Growth Opportunities and Exit Strategies for UK Coffee Shop

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Investing in the Future and Developing
an Exit Plan
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Table of Contents
Introduction......................................................................................................................................3
PART 1 - Investing in the Future....................................................................................................4
LO1 Analyse the key considerations SMEs should consider when evaluating growth
opportunities................................................................................................................................4
LO2 Assess the various methods through which organisations access funding and when to use
different types of funding............................................................................................................8
LO3 Develop a business plan (including financials) and communicate how you intend scaling
up a business..............................................................................................................................10
PART 2 - Developing an Exit Plan.............................................................................................12
LO4 Assess the various ways a small business owner can exit the business and the
implications of each option........................................................................................................12
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15
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Introduction
In order to develop and grow an organisation it is necessary to invest in future. The organisation
the UK Coffee Shop has been chosen. In this assignment, the major considerations of the
opportunities with respect to the growth of an organisation have been evaluated. The
considerations have been justified with respect to the UK Coffee Shop. Ansoff’s Growth Vector
matrix has been used in order to analyse the prospects of growth. The sources that are available
for funding for the organisations have been assessed. The advantages as well as disadvantages of
each source has been analysed in the assignment. A business plan has been devised for the
growth of the UK Coffee Shop that involves financial data as well as objectives required for
developing an organisation. The options for succession or exit for small organisations have been
assessed along with the illustration of advantages and disadvantages of each option.
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PART 1 - Investing in the Future
LO1 Analyse the key considerations SMEs should consider when evaluating growth
opportunities
It is necessary for the organisations to assess the opportunities of growth that they have so that
they can devise proper strategies to enhance their operation. The considerations of the SMEs like
UK Coffee Shop that must be considered for evaluating the opportunities of growth have been
explained below:
 Market Size: In order to analyse the chances of growth that is available to an organisation it
is important that the market size is assessed. With respect to UