Planning for Growth: A Business Plan for The Old Engine House SME

This report assesses growth opportunities for The Old Engine House, a UK-based family restaurant, using the Ansoff Matrix and Porter's Generic Strategies. It identifies potential funding sources like bank loans and crowdfunding, detailing their pros and cons. A comprehensive business plan is developed, encompassing market penetration, product development, and diversification strategies. The report also explores exit and succession options for the SME, considering political, economic, social, technological, legal, and environmental factors impacting the business. The analysis aims to provide a strategic framework for sustainable growth and development of The Old Engine House, leveraging available resources and adapting to the changing business environment. Desklib provides study tools and solved assignments for students.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Main considerations for evaluating growth opportunities................................................3
P2. Ansoff Matrix to appraise growth opportunities..............................................................5
TASK 2............................................................................................................................................7
P3. Sources of funds...............................................................................................................7
TASK 3............................................................................................................................................9
P4. Business plan for growth..................................................................................................9
TASK 4..........................................................................................................................................15
P5. Identify exit or succession options for SME..................................................................15
CONCLUSION..............................................................................................................................16
REFERNCES:................................................................................................................................17
Books and Journals:..............................................................................................................17

INTRODUCTION
Small and medium organisations are the significant part in the development of an
economy. So, it is necessary for SMEs to create an effective business plan that will help in
development and growth of their business (Bruton, 2021). A business environment is included
with several internal and external factors that are not fixed in nature and can be changed over
time so it is necessary for the organisations to make plans and work accordingly to meet their
pre-determined targets efficiently and effectively. Government also support SMEs and take
various initiatives to grow them in the country. The following report will consider the small
organisation named The Old Engine House. It is located in United Kingdom as a small family
restaurant where people can come, crave and have some quality food and drink at their table. It
includes foods such as sandwiches, cakes, soups, deserts coffee and much more. It also offers
vegan, vegetarian and gluten free options to their customers. The current report will identify
different growth opportunities that are available for the organisation so Ansoff Matrix will be
used for this. Different sources of funds which can be used by organisation are also evaluated. A
business plan will also prepare for the organisation. In the end, different exit and succession
strategies will be elaborated.
TASK 1
P1. Main considerations for evaluating growth opportunities.
It is important for the organisation to evaluate its growth opportunities that are available to
in the marketplace. In case of The Old Engine House, it is required to conduct an investigation
about its market so that it can attain first mover benefit. It is important to analyse its available
resources so that it can expand its business effectively (Demazière, 2020). Also, the capabilities
of employees are also fundamental to be considered as these capabilities are important for the
overall growth of business. Core competencies signifies the abilities of the workers that help in
gaining competitive edge in the market. Therefore, in case of chosen organisation they recruit
and choose the employees that have high qualities, abilities and skills that are enough to find and
fulfil the customers’ demand. Through such variables the organisation will be competent to
analyse it growth of opportunities in an effective way.
Porter' generic matrix: It is a useful framework that support companies to identify its
position in the competitive marketplace. Strategy must be followed by the company that would

help in achieving success and growth. In addition to The Old Engine House, different strategies
have been discussed below:
 Cost leadership: This strategy aims to reduce the cost of products and service in order to
accomplish leadership in their target market. For the chosen organisation, it can go for
this strategy to attain customer loyalty while attaining different advantages over other
companies in the similar market. It helps in improving customer base for the company
(Hoseinzadeh, 2020).
 Differentiation: With the help of this strategy the company can develop product and
services that have unique or differentiated features from their competitors. The selected
coffee shop can offer coffee which has differentiated and unique flavour that helps in
competitive advantage.
 Focus: Through this strategy, the company can sharpen their focus on the target market.
The chosen organisation can either focus on achieving leadership in niche market or can
offer differentiated goods and services in niche market.
Pestle Analysis:
The Old Engine House identifies different external factors in its business environment
that can bring opportunity or threat to its business. It is vital to have an analysis on such factors
so that informed decisions can be made for the company. The analysis has been done below:
 Political factor: The business success or failure is highly depending on the political
stability and commercial restrictions introduced by the country. It includes different
factors such as trade restrictions, tax policies, tax rates, government interferences and
much more. The business profits of the chosen organisation are fluctuated with the
increase and decrease rates of tax. Also, UK government highly supports the small
organisations in the country which is favourable for the organisation.
 Economic factors: The business growth and development is influenced by the economic
factors such as interest rate, growth rate, labour market condition, inflation rates and
much more. The gross domestic profit has an immense impact on the business
profitability of the selected organisation. The organisation can increase its business sales
with the higher rates of GDP which leads to high profitability for the organisation but
when the inflation rates are high the cost of inputs and other raw materials have been

highly affected. Economics of the scales is also essential to decrease the economic
instabilities.
 Social factors: The organisation is also influenced by the social factors that are rapidly
changes. It could be either the change in taste and preferences of the customer or
disposable income that might be a threat or opportunity for the organisation. The
consumer is also becoming health conscious and due to which they tend to avoid the food
and beverages that are harmful for their health. In case of The Old Engine House, it might
be a threat for the organisation.
 Technological factors: In present times, almost each and every organisation keep
themselves updated with advanced technology and equipment (Huxley, 2020). Hence, it
is also vital for the selected coffee shop to invest in advanced technology to manage their
HR and payroll systems. It can also invest in contact less payment tools and technology
that will allow customers to pay without making any physical contact to anyone.
 Legal factors: It is necessary for the organisation to work under the lawful framework
which is introduced by the government and judicial bodies of the country. Adopting such
laws secure both employers and employees’ right in the organisation. For the chosen
organisation, it is essential for the employees to provide relevant work hours, lunch
hours, medical claims and much more. Environmental factors: In current times, everybody is becoming aware of the climate
changes so it becomes a big responsibility for the organisation to offer products and
services that are environmental friendly and that does not harm the nature as well. The
respective organisation can reduce the usage of plastic as it harms the health of living
beings and surroundings as well.
P2. Ansoff Matrix to appraise growth opportunities.
By applying the Ansoff Matrix, the company can evaluate the growth and development
opportunities in the target market. In addition to The Old Engine House, the four strategies
involved in Ansoff Matrix are explained below:

 Market penetration: It is one of the growth opportunities that can be used by
organisation to use its current goods and services in the current marketplace. In respect of
The Old Engine House, the organisation can use this tactic by keeping their price low for
the purpose of achieving success in the market. One of the advantages of this strategy is
that the organisation is able to increase its business sales as well as attain competitive
benefits due to its low price factor. On the other hand, the disadvantage is that due to low
price of the products and services the company decreases its profitability.
 Market development: It is the second strategy for growth which can be used by
organisation to expand its business. Through this strategy, the company can use it
existing products and services in the new market. It will be beneficial to increase its
business sales together with its customer base. The benefit of this strategy is that the
organisation is able to offer more and more customers by taking minimum risk. The
downside is that it may not provide the aimed results as compared with its previous
market.
 Product development: In this is strategy the company uses its current goods and
services in the current marketplace. This strategy used when the company is getting
bounteous amount of product sales in its existing marketplace (Konvitz, 2020). With the
help of innovation and creativity, the company create something new or add something
new to its current goods and services for the purpose of attaining customer satisfaction
and they do not feel boredom by using the usual goods and services again and again. It is
often employed by the organisation to put differentiated features to its current goods and
services. The benefit of this strategy is that the company increase its demand by bringing

something new and unique to the current customers. The downside is that as the company
introduces something new might not be appreciated by the customers and they might lose
the customers as well.
 Diversification: This is the last method in the matrix in which the organisation highly
focuses on the launch of new good and services in the new market place. Through this
strategy, the company can face most risk in the business but simultaneously it increases
the chances of making revenues as they developed new goods and services in a
completely new market. The benefit of this strategy is that the organisation allow itself to
make profits. The downside is that the organisation may face several challenges and
uncertainties while aiming new customers in new market.
It has been evaluated from all the above strategies is that each strategy contains certain risks
and opportunities for the company. It can be said that as the chosen organisation already
established their market position in the current marketplace so it will be better to use product
development is strategy for the growth and development of business. It can introduce some new
products or services to increase its customer base and gain competitive benefits.
TASK 2
P3. Sources of funds.
It is very important for the organisations to have a potential source of funds. Finances
required by all kinds of organisations to expand its regular business operations and functions
smoothly. As there are numerous expenditures that cannot be neglected by the organisation,
therefore, it becomes very essential to make decisions related with sourcing finances that has low
interest rates for the business (Liang and Yang, 2019). There are different aspects that requires to
be considered by the organisation while making any choice related to finances. Such as they
must evaluate the time they will take to rescue the investment cost which is known as payback
period. The company is also needed to determine net present value (NPV). All such aspects
support organisation to make smart decisions for their business and invest in such activities that
give high returns on investment. In case of The Old Engine House, the following are some
options that can be used by organisation to source their finances:
 Bank loan: This is one of the common methods which is used by organisation in which
they take loan from the bank and in return they have to give some collateral properties or

