Strategic Growth Planning: Funding, and Exit Options for Kaffeine

This report provides a comprehensive analysis of growth planning for SMEs, focusing on Kaffeine, an independent coffee shop in London. It covers key considerations for SMEs when evaluating growth opportunities, including political, economic, social, technological, legal, and environmental factors, as well as Porter's generic strategies and the BCG matrix. The report evaluates growth opportunities using the Ansoff Matrix, exploring market penetration, market development, product development, and diversification strategies. It also examines potential sources of funding available to businesses, such as venture capital, angel investors, and loans, outlining the benefits and drawbacks of each. Furthermore, the report discusses the importance of a business plan with financial information and strategic objectives and explores exit and succession options for small enterprises, considering the risks and rewards involved with growth. Desklib provides past papers and solved assignments for students.

Planning for growth

Contents
INTRODUCTION.............................................................................................................................3
MAIN BODY....................................................................................................................................3
key consideration SMEs should consider when evaluating growth opportunities........................3
Evaluate the opportunities for growth Ansoff Matrix..................................................................5
Potential sources of funding available to business and benefits and drawbacks of each
sources...........................................................................................................................................6
Business plan with financial information and strategic objectives................................................8
Exit and Succession option for the small enterprise....................................................................10
CONCLUSION................................................................................................................................12
REFERENCES................................................................................................................................13

INTRODUCTION
Planning for growth is a business planning which focus on generate revenue. It allows the
company to assess that how the organisation is performing and identifying the opportunity's area
which can help in expand the business. It set clear goals and allows better management of cash
flows by providing financial projections. It also helps the business in set their goals, and making
clear strategies to accomplish their objectives. It allows the organisation to allocate their resources
towards a centred efforts to adopt new changes in the industry, which are driven by their
competitors an digital disruption. Planning for growth is an essential step to grow the business
successfully. It include marketing aims and objectives, operational information and financial
information to achieve the business growth. In this report the company chosen is Kaffeine, it is an
independent coffee shop situated in London and has two location there one is Oxford Circus and
other is Tottenham Court Road (Caesar, Cahoon and Fei, 2020). In this report it include how the
small and medium business develop, techniques of identifying opportunities for growth, business
plans and understanding of SMEs in term of exist or succession with risk vs rewards involved
with the growth.
MAIN BODY
key consideration SMEs should consider when evaluating growth opportunities
Growth of a business is maintained only if the organisation can maintain its competitive
advantage and innovation. Competitive advantage is a foundation for growth as it helps in staying
ahead of the competitors. The company can make use of its resources so that it can take
competitive advantage in the market. The resources and capabilities of organization helps it to
take edge over others which makes the company a success. There are various frameworks which
can be used by Kaffeine when evaluating the growth opportunities which includes the following-
 Political factor- This factor affects the organisation by policies, trade tariffs and fiscal
policies etc. There is government interference in the organisation which can be a hinder in
the business. Kaffeine enjoy the political stability in UK and government also performing
well by maintaining the rule of law and effectiveness of government policies (Cao and et.
al., 2020).
 Economic- This factor affects the company for a long time and it include foreign
exchange, inflation rate and economic growth rate etc. it determines the performance of an

economy, that have direct impact on the business. In context of Kaffeine, UK has s strong
economic position with high GDP due to this the organisation attract high income peoples.
 Social- This factor of the market affect the firm on the basis of culture, traditions and
health consciousness etc. These are important for the marketers as they target certain
customers. In relation to Kaffeine, in UK there is high standard of living and the changing
trend affect it so it should focus on changing trends of lifestyles and working conditions.
 Technological- In this innovation in technology impact the organisation favourably or
unfavourably by research and development, automation and the awareness of technology
in the market. Kaffiene uses new technology and machines with innovation, it has great
opportunities due to invention and development of technology in UK.
 Legal- In this factor it have internal or external sides, there are certain laws which affect
the business environment in a country like consumer laws, labour laws etc. Kaffeine also
ensure that the labour laws are effectively implemented and it also should follow legal
requirement otherwise it has to face legal challenges (Dittmer, 2021).
 Environmental- This factor is crucial for certain industries and it include the weather,
change in climate etc. It concerns the ecological impacts on the organisation. In relation to
Kaffeine, it uses such types of equipment which are not harmful for the environment and it
should focus more on using sustainable products.
Porters generic strategy
In this, there are three approaches which can be applied to the products and services in all
industries. It is a way of gaining the competitive advantages and helps in to face the competition.
 Cost leadership- In this the organisation charge lower price to increase sales and
company's profile. This strategy is very effective in gaining market share as well as
customer’s attention. Kaffeine must use economic scale, preferential access to raw
material and many other factors. To deploy this strategy, the organisation has to produce
the product with good quality and a price which is competitive than the other competitors.
 Differentiation- In this it develops a unique and effective product to attract the customers
and create a brand image by ensuring quality. They promote the durability and general
utility of the products to increase the competitive advantage. Kaffeine needs to target
market and fulfil their needs, as this will help the company to make a unique position on it
and allows it to compete in the market with something other than lower price.

