Funding and Expansion Plan for Sandwiches 043-2019

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PLANNING FOR GROWTH
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Contents
LIST OF FIGURES.......................................................................................................................3
INTRODUCTION........................................................................................................................4
LO1........................................................................................................................................... 5
P1 KEY CONSIDERATION FOR EVALUATING GROWTH OPPORTUNITIES AND PROVIDE
THEIR JUSTIFICATION WITHIN THE ORGANIZATION AND GIVE ITS IMPACT ON DIGITAL
TECHNOLOGY....................................................................................................................... 5
P2 EVALUATE THE OPPORTUNITIES FOR GROWTH USING ANSOFF’S MATRIX FOR THE
BUSINESS.................................................................................................................................. 8
LO2......................................................................................................................................... 10
P3 ASSESS THE POTENTIAL SOURCES OF FUNDINGS AVAILABLE TO THE BUSINESS ALONG
WITH THEIR MERITS AND DEMERITS..................................................................................10
LO3......................................................................................................................................... 12
DESIGN A BUSINESS PLAN FOR GROWTH INCLUDING ITS FINANCIAL INFORMATION AND
STRATEGIC OBJECTIVES FOR SCALING UP THE BUSINESS...................................................12
LO4......................................................................................................................................... 16
P5 ASSESS EXIT OR SUCCESSION OPTIONS FOR SMALL BUSINESS WITH THE MERITS AND
DRAWBACKS OF EACH OPTION..............................................................................................16
CONCLUSION.......................................................................................................................... 18
REFERENCES........................................................................................................................... 19
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LIST OF FIGURES
Figure 1: COMPETITOR ANALYSIS.............................................................................................5
Figure 2: PORTER GENERIC STRATEGY......................................................................................6
Figure 3: ANSOFF MATRIX........................................................................................................8
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INTRODUCTION
UK has been experiencing rapid expansion in the number of SME businesses in the country.
The managers or the business owners of small businesses focus on expanding the business
by applying different methods and processes to attain the desired growth (Burns and
Dewhurst, 2016). As an entrepreneur, an ambitious business project will be launched named
Sandwiches 043-2019 in the North West, UK. Therefore, certain measures would be taken
for expanding the business focusing on identifying different sources for raising funds in the
business, developing an effective business plan, using various strategies in the business to
gain success. Also, at the end of the report strategies for exit or succession in the business
are identified and most appropriate strategy that can be used for the selected project is
recommended.
As an entrepreneur of a retail business in the food and beverage sector, the business is
undertaking a project/ contract with Manchester Central to provide best and tasty
sandwiches to Manchester Townhall complex and Manchester Central Convention Centre.
The business estimates the annual expenditure of £128000 for purchasing the raw
materials, preparing the items, supplying it to the right destination and carrying out other
activities of the business. It is a one year contract starting from December 2019 (GOV.UK,
2019).
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LO1
P1 KEY CONSIDERATION FOR EVALUATING GROWTH OPPORTUNITIES AND
PROVIDE THEIR JUSTIFICATION WITHIN THE ORGANIZATION AND GIVE ITS
IMPACT ON DIGITAL TECHNOLOGY
The entrepreneur of the business is engaged in providing the tastiest sandwiches to the
client to enhance their satisfaction and gain a competitive advantage in the food industry.
Therefore, effective strategies would be formed that help in giving tough competition in the
industry and maximize customer loyalty (Indris and Primiana, 2015). The business should
apply competitor analysis to strategies for achieving the business objectives.
Figure 1: COMPETITOR ANALYSIS
(Source: Peng and Liang, 2016)
COMPETITORS: The entrepreneur must identify and analyse the strategies of the
competitors, the product offered by them, their prices, their restaurant menu, etc. This
would help in formulating strategies better than that of the competitors to attract
customers and increase the consumer base (Peng and Liang, 2016).
CUSTOMERS: The entrepreneur must research the market to identify and understand the
choices and preferences of the customers and alter the café menu accordingly to enhance
their satisfaction and retention.
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PRODUCTS: Being an owner of a café, the entrepreneur must emphasize the products that
are the food items being offered at the café. The major aim should be providing the best
taste and services in town at reasonable rates and taking initiatives for promoting the
business (Indris and Primiana, 2015).
The entrepreneur must apply the strategy of Porter’s competitiveness for understanding
different aspects of business in the industry and increasing competitiveness by using the
most appropriate strategies in the business that lead to the accomplishment of the targets
effectively.
Figure 2: PORTER GENERIC STRATEGY
(Source: Bell et al. 2017)
COST LEADERSHIP: In the following project selected by the entrepreneur, the business can
use the cost strategy by reducing the cost of various kinds of sandwiches and other food
items like Panini, toasties and wraps to increase the attractiveness of the offering and boost
the sales.
DIFFERENTIATION STRATEGY: The entrepreneur must focus on introducing new and
innovated products, services and offers that are not used by the competitors in the industry.
Some uniqueness in the taste of the food can help the business in differentiating the
business from others and enhancing competitiveness (Bell et al. 2017).
FOCUS STRATEGY: By applying this strategy in the business, the entrepreneur can increase
the customer base by offering differentiated products in the market at reasonable rates.
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Therefore, the café owner must use a focus strategy for the selected contract to sell its
sandwiches to Manchester Central for one year. This is an effective strategy that can be
used in the business by focusing on eliminating wastage, selecting the best supplier who
provide a good quality of raw materials at the best industry prices, using all the resources
efficiently and thus, fulfilling the demands of the client by providing them with the best
services (Bell et al. 2017). These strategies that would be used by the entrepreneur would
influence the use of digital technology in the business for promoting the products online,
conducting online researchers to bring something new for the customers, communicating
with the client through emails, allowing online payments, etc. therefore, the increased use
of digital technology would help in increasing the effectiveness of the processes and
reducing the workload of the team.
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P2 EVALUATE THE OPPORTUNITIES FOR GROWTH USING ANSOFF’S
MATRIX FOR THE BUSINESS
For expanding the small-medium enterprise in the UK and providing effective services to
Manchester Central for accomplishing the contract, the entrepreneur must analyse and
alter the strategies used in the business as per the requirement to attain the objectives and
achieve growth (Dawes, 2018). The business must apply the Ansoff matrix to use the best
strategies applicable to the contract.
Figure 3: ANSOFF MATRIX
(Source: Dawes, 2018)
MARKET PENETRATION: The business must offer the existing products like premium
sandwiches, Panini, toasties, wraps, sandwich wedges, etc. and offering new and innovative
services along with the product so that the customers feel satisfied with the services
provided and the loyalty of the customers and clients increases and they give more such
contracts to the enterprise in the future (Dawes, 2018).
MARKET DEVELOPMENT: The entrepreneur can also use the strategy of market developing
and identify new such projects to entering new markets to increase the customer base of
the product and services offered by the café. The business can enter new markets with the
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help of geographic segmentation and opening new outlets or branches of the café in
different regions of the UK that helps in boosting the sales of the business and gaining
success (Gurcaylilar-Yenidogan and Aksoy, 2018).
PRODUCT DEVELOPMENT: To attract more customers towards the café, the entrepreneur
must focus on providing a wide range of products and enlarging the café menu by adding
more varieties of sandwiches, toasties, wraps, etc. The entrepreneur can also add a new
product line or offer beverages to the customers. The entrepreneur can conduct market
research to identify the products and services offered by the competitors to find ways and
introduce products that help in enhancing the competitive advantage and achieve growth
(Gurcaylilar-Yenidogan and Aksoy, 2018).
DIVERSIFICATION: This is the riskiest strategy that can be used in the business by the
entrepreneur as the business would develop new product and introduce it in the new
markets that have been untouched by the business yet. Therefore, there is a high risk of
whether the new variety of sandwiches would be liked by the customers or not. If the
entrepreneur decides to use this strategy, an effective market analysis must be done to
identify the choice and preferences of the customers to fulfil them efficiently (Gurcaylilar-
Yenidogan and Aksoy, 2018).
The café owner must apply product development strategy for this contract and try to
introduce a new range of tastiest sandwiches, Panini, toasties, and few beverages in the
business to increase the satisfaction of the client.
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LO2
P3 ASSESS THE POTENTIAL SOURCES OF FUNDINGS AVAILABLE TO THE
BUSINESS ALONG WITH THEIR MERITS AND DEMERITS
The budget made for the following contract- Sandwiches 043-2019 states that the contract
must be completed in £128000 inclusive of all the activities from production to the delivery
of the product at the Manchester Centre. The entrepreneur has £20,000 with himself and
the rest £108000 can be allocated using a combination of different sources of finance after
assessing the benefits and drawbacks of each source. These sources include:
ANGEL INVESTORS: The entrepreneur can get finance from angel investors who can invest
£10k- £750k in a start-up business that has a high probability of growth. The angel investors
provide entrepreneurial expertise along with the funds to the business and expect a fixed
amount of return from the business after a particular period (Kumar and Rao, 2015).
Merit: They provide effective, skills, guidance, knowledge and experience to the business
and also help in increasing the networks and connections of the entrepreneur.
Demerit: The entrepreneur has to lose some control over the decision-making and
operations of the business.
FRIENDS AND FAMILY: The entrepreneur can ask for help from their friends and family and
they can provide some amount for starting up the business or launching the project. This
type of investment is a kind of seed investment to bring the business to a stage where it is
eligible for obtaining funds from venture capital or angel investors (Kumar and Rao, 2015).
Merit: The entrepreneur can get the funds quickly because of their relationship with the
fund provider.
Demerit: This source of finance provides only capital for the business, not any skills or
expertise.
VENTURE CAPITAL: The venture capitalist offers a large number of funds to the
entrepreneurs for their start-ups and takes equity of the business in return. The investors
invest their time and resources in the business with the motive of expansion. They become
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the equity shareholders of the business and thus, possess the right to take the decisions in
the business (Bruton et al. 2015).
Merit: They provide expertise in the business along with a large number of funds.
Demerit: There may increase conflicts in the business due to the difference of opinions
between the entrepreneur and the investor.
BANK FINANCING: This is the most commonly used source of finance by almost all the
businesses as it is easily available and beneficial for the businesses in many ways. The UK
government offers various schemes to the SME businesses that help in their growth and
expansion, for example, National Loan Guarantee Scheme in which the government of the
UK provides guarantee on the behalf of the owner for their unsecured loans. There is a wide
range of financing options available with the banks having different rates of interests. Thus,
the entrepreneur must gain effective knowledge about the deals before taking loans from
the banks (Bruton et al. 2015).
Merit: Banks offer a wide range of funding options to businesses with different payback
options as per the needs of the entrepreneur.
Demerit: The availability of the number of options confuses the entrepreneur and their lack
of knowledge may end up in finalising an inappropriate deal. Also, it is a time-consuming
procedure as it includes a lot of documentation.
Thus, after conducting an effective evaluation of all the sourcing options available to the
entrepreneur for obtaining funds for the launch of the new project, it is recommended that
the business must use a combination of bank loans and funds from friends and family. The
owner has £20,000 as personal funds to be invested in the business. The remaining £108000
can be taken half from the bank and the other half from a friend or a family member as
these are the two most appropriate sources or the abovementioned project as the
entrepreneur must be able to take all the decisions on his own and the chances of conflicts
and lack of control over the business can be eliminated (Bruton et al. 2015).
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LO3
DESIGN A BUSINESS PLAN FOR GROWTH INCLUDING ITS FINANCIAL
INFORMATION AND STRATEGIC OBJECTIVES FOR SCALING UP THE
BUSINESS
EXECUTIVE SUMMARY:
Sandwiches 043-2019 is a contract taken by an entrepreneur who is a café owner in the
North West, the UK for providing tasty sandwiches and best services to Manchester
Townhall complex and Manchester Central Convention Centre. The contract will be
undertaken from December 2019 - January 2020 (GOV.UK, 2019).
MISSION:
The mission of the entrepreneur is to enhance customer satisfaction by providing the best
sandwiches in town.
OBJECTIVES:
 To introduce a new variety of sandwiches and increase the attractiveness of the
customers
 To offer best services and maintain good communication with Manchester Centre
 To expand the business by opening new outlets in the country.
SITUATIONAL ANALYSIS:
Under the situational analysis of a business, the internal and external factors of the
environment are identified and analysed that influence the decision-making and operations
of the business and must be considered effectively to achieve the desired results.
INTERNAL ANALYSIS:
The consideration of the internal factors such assessment of strengths and weakness of the
organization, etc. will help in expanding the business by making necessary changes.
Therefore, a SWOT analysis can be done to understand the internal factors in a better way.
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