securities. The interest rate is pre-determined and the company needs to pay on regular
interval of time. It involves some formalities and documentations which needs to be
done. It is beneficial for SME to identify right bank that satisfy all the needs of business.
Pros Cons
 It is easy and quick to access.
 The bank can provide a good range of
money to the companies.
 The company need to pay specific
amount of interests.
 If the organization is newly established,
then it might by difficult to access this
option to source funds.
 Crowd funding: It facilitate a platform in which the business enterprise can increase its
finances from a range of a small offerings from different single investors. The
organisation can either run equity based crowd funding campaign in which they can
produce transactions of equity for the investment. It can also get perks and rewards by
reward based crowd funding campaign.
Pros Cons
 Through this option, the business entity
might expect a fast investment return.
 There is a possibility that the business
might unable to give as guaranteed
which can result negatively on the
public image.
 The idea of business can be steal, if it is
not having patent or copy right on it.
 Government grants and subsidies: This option is financially rewarded by local, state or
federal governmental authorities for an activity which is useful (Liu and et.al., 2020). It
does not contain any technical or financial support such as revenue sharing, direct
appropriation or loan. The guarantee is not projected to provide back the amount but is
estimated to use the financial resources for the targeted objectives.
Pros Cons
 It is accessible to SME such as The Old  It is necessary that the business need to

Engine House.
 It does not necessitate to be paid back.
meet its particular criteria.
 It consumers time to apply grants and
to complete the paper formalities.
In respect of The Old Engine House, the company can use bank loan option to source
their funds. It needs to give some collateral properties to use this option and needs to pay a
particular amount of rates of interests on fixed time period. Hence, it will assist the organisation
to have secured finances.
TASK 3
P4. Business plan for growth.
Executive Summary: The following business plan is created for The Old Engine House
organisation which is a small medium enterprise in UK. The company is planning to expand their
business and for which they need to create an effective business plan. The following are aims
and objectives of business:
 To increase its current goods and services.
 To increase business sale by 8% in upcoming four months
 To establish a robust and competitive edge in the marketplace.
About the Company: The entrepreneurs and promoters of the chosen organisation are planning
to develop and evolve their business by increasing its market share. The company is specialised
in making sandwiches, coffee, soup, salads and much more (Mikuła, 2020). They are extremely
focused on their high quality food and beverages. The long range objective of business is to
achieve a strong competitive market position by spreading its current product portfolio in the
country.
SWOT analysis:
Strengths Weaknesses Opportunities Threats
 The company
improves its
customer base
by maintaining
taste and
 It needs a big
investment
where it need
to pay a
particular
 The changing
taste and
preferences for
coffee in young
generation can
 Growing
competition in
the market is a
big threat for
the company as

quality of their
products and
services.
 The workers
and employees
are the
strengths of the
organisation as
they dedicate
themselves for
the goals
achievement of
the business.
amount of
interest rates
on timely
manner.
 The marketing
expenditure of
company is
high and it also
shows the lack
of awareness of
different
marketing
tools.
be a big
opportunity.
they can snatch
the customer
from respective
organisation.
Market analysis: It is fundamental to evaluate market in which the enterprise operate their
business. Analysing market will help in targeting the right customers effectively. For such
purpose, the chosen organisation focuses on STP approach:
 Segmentation: Customers can be targeted through various manners (Wann-Ming, 2019).
The chosen organisation can target their customers on the basis of psychographic and
behavioural factors. The segmentation can be done by understanding the changing taste
and preferences, perspectives or lifestyles of the customers.
 Targeting: People are targeted on the regional basis who can enjoy coffee and others
dishes. Positioning: The organisation can establish a strong competitive image by using different
marketing tools such as advertisements and social media channels.
This small organisation can pay attention on their current products and services to target the
right audience and make good amount of profits out of it. It is essential to understand and
evaluate competitors as well. There are many small and large firms which can give tough
competition to the company such as Starbucks, Costa coffee and much more. Evaluating
competitive strategies will help in making better plans for the organisation (Morrison and

Misener, 2021). The company can also reduce the prices to attract customers. Innovation can
also help in retaining the customers while attracting new ones.
Market or Sales Strategy:
 Marketing strategies: Marketing is used by the organisation to create awareness among
target customers about the organisation and its offerings. The chosen organisation can
also promote their food and beverages by using TV commercials, social media tools,
advertisements and many more. Revenue sources: The company is able to make profits by selling different types of
coffee. Sales strategy: The company can also use online and take away options for improving
their sales and profits (Syssner, 2020).
 Pricing strategy: Through penetration pricing strategy the company can target the
customers.
 Marketing and communication strategy: Online marketing strategy can be exploited by
the organisation.
Research and Development: A road map can be used by the organisation to perform its
investigation about the market. It will help in analysing current trends and also help in making
informed decisions of the business.
Staffing and operations: Employees plays a very important role in the company as they can give
ideas for the creativity and innovation for any kind of new product. The company highly focuses
on divisional structure in order to give roles and responsibilities to the employees.
Financial projections:

Main assumptions:
 The key source of income is coffee (Sun and et.al., 2021).
 More people will be employed if there will be vacancy in the organization.
 Dealers will pay off in one month.
Profit and loss statement: