Business Plan for Skin Elixir: Growth, Funding, and Exit Strategies

This report provides a comprehensive analysis of growth strategies, funding options, and exit strategies for Skin Elixir, a small UK-based business specializing in handmade, organic, vegan skincare products. The report begins by examining key considerations for evaluating growth opportunities, including competitive advantages and Porter's generic strategies. It then applies Ansoff's growth matrix to identify market penetration, market development, product development, and diversification strategies suitable for Skin Elixir. The report also assesses various funding sources, evaluating their suitability for the company's context, and develops a detailed business plan with financial information and strategic objectives. Finally, the report evaluates exit or succession options for the small business, providing recommendations for Skin Elixir's future.

Unit 42 –
Planning for
Growth
1

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Analysis of main considerations for growth opportunities evaluation and justification in
organisational context.............................................................................................................3
P2 Application of Ansoff’s growth Matrix............................................................................5
M1 Discussion on progress options to depict understanding of competitive advantage........6
D1 Critical evaluation of growth options and understanding associated risks and ways of risk
mitigation................................................................................................................................7
TASK 2............................................................................................................................................8
P3 Assessment of potential funding sources available to business........................................8
M2 Evaluation of sources of funding with justification of appropriate sources for funding in
organisational context...........................................................................................................10
D2 Critical evaluation of funding sources with justified argument for adoption of specific
source....................................................................................................................................12
TASK 3..........................................................................................................................................12
P4/D3 Business plan for growth with financial information and strategic objectives.........12
M3 Development of a suitable and detailed business plan for growth.................................13
TASK 4..........................................................................................................................................14
P5 Assessment of exit or succession options for small business firm..................................14
M4 Compare and contrast succession or exit options for small business with suitable
recommendations..................................................................................................................14
D4 Critical evaluation for exit or succession options for small business with suitable course of
action, justified recommendations to assist in implementations..........................................15
CONCLUSION..............................................................................................................................15
REFRENCES.................................................................................................................................16
2

INTRODUCTION
Small business firms aim to expand their business operations and attain beneficial
position in their industry. Small business organisations need to complete various tasks such as
identification of appropriate growth and exit options so that business objectives are attained in a
timely manner. Skin Elixir is the small business firm selected for this report. Skin Elixir was
established in the year 2016 and is headquartered in Nottinghamshire, UK. The company
produces handmade, organic, vegan, non-toxic, synthetic free, pet friendly beauty and skincare
products which are suitable for every skin type. In addition to physical store, the company has an
online website to acquire online sale (Skin Elixir, 2021). The present report analyses
considerations for growth opportunities and evaluates specific growth options in relation to Skin
Elixir. Sources of funding available to business firms are evaluated with justification for
adoption of specific funding source in context of Skin Elixir. Detailed business plan for growth
in case of Skin Elixir is provided in this report. Exit options for small business firms are
evaluated in this report with justified recommendations for Skin Elixir.
MAIN BODY
TASK 1
P1 Analysis of main considerations for growth opportunities evaluation and justification in
organisational context
The primary consideration which helps a business firm effectively evaluate growth
opportunities is determining the competitive advantage gained with each growth option available
(Bock and George, 2017). Competitive advantage need to be the foundation of growth
opportunity for Skin Elixir. The Human resources present in the company who play an important
role in production of nourishing toxin-free skincare products can be used by the company to gain
competitive advantage in their industry. In addition to this, Skin Elixir can also base their
capability in producing vegan skincare products for every skin type which provides the company
competitive advantage. This is because toxin-free vegan products are sustainable alternative to
mainstream skincare product range which are created with usage of non-vegan raw materials and
are not suitable for every skin type. The company can use the human resources and unique
capabilities as a foundation for future growth.
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Porter’s generic strategies
This framework needs to be considered in order to ensure effective evaluation of growth options
as it provides information about strategies which provide the company competitive advantage.
Each of the strategies in this framework have advantages and disadvantage. Effective growth
option can be selected for Skin Elixir by determining the most favourable strategy which will
assists in attainment of competitive advantage.
Cost leadership strategy
This strategy provides business firms competitive advantage by catering to price sensitive
consumers. In order to adopt this strategy the company needs to sell their products or services at
industry average prices while reducing costs of the firm (Bongomin, and et. al., 2017). Direct and
indirect operating costs of the company can be lowered by offering standardised products in the
market on large scale.
The primary advantage of this strategy is that it helps the company enhance market size
and profit margins quickly.
The main disadvantage of this strategy is that it hinders innovation which is crucial for
continuous improvement of the company. This occurs as finances to critical business operations
such as R&D are curtailed in favour of cost reduction.
Differentiation strategy
This strategy revolves around building unique aspects of the products or services offered
by the company in order to stand out from business rivals and gain competitive advantage. This
strategy is most effective in an over saturated market by targeting on consumers which are not
price sensitive. This strategy provides the company competitive advantage by using the unique
capabilities and resources of the company to solve unlooked needs of the consumers.
The primary advantage of this strategy is that adoption of this strategy leads to creation of
unique product portfolio which lacks substitute and helps the company secure beneficial market
position as the sole producer of the product.
In order to build intellectual property, technical expertise or talented workforce required
for adoption of differentiation strategy business firms have to invest large amount of money into
HR and R&D departments (Greeven and Wei, 2017). The huge expenditure associated with this
strategy is the main disadvantage of differentiation strategy.
Focus strategy
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This strategy revolves around targeting of niche market segment and developing a
strategy according to the market conditions and needs of the specific niche segment. Under the
cost focus strategy, business firms aim to gain cost advantage in the specific segment while for a
differentiation focus strategy enterprises aims at offering the target market consumer’s
differentiated products and services. Business firms gain competitive advantage in niche market
segment their industry with adoption of this strategy.
The main advantage of using focus strategy is that it helps enterprises build strong
relationship with the target consumer base in specific market (Kariv, Cisneros and Ibanescu,
2019).
The disadvantage associated with this strategy is that the strategy works on the specific
target market which might not work in other market segments and limits.
Partnership
This strategy involves partnering with commercial enterprise in which the relationship
between two enterprise is formalized by one or more business contracts. Constructing strong
partnerships with business firms to introduce new products or expand in different international
markets.
The main advantage of this strategy is that it increases the possibility of success in
entrepreneurial venture as the company utilises expertise and resources of experienced company.
The main disadvantage of this strategy is the lack of control of business firms which have
entered a partnership on daily activities of the establishment.
Franchising
This strategy focuses on building franchises of the company in different locations by
granting individuals right to sell intellectual property of the company by utilising the business
system of the firm. The individuals who gain the right to open a franchise have the origins owner
of the intellectual popery and business model who are called franchisors royalty as per the
franchising contract. Franchisors gain royalty and are able to expand their business by using this
strategy.
The main advantage of franchising is that it limits the risks and liability of the company
while increasing the growth of the organization.
The disadvantage of this strategy is lack of privacy and threat of damaged company
image because of the action of the franchisee owners.
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Introduction of new products
This strategy involves introduction of new product lines and venturing into newer
business sectors to increase consumer base. This strategy enables the company to interact with
larger consumer base and expand the offerings of the brand.
This strategy can be used by business firms in order to exploit technology advancement
and gain leading position in the industry which is an advantage.
The disadvantage of this strategy is that it involves high initial investment to develop new
product and build infrastructure to deliver the product effectively.
In context of the British Skincare enterprise Skin Elixir the firm needs to consider the
role of the strategy in providing competitive advantage to the company. The most suitable
strategy for the firm is differentiation strategy as it will help the company gain a loyal consumer
and build a distinguished brand identity base in an over-saturated market.
P2 Application of Ansoff’s growth Matrix
Ansoff’s growth matrix is a strategic planning framework which assists in devising
strategies for future growth. The four strategies present in the Ansoff’s growth matrix are
provided below in context of Skin Elixir:
 Market Penetration: This growth strategy focuses on development sale of current product
range to the existing consumer base of the company. The aim of this strategy is to
enhance the market share of the current product portfolio, gain dominant position in
existing market, increase product usage by current consumers and make the market
unsuitable for competitors (Khan and Naeem, 2018).
Advantage: It enables the business firms to increase their market share.
Disadvantage: This strategy can cause harm to the reputation of the company.
Elixir Skincare can adopt this strategy by constructing loyalty schemes and discount offers to
increase market share of the firm. This act will attract more consumer, enhance consumer loyalty
and decrease market suitability for competing firms contributing to the growth of the company.
 Market Development: As per this growth strategy, business firms sell their current
product portfolio in an unexplored market. This includes entering new geographical
location, expanding distribution channels such as addition of online sales channels or
building new product dimensions such as packaging.
Advantage: This consumer base of the company is increased with this strategy.
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Disadvantage: The adoption of this strategy requires high amount of investment.
Skin Elixir can utilise market development strategy by expanding their physical store chains and
increasing accessibility to non-European consumers. This can be attained by improving
international marketing strategy. The distribution channel used by Skin Elixir to deliver online
orders is by shipping through Royal Mail (Shipping & Delivery, 2021). The company needs to
build an acquire more effective domestic and international distribution channel in order to adopt
market development strategy and increase accessibility on global scale.
 Product Development: This growth strategy involves introduction of new products for the
current consumer base of the company. Modifications in existing products or
development of new product line which is suitable for the current consumer base are
required in order to adopt this growth strategy.
Advantage: The company is able to maintain relevancy for long time with the help of this
strategy.
Disadvantage: This growth strategy requires huge financial and labour resources to gain success.
Skin Elixir currently offers limited range of skincare products including body oils, jade rollers
and moisturisers. The firm needs to expand their skin care range by adding other products such
as skin cleansers, face serum, exfoliating s scrub and develop an extensive skincare range in
order to offer consumer complete skincare line and grow as a skincare brand.
 Diversification: Entering new markets to introduce new products is the central concept of
diversification strategy. This strategy helps business firms grow as the product portfolio
of the enterprise is enhanced and the company is able to establish themselves in a new
market (Nicholls-Nixon and et. al., 2021).
In order to adopt this growth strategy Skin Elixir needs to introduce new products in an
unexplored market.
Advantage: This strategy can be used to satisfy specific needs of international consumer base by
development of new product.
Disadvantage: The success of this strategy is dependent on precise research about the unexplored
market and consumer base selected for diversification along with research required for
development of new product.
M1 Discussion on progress options to depict understanding of competitive advantage
Porter's five forces analysis of Skin Elixir
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 Bargaining power of the suppliers: The ability of the suppliers to influence business firms
in case of Skin Elixir is low. The reason behind low bargaining power of suppliers is that
Skin Elixir utilises organic and vegan raw material to develop their products which have
hug market. The high number of suppliers offering high quality material reduce the
bargaining power of suppliers.
 Bargaining power of the consumer:The ability of consumers to influence price of the
products is moderate in case of Skin Elixir. This is because the lack of affordable
organic and vegan skincare products reduces price sensitivity of consumers. Home
remedies can be used by consumers which increases the bargaining power of consumers
from low to moderate.
 Threat of substitute: The threat of substitutes in case of Skin Elixir is moderate. This is
because consumers can easily shift to usin g home remedies instead of the skincare
products offered by the company. Home skincare remedies are effective substitute of
affordable organic skincare products because they are cheaper and can be made organic
by using organic ingredients.
 Threat of new entrants: This competitive force is high in context of Skin Elixir. This is
because establishment of skincare company which produces affordable organic and vegan
skincare products does not require high investment or research. Small business firms can
easily establish their brand and became a threat to the market share of Skin Elixir.
 Intensity of rivalry: Skin Elixir faces high level of rivalry. Presence of home remedy
substitutes and competition from small as well as international organisations increases the
level of competition in the industry.
D1 Critical evaluation of growth options and understanding associated risks and ways of risk
mitigation
There are different risks associated with options of growth strategy provided in the
Ansoff Matrix. These are explained below:
The risk associated with market penetration strategy is that if the products utilise high
financial resources for production, attempts to affect the quality of the product negatively or
result in unmet production costs which leads to loss of the organisation (Shala, Kutllovci and
Troni, 2018). On the other hand this strategy provides various benefits such as increase in market
share of the existing products of the company with the help of marketing activities such as
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personal selling and loyalty schemes (Rexhepi and et. al., 2017). Skin Elixir can use this strategy
by developing loyalty scheme for their consumers, offering competitive pricing for products and
personalising promotional offers for each consumers. This will help the company attract and
retain large number of consumer and become preferable option for large amount of market share
over competitors.
The organic vegan skincare products produced by Skin Elixir require high investment to
obtain cruelty free, organic and vegan raw material. This introduces the risk associated with
market penetration strategy. In order to mitigate this risk, the company needs to ensure that costs
are reduced to level which maintains quality of the products do unmet production costs not
emerge.
Market development focuses on offering current product line to new market. Skin
Elixir can utilise this strategy by expanding their international presence. This growth strategy
provides the company benefits by increasing global recognition and income sources of the firm.
The main risk associated with market development strategy is the unknown nature of the
unexplored market. Business firms rely on market research to gain success in international
markets which does not provide desired results always. This risk can be mitigated by Skin Elixir
by collaborating with local organisations and forming strategic alliance to enter new market.
Product development focuses on creation of new product which is presented in the
existing market of the company. This strategy helps the company stay relevant and change their
offerings as per the changing preferences of the consumer. Skin Elixir can utilise this strategy by
expanding their skincare product range. The risk of changing consumer preferences is associated
with product development growth strategy. The product developed by the company to implement
this strategy can fail to attract consumers and risk loss of high investment required for creation of
new product (Sherman, 2017). Skin Elixir needs to utilise after extensive research and take
feedback on sample product before finalising specific idea for production in order to minimise
risk of failure.
Under the diversification strategy business firms introduce new product in a new market
(Sassen, 2017). This strategy is advantageous for Skin Elixir as it establishes their brand in new
markets and helping them develop products which cater to the needs of the market segment to
ensure success. Diversification is the most risky growth strategy present in Ansoff Matrix as low
knowledge about new market and reaction of risk of changing consumer preferences affect
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success of this strategy. In order to mitigate this risk, Skin Elixir needs to ensure that the product
offered in the market in according to the needs of the consumer and keep investment minimum.
TASK 2
P3 Assessment of potential funding sources available to business
It is important for business firms to gain suitable financing source for future growth so
that the progress plan is not hindered by the drawbacks associated with the funding source. The
primary funding sources available to small business enterprises are mentioned below with
drawbacks and benefits:
 Loan from financial institutions: This is one of the most commonly accessed funding
source by small business organisations as it is provided by financial institutions. This
source of funding is given by the bank to an enterprise which is repaid with interests
typically in monthly instalments. Loans gained through financial institutions can be short-
terms and long-term depending on the needs of the enterprise (Sung an et. al., 2017).
The main benefits of this funding source are that it can be gained in a straightforward manner
and is temporary. This main drawback of selection of bank loan as funding source is that in order
to qualify for a bank loan business enterprises are required to have documentation which is
different for every banking institution. This increases the difficulty with securing bank loan of
the desired amount.
 Crowd funding: This process of funding is completed by gaining small capital amounts
from large number of people in order to reach a particular target sum of money. This type
of funding is usually completed with help social media platforms as it enables business
enterprises to communicate their growth plan and funding requirements with large
number of people easily and cost-effectively.
Benefits gained from the usage of this source of funding include is that it does not require
successful financial and strong plan for growth can be leveraged to secure funding from people.
The main drawback of using crowd funding as financial source is that crowd funding large sums
of money is time taking and does not guarantee securement of desired amount in a timely which
might increase the risk of the company. Manner.
 Peer to peer lending: As per this funding process, financial investment is gained from
lenders as business firms and borrowers are connected through online platforms.
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The primary advantage of peer to peer learning is that it has lower interest rates than any
traditional source of income which enables business firms to utilise profits gained from the
growth instead of using the money to pay of loan interest (Thakur and et. al., 2018). Peer to peer
lending has drawback, this includes the fees paid to the online platforms for the connecting with
a suitable borrower which can be time taking. This means that small business enterprises have to
pay certain amount without surety of connecting with suitable lender.
 Angel financing: Under this funding model small business firms give investors some
amount of equity in their company in exchange for financial funding. Investors which act
as lenders in this funding option are highly valued individuals termed as angel investors.
Angel investment provides small business firms advantage which includes no-debt financing to
the business firm. The main drawback related to this funding source includes loss of control over
daily decision making of the company as the angel investor gains some equity in the company.
 Venture capitalist financing: Venture capitalist financing is type of funding source which
is usually accessible to start-up business firms that offer high growth potential but also
have high risk associated. This type of financing is managed by a venture capitalist fund
and the money invested in small business firm is from institutions or high net worth
individuals (Umar, Sasongko and Aguzman, 2018).
The primary advantage gained by small business enterprises which seek this type of
funding source is that gaining venture capitalist funding enables business firms to networking
opportunities which can advance further growth of the company.
The main disadvantage associated with a venture capitalist business firm is that the
process of seeking venture capitalist financing is time taking process.
 Overdraft: This is one of the most effective source of funding for small business
enterprise. Overdraft is a banking facility which enables business firms to utilise more
money than the amount currently present in the bank account of the firm. The amunt of
overdraft which cane be used by a company increases and decreases on the basis of
money spent and deposited in the bank account.
The primary advantage of this funding source is that it provides small business firms to
gain short term finance for their daily business requirements easily.
The amount of money which can be accessed through overdraft is lower the seeking
financial loan is the disadvantage of this funding source.
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 Trade Credit: This funding source enables business firms to purchase good and services
on account and eliminating the requirement of immediate payment. Small business
organisations can acquire raw material and transportation services without immediate
cash with the help of this funding source.
The main advantage of this funding source is that it mitigates risk from suppliers and
contributes to business progress.
The primary disadvantage of the trade credit is loss of goodwill.
 Invoice factoring: Thais source involves quick attainment of funds by unlocking funds
from pending invoices to cover operational expenses and exploiting growth opportunities.
Business firms sell their accounts receivables to invoice factoring company in return of
cash.
Securing funding from invoice factoring is advantageous for the company because it is
not time taking and provides financial flexibility to the company.
This funding source is disadvantageous as it limits the control over the company by
giving certain invoices to other invoice factoring firm.
M2 Evaluation of sources of funding with justification of appropriate sources for funding in
organisational context
Angel funding is a type of financial source which is involves highly valued individuals
giving business firms monetary resources in return for equity in the company.
Merits:
There is low risk involves in this type of funding as angel investors are not repaid
financial resources unlike other conventional funding source. This advantage enables business
firms to freely utilise the funding and take risks with attained finances to gain huge return.
Financial success gained from this funding source is only for the company and is not divided
between other parties.
The high range of funding provided by angel investors is a merit of this funding source
which is not present in venture capitalist funding (Zhou and Wen, 2020). The diverse funding
range enables small business firms to seek funding fro any regardless of the size, scale or risk
associated with the requirement. Small business organisations can ensure accomplishment of all
their needs with the help of this funding source.
Demerits:
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This funding source lacks transparency as there are no regulations related to this funding
source. This disadvantage of angel investment increase the possibility of fraud against the
company which can lead to financial ruin of the organization. In addition to this lack of
regulations can lead to the angel investor seeking control of the company and facing low legal
repercussions because of lack of regulations.
The lack of structural support provided by angel investors in comparison to venture
cartophilists. Angle investors offer financial assistance to small business firs but are not able to
guide business firms in their entrepreneurial journey which increases the risk of failure
(Bongomin, and et. al., 2017). This is because small business firms are not able to handle large
sums of finance without guidance and make risky decisions which leads to closure of the
company.
Venture capitalist financing is popular funding option which is provided by highly valued
individual or institutions to start-up firms with high growth potential.
Merit:
The venture capitalist firm provides small enterprises business acumen to ensure growth
of the company. This is highly advantageous as ventures capitalists are able to direct the small
business enterprise and provide knowledge gained from experience which helps such firms avoid
risky mistakes. In addition to this knowledge provided by venture capitalists ensures swift
growth of thr company.
The venture capitalist firm are easy to locate compared to angel investors. In order to gain
quick investment small business firms can easily pitch their business model to a venture
capitalist and gain decision from the venture capitalists institutions quickly in comparison to
angel investment. It is difficult to find an angel investor who suits the need of the company. On
the other hand venture capitalists are able to fulfil every requirement of the company and can be
communicated easily.
Demerit:
Venture capitalist financing seeks to redeem investment after a short period of time of 3-5
years which makes this funding source unsuitable for business firm which have long-term plans
for success. Small business firms which are not able to attain high profitability after few years of
securing investment from venture capitalist institutions have to be returned as thee investors seek
to gain profits from their investment. This decreases the appropriateness of venture capitalist
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investment for business firms operating in competitive industry and require long time before
making high profitability.
Venture capitalist firms often undervalue a company (Wang and Warn, 2019). This
decreases the investment gained by the company and undervalues growth potential of the
business firm. Small business firms are not able to gain adequate amount of investment from
their growth. Small business firms have to underfund various operations due to this practice of
undervaluation by venture capitalist investors. This can lead to failure of the company.
Bank Loans
This simplistic funding source involves seeking loans from financial institutions. Small
business firms apply for loans which are eligible for start-up businesses.
Merit:
Small business firms have control over their firm after seeking this type of funding.
Loans provided by banking institutions enable small business firms to maintain ownership of
their business firms and gain finance in exchange of regularly paid interest. After complete
payment of interest business firms maintain full ownership of their company without any
interruptions form the investors on control of the company. This gives the company to make
business decisions freely without involvement of outside parties in daily business decision
making of the company.
Small business firms can seek loans with low interest rates if they select this funding
source. Low interest rate elbow small business firms to invest in daily business operations and
activities which ensure attainment of business objectives. In addition to this low interest rates
also helps business firms effectively construct financial plan as banks take small amount of
interest periodically. After giving the interest back completely
Demerit:
Banking institutions charge penalty upon missing a loan payment. This penalty varies
from different types of loans. In case of small business firms who seek finance from this funding
source, the inability to fulfil loan payment before the deadline leads to banks chagrining
penalties. This can create huge setback for small business firms. If economic downturn or any
other external factor affects the profitability of the company and the firm is not able to timely
pay the interest penalty charged by the Hotel can financially burden the company. This can affect
future growth and survivor of the firm.
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The process of seeking bank loans is complicated. Many small business firs are not able
to gain a bank loan which is suitable for their company because securing a bank loan requires
documentation and is time taking process. Small business firms have to go through complicated
and time taking process without guarantee of securing a loan of their choice. This is huge
disadvantage of taking loans from banking institutions as small business firms require immediate
finance during difficult conditions.
Crowd funding involves raising large sums of money in small amount from large number of
people.
Merit:
This type of funding also acts as marketing tactic promoting success of the business in
attracting investors. Small business firms can promote the success of their company by
advertising successful crowd funding. Crowd funding can be used as a method of promotion
because common people provide funds to the business firms and the ability to persuade large
number of people into giving funds depicts that the product or service offered by the company
can attract consumers. This type of publicity can advertise the firm to other investors and firms
to acquire the company on the path to success.
This type of funding provided business firms opportunity to test their growth idea
(Trigkas and et. al., 2020). Small business firms can test their new product with the help of
crowd funding. This can be completed by creating a pitch for the new product to the public for
crowd funding. This will help the company as quick crowd funding will suggest the success of
the product while low crowd funding will helps the company understand weakness of the product
or service offered by the company by taking feedback from the consumers.
Demerit:
Crowd funding may not provide business firms target amount of investment. Crowd
funding is time taking process and does not guarantee that business firms are able to reach their
target funding amounts even after waiting for a long time. In addition to this most efforts to
attract people for crowd funding are ignored and business firms are not able to secure finances in
time. This can lead to loss of opportunity of small business firms as the idea which initially
offered huge scope of success is exploited by rival business firms because of time taking nature
of crowd funding.
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Gaining interest of large number of people to invest in the company is difficult process.
This is a primary disadvantage of crowd funding as attracting large number of provide funding
to a small business firms requires financial investment in promoting the product or service to
large number of people. Business firms are not able to gain attention of large number of people
without promotion of the brand which requires initial investment. This makes crowd funding
unsuitable funding source for micro business firms with no money to invest in promotions (Schu,
2017).
