Business Growth and Funding: Planning for Dimello Coffee Expansion

This report provides a detailed analysis of growth planning for Dimello Coffee House, a UK-based SME founded in 2002. It evaluates growth opportunities using tools like Porter's generic strategies, the BCG matrix, and PESTLE analysis, and applies the Ansoff matrix to explore market penetration, d...Read More

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Analyse and justify the main considerations for evaluating growth opportunities...............1
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix...................4
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................5
P4 Design a business plan for growth that includes financial information and strategic
objectives for scaling up a business............................................................................................7
P5. Identify exit or succession options for SME.......................................................................13
CONCLUSION..............................................................................................................................14
References:.....................................................................................................................................15

INTRODUCTION
Small and medium-sized businesses play a critical role in the growth and development of
any economy. It is critical for SMEs to develop an effective business plan that will aid in their
growth and development. The business environment is comprised of several internal and external
factors that are dynamic in nature, and it is critical for such organisations to develop plans and
work accordingly in order to meet targets in the most efficient manner (Bruton, 2021).
Furthermore, governments support small and medium-sized businesses and take the necessary
steps to help them. Dimello Coffee House is the company under consideration in the following
report. This company was founded in 2002 and has its headquarters in the United Kingdom. The
current report will focus on the market's existing growth opportunities. The Ansoff matrix will be
useful in identifying growth opportunities. There are several funding sources available, so
determining the most appropriate source is also part of this report. A business plan is also being
developed for the Dimello Company. Finally, there is an explanation of the various exit and
succession options available to the business.
TASK 1
P1. Analyse and justify the main considerations for evaluating growth opportunities.
It is critical for the company to analyse the market's existing growth opportunities. In
order to benefit from being the first to market, the Dimello Company must conduct extensive
market research. Dimello organisation must first analyse available resources in order to expand
business with the best use of such resources. Aside from that, worker capabilities must be
considered, as worker capabilities are critical for growth (Demazière, 2020). Core competence
refers to an employee's skills that help the company gain a competitive advantage in the market.
As a result, in the case of Dimello Coffee House, they hire and select workers who have high
skills and are competent enough to meet the needs of customers. With the help of such variables,
the respective organisation will be able to effectively examine the opportunities for growth.
Porter's generic matrix:
This matrix assists organisations in determining their market position. The organisation
must implement a strategy that will help them achieve growth and success. The following
strategies, in addition to Dimello Company, are discussed:
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 Cost leadership: It is a strategy that focuses on lowering the cost of achieving market
leadership. In the case of Dimello Company, they choose this method to gain customer
loyalty and gain an advantage over the market's established companies. Cost leadership
strategy aids in increasing customer base. Differentiation: This strategy focuses on developing products or services with novel
features in order to differentiate themselves in the market (Hoseinzadeh, 2020). It enables
companies like Dimello to offer coffee with distinct flavours and tastes while also
gaining a competitive advantage. Focus:Companies that use this strategy tend to narrow their focus on the target market.
In this method, the organisation either focuses on gaining leadership in a niche market or
on providing a unique and differentiated product in that market.
Boston Consultancy Group Matrix:
The BCG matrix is a useful method for identifying market growth opportunities. It is
useful for critically analysing the portfolio and making decisions about which products and
services should be continued or discontinued. In the case of Dimello, the BCG matrix is used as
follows: Dogs: In this stage, product growth is slow and market share is small. As a result, it is
critical to discontinue products in this category because they are neither profitable nor
increase the customer base. Question Marks: During this phase, the products are of a high demand category but have
a low market share in the target market (Huxley, 2020). As a result, the company must
focus on things that will help it increase its market share and achieve success. Cash Cows: During this stage, the products and services have a large market share, but
the market growth rate is slow. The company must work hard and devise strategies to
increase product demand in the target market. Stars: The quadrant in this category shows that the growth rate of products and market
share are both high. As a result, the corporation must continue the product that falls under
this phase because it improves the brand image and generates more profits for the
company.
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Pestle Analysis:
The Dimello Company investigates the external factors of its business environment in
order to make effective business decisions. It is an excellent management tool that aids in the
development of strategic plans. The following is an explanation of various external factors that
influence business operations: Political factors: The success or failure of any business is heavily dependent on the
country's commercial constraints and political stability. It includes factors such as policy
changes, tax rates, trade restrictions, government influence, and many others. In the case
of the chosen firm, the company profits fluctuate with changes in the tax rate.
Furthermore, as a SME, the government influences support Dimello. Economic Factors: The growth of the company has been influenced by various
economic variables such as inflation rates, labour market conditions, interest rates, and
many others. The GDP has a significant impact on the Dimello Company's profitability.
With higher GDP rates, the company can have higher sales, resulting in higher disposable
income (Konvitz, 2020). When inflation rates are high, the cost of raw materials and
inputs suffers greatly. To reduce economic instabilities, economies of scale are also very
important. Social factors: These factors have had a significant impact on the company, as social
factors are rapidly changing. It could be a change in the disposable income of consumers
or a change in their tastes and preferences. It could be an opportunity or a threat to the
company. Dimello Company is heavily influenced by these factors because consumers
are becoming more health conscious, and many people believe that coffee can harm their
health. Technological factors: Nowadays, every company, from small to large, keeps up with
the latest featured technologies (Liang, and Yang, 2019). The Dimello Company must
also invest more in technology to manage their HR and payroll processes. It can also
invest in contactless payment technologies, allowing customers to pay by waving their
cups. Legal factors: It is critical for the firm to operate within the legal framework established
by the nation's local governments and judicial bodies. One such law requires that workers
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be treated humanely and that specific working conditions be met. Dimello must provide
relevant rest hours, lunch breaks, paid time off, medical claims, and so on.
 Environmental factors: In the current scenario, everyone is becoming aware of climate
change, and it has become a major responsibility to provide eco-friendly goods and
services that do not harm the environment. In addition to Dimello Company, it can use
products that do not contain plastic, which harms the environment and the health of living
beings.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
The Ansoff Matrix can be used to analyse the organization's growth and development strategies.
A company can use a variety of strategies to grow and develop in its target market. In the case of
Dimello Coffee House, the explanation is below: Market penetration: The company is working for the existing offering in the current
market using this method. This will work with the intention of increasing current product
sales as well as effectively satisfying customer needs, as these products are already
established in the market. Dimello Organization tries to keep their prices low in order to
achieve success in the target market. The benefit of this strategy is that the company can
increase sales. They are also capable of gaining competitive advantages due to their low-
cost strategy. At the same time, the disadvantage is that by maintaining low prices on
goods, the company reduces its profit margin. Market Development: This is yet another way for a company to expand its operations.
The company can expand its operations by utilising existing goods and services in new
markets (Liu and et. al., 2020). It will be beneficial to the company's customer base and
sales. The main benefit is that the market development method allows a company to serve
more and more customers while taking less risk in the business. However, when
compared to previous markets, it does not always provide the desired results. Product development: It is the method by which a company attempts to develop its
current product in the current market. It is carried out when the organisation has a
sufficient amount of product sales in its current market. As a result, the company creates
and innovates something new in the current product so that their customers are not bored
by using the same product over and over again. This method is frequently used by the
chosen company to add features to their goods and services. The advantage of this
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method is that it helps to increase demand for the brand's new offering. The disadvantage
is that new products in the market are not always well received by customers, and the
company may lose customers as a result.
 Diversification: It is the final method in the quadrant, and it focuses on the launch of a
new product in a new target market. It carries the most risk for the company. However,
there are more opportunities for the company to generate revenue as it develops new
products and serves them in new locations (Mikua, 2020). The advantage of this method
is that it allows the company to generate a lot of money. On the other hand, the
disadvantage is that the firm must deal with numerous uncertainties and risks when
entering a new market with new offerings.
After analysing all of the above strategies for the Dimello Organization, it can be stated
that the company is capable of identifying market growth opportunities. As a result, the firm will
pursue a new product development strategy in order to increase its market customer base and
improve its portfolio of protects in order to gain competitive advantages and generate additional
revenues. This will help with revenue generation and growth.
P3 Assess the potential sources of funding available to businesses and discuss benefits and
drawbacks of each source.
