Prufrock Coffee Shop: Planning for Business Growth Analysis

This report provides a comprehensive analysis of Prufrock Coffee Shop's growth strategies. It begins with an introduction to growth planning and its importance, followed by an examination of key considerations for growth opportunities, including BCG and McKinsey matrices to assess product portfolios and investment potential. The report then delves into the Ansoff Matrix, evaluating market penetration, product development, market development, and diversification strategies. Subsequently, it explores potential funding sources, such as banks, investors, and relatives, along with their respective merits and drawbacks. A section on business planning outlines strategic steps for growth. The report concludes with a discussion of exit and succession options, ensuring a well-rounded perspective on the challenges and opportunities for Prufrock Coffee Shop. Throughout the report, recommendations are made to enhance the coffee shop's market position and financial performance.

PLANNING FOR
GROWTH

Table of Content
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Key Considerations For Growth Opportunities...........................................................................1
Ansoff Matrix for Growth ...........................................................................................................3
LO 2.................................................................................................................................................5
Potential Sources of Funding.......................................................................................................5
LO 3.................................................................................................................................................6
Business Plan...............................................................................................................................6
LO4..................................................................................................................................................9
Exit and Succession Options........................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Planning for growth is plan of action of business which help them to understand al;l the
factors while analysing the strengths and weakness to attain opportunities to grow effectively. It
is the integration of different factors which helps the business to grow and expand in the new
market effectively (Van Niekerk and et.al., 2016). This also helps business to compete in the
market due to change in the market trends and achieve core competency effectively. Growth
planning helps the organization to increase revenue and size of business by improving internal
factors like human resource, capital. Products and services plays an important role in business
growth as it helps to increase sales and profit margins which gives potential for business to invest
in expansion. This report provides different factors and drivers for growth of Prufrock a small
Coffee shop which is situated in London, UK. Report also discusses Ansoff matrix growth
analysis which helps to understand all the opportunities to increase the potential of small
business. In addition, report highlights the merits and drawbacks of types of funding which
Prufrock coffee house need to adapt to increase the potential and returns and it discusses the
business strategic plan for business and exit plan to reduce risk of losses in the market effectively.
LO 1
Key Considerations For Growth Opportunities
Small businesses has to analyse different factors to consider effective growth
opportunities and increase their potential in the market effectively. It is very essential for the
business to understand the opportunities in order to integrate strengths with them and convert
weaknesses into strengths effectively. With the use of different factors this helps to understand
the growth opportunities and improve the quality of products and services and satisfying
customers and increase customers base of Prufrock coffee shop effectively.
BCG Matrix
BCG matrix is the tool which is used identified the uniqueness products of the business
and improve the quality of products effectively (Mishra and et.al., 2019). This tool helps business
to formulate strategic planning for long term by analysing the strength of products effectively.
This matrix helps the business to understand the products which are more potential in investing
and gaining more profits.
Dogs
1

This quadrant of matrix analyses the products which are having low growth opportunities
and low market share. Prufrock Coffee shop also has analyses that the use of plastic mugs which
is very ineffective for customers who are having coffee at the cafe and it cools downs very easily
and reduce the efficiency of products. The demand of plastic cups has also decreased which
impacted the sales of coffee of Prufrock cafe negatively.
Cash Cows
Cash cows quadrant includes all the products which are having high market share and low
growth market opportunities (Tian, Ge and Li, 2017). Prufrock cafe has coffee which is cash
products and also has the potential to increase the market share and profit margins of the
company. As the company has the uniqueness In its taste which can improve the customers base
and sales of cafe to grow in market effectively.
Question Marks
This quadrant of matrix analyses high growth market products which have low market
share. Prufrock analyses that eateries have the high potential to grow in market but due to high
competition its market share is low and impacting the sales of cafe negatively.
Stars
This quadrant helps to understand the products which have high market share in high
growth market. Cafe has customer friendly environment and high skilled labour which helps the
Prufrock to increase their sales effectively. Cappuccino is also star product of Prufrock as it
provides better sales and attract more customers due tom its tastes and quality effectively.
Mckinsey Matrix
This matrix is analysis tool which helps to ensure effective investment opportunities for
business growth and expansion in the market effectively. This is very similar to BCG matrix and
also has very effective in understanding the product portfolio of the business effectively.
Invest
These are the quadrants which are under-investment boxes in the matrix and also has the
potential to grow effectively. This box helps to ensure the high return in long run of the business
to improve the market share. Prufrock needs to analyse that if the company is generating enough
profits margins and comes under this quadrant than they have the potential to invest in market to
grow and expand effectively (Agyemang and Silva, 2019). Cafe also analyses that it is very
essential for business to understand the products and services with the help of BCG matrix to gain
2

better information in investing. As cafe need to invest in star category which is cappuccinos to
increase profits effectively.
Selectivity
Selectivity helps the business to understand the financial position so that they can ensure
the importance of all the factors. These quadrants help the business to ascertain all investment
according to available cash and to only required areas of the businesses to increase the growth
efficiency in the market effectively (Lin, 2019). Prufrock cafe also analyses in the businesses if
there is any money left for investment after all the investment to increase profit margins
effectively.
Harvest
This matrix quadrant shows all the factors which have no potential to invest and the
business also have to understand their efficiency to ensure all the factors which can be seen in the
business. The businesses which are operating in the unproductive industries need to harvest their
investment and use it in other industries to increase the profit margins and provide better growth
in market to compete effectively (Pennock, Poland and Hancock, 2016).
Ansoff Matrix for Growth
Ansoff Matrix is a grid which is used as a tool so that the organizations can plan their
strategies for growth. This is a tool which is being used by mostly all the organizations in the
market so that they can have a productive functioning for themselves. There are four categories
which are there in this tool which are market penetration, product development, market
development and diversification (Hanlon, 2019). These factors can help organizations to make
their strategies and future planning accordingly which is a very important factor and specially
when they willingly want to expand in market. Market Penetration
There are a lot of organizations who take this method so that they can make the most
without the research and development department in the organization. This is cost friendly
because there is an existing market with the existing product which the company is selling. This
will make the company have a strong base in market which is important so that they can have a
better functioning for themselves which will help them to have a better functioning for
themselves and understand the same customers better which can help in innovation if the
3

company wants to expand. Portfolio of the organization can be strengthened with the help of this
method which will make the organization have a strong base before they expand in the market.
 Product Development
There is an investment which is required by organization so that they can develop the
product or get a new product in market so that they can have a larger base of customer for
themselves. This is very important because the needs of the customers are changing which is why
they have to make the most from that factor so that the company can satisfy the customers.
Launching new products in market, be it existing or new market, it is risky for the organization
because the reaction of the customers is not certain. This will improve the quality of the products
which are being sold in market.
 Market Development
There is a trust which organizations have in their products therefore they must use the old
existing products in new market so that more customers base can be attracted by the organization.
This will require a lot of investment for promotions and opening a new set up in other place but
the organization will be able to have more customers and the profit margin will increase. The
demand for the products will increase and the customer awareness for the product will increase
which is a great advantage for the organization.
 Diversification
New market and new product is what diversification is but this is a very risky factor for
the organization but not so much for the big organizations in market because they have loyal
customer base and the profit margins of them are high. It is very important for taking these risks
for the organizations so that they can have a larger base for themselves in market which will help
them to have an effective functioning for themselves.
Recommendation
Prufrock Cafe should adopt product diversification strategy which will help the cafe to
increase the sales with the help of better customer retention and loyalty. More products will
increase the profit margins as it reduces the bargaining power of the customers to increase their
satisfaction and also help cafe by providing more information in order to become more effective
in understanding investments options for growth and expansion opportunities.
4

LO 2
Potential Sources of Funding
There are various potential sources of funding available for Prufrock coffee shop. The
management of this business is able fulfil its all financial needs with support of these sources.
Some major funding sources for coffee shop has been discussed below;
Banks: Banks arr one of the most popular funding sources to businesses. This business can easily
fulfil its financial needs with support of banks. These banks generally provides loans to all
businesses (STAFF, 2019). Bank loans are generally divided into two parts short term loans and
long term loans. There is short term loans are provides by a bank for maximum 12 months. On
the other side, long term loans are provides for upper than 12 months. Basically, small businesses
are taking only short term loans from banks, because they are not needed high fund as big or large
businesses. In this case, owner of coffee shop is able to take both types of loan according to its
need to fund. However, short term loans are favourable to this business according to its current
situation. Banks not interfere in business operations when owner takes loans from them, it is main
benefit of this source. On the other side, an owner need to fulfil many complicated paper
formalities when it takes loans from bank, it is a main drawback of this source.
Investors: Investors are another great source of funding for businesses. When any business wants
some fund for expand its business, then it'll contact to investors. These investors always ready to
invest in those businesses which want grow their operations. In this case, it is an effective funding
source for coffee shop too (Quadlin, 2017). Suppose owner of Prufrock coffee want to enter the
new market segments, then it needs to searching for that investor which can easily invest in their
business. Many times a business owner need to convince investors to rise fund from them. When
any investor invest in any business, on that time it fully researches about business where it'll
invest. It is one of important tasks of an investor, because no investor want to invest in such
businesses which has zero growth opportunity. That's why good image of a business is necessary
to attract lots of investors. If coffee shop owner fulfils its financial needs through this source, then
it no need to fulfil lots of complicated paper formalities like banks, it is major benefit of this
source. On the other side, owner will lose its full ownership on its own business when it'll take
fund from investors, it is main drawback of this source.
Relatives: A business owner can fulfil its financial needs through this source too. Under this
source, owner enables to take needed fund or money from their family members and friends etc.
5

This funding source is specially favourable for small businesses like as Profruck coffee. Reason
is, small businesses are always needed small amount in comparison of large and big businesses. It
is the easiest way to a business owner to raise needed fund, because relatives are already knows
its business conditions. Relatives' provides fund to owner in the fast manner in comparison of
other funding sources, because they already introduced with owner's background (Janetos, 2018).
Owner of coffee shop no need to follow various legal formalities when it'll raise fund from this
source, it is main benefit of this source. On the other side, an owner can't able to raise huge fund
from this source, it is major drawback of this source.
Customer Advance: Customer advance is also a productive funding source for businesses.
Process of raise fund through this source is, a business need to take some additional amount or
money from customers when they buy it's any product or service. Then it needs to return that
additional money to customer after few days or months with interest or additional benefits. This
process currently follows by many businesses. This is really favourable source of funding to a
business, because it is simple trick to raise fund in own operational area (STONEMAN, 2016). If
coffee shop owner raise fund from customer advance, then it'll no need go outside from
operational area to raise fund, it is main benefit of this source. On the other side, convince
customer to pay additional amount on each purchase is difficult task to business, it is main
drawback of this source.
Banks are most appropriate source of funding to Prufrock coffee, because owner of coffee
shop able to fulfil its all financial needs through banks, like; short term, long term etc. Banks are
not interfering in operational activities of business, so this is a big benefit to owner. That's why
this source of funding is too appropriate or favourable to this coffee shop.
LO 3
Business Plan
This business plan will help to Prufrock coffee to achieve its business objectives
successfully. Some major business strategies has discussed in this plan which will support to this
coffee shop raise its profit in respective market.
Business Plan
Executive Summary
This business plan is created for growing market share of Prufrock coffees shop. This
6

plan includes various marketing factors which will guide to business for properly running its
operations in respective market. Some productive business strategies also has been mentioned
in this plan.
Company Description
Profruck coffee is a cafe which situated in London, England. It provides wide range
coffee to customers (Sparkman, 2018). This coffee shop has great brand image in London's
coffee cafe market. Top-level management of this shop currently running its business
operations on progressive path.
Product and Service Description
Coffee shop provides different flavours of coffee to customers. It offers exclusive team
as well. It provides different meals too, like; Breakfast, lunch and dinner. Currently people are
very satisfied with products and services which this coffee shop has offered.
Marketing Analysis
There are PEST and SOWT analysis has been mentioned below, which will help to
business for analysing market environment.
PESTLE Analysis
 Political Factors: These factors highly influence coffee shop when, because it needs to
fulfil those all formalities which UK's government has imposed on local businesses. For
example: Taxation.
 Economic Factors: UK is one of the richest countries in the world, in which people are
here can easily afford products and services which this coffee shop has offered
(Kepczynski and et.al., 2018). In this case, these factors positively influence coffee
shop.
 Social Factors: Social factors are too favourable for this shop, because most people in
UK are literate. Thee believes in buying quality products, so cafe need to provide them
quality coffee.
 Technological Factors: Technological factors of this country are very supportive to this
coffee shop, because by using existing technology it can easily improve its current
performance.
SWOT Analysis
 Strengths: Its innovation aspect is too productive, because it always innovates new
7

range of coffee. It is main strength of this coffee shop.
 Weaknesses: It is still using some traditional business strategies in their daily
operations, which are not much effective (Tomczak, Reinecke and Kuss, 2017). It is
main weakness of this business.
 Opportunities: It currently has opportunity to expand its business operations in
different markets segments. It is able to boost its promotional activities by using digital
marketing. These are some opportunities to this coffee shop.
 Threats: day by day increasing competition in coffee cafe market is the main threats to
this shop. It needs to use some modern business strategies in their business environment
to deal with this threat.
Marketing and Sales Strategy
Current marketing and sales strategy of this coffee shop is completely common as other
businesses. It promotes its products and services through social media, newspapers, radio etc. It
follows concept of product differentiate strategy. These are some strategies which cafe uses in
its marketing campaigns.
Organization and Management
It is a small coffee shop business, so its organizational structure is not too much wide.
This shop is completely managed by its owner (Cassidy, 2016). Means, owner of Prufrock
coffee is only responsible person who sees all managerial activities.
Daily Operations
Its daily operations are not much complicated, because it is just a coffee shop. It serves
daily its products and services when customers come in cafe. Management of this coffee shop
always researches for producing new flavours of coffee. These are some major activities which
comes under its daily operations.
Financial History and Funding
Owner of coffee shop is always raising fund from their family members and friends to
fulfil its financial needs. Now it interested to fulfil its financial needs through banks too.
Financial Plan and Projections
Start-up Expenses Amount (£)
Promotional material 600
8

Legal 1000
Insurance 400
Contractors 720
Computers 850
Others 550
Total 4120
Justification
This business plan is too productive to Profruck coffee shop. It can easily boost its current
market share with support of this plan. There are various funding sources are available to this
coffee shop, but banks are most appropriate option for this. Top-level management of shop
should develop some new business tactics to gain huge competitive advantage in coffee cafe
market of the United kingdom.
LO4
Exit and Succession Options
There are various productive exit and succession options currently available for
businesses. Some major options of exit and succession has been mentioned below;
 Transition to Family: This is a common exit and succession option which most owners
currently uses in their business environment. Through this option, a business owner can
easily exit from business by transferring its succession to their family members or
relatives, like; son, daughter, sister, brother etc. In this option, a business owner no need
to fulfil various legal formalities, It is a major benefit of this option (Foster, 2017). Many
times' family members can't run that business in progressive manner like as current owner,
it is main drawback of this option. Many times an owner and its son run a business
together. In this situation, this option is become the most suitable or favourable option of
exit and succession to that owner. Reason is, owner no need to give each information
about business to its son, because son is already working in current business operations.
 Selling to Another Company: It is another most popular option of exit and succession. A
business owner easily exit from its business by selling it to another company. If its
9

business currently has great brand reputation in market, then it'll easily able to take huge
advantages from this option, because other companies always showing interest in buying
those businesses which has high reputation in market. Currently Prufrock coffee shop has
excellent brand image in its local market. In this case, owner of coffee shop is able to take
great return if it'll exit from its current business. For selling business to another company,
owner of that business firstly need to find such companies in the market which can give
great return on buying (McLin, 2018). A business owner enables to generate huge return
through this exit and succession option, it is main benefit of this option. On the other side,
it is difficult to a business owner to find that company which will give the best return, and
owner need to complete high market research when it chooses this option. It is main
drawback of this option.
 Marge with Another Company: Currently many businesses choosing this option also to
exit or succession. Under this option, an owner enables to merge its business with another
business or company. Mainly those businesses chooses this option which want come
together for dealing with market competition. This is really favourable option for a
business owner who wants to exit from their business. In this case, coffee shop owner also
need to find such coffee business in market which looking for merging with another
company. Then it needs to contact most suitable business to merge own business with
them. This option provides the easiest way to exit and succession to business owner, it is
main benefit of this option. On the other side, an owner need to fulfil lots of legal
formalities when it chooses this option, it is main drawback of this option.
 Selling to Management: Selling business to existing management is another exit and
succession option for an owner. In this option, business owner need find a high performer
employee within its management to give them full authority of current business. Most
businesses always has some skilled and talented employees in their business environment.
In coffee shop's case, this business also has some skilled employees, so owner can easily
exit from business by transferring it succession to a skilled and talented employee
(Mazzarol and Reboud, 2020). An owner no need give all information about business to
that employee who belongs to existing management, it main benefit of this option.
Reason is, that employee is already working in this that business and completely aware
about business operations. On the other side, this option promotes disputes within a
10