 Focus- Both of the cost leadership and differentiation are all about appealing to the widest
customer base possible. It aligns a company's product and marketing with its target
customers. And the organisation is very clear with its mission and vision. Kaffiene must
select a proper market segment or a group of market in the market to identify a niche-
market and introduce a different product in the market. It will build a strong relationship
with each target market.
BCG matrix- It is a planning tool which shows the company's product and its services in a
graphic representation. It is helpful in long- term strategic planing and make enable the business to
decide where to invest, to develop the products. Here, in context of Kaffeine there are the
elements of BCG matrix given below:
 Stars- These products have business units with dominant market share in a fast growing
industry. It require huge investment to retain their position to maintain its lead over
competitive products. Kaffeine's food products has surely been the star for the cafe. Its
double food business is going full experimenting with its food offering and options.
 Cash cows- It represent the business unit have weak market share in slow growing
industry. It require a little investment to maintain their leads. Kaffeine's coffee business is
cash cows for it, their coffee business has grown leaps and bound all these years, it help
the organisation to post strong financial numbers.
 Question mark- These product have low market share in a high growth industry, because
it is very new product in the market to have potential of becoming stars, it require a huge
investment (Dolzhenkova and Iurieva, 2020, January). Kaffeine's mugs provide them a
great amount of profit with the seasonal trends and have good profit quality.
 Dog- It represent business having weak market shares in low-growth markets. It does not
require any investment these products makes a loss or very low profit. Kaffeine's
packaged coffee beans do not generate much revenue for the organisation as customers
tend to go to there for good and quick service for food and coffee.
Evaluate the opportunities for growth Ansoff Matrix
Ansoff matrix helps in identifying the opportunities to grow an organisation through
developing a new product and services or enter into a new market. There are four strategies
described below:

 Market penetration- This strategy is about business as usual in this it increase the market
share of the existing product and secure dominance of the growth markets. If an
organisation has high market penetration then they are considered a market leader in that
industry and they have a marketing advantage of to reach more customers. It helps
Kaffeine in increasing their market share and revenue. The organisation implement this
strategy by different ways like reduction in price, increase the promotion, offering
discounts and other etc.
 Market development- It is a growth strategy in which a company target and try to find
new potential buyers or market for it existing products and services. It include a market
research where an organisation carry out segmentation analysis of the existing market on
the basis of new geographical areas, demographic segments and new customers needs etc.
Kaffeine increase the sales of their products and services by explore the new market or
target new customers base (Falcone, 2020). This can be done by adopting new distribution
channels and new product dimensions etc.
 Product development- In this a business bring a new product from being a concept
through to reaching the market and it require to the business to develop modified products
in existing market. The understanding of customers needs and wants and the nature of the
market is very essential to launch a new product. It include the product innovation, from
the thinking of a concept to delivering the product to customers. Kaffeine adopt this
strategy and expand the product portfolio by introduce a new product in the existing
market and create awareness among the people to promote the new product.
 Diversification- It is a risky strategy because in this an organisation move into a new
market with a new product without any experience and offers using the skills in the
businesses. It require a lot of analysis work to limit the impact of change in the market. It
increase the profit and variety or products in the organisation. If Kaffeine adopt this
scheme and it gets hit, then it will bring greater benefits for the organisation. The company
should diversify itself into the food industry, it will help the organisation to tap in food
market.

