Developing Growth Plan: Funding & Exit Strategy for New London Café

This report provides a comprehensive analysis of growth and exit strategies for New London Café, a small restaurant specializing in organic coffee. It begins by evaluating key considerations for growth opportunities, utilizing frameworks such as Porter’s generic strategies and PESTLE analysis to assess the competitive landscape and external environment in Latvia, where expansion is considered. The report identifies potential funding sources, weighing the benefits and drawbacks of each, and designs a business plan with financial information and strategic objectives for scaling up the business. Finally, it assesses various exit and succession options for the small business, detailing the advantages and disadvantages of each to inform strategic decision-making. This analysis aims to equip New London Café with a robust plan for sustainable growth and a well-considered exit strategy.

Investing in the future/
Developing and Exit Plan

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analysing key considerations to evaluate growth opportunities along with justification of
the considerations in context to the company..............................................................................1
P2. Evaluation of opportunities of growth through applying Ansoff’s growth vector matrix.....8
M1: Discussion of the options for growth.................................................................................10
D1: Critical evaluation of the specific options and pathways for growth..................................11
TASK 2..........................................................................................................................................11
P3. Assessing potential sources of funding that are available for business along with
discussion of benefits and drawbacks of each...........................................................................11
M2: Evaluation of potential sources of funds............................................................................13
D2: Critical evaluation of the potential sources of funds..........................................................13
TASK 3..........................................................................................................................................13
P4. Designing a business plan for growth which comprises financial information along with
strategic objectives to scale up business....................................................................................13
M3: Development of appropriate and detailed Business Plan...................................................16
D3: Presentation of a coherent and in-depth Business Plan......................................................16
TASK 4..........................................................................................................................................16
P5. Assessing exit and succession options for small business explaining advantages and
disadvantages of each option.....................................................................................................16
M4: Evaluation of exit or succession options............................................................................17
D4: Critical evaluation of the exit or succession options..........................................................17
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Planning for growth is essential for business ventures to make strategic decisions to allocate
resources, keeping priorities straight as well as meeting certain key objectives. Business growth
planning is an effective way for achieving success and growth. It is a strategic practice which
enable owners of business to plan addition to track organic growth in revenue (Lines and et.al.,
2015). It assists enterprise to identify markets which are growing and makes it easier for building
sales volume and high profit margins. For gaining insights about planning for growth, selected
business is New London Café which is small restaurant that provides premium organic coffee
with memorable café experience. It is unique along with retro feel that takes customers back to
golden era when they sip coffee in nostalgic control. It was initially opened as organic house of
coffee which have now evolved into cosy neighbourhood café which serve generous portions at
prices which are affordable in nature.
The report analyses key considerations which small enterprise must consider at the time of
evaluating growth opportunities. It also assesses certain methods to access funding and uses of
different funding kinds. Further, business plan is developed and options of exit or succession are
explained with benefits and limitations.
TASK 1
P1. Analysing key considerations to evaluate growth opportunities along with justification of the
considerations in context to the company
New London Café is a small business in hospitality sector of UK. It is down to earth
neighbourhood café that offers comfort food at reasonable prices. It is a warm cosy venue in
heart of Highbury.
SME refers to a business which maintains revenue, assets as well as number of employees
below certain threshold. New London Café is a SME whose personnel numbers fall belwo
certain limits.
Planning and growth are defined to business chance for making sense of chaos which
accompanies expansion. For New London Café, planning and growth are said to strategic
business activity enables owners to plan as well as track organic growth in terms of revenue.
Competitive advantage is said to a factor which permits an organisation to produce goods
and services better along with cheaper than rivals. In New London Café, competitive advantage
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assists in generating more sales addition to superior margins as compared to market rivals. It is
an attribute which permits business concerns for outperform its rivals.
In context to New London Café, framwork used for analysing resources and capabilities is
VRIO Analysis. Some of resources of the coompany are as follows:
 Threshold resources: It refers to esources of company for participate in industry as
well as compete in the market. For New London Café, threshold resources are
research and development, infrastructure of administrations, etc.
 Unique resources: Organisational resources which create competitive edge as well as
cannot ne imitate or obtain by others are unique resources. In aspect to New London
Café, unique resources are distribution network, financia resources and many more.
 Core resources: Resources of company that permits attainment of profitability are core
resources. For New London Café, core resources are human resources.
With the context of New London Café, VRIO analysis is used to evaluate all of its
internal resources and capabilities individually to check its advantages in comparison with
competitors and measures have been made for improvement. Evaluation of VRIO analysis of
New London Café is as below:
Resources
and
Capabilities
Valuable Rare Imitable Organised Competitive
Advantages
Research and
Development
✔ - - - Partly
competitive
Distribution
Network
✔ ✔ ✔ ✔ Sustainable
Competitive
Financial
Resources
✔ ✔ ✔ ✔ Sustainable
competitive
Human
Resources
✔ ✔ - - competitive
Legal
Resources
✔ ✔ ✔ Sustainable
competitive
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Valuable:
 New London Café financial resources are greatly valuable as it helps in providing
investment opportunities in external factor when arises. This resources also helps in
declining macro threats.
 Human resources of New London Café are valuable resources as employees there are
highly trained which impacts in high production activities starting with more production
of goods to distribution of goods in market.
 Its patents are a valuable resources for company as it provides sales opportunities without
any competitive interference by allowing licensing its patents to other producers or
manufactures.
 Distribution network of New London Café is valuable it makes potential approach to
reach more to its targeted audience. It also makes sure that company generates high
revenue by conducting promotional activities it increase its sales and gain more
customers.
` Rare:
 New London Café's financial resources is concluded as rare as company has a well build
financial resources which are available with few companies of this industry.
 Human resource of New London Café is rare as company has well trained and high
skilled employees working with it. This type of employees are rarely been seen with
other firms.
 Patents of New London Café are rare sources as these type of patents are hardly available
and possessed with other competitive firms.
 Distribution network is also a rare resource as context of New London Café as its
competitors needs a huge cost to build a distribution networks as like of New London
Café.
Imitable:
 New London Café’s financial resource very expensive to imitate as the company has
obtained it from prolonged profit of years. To accumulate this type of profits its
competitors would have to acquire similar amount of profit for years.
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 Distribution network of this company is also costly to imitate by its competitors as has
been build over the struggle and operational activities for years that like as New London
Café. Its competitors would require high cost with a long period to time to build a
distribution network same as New London Café.
Organised:
 New London Café’s financial resources are well organised to regenerate revenue for
company. Strategies were made to use this resources for investing at right place and right
time according to opportunities that arise.
 Distribution network of this company is so well organised to attract new consumers by
organising promotional activities time to time for profitability. This network helps the
company in reaching out to its customer with information of availabilty of its new and
existing good in the market.
In aspect to New London Café, strength of VRIO analysis is that it is effective mechanisms
for evaluating organisation resources for fuure growth.
The framework provide opportunity to the business for gaining valuable insights to
become competitive in dynamic business situations.
New London Café is a small coffee business which is willing to expand at Latvia. Key
considerations for opportunities of growth for New London Café are as analysed:
Porter’s generic framework: Porters generic strategy provides competitive strategy to a
firm to sustain its long term profit and provides a competitive edge over its competitors. This
strategy helps companies to evaluate their suitable niche which has potential to provide long and
sustainable profits to the company. In case of New London Café, application of Porters generic
strategy can grow its potential customers and also expand its market base.
Porter bifurcated its strategy in sub-heads discussed below-
Cost leadership: Cost leadership strategy of a company can help it to aggravate its sales
revenues by providing competitive edge to it over its competitors. New London Café can use it
to expand its market base from premium customers to a medium range of consumers doubling
the present sales.
Differentiation: Differentiation strategy is adopted by companies to distinguish their
brand name from others in the market. This advantage can be availed through innovations,
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promotional strategies, differential services or brand goodwill. New London Café can use this
tool to differentiate its stand from the competing brand in the market.
Focus: Focus strategy is used by companies to its customers by focusing on certain
segment while overlooking the other factors. It helps company to expand their base by focusing
on particular section. New London Café can use this strategy in following two ways:
 Cost focus: Cost focus strategy could help New London Café company to produce
certain products keeping price range in mind for a section of people that could
increase the sales for the company.
 Differentiation focus: In this the strategy is so formulated certain range of exclusive
quality of products are so produced to serve the interest of premium customers.
From the assessed consideration, it is determined that differentiation strategy is effective
for New London Café. With this strategy, the small business is able to lower price commission in
the industry. Moreover, it will assist in achieving tremendous success as competitors cannot
deliver same quality of coffee and experience (Csrow, 2015). Strength of Porter’s Generic model
in growth within New London Café’ is that it provides insights about how the small business
pursue competitive advantge across selected market scope. At same time, opportunities of the
model in growth in the selected company includes assistance for identification where power lies
in situation of a company and understanding strength of existing position along with looking to
move into.
PESTLE Analysis: With this key consideration, managers of New London Café scan
external business environment and target market where they are willing for expansion.
Moreover, the consideration assists in analysing what factor is opportunity for the venture and
what is threat so that further planning could be performed better. For New London Café, factors
of PESTLE Analysis are as follows:
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(Source: PESTLE Analysis, 2021)
Political: In Latvia, political system is quite stable that is an opportunity for a business to
initiate its operations. The government of the country provides subsidies to various new business
for opening its business which is an opportunity for New London Café. It is because the small
business could open its premise without huge investment and can make profits by enjoying
government grants.
Economic: Economy of Latvia is small with free market. In Latvia, factors of production
are easily available. The country is free to international trade as well as investment (Lambert and
Oatley, 2017). It is an opportunity for New London Café to employ people at lowest rates. With
this, the company will be able to hire manpower at lowest rates and could complete practices for
satisfying customers resulting to improving sales volume.
Social: The population of Latvia is huge and have preferences to sip variants of coffee.
However, the taste and preferences of population of Latvia is different from that of population of
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Figure 1: PESTLE Analysis, 2021

London. It can be a threat for New London Café as the company needs to modify its taste secrets
which can impact on its brand image in the nation.
Technology: Technological infrastructure of Latvia is highly developed, however, the
country fails in integrating digital technology. It is threat for New London Café as it lacks use of
technology such as chatbots, artificial intelligence and hence forth. Moreover, the company
needs to make huge investment for arranging required technological equipment to carry out its
practices.
Legal: In Latvia, efficient legislations are enforced by government for businesses. For New
London Café, it is an opportunity to understand legal infrastructure including corporate tax,
minimum wages act, data protection act, equality act and many more so to carry out all the
practices ethically.
Environment: Latvia has huge environment pollution concerns about air and water. The
government of the country has established ample number of initiatives so to preserve natural
environment. It is an opportunity for New London Café to start its practices and contribute in
initiatives of government to save the environment from pollution and conserving water. With
this, the small business can gain recognition from the government and can establish the business
successfully in Latvia.
Strength of PESTLE Model in growth in New London Café’ inlcudes bringing
information about the possible impact of the six external factors on the organization. Another
strength is making it easier for New London Café’ to prepare for any sort of problems caused by
these factors. s
Opportunities of PESTLE Model in growth in New London Café’ are facilitates an
understanding of the wider business environment, encourages the development of external and
strategic thinking and enable to anticipate future business threats and take action to avoid or
minimise their impact.
Other framework:
 Mergers: It is voluntary fusion of two companies on broadly equal terms into one new
legal entity. In context to New London Café’, strength of mergers includes reducing cost
of operations, preventing closure in case of unprofitable situation and avoiding
replication. Opportunities of mergers New London Café’is expanding in another country
by getting merged with established organisattion to enjoy success.
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 Franchising: It refers to a method of distributing products or services involving a
franchisor, who establishes the brand's trademark or trade name and a business system,
and a franchisee, who pays a royalty and often an initial fee for the right to do business
under the franchisor's name and system. For New London Café, strength of franschising
in growth is lower failure rate and working iwthin in-buit customer base. Opportunities of
franchising in growth to New London Café are adapting new buyer base, support from
larger business network and working as own boss.
From the above information, it is concluded that growth opportunity is said to a chance to
grow the business significantly. These are key for overall success as well as satisfaction. Some of
framework to analyse and evaluate strengths and opportunities of growth to small business are
VRIO Frameowk, Porter’s Generic Framework and PESTLE analysis. Other frameworks in
competitive advaantge are mergers and franchising.
P2. Evaluation of opportunities of growth through applying Ansoff’s growth vector matrix
Ansoff Matrix refers to a model which can be used by the organizations for the purpose of
ensuring that they are able to properly and appropriately identify the options which they can
consider for the attainment of growth (Bunicontro and Marcomini, 2021). This will help the
Businesses to be able to ensure that they can effectively and efficiently attain the necessary goals
and objectives in a proper and appropriate manner which will therefore help them a lot. The
options which are available for growth for New London Cafe are as follows-
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Figure 2: Ansoff Matrix. 2021
(Source: Ansoff Matrix. 2021)
 Market penetration- It is the strategy which can be used by the organisations so that
they are able to identify the way in which they can enter into a particular market. New
London Cafe is required to make sure that it is able to properly and appropriately make
its use so that it can enter into a market and can enhance the profitability level effectively
and efficiently. Advantages of market penetration to New London Cafe are quick
diffusion and adoption of your product in the marketplace, incentives to be efficient,
discouragement of competition, and creation of goodwil. However, disdavnatges of the
strategy to the company are lower prosfit margins, possible harm to your company's
image, and the risk of a pricing war.
 Product development- It is the strategy which should be used by the organisations so
that they can develop a new product which can be launched in the market (Chen and
et.al., 2021). In the context of New London Cafe it can be stated that through making its
use it can attain its goals and objectives effectively and efficiently. For New London
Cafe, advantages of product development are producing the goods and services of best
quality as well as providing maximum possible satisfaction to customers. However,
disadvantges of the strategy to the small sbusiness are riskiness, extra cost and intense
competition.
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 Market development- It is the strategy which can be used for the purpose of bringing a
product into an existing market (Davis, 2020). For New London Cafe, it is essential and
important it will be able to properly and appropriately identify the way in which it can
enhance the overall level of profits quite effectively and efficiently in this way which will
help it a lot. For New London Cafe, advantages of market development are expanding
customerbase, increasing revenue and gaining decisive edge. At same time, disadvantage
of market development to New London Cafe are require capital investment, arranging
huge resources and huge risks.
 Diversification- It is the strategy which can be used by the organisations for the
particular purpose of ensuring that the new products can be launched in a new market
(Ghosh, Kaliyath and Roy, 2020). It can be used by New London Cafe for the purpose of
ensuring that it can enhance the overall profitability level effectively and efficiently in a
proper and appropriate manner. This will therefore help the organisation a lot in making
progress in the future. Advantages of diversification to New London Cafe are reduction
of volatility, minimising risk of loss of overall portfolio and exposing to more return
opportunities. Disadvantges of diversification to New London Cafe are reduces quality,
bad investment vehicle, too complicated, lack of attention to portfolio and huge risk
involvement.
Justification- The use of Product development strategy can be made by New London
Cafe so that it is able to make sure that it can launch the new products in the market which will
therefore help it a lot in managing the needs and requirements. It will be able to make sure that it
can properly and appropriately enhance the overall level of profitability in this way which will
thus help it a lot in ensuring that the management of a wide range of different types of needs and
requirements can be done highly effectively and efficiently in a proper and appropriate manner.
In this way, the attainment of sustainable level of success can be done highly effectively and
efficiently.
M1: Discussion of the options for growth
There are various types of options which can be considered by the organisations for the
purpose of ensuring that the attainment of growth can be done quite effectively and efficiently.
This will be useful in ensuring that the management of the needs and requirements can be done
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