It is critical for organisations to have a potential source of funds. Every type of business
requires financing. To grow the business and run its operations and activities smoothly. As there
are numerous expenses that cannot be ignored by the firm, it becomes critical to make wise
decisions in terms of sourcing funds with low rates of interest for the business. There are
numerous factors that the firm must consider before making any funding decisions. For example,
they must calculate the time it will take to recoup the cost of investment, which is known as the
pay back period. They must also calculate the net present value (NPV) (Morrison and Misener,
2021). It refers to changes in the value of money caused by inflation. All of these determinants
assist firms in making sound business decisions and investing in projects that provide high
returns. The following are the options available to the Dimello Company for collecting funds for
the business: Bank Loan: It is a source of funds in which a company obtains a loan from a bank in
exchange for providing collateral security. There are predetermined interest rates that the
business must pay on a regular basis. There is also some documentation in which all
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formalities are completed. It is best suited for small and medium-sized businesses that
need to find the right bank to meet all of their specific needs.
Pros Cons
 The firm will have easy and quick
access.
 The company can receive a large sum
of money all at once.
 It necessitates the payment of a certain
amount of interest.
 It is difficult for the new organisation to
gain access.
 Crowdfunding: It provides a platform for the company to raise funds through a variety of
small contributions from a variety of single investors (Norouzi, Fani and Ziarani, 2020).
The company can run an equity-based crowdfunding campaign, in which it can make
equity transactions for investment, or a reward-based crowdfunding campaign, in which
investors can receive rewards or perks in capital dealings.
Pros Cons
 The company may anticipate a quick
return on investment.
 There is a chance that the company will
be unable to provide what was
promised, resulting in a public image
failure.
 If the patent or copyright is not
obtained, the idea can be stolen and
misused by another person.
 Government grants and subsidies: It is a monetary reward given by local, state, or
federal government authorities for a beneficial project. It is, in essence, a transfer
payment. It excludes any financial or technical assistance, such as a loan, revenue-sharing
arrangement, or direct appropriation. The guarantee is not expected to return the money,
but rather to use the funds for the stated purposes.
Pros Cons
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 It does not have to be paid back.
 It is available to small and medium-
sized businesses.
 Applying for grants and completing
paper-related formalities is a time-
consuming process.
 The company is required to meet
certain criteria.
In the case of Dimello Company, they must seek a bank loan to fund their operations because
they can pay a set amount of interest at regular intervals. It will help the company secure
financing (Papageorgiou and et. al., 2019). They must prepare themselves to pay interest at
regular intervals.
P4 Design a business plan for growth that includes financial information and strategic objectives
for scaling up a business.
Executive Summary: The business plan includes a detailed examination of Dimello
Organization's growth. It is a small-medium sized business in the United Kingdom. They intend
to expand their business, which necessitates the creation of an effective business plan. The
following are the objectives and goals:
 To improve the products portfolio.
 To establish a strong and competitive position that is essential for the business.
 To boosts the sales of the business by 5 percent in the near three months.
About the company: Ms. Niovi Kallergi and Ioannis Iosifidis, the promoters, intend to expand
and develop Dimello Coffee House's business by increasing its market share. They specialise in
items such as coffee beans, capsules, ground coffee, and home appliances. They are concerned
with the quality of coffee as well as its taste and flavour. They also keep track of sales of ground
coffee (Smith and et. al., 2019). The long-term business goal is to establish a strong market
position by expanding operations in various parts of the world. They also intend to provide high-
quality products to their customers.
SWOT Analysis:
Strength Weakness
 Enhancing the strong base of customer
through providing good taste and
 In order to expand their business, the
respective business organisation is
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quality of coffee.
 Employees of business organisation are
also consider as the strength of
organisation as they are working for
them with high dedication.
required huge amount of investment
and the management have to pay fixed
amount of interest rate on the borrowed
amount.

Opportunities Threats
Market analysis
It is critical to investigate the market in which the company operates. It enables them to target
customers more effectively. The Dimello Organization employs the STP approach for this
purpose: Segmentation: Customer segments can be targeted in a variety of ways. Dimello
Company targets their customers based on behavioural segmentation and psychographic
segmentation (Sun and et.al., 2021). Customers are segmented based on their tastes and
preferences, opinions, lifestyle, what they like to eat, and other factors. Targating: People who enjoy and consume coffee.
 Positioning: As a result of providing quality products and services to its customers, the
company has developed a positive reputation.
To target the audience and increase revenue, the corporation focuses on their services and
products. It is critical to understand and analyse the market rivalries, such as Costa Coffee and
Starbucks, which are tough competitors. Analyzing competition will aid in the formulation of
strategies and the acquisition of a competitive advantage. Lowering prices aids in attracting more
customers. Furthermore, they constantly innovate their products and services so that customers
are never bored. They never compromise product quality, which is a significant benefit to the
brand.
Market or Sales Strategy:
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Marketing strategies: Marketing is intended to raise customer awareness of the brand
and its offerings. Dimello Corporation also uses effective marketing strategies to
promote their products. They used social media advertising, TV commercials, and other
methods.
Revenue Sources: By selling ground coffee, the organisation can increase its profits.
Sales strategy: The company also emphasises take-out and online ordering options, which helps
them increase sales and revenue.
Pricing strategy: The Dimello Company employs a penetration pricing strategy to attract
customers (Syssner, 2020). They attract customers by charging low prices for their coffee.
Marketing and communication strategy: The company employs a digital marketing strategy to
attract customers' attention.
Research and Development:It has been discovered that the firm can conduct its research by
utilising the technology road map. Using this type of roadmap, they can concentrate on the most
recent trends. The R&D team can concentrate on the most recent market trends and promptly
inform the company on how to innovate their products.
Staffing and operations: It has been observed that firm employees are very important to the
company and play an important role in the innovation and creation of any new product. Workers
are also responsible for the firm's productivity. Furthermore, the company prefers to conduct
business through divisional structures.
Financial projections:
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Main assumptions:
• The main source of income is coffee.
• If there is a vacancy in the company, new people will be invited.
• Suppliers will be paid within 30 days.
Profit and loss statement:
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Balance Sheet:
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Cash Flow:
12

Sales pipeline:
Financial requirements:
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It is necessary to generate funds in order for the business to run smoothly (Wang and et. al.,
2020). The chosen firm will use a bank loan because it is suitable for funding. It is beneficial to
understand the payment period as well as the interest rates.
P5. Identify exit or succession options for SME.
The plan used by the firm to leave their business is referred to as an exit strategy. At some point,
all businesses require an exit or succession strategy, even if it is simply the transfer of ownership
when one entrepreneur decides to leave the business. In the case of Dimello Company, the
following options are available:
Liquidation: It entails the dissolution of a corporation and the distribution of its assets among
shareholders and creditors. It has two options. The first is to close the business and sell its assets
as soon as possible (Wann-Ming, 2019). This is frequently the last option for a business because
the owner can profit by selling the assets, but valuable items such as business relationships and
clients are lost.
Pros:
 It is simple to leave. The closing process can be quick.
Cons:
 If there are creditors, the company must pay them first from any revenue generated.
 The owner can profit by selling the assets he owns.
Another option is to pay oneself until the company's finances run dry, at which point the
owner must close the company. This is known as a lifestyle business.
Pros:
 The owner has sufficient cash flow to support his lifestyle.
Cons:
 The company's growth and sales value are stifled. The situation irritates the other investors.
IPO (Initial Public Offering): It usually refers to the first time a company sells its stock to the
general public. Firms typically use this procedure to raise additional capital. When a company
goes public, it is a significant step for it because it is an expensive and time-consuming process,
and the company is then subject to public reporting requirements.
Pros:
 When the company goes public, it may be profitable.
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 It aids in the enhancement of reputation, publicity, and brand awareness.
Cons:
 It can be a time-consuming, tedious, and costly procedure.
 Making a business public may impose new obligations, such as filing SEC reports or
disclosing information about the company's finances, operations, and management.
In the context of Dimello, liquidation may be the best way to exit the business because it
is a standardised procedure with some rules that the liquidator must follow. At the same time,
debt holders and creditors would be compensated (Ziari and Ehsanifard, 2021). Furthermore, the
company's owner would be stress-free.
CONCLUSION
From the above report, it has been concluded that this report is based on a discussion of
small-medium enterprises, such as Dimello Company, a small coffee shop in the United
Kingdom. It is clear that SMEs provide employment and play an important role in the
development of the UK economy. It is critical to develop growth plans and strategies and to
implement them effectively. In order to evaluate opportunities, various models such as the BCG
matrix, Ansoff matrix, PESTLE, and others were used in the report. There was also a discussion
about funding sources such as bank loans, crowdfunding, and so on. An effective business plan
will aid in the growth of the company, and working in this manner can open up numerous
opportunities. The company's exit and succession options must be carefully considered.
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