Potential sources of funding available to business and benefits and drawbacks of each sources
Finance is very essential for the operation and development of any business, it is very crucial for
the organisation to manage their financial resource properly. For the small business there are 3
sources given below:
 Venture capital- It is a private equity investor that provide capital to the start-up and
small business with long term growth potential and helps the new entrepreneurs gather
business expertise in the exchange for ownership stake ( Granato and et. al., 2020).
Advantages Disadvantage
It invest large amount of money in the business.
And provide expertise to help in growing the
business.
It is very lengthy and complicated process and
take a long time to decide that they want to
undertake investment or not.
Help in building network and connections in
business community which can be helpful for
become successful.
The owner of the venture capital may influence
the decision making of the business to protect
their investment. So there is possibility of
different opinion between the start-up founder
and the venture capitalist.
 Angel investors- They are primary sources of raising funds with high-net-worth
individuals who gave funds to the business to help start-up take their first step in the
exchange of equity in the company.
Advantages Disadvantage
They are experienced in the industry and can
provide helpful guidance
They take an active role in the decision making
and take some degree of control in the company
Due diligence process of angel investor is very
quite rather than other investors and complete
the process within 30 days.
They can exist as soon as they have got their
return on investment.
 Loans- It is common form of finance and provided by the banks to the long term
businesses project like development or expansion of the business. To get a loan

organisation need to prove the bank of the viability of their project and ability to pay back
the loan, this loan can be substitute for other source of finance (Yadav and Sagar, 2021).
Advantages Disadvantage
No need to paid back for a fixed time period, it
offer a range of payback option.
The borrowed amount has to repaid on a fixed
time period.
Business do not have to share the equity in the
organisation.
It is time consuming process because of large
amount of documentation.
From the above discussion it is clear that in the context of Kaffeine bank loans are the best
used source of funding. It offer many different benefits, whether it is customized repayment or
personalized services. Bank loan does not require any type of equity in the business and there is
no impact on the ownership of businesses (Helm, 2020). It provide funding on low interest rate
and fund can be used for any purpose. Overall it is one of the first a very good and source of
funding for the small businesses.
Business plan with financial information and strategic objectives
Summary
kaffeine is an owned and espresso bar with a simple interior design situated in london with two
location. It offer a variety of Cappuccino, Coffee Latte and also offer various food variety like
baked food, sandwich and salads. This cafe is going to develop its market to show the opportunity
of growth for its market. This analysis will include mission, vision, objectives, Ansoff model,
marketing strategy and source of funding etc. are given below:
Mission- To offer the customers best service at a price that is fair for customers as well as
business.
Vision- Provide a comfortable environment where the customers can receive quality service and
enjoy at a reasonable price.
Objectives- Launch same product in new market to gain market share.
Create competitive advantage and generate profitable revenue.
It allows the business to grow with expanding base of the customers.
Incraese sales of their product by providing new variety to its customers.

Strategic option of growth- Ansoff model
In this business plan the market development strategic option is chosen by the company. In this
the business is going to expand their market geographically with the current product (Symes,
Cardwell and Phillipson, 2020). They are opening one more branch of their cafe in the another
city Manchester in UK to increase their market share and create awareness about their product in
new market place. It helps them to find new customers and potential buyers for their existing
product and services.
Marketing strategy- 7Ps
 Product- It is something which can be delivered to satisfy the customers, kaffeine offer
the products like coffee, sandwich, food etc.
 Price- It is the value of the product or services, kaffeine use a premium priced policy to
maintain the competition.
 Place- It is a location where the stores are operating, kaffeine provide the offline service as
well as online service (Kotler, Kartajaya and Setiawan, 2021).
 Promotion- It is the promotional activities to promote the products and services, kaffeine
use social media and news paper for their advertisement.
 People- Excellent customer service increase the customer base by referrals so ,everyone
who represent the company's brand should be fully trained. Kaffiene's employees are well -
trained and handle the issue s very well.
 Process- In this the product delivering service should be with maximum efficiency and
reliability, online shopping is an essential part of it. Kaffiene's delivery services is very
efficient and convenient.
 Physical evidence- These are incorporate aspects that proves the company's brand exist
and that a purchase took place. Kaffeien provide their service offline modes at their cafe or
restaurants.
Source of funds- For this business plan Kaffeine will raise funds from bank loan, funding from
bank would involve the usual process of sharing the business plan and valuation details with the
project report, on this basis the loan is sanctioned. Mostly, all banks provide SME finance through
various programs.

Financial information- It gives the data of all the transaction related to the funds of business. It
helps in the evaluation of the liquidity and solvency of the company. The information is given by
the help of the financial statement which are
1. Balance Sheet
2 Income Statement
3. Cash flow Statement
The above statements gives a wider set of information about the shareholder's, investor's. It tell
about the efficient working of the firm and showcase the company's performance (Venturelli and
et. al., 2021).
Exit and Succession option for the small enterprise
Exit strategy is a contingency plan to liquidate or dispose of a business due to many reason to
which an investor or business could execute an exit strategy, there are some example are given
below:
 Liquidation- It is a process of bringing a company to an end , when an organisation is no
longer able to trade due to its debts then liquidation is a very useful way of shut down a
limited company.
Benefits- It remove the responsibilities from the directors and business owners to deal with
creditors (Lee and Raschke, 2020).
It takes matters at the end of an insolvent company and enable the business to bring an end of
legal action.

Drawbacks- They lost trading licences, business reputation and sold off other valuable assets.
Business will no longer be able to trade and restricted to using the same company name in future.
 Selling business to employees- This process be accomplishing by setting up an employee
stock option plan, in this a stock equity plan that lets employees buy the ownership in the
business (Xu and et. al., 2020).
Benefits- It is very simple way there is no need for extensive financial due diligence.
It motivate the employees for hard work and more productivity.
Drawbacks- There is less involvement of owner and it will reduce the their ownership in the
organisation.
Employees enjoy the reputation of business. which is made by the owner and cand damage image
of the company.
 Winding up- In simple term it means that closing of the venture voluntary either by the
members themselves or by the obligation of the court
Benefits- A company has the opportunity to choose liquidator according to them.
If directors of debtor company want to continue trading ten debtor attempting to settle the debt
owed.
Drawbacks- There is no guaranteed payment of the debt or receive a small portion.
It is difficult to assess the financial positions of the debtors.
 Selling business to employees is best exist strategy for the Kaffeine, it allows to remain
involved in business and generate liquidity for them. Their involvement provide the
opportunity to maintain the business by serving as advisor to help the buyers ease the
transaction to new ownership.
Succession strategy is for identifying and developing future leaders at the company on the top
and for major roles at all levels, there are some example of this strategy are given below:

 Licensing- In this a business give permission to the other company to use his brand name
and manufacture its products (Matencio and et. al., 2020).
Benefits- It offer the freedom to develop a unique marketing approach by attract the buyers.
If the license allows for intellectual property to cross border requirement, it become easy to enter
in foreign market.
Drawbacks- There is no guarantee of revenue and generate cash by the licensing agreement.
The mismanaged relationship between licensor and licensing could damage the reputation of
both parties.
 Merger and Acquisition- In this two separate entities combined and create a new joint
organisation, there is a consolidation of company is through various types of financial
transactions.
Benefits- It create multiple growth opportunities such as expanding a new market for their
business.
This strategy diversify the risk accordingly because of large number of revenue streams and this
minimize the financial impact.
Drawbacks- It eliminate the underperforming employees and this may result in employees losing
their jobs.
It increase the price of the products by reducing the competition and gaining large market shares.
 Franchising- In this the owner of a business grants right to an individual or franchisee to
run a business with using the same product of franchisor's business system and also give
right to use trademark and brand etc.
Benefits- It allows to promote multi-unit expansion of the business.
It provide the benefit of fees and royalties paid by the franchisees.
Drawbacks- It require the investment of capital and time (Navarrete Escobedo, 2020).
The franchisees own and operate the business in his way and franchisor lost his control.
Merger and Acquisition is a very good option for the succession of Kaffeine, it bring the
economic of scale to their merged business. It will increase the market share with reducing risk.
In this the the entrepreneur's equality will be taken by the acquirer with tax benefits.