Business Growth Plan for Rock Builder Ltd: Strategies and Funding

This report analyzes the growth strategies for Rock Builder Ltd, a small business manufacturing rock-based tiles. It explores various growth opportunities using Porter's generic strategies and a PEST analysis, highlighting the importance of digital technology. The report applies Ansoff's growth vector matrix to evaluate market penetration, market development, product development, and diversification strategies. It also examines funding sources like crowdfunding and discusses the design of a business plan for growth and succession planning. The report emphasizes the need for strategic planning to enhance productivity, profitability, and competitiveness in a dynamic market environment, offering valuable insights into business expansion and financial management.

Planning for growth

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Evaluating growth opportunities for organisation..................................................................1
P2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix..................4
TASK 2............................................................................................................................................6
P3 Sources of funding for small businesses................................................................................6
TASK 4............................................................................................................................................8
P4 Design a business plan for growth of a company...................................................................8
TASK 5..........................................................................................................................................11
P5 Succession or the exit planning of a business......................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth plays an important role in increase productivity and profitability
of a small business firm. Proper planning leads to effectiveness in the growth of a company.
Here, top management requires to conduct a brief study on growth planning for the
beneficial of small business firms (Arku, Yeboah and Nyantakyi-Frimpong, 2016). This
report is carried on Rock Builder Ltd which manufactures rock based titles and other related
products which sells to their customers etc. “Replacement roofs of listed building“is a
government contract in which company has made a bid of “£70000”. This report puts light
on growth strategies of a company using growth model, sources of financial funding
company uses for generating money for carrying out business and succession options of an
entity. This company is small business entities, so this report will help in suggesting
marketing strategy to whether to expand the business or sell new products in the existing to
maintain profitability.
TASK 1
P1 Evaluating growth opportunities for organisation
Every company needs to grow for surviving in competitive environment and
achieving goals and objectives by utilizing their full potential. Stone Builders deals in
providing variety of tiles to its target customers. They can use different technologies to have
advantages from opportunities available in the marketplace. Company can use digital
technology for their growth like they can use social media, artificial intelligence, internet of
things etc.
Competitive Advantage: It refers to the ability of business to produce goods and services in
a different way than its competitors. Which helps company to earn more profit than other
rival businesses (Andersson, and Moroni, 2014). Company can provide quality of goods and
services to its target and potential consumers for retaining them and attracting new
customers. For this organisations use many technologies for reducing product cost,
increasing product quality, which can differentiate them from others. Company can analyse
growth opportunities available in market through Porter's generic model.
Porter's generic competitive strategies

This model was introduced by Michael Porter. According to this model position of a
firm in market is identified by its profitability in the industry. Competitive advantages of a
firm is determined by applying generic strategies- Cost leadership, Differentiation and
focus. These strategies are discussed as follows:
 Cost Leadership: In this strategy company reduces their cost of products and
become low cost manufacturer in the industry (Loh and Norton, 2015). Rock
Builders can achieve advantages by focusing on price sensitive consumers.
Company can sell their products on lower rate than its rivals to capture large market
share and maintaining high profitability by achieving economies of scale. It can use
digital technology as it will help them to connect with many customers who are
interested in their products and services and it will also increase their production
capabilities.
 Differentiation: It involves making products and services different and attractive
from competitors. This depends on features, brand image, functionality and
durability of products and services. Rock Builders can use this strategy by focusing
on research and innovation, good quality of products, effective and attractive
marketing. Company should be flexible and adaptable to changes in the market to
satisfy their potential customers.
 Focus: Company use this strategy to concentrate only on a selected market to satisfy
their specific needs and wants. Company select their target customers and serve them
by applying Cost focus or Differentiation focus.
In Cost focus, businesses take advantage of cost in niche market. They can serve products
at lower or higher cost to target customers.
In Differentiation focus, company focuses on providing something extra and unique to
concentrated market. It needs strong marketing of products and increases loyalty of
customers to be ahead in competitive market (Woltjer, 2014).
Rock Builders can use focus strategy to serve limited customers by analysing their specific
demand and fulfilling it by introducing products which have some different elements from
rival company's products.
Rock Builders should adopt differentiation strategy because there are so many
companies who provides same products to the customers. So in order to retain their

customers and to capture more market share company needs to introduce different products
than its rival businesses.
Enterprise can use digital technology for attracting customers like use of social
media such as Facebook, Twitter etc. to understand its customers and analysing their needs
and demand. Artificial Intelligence will help organisation in improving product growth by
innovation by identifying customer choices. Cloud technology also helps in storing and
sharing important data of their target customers for future references. Therefore, Rock
Builders should use Digital technologies for identifying growth opportunities for their
businesses.
Pest analysis
This type of analysis is used for analysing external environment that can affect the
business. It includes Political, Economic, Social and legal environment that external to the
company and are uncontrollable (Miller, Hauer and Werner, 2015). It will help Rock
Builders to identify new opportunities in the market. The following are components of this
analysis:
 political factors: It includes political condition of an economy. It shows government
involvement in economy. These factors are related to rules and regulations prepared
for industries like employment laws, tax policy and environmental laws etc. They act
as opportunities as well as threats for company in various situations. UK government
has made some special provisions for SMEs regarding Tax policy. This will help
business to save money by paying less tax, company can use this saved amount for
other use like for paying debt.
 Economic factors: These factors include issues related to the economic condition of
the country. It consists interest rate, inflation rate, foreign exchange, employment
and unemployment rate of economy. In case of Rock Builders these factors can
affect as both opportunities and threat. Company will have growth opportunities
when inflation and interest rate is low than it will result in decrease in price of its
products and will provide ease in acquiring finances.
 Social factors: It includes factors related to social environment of potential
customers to understand their needs and demand (Brown and Mawson, 2016). It
includes analysis of consumer's culture, age, gender, demographics, education and

attitudes towards their products for estimating demand from them. Rock Builders
can identify opportunities by understanding the nature of their customers and
through this they will be eligible for providing their products to the customers as per
their social status.
 Technological factors: Technology plays an important role in every industry. As it
has both negative and positive impact on businesses (Beatley, 2014). Rock Builders
can introduce new technology for introducing products in the market. For availing
opportunities company can adopt Digital technology to respond the technological
changes in the marketplace like use of social media, cloud technology and artificial
intelligence etc. to be competitive in market.
P2. Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
The Ansoff’s matrix is most commonly known as Product/Market matrix. In context
with Rock Builder, it will help company to acknowledge their growth opportunities and rise
productivity. It has four option for growth purpose by matching up new and existing
products and new and existing which is drawn in matrix (Gurran, Austin and Whitehead,
2014). This matrix exposes your business when a business move from one stages of matrix
to another. This approach has four growth strategies: market penetration, market
development, product development and diversification. Ansoff’s matrix is providing
different strategies in context with Rock Builder:

Illustration 1: Ansoff growth matrix
(Source: An introduction to Porter’s Generic Strategies. 2015)
Market penetration - This strategy tells about selling same product more and more
to existing customer or market. To implement this, business wants to increase customer
loyalty and grow customer base for lifetime values. Rock Builder can improve their order
process by making it easier for customer to understand products and services clearly or
extend current business for profit purpose. In this strategy, there is a partial chances of rising
in price of an existing product. This process can put negative effect on company, as if there
is any product of expensive range then for market penetration it is essential for company to
lower its process as to generate more consumer base. This will lead to lower level of profit
generation for company and decrease on production cost per value.
Market development - Some entities approach to attract new customers for an
existing product (Haaland and van den Bosch, 2015). New customer can be classified on the
basis of geographic and demographic factor. Geographic factors includes: finding customer
by locating them from country, region, place etc. and demographic factor includes: age,
occupation, gender etc. Rock Builder can add their customer base on the basis of these

factors. This will also results in creating new customer base for future purpose of market.
This process somehow can impact negatively on company, as to find customer form
different geographical location company is required to invest huge funds and produce
products and services related as per according to different consumer perceptions which is a
time taking process.
Product development - This strategy is about creating and developing new product
or developing existing product by adding homogeneous requirements such as colour,
features, design, shape and other technical aspects. Rock Builder can replace their products
or services with existing one or develop new identity by fresh product development. Any
new development supposed to be influenced by customer feedback or previous user
experience. In order to find and analyse consumer demands and perceptions it is essential
for a company to regularly engage in the process of research as to find actual market
condition. This can negatively affect organisation as it require huge capital investment to
conduct various research.
Diversification - It is considered as high risk taking strategy. This strategy is
different from market penetration and market development (Hess and Sorensen, 2015). In
this, entities need to adopt strategy of selling new product into new market. Diversification
will work if the company has foundation and support to bear risk taking while implementing
such step. Here, Rock builder wants to provide their manufacturing goods at most affordable
price to existing customers and slowly and gradually to new customer base. This process
can negatively affect company by increasing their total investments to sell new products in
new market. In order to generate new consumer base company is required to take
unexpected risk which may sometime result in huge loss in their overall operation functions.
Managers of Rock builder are taking market penetration strategy to expand their
business and growth rising. The reason behind this strategy that generally small enterprises
are not capable of adopting new product strategy because it will lead to incurring huge costs
and risk taking also.

TASK 2
P3 Sources of funding for small businesses
Every business needs fund to operate their business in a smooth manner. Small business also
need funds for managing their sales and operations (Keough, 2015). Entrepreneurs arrange
funds from different sources to purchase essential assets for running their business and
increasing profitability.
Crowdfunding: It is a method of capital raising by collectively from customer, friends,
family and individual investor. This type of funding generally comes from collective efforts
of different kind of people and pool of individuals. Funds can be sourced via social media
and different network and platform.
 Benefits:
Fast mover advantage - It is a fast way to raise funds with no fee charge on it.
Alternative finance option - It is difficult to raise funds from bank or traditional
investor because of critical involvement of formalities. It is easy to generate funds
from crowdfunding.
 Drawbacks:
Reputation of the business - if raised would not repaid, there is a high risk
involvement and it may effect reputation of the company.
Not fixed time of repayment of loan - There is no fixed time of repayment of loan
like bank. Borrower needs to redeem the amount of loan any time, when asked to
repay.
Small Business Administration Loans: Some government administrations provides funds to
help small enterprises. It ensures small companies that they will get a certain amount from
contracts will be given to them.
 Benefits:
These types of loans are structured so it help company to manage their cash flows.
Down payment for these loans are very low, which is an advantage for business.
 Drawbacks:
It has high interest rate because it gives guarantee to lender for payment. Lengthy
and time consuming process as it requires a lot of paper work and approvals from
government.

Bank loans: it is a very common source of arranging finances for long-term or short-term
period (Pothukuchi, 2015). These loans are provided by Public as well as private banks to
businesses. For this borrower has to pay some amount as per interest rate.
 Benefits: Various options are available for the borrower; they can avail loan as per
their financial need. Business are not required to lose their business control.
 Drawbacks: it has large process for documentation which is very time consuming
process. Company has to pay the amount whether they are getting profits or loss in
their business.
Henceforth, for “Replacement roofs of building” business has made bid of £70000. From
this amount, entrepreneur have £20000 and rest £50000 are arranged from crowdfunding
and Small Business Administration Loans. This will help business person to organise
finances for bid process in government contract.
TASK 4
P4 Design a business plan for growth of a company
Business plan- It is the formal statement which helps in achieving the objective of
business (Sager, 2017). It includes the historical background of organisation, vision and
mission of the company, SWOT analysis, objective and financial information are also
included in the plan
Companies overview- The Rock Builder is the construction company which is
situated in UK, Hawick and it is expert in making tile at the lower price from which
costumer enjoy benefits of lower pricing. Replacement roof of building is a government
contract which consists of the bid value of £70000 which is made by the organization.
Vision and mission- Vision of the company refers to the long term goal. The Rock
Builder tries to make quality tiles in affordable price the company can retain for longer
period of time and can establish their brand image in the mind of the customer. While its
mission is to improve the market share and to enhance the sales revenue.
Strategic objective- The strategic objective of the company is to formulate their
smart tactics which helps in achievement of goal (Viitanen and Kingston, 2014). It includes

the planning of acquiring the 40% of share in the next three years, and to develop the brand
image so that company can retain their costumer’s loyalty.
Product and services- The Rock Builder provides different variety of tiles at an
effective and reasonable price this helps in keeping attracting the large number of customer
and due to which there are higher chances of making profit and also helps in building profit
index.
Consumer analysis- The Rock Builder effectively analyse market and examine
actual needs and wants of their consumer. This will aid them to satisfy needs of their
customers in efficient way. Company conducted related research to gather information and
data and use that same in their production process as to create qualitative products and
services.
Market plan- Company conduct effective research and then formulate strategic plans
and procedures. This will help them to deliver products and services as per according to
customer preception.
Situational analysis- The company acquires or gather the information from the
different sources to analyse the current condition of market which can improve the system
capabilities and it also tries to gather strong factors which helps the organisation for
acquiring the businesses.
Strengths of the company- The Rock Builder uses the latest technology for
performing different activities of the business. It uses digital technology which helps in
getting customer from the remote areas also and it also offers variety of tiles to retain their
loyal customers, they also make tiles according to the different needs of the customer.
Opportunities- The managers of The Rock Builder also do the awareness program so
that business could reach to the large no of people. Fast growing of the business helps in
making opportunities which attracts the customer.
Financial information of a business- cash flow statement shows the inflows and
outflows of cash it provides the data regarding inflow and out flow of money in the
operating condition. In The Rock Builder the investment is £ 70000 and the statement
includes the overall information regarding the sales from January to June 2018 which
includes the sales in the credit, the cost of raw material, and expenses and the closing
balance is £ 10,040. hence the cash flow statement of The Rock Builder is as follows.