In case of Skin Elixir the most suitable funding source is are crowd funding and venture
capitalist funding. This is because these investment provide company large amount of money to
expand internationally.
D2 Critical evaluation of funding sources with justified argument for adoption of specific source
Bank loan have advantage of flexible financing with disadvantage of high interest rate.
Crowd funding have advantage of promoting the company with disadvantage of past failures
affecting ability of the firm to collect crowd funding. The main disadvantage of peer to peer
funding is high risk with an advantage of connecting with suitable lenders (Wang, 2020). Angel
investors provide advantage of low risks but have disadvantage of reduced transparency.
Venture capitalist firms have an advantage of business support with disadvantage of complicated
process. Skin Elixir needs to gain investment from venture capitalist as it will to only provide
financial sources to the company but also but also help the company innovate and expand.
TASK 3
P4/D3 Business plan for growth with financial information and strategic objectives
Mission: To provide range of skincare experiences which value diversity and
sustainability.
Vision; To become market leader in British skincare industry and successfully expand to
international markets.
Business Objectives:
 To maintain sustainability while building product range.
 To offer sustainable and affordable skincare alternative to consumers. To grow on an international scale.
Business Case for Skin Elixir
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Executive Summary: Skin Elixir is UK based skincare brand which has gained loyal consumer
base in short time period due to vegan skincare solutions offered by company for all kin types.
Three options are considered to globally expand with the most suitable option of
Reasons
 To gain success in domestic market
 To expand on an international scale To secure competitive position in British skincare industry
Business Options
1. The first business option for the company is to form strategic alliance with European
healthcare company to enter international markets with expert guidance and build
product range as per the needs of international markets. This is low risk option due to
collaboration with successful business.
2. The second option is to enhance product portfolio for domestic consumer base and
improve international marketing efforts to build online sales.
3. The third option is to increase aggressive marketing efforts for current consumer base
and enhance market share in order to gain leading position in domestic markets.
Expected benefits: The primary benefit gained from these options is competitive advantage of
the firm and increase business recognition with profitability.
Timescale: The completion of the project requires 2-3 years
Cost: The overall cost of the project is estimated between 10 to 12 million GBP.
Investment appraisal
1st year 2nd year 3rd year
Project costs -£10 million - -
Operational costs - -£6 million -£6 million
Benefits - -£40 million --£40 million
Net Benefits -£10 million +£32 million +£32 million
M3 Development of a suitable and detailed business plan for growth
Mission: To provide range of skincare experiences which value diversity and
sustainability.
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Vision; To become market leader in British skincare industry and successfully expand to
international markets.
Business Objectives:
 To maintain sustainability while building product range.
 To offer sustainable and affordable skincare alternative to consumers.
 To grow on an international scale.
Strategic Options
 The first business option for the company is to form strategic alliance with European
healthcare company to enter international markets with expert guidance and build product
range as per the needs of international markets. This is low risk option due to
collaboration with successful business.
 The second option is to enhance product portfolio for domestic consumer base and
improve international marketing efforts to build online sales.
 The third option is to increase aggressive marketing efforts for current consumer base and
enhance market share in order to gain leading position in domestic markets.
TASK 4
P5 Assessment of exit or succession options for small business firm
The most popular exits strategy of business firms is selling the business to other firms.
The advantage of this strategy is that it helps business firms is that enterprise can be sold at high
value to attain profits. The disadvantage is difficulty with finding suitable buyers.
Merger with other business firm is another exit strategy which involves forming a merger
with other business to save company from failing (Bock and George, 2017). The primary
advantage is the support gained by merging with successful business firms. Business mergers
often lead to job cuts which is a drawback of this exits strategy.
Liquidation is another exit strategy which involves distributing the assets of the company
to claimants and ending the organisation. The advantage of this exit strategy is that it enables the
firm to write of outstanding debt and avoid legal action against the company. The disadvantage
of this strategy is that owner of the company becomes personally liable for company debts.
Realising IPO is another exit strategy which involves offering shares of a private firm to
public in a stock insurance. The advantage of this strategy is that business firms gain funds for
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expansion of the company while disadvantage is that account marketing and legas costs need to
be fulfilled by the firm.
