Growth Opportunities, Funding, and Exit Strategies for The Little One

This report focuses on the growth planning for The Little One Coffee Shop, a small business in the UK coffee market. It begins with an analysis of growth opportunities, including competitive advantages, resource assessment, and the application of Porter's Generic strategies. The report then evaluates these opportunities using Ansoff's growth vector matrix and assesses potential funding sources. A business plan is developed, incorporating financial information and strategic objectives for scaling up the business. The report also explores exit or succession options for small businesses, outlining their benefits and drawbacks. The analysis includes PESTLE analysis to understand external factors, and explores various collaboration, merger, and acquisition strategies. The report provides a comprehensive overview of the key elements necessary for The Little One Coffee Shop's sustainable growth and market expansion, including external environmental analysis using the PESTLE tool.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
P1 Analysis of evaluation of growth opportunities................................................................1
P2 Evaluation of growth opportunities by usage of Ansoff's growth vector matrix..............5
P3 Assessment of potential sources of funding......................................................................7
P4 Business plan for growth along with financial information and strategic objectives for
scaling up a business..............................................................................................................8
Part 2..............................................................................................................................................14
P5 Assessment of exit or succession options for a small business along with their benefits and
drawbacks.............................................................................................................................14
CONCLUSION .............................................................................................................................16
Recommendation...........................................................................................................................16
REFERENCES..............................................................................................................................17
.......................................................................................................................................................17

INTRODUCTION
Planning for growth refers to strategic business activity which enables to plan and track
growth within revenue of business. They allow businesses to allocate their restricted number of
resources with a centred effort for attainment of alterations within organisation by usage of
digital disruption and differentiating themselves from their competitors (Barbour and Deakin,
2012). For growing as well as sustaining within same environment, it is necessary for an
organisation to formulate efficacious plan for growth within market. If organisation is looking
forward to expanding their business within national as well as international market, they need to
have effectual planning with respect to certain aspects such as resources, products, services and
cost associated with the same. Organisation can plan their growth by expansion by usage of latest
technologies and techniques. Small and medium sized enterprises are independent, non-
subsidiary firms which are responsible for employing a smaller number of employees. SMEs
formulate around 99% of businesses operating within UK. Millions of people work within this
sector which acts as a key engine for sustainability as well as growth. This report is based on The
Little One Coffee Shop serves their customers with fresh products; they are responsible for
roasting their own coffee. They were founded in 2009 by Ben & Lisa. They serve their customers
with crepes and coffee along with muffins. They are present in Hertfordshire Business Centre,
London. They have approximately 10 to 15 employees. There competitors are Allpress Espresso
Bar, Little Oak Coffee and Prufrock Coffee. This report contains growth opportunities, sources
of funds and business plan for growth of organisation. In addition to this, succession and exit
options for small businesses are assessed.
Part 1
P1 Analysis of evaluation of growth opportunities.
It is challenging for small businesses to grab or catch suitable opportunities within
competitive market. In this aspect management needs to formulate strategies for their business
and plan accordingly for their survival and upholding so that benefits can be attained from
market. The Little One Coffee Shop have limited number of employees but they have effectual
strategies as well as plans. For growth as well as success various factors could be taken into
consideration, they are illustrated below:
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Competitive Advantages
This refers to a condition in which organisations or other coffee shops produce similar
services as well as products at lower prices within efficient and effectual manner (Beatley,
2014). It is the responsibility of management of The Little One Coffee Shop for formulating
planning strategies so that competitive edge can be attained. External analysis have been
conducted by management for making improvisation within their existing services through
which volume of sales can be intensified within market.
 Resources: The major resources are knowledgeable as well as experienced who are
responsible for satisfying needs of their customers.
 Capabilities: They are capable of rendering their services at reasonable and affordable
prices which enables them acquire more number of customers.
 Core competencies: They offer their consumers with high quality services which enable
them to attract customers. Along with this, they gain a competitive edge within a market.
The Little One Coffee Shop can opt for Porter's Generic strategy model which is depicted
below:
(Source: Porter's Model of Generic Strategies for Competitive Advantage, 2018)
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Illustration 1: Porter's Generic Strategies

Cost Leadership: This strategy assists organisation to create their position within market
by providing services at low rate. The Little One Coffee Shop can make use of such tricks or
methods for carrying out market analysis as well as target audiences for acknowledging their
needs. In this case, price of commodities is low and quality which is offered by them is high so
that they can captivate a greater number of customers (Goodfellow, 2013). This strategy aims at
furnishing opportunities for enhancement of market shares and size for providing strong
competition within market.
Differentiation Leadership: The services and goods which are furnished by The Little
One Coffee Shop are incomparable in terms of quality which aids them to pull in a greater
number of customers. Through assistance of these strategies, organisation can bring in innovative
features within their services so that they can enter within target market. For an example, if The
Little One Coffee Shop can have creativity in their design as well as enhanced quality of their
coffee then strong impact can be created on customers and their buying behaviour.
Cost Focus: In this case, focus is on niche market as they furnish services as well as
goods at lower prices. With the assistance of this specific strategy, organisation can carry out
analysis of market as well as needs of customers and provide their services at low cost. It is
crucial for them to have this so that services & products can be designed accordingly (Keough,
2015). For an instance, this strategy will aid to acknowledge exact requirements of customers
which will aid them to eliminate waste while producing their services.
Differentiation Focus: With respect to this, organisation focusses on target group
designing of services and goods by bringing creativity as well as innovations within their
products. The Little One Coffee Shop needs to analyse what customers are expecting at present
moment of time. Through differentiation in their products, they can create opportunities for
survival within competitive market which will assist them to increase profits as well as number
of sales.
Competitive Advantage with Opportunities for Growth
In context of growth opportunities, The Little One Coffee Shop has made use of external
environment analysis with assistance of PESTLE tool. This will aid them in understanding of
market growth, description of operations and also position of business (MacLeod, 2013). They
are illustrated below:
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Political factors: The Little One Coffee Shop is looking forward to expanding their
business in Germany, then they must carry out study with respect to policies, regulations,
barriers, rules and many other factors which will lead them to have effectual decision-making.
This will aid entire organisation to carry out their operations in an appropriate way (Mahmoudi
and et. al., 2013). Thereby, it leads to identification of business as well as acquire opportunities
such as manufacturing of services and products within market of Germany by assessment of
political factors.
Economic factors: If the Little One Coffee Shop wants to carry out expansion in their
business within other countries then they must evaluate purchasing power of their customers
within appropriate way so that results can be attained. This will aid them to formulate strategies
according economic rates at specific instance. Thereby, leads to creation of opportunities for
business within competitive market. By acknowledging buying patterns of individuals, prices of
goods can be set for them so that customers can purchase a greater number of products.
Social factors: This comprises of belief, values and attitude of people, it also includes
factors like population growth, health concern, age distribution, etc. For expansion of business,
The Little One Coffee Shop have to carry out analysis for understanding buying trends of
customers. This will lead them to creation of opportunities for organisation as people of
Germany prefer to have innovative services which seems captivate (Mason, 2015).
Technological factors: For creation of opportunities, The Little One Coffee Shop need
carry out appropriate research by usage of technology for manufacturing of their services by
maintaining high standards. For this, they need to have uninterrupted innovation within their
services as well as goods. With respect to this, business can ensure high quality of their services
for customers at minimal time. This will lead to enhancement in gains and profit.
Environmental Factors: This factor is associated with surroundings which comprises of
weather, climate and pollution. For creation of opportunities within market, The Little One
Coffee Shop must analyse environment and make sure that there is no negative impact
environment by this. By preparation of coffee and crepes, they do not create any kind of negative
impact on opportunities they can have (Mitchelmore and Rowley, 2013). This will aid them to
expand their business in various countries which leads to enhancement in sales, thereby probable
increment in profit.
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Legal: There exists diverse laws which organisation need to abide for carrying out
operations, functions and activities like health and safety, consumer laws, employment laws, etc.
Management of The Little One Coffee Shop must interpret policies and laws of Germany in
appropriate manner before they start their business.
This will aid respective organisation to conduct their activities in effectual as well as
efficient manner which will lead to attainment of objectives and goals within appropriate manner
(Rydin, 2013). Each factor must be identified in relevant manner for attainment of results.
Collaboration: It refers to a practice in which individuals work in collaboration with
each other for attaining business benefits. With respect to organisation, it can be in two forms,
they are: Synchronous:In this case, every individual communicate in real time like online meetings
which are carried through Skype or instant messaging.
 Asynchronous: The interaction is time-shifted, while uploading annotations or document
to shared media.
Mergers: It refers to aggregation of two organisations into one by closing old entities into one
entity or by absorption of other. Two or more firms are consolidated into one. There benefits and
drawbacks are shown below:
Benefits: They lead to enhancement in scales, as bigger firms are more efficient as well
as it lead to more profit and enables to carry out research & development.
Drawbacks: Enhanced market shares lead to monopoly within power as well as higher
prices for customers. It may be difficult for large firms to coordinate and communicate.
Acquisition: It is similar to organisation which exists as a detached legal entity. In this case, one
organisation act as parent firm of other.
Benefits: There are less entry barriers in new market along with this there are reduced
reactions by competitors. It will lead to enhancement in the market shares of organisation by this
they can minimise stronghold competition's.
Drawbacks: Organisation have unique culture and by acquiring a firm conflicts with
respect to culture may arise that will be problematic.
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Joint ventures: It is combination of resources as well as expertise of two unrelated organisation.
This is carried out to have strategic and tactical edge within market.
Benefits: It provides access to new market along with distribution network. Furthermore,
it denotes enhanced capacity.
Drawbacks: Partners may have different objectives for joint venture, which means that
objectives of the ventures are not clear.
Strategic alliances: It denotes relationship among two or more business which enable each firm
to attain their important objectives rather than their individual. It is an agreement which takes
place in between organisation to do business by which they can go beyond organisational
dealings.
Benefits: It makes it possible for every partner to epitome on activities which match their
capabilities along with this it provide competent suitability of competencies as well as resources
of an organisation for their survival.
Drawbacks: It comprises of sharing of resources along with skills and knowledge but it
can be problematic if trade secrets are involved.
Horizontal integration: It refers to process of acquisition or merging with competitors which
leads to industry consolidation. This is carried out for strengthening their position within the
industry.
Benefits: It refers to enhanced differentiation which leads to production of more products
as well as services. Large organisation possess more power above their suppliers.
Drawbacks: Minimised flexibility which make large organisation difficult to manage
and introduce new innovations within market.
Vertical integration: It is a competitive strategy that is adopted by organisation to have control
above one or more stages involved within distribution of services.
Benefits: It smooth-en supply chain by making sure that services offered by organisation
are meets exact specifications and make its distribution.
Drawbacks: The quality of goods supplied by external sources due to lack of
competition. It will be difficult for organisation to sustain core competencies when they are
focussing on integration of new units.
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The Little One Coffee Shop can opt for horizontal integration as by this they will merge
with their competitors within the market. This will lead them to enhance their position within
market and also lead to higher growth options.
P2 Evaluation of growth opportunities by usage of Ansoff's growth vector matrix.
Ansoff's growth matrix refers to tool which assist in furnishing guidelines to executives
and managers for designing of effectual strategies so that business can be grown as well as
expanded. The Little One Coffee Shop can make use of this matrix for formulation of strategies,
they are illustrated below:
(Source: Ansoff Matrix, 2019)
Market Penetration: It refers to situation in which organisation grows within existent
market by their existing services and goods. Within a growing market, maintenance of market
shares will lead to growth and opportunities for enhancement of market share if competitors
attain capacity limits. The Little One Coffee Shop can do this by creation of awareness about
their products, increase in promotional activities and by reducing their prices. It will lead them to
enhance market shares within same market.
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Illustration 2: Ansoff Matrix

Market Development: It refers to a situation in which organisation looks forward to
possess market segments within diverse geographical regions. In this, firm will be making use of
existing offerings with minimal services or product development. With respect to The Little One
Coffee Shop, for being successful, management need to ensure that they are making use of
unique product technology, economies can be improvised if output increases, new distribution
channels, innovative packaging and many others. They can be adopted by Coffee shop for
expanding their business within new market of Germany by the usage of existing services.
Product Development: It refers to strategy in which organisation, bring in new products
within same market for expansion as well as growth of shares and profits. This involves
extension within product range that is available with existing market of business (Schetke, Haase
and Kötter, 2012). Management of The Little One Coffee Shop can make investment within
R&D of additional products, acquisition of rights for producing someone new services and
various others. The focus is on expansion of different categories of services and goods within
same market. It is only possible when firm or business is open to opt for diverse activities such
as carrying out research, launch of new services, acquisition of right techniques and many others.
Diversification: This denotes strategies in which organisation expands their business
within new market through new services. It is considered as risky as market and products are
new, this makes high possibilities that success may not be acquired (Shi and et. al., 2012). For
this, The Little One Coffee Shop needs to carry out appropriate research with respect to product,
market, requirements of customer and others.
Thereby, The Little One Coffee Shop can make use of market development strategies for
expansion of business within other market through existing services as well as products. IT will
render organisation with high profits as it is less risky. When affirmative points of Ansoff matrix
are taken into consideration then it is focused approach which will enable owner, managers and
employees of The Little One Coffee Shop to formulate strategies which will be working in a
required manner. Along with this, it will also lead to growth by providing coffee shop with
retrospective and prospective analysis. But on the other side, if it's limitations are taken into
consideration then it makes complicated tasks simple which seems more complicated. It might
lead The Little Coffee Shop to drown instead of actionable plans.
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Limitations of Ansoff Matrix: It fails to show that market development as well as
diversification strategies needs to alter every day execution of business. There are conflicting
objectives of stakeholders.
Overall impact of Ansoff on SME is affirmative, as it forces management as well as
market planners to think about anticipated risks for moving in a definite direction along with
laying down possible strategies for growth.
P3 Assessment of potential sources of funding.
For enhancement of growth and success within competitive market, various plans and
strategies must be used. For this, various sources of funds are available to business for attainment
of objectives as well as goals. The sources of funds can be defined as means which enhances
operations of organisation as well as their working capital. For starting business appropriate
funds are needed so that they can furnish their services in an appropriate manner (Todes, 2012).
Investment decision-making refers to the decisions which are carried out by top level executives
or investors in context of amount of funds which are deployed within investment opportunities.
They comprise of long term as well as short term assets. Payback period is used for identification
of length of time which is needed for recovering the entire internal cash outlay required for
carrying out specific project. It is a time-based measurement which is responsible for depicting
management the ways in which investment can be risky as well as lucrative. Net Present Value is
the comparison in between present value of cash flow inflow to outflow over a certain time
period. It is used within capital budgeting as well as investment planning for carrying out
analysis of profitability of a projected project. The various sources of funds which The Little
One Coffee Shop can make use of are illustrated below with a brief assessment:
Bank Loan: It is one of the common as well as easiest type of finance which is provided to
SME's. This kind of funds are taken by bank for specific time duration and charging some
interest rate for the same. The Little One Coffee Shop can have funds from bank by taking loans
as it is secured method. By this they can expand their business successfully.
Benefits: In case of bank loan Credit scores of organisations can be increased through
regular payment methods of instalments. This source of funding charges lower rates of interest
with respect to other institutes (Wu, 2015).
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Drawbacks: With respect to there exists certain legal formalities which must be
accomplished while furnishing loans to organisation. In this monthly instalment have to made
and if organisation fails then they have the right to seize assets.
Peer to Peer Lending: It refers to financial creativity which connects borrowers to search for
unsecured loans with investors for attaining higher returns. With respect to this, individuals take
funds without any kind of financial institutions (Wynn, 2017). The Little One Coffee Shop must
to make use of such funds as they are not secured.
Benefits: Peer to peer lending provides low interest rates as compared to other funds of
funds. In this case, additional money is not charged for early repayments. It carries low interest
rates as compared to others.
Drawbacks: With respect to peer to peer lending, individuals with high score can only
get this type of loans, which acts as a major drawback of this source. Tax free interest and large
amount of money is not made available in this case. Only high credit score individual can get
such loans which drawback of this source is.
Venture capitalists: It denotes finance which is provided for an equity stake for high potential
growth of organisation. They make investments within 3 years of start up at an initial stage of
development.
Commercial finance: It is a effectual manner for buying a business as repayments take place for
longer time period. It may last up to around 20 years and there needs to be some kind of security.
Apart from this, there also exists other sources of funding which can be utilised by The
Little Coffee Shop depending upon their requirements. Some of them are: business incubators,
angels finance, government grants and subsidies, family and friends, etc.
Bank loans are effectual way for SME as in this there is a security. Along with this,
credit scores of organisations can be increased through regular payment methods of instalments.
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