession for such small business. Here are the options for both of it in context
of New London Cafe
Succession - They serve the important function in the business lifespan. Every business needs
to create a succession plan to ensure that operations continue and customers do not experience a
disruption the service. It will relates to the basic sections in the manner of the business that have
succession period. The owner needs to plan accordingly when the business is expanding and
having a good amount of sales and everting is going well it needs to have a plan ready. The are
various options discussed below; Franchising- This can be used by the New London Cafe by giving its franchise to the
franchisor by giving its products and services. It will relates to the varied term of the
divisions and sections in an effective manner.
Advantage- The risk of failure is reduced by franchising the business.
Disadvantage- it includes restrictions on conducting business that the local market cannot adopt
to change. Licensing – This is the another succession plan which can be considered where the owner
can give the copyright and its manufacturing process to the another company for the
growth of the business.
Advantage- The owner of the business will need not to incur the cost of production, promotion,
packaging or selling the products or services.
Disadvantage- The owner might loose control over the products including promotion, packaging
and selling. Merger and acquisition- In order to gain a success, the New London Cafe can also have
a plan of merger and acquisition of its business with some other branded cafe which is
providing the high quality of products and services
Advantage- It can create new growth opportunity and a large market share.
Disadvantage -the company which have agreed upon the merger might have different culture
which can create a communication gap between the employees.
From the above three options it would be suggested that the New London Cafe can adopt
the merger and acquisition strategy for its succession
Exit – It is a plan in case if the business fails in future or its not working in the way that have
been planned(Davidson, Berka and Meador 2021). It will follows the suitablity of the planning
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source that might further evaluate the global context to the section. So this need to be kept in
mind before planning a business it also can be exit. There are various options for it which is
explained below: Selling to the third party- This is the exit strategy where the business can be sell to the
another party in return of the worth of the business (Guerreiro and et.al., , 2017). This can
be done legally by giving the business ownership to the another person that can handle it
with more of innovation and new technology and investing more in the business.
Advantage- the owner can negotiate on the terms and price and can have a some return on
investment on this business.
Disadvantage- It is a bit time consuming and a long process as the third party is not easily
available at the right time Dissolved – This is the exit strategy if the business plan does not work properly. This is
the most final decision which can taken of liquidating the business and selling of all the
assets . If this is taken into consideration it need to be kept in mind that all the debts
should be cleared.
Advantages- This is one of the simplest and quickest method among the all other options.
Disadvantages – The owner will not able to get the biggest return on investment with this option. IPO – It provides the investor to take the exit in order to sell the stake in the
organisation. The shares of the investors are locked for a particular time period.
Advantage- The business owner gets an opportunity to sell its share and can make money .
Disadvantage- The of the investor is locked for a certain time period.
M4 Evaluate the exit or succession options for a small business comparing the options and
making valid recommendations?
Succession option is recommended for the New London cafe as the business is planning
to increase its market share by developing in other cities. So the Franchise option will be more
suitable for the business to expand its operations .
D4 Provide critical evaluation of the exit or succession option for the small businesses and
decide the course of action appropriate with recommendations ?
Both the exit and succession plan is equally important for the business organisation to
identify the problems and their solutions(Bernstein, 2021). New London cafe can adopt the
succession plan to cover its losses during the pandemic and from this plan it will help the
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business to grow faster and increase its sales which will lead to profits in the business
organisation.
CONCLUSION
From the above report it is concluded that it is very important for every business to plan
in order to identify the growth opportunities . From the above discussion on the various growth
strategies model such as pestle analysis , BCG matrix , marketing mix , ansoff. The best model
which can be taken into consideration is ansoff for identifying the opportunities in the market to
expand the business of new London cafe . Moreover there are various sources of funds available
for the expansion such as bank loans, venture capital and angel investors . The bank loan as a
source of fund is recommmned3d to the business in order to meet its objectives and as well as to
expand in different cities with the less interest rate and create a brand value for its products and
services. Also the organisation have a plan of exit or succession in the case of any issue . The
company can exit and also plan for a franchise it its successful and able to meet its objectives.
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