M4 Compare and contrast succession or exit options for small business with suitable
recommendations
Selling
Merits:
 High profitability can be attained. Business firms can attain high profits by selling the
firm as an exit strategy. This exit strategy helps the company ensure that initial
investment in the small business is regained after selling the company for profit and not
suffering huge loss in the future. This money can be used to invest in more profitable
idea.
 Enables entrepreneurs to leave business which lacks potential for growth. Entrepreneurs
can sell the company which does not have high growth potential and utilise that money to
invest in new and exploitative business prospects. In addition to this, business which are
in saturated industry can be sold by entrepreneurs to enter new markets which have
negligible competition and leading market position can be easily attained.
Demerits:
 Difficulty in finding suitable buyers. This strategy requires presence of buyer which
provides appropriate amount for the business firm which can be very difficult to fulfil.
Business firms with low growth potential or are present in a saturated industry are usually
undervalued by buyers. This reduces the possibility that small business can find a buyer
to make profits after utilising this strategy.
Merger
Merits:
 The company is able to collaborate with expert firm and gain new resources and
knowledge. One of the main advantages of a merger is that business firms are able to gain
the experience and resources of the other firms. This can helps the company reduce costs
and provide more effective services to the consumers to increase profitability and secure
beneficial position in the industry.
 This helps the company gain growth potential (Bongomin, and et. al., 2017). Business
firms are able to attain growth with the help of this exit strategy because Merger with
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business firms from international markets or other industries enables the firm to expand
their product portfolio or reach a new market with less risk in comparison to working
towards these goals as a singular company.
Demerits:
 Merger can lead to resistance from current employees. Business mergers drive
transformational companywide change which leads to resistance from employees.
Business firms have to handle this resistance in order to ensure smooth functioning of the
company and gain desired outcome from the merger. In ability to manage change can
cause dramatic impact on the progress and survival of the firm.
 It is difficult to change company culture after the merger to adjust with culture of other
firms. In order to successfully implement this business strategy organisations have to find
a business firm which is suitable for their workplace culture. After this ensuring that the
workplace culture smoothly collaborates with the culture of other firm is a challenge in
this exit option.
Exit strategy Differences Similarities
Merger and selling Merger helps the company
grow while selling the
company limits the growth of
the firm.
Both merger and selling
bring transformational
change to a firm.
IPO and liquidation IPO enables the company to
access funds while
liquidation divides assets to
claimants.
A lot if time and effort is
given t management in both
cases.
D4 Critical evaluation for exit or succession options for small business with suitable course of
action, justified recommendations to assist in implementations
The most suitable exits strategy for Skin Elixir is to merge with a successful Skincare
company. This will provide the company knowledge in terms of industry experience and
advanced resources to expand skincare line to other areas of beauty industry. The main
disadvantage associated with this exit strategy is rise of conflict due to company cultural
differences (Greeven and Wei, 2017).. In order to successfully implement this strategy Skin
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Elixir needs to merge with successful business firm which has similar business values as Skin
Elixir to ensure smooth transition and reduce conflicts after merger.
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CONCLUSION
From the above report it is concluded that competitive advantage, capabilities
development off products or services as basis of growth are some of the consideration areas
which need to be considered by SME’s during evaluation of growth opportunities. Application of
Ansoff’s matric provides business firms growth options which have disadvantages and
advantages. It is important for business firms to analyse risk associated with progress options and
the risk mitigation in order to select the most suitable growth option. There are various funding
sources available to small business firms such bank loans and crowd funding. Evaluation of
funding sources is essential so that the finance required for business progress is gained form
sources which facilitate growth. Effective business plan for growth includes various elements
such as cost, business case and other elements. Determining suitable exit option helps business
firms abandon business enterprise in case of failure. There are various exit options available to
small business firms which have different benefits and drawbacks.
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Online
Skin Elixir, 2021. [Online] Available through
<https://www.neighbourfood.co.uk/producers/skin--elixir/95>
Shipping & Delivery, 2021. [Online] Available through < https://skinelixir.co.uk/pages/shipping-
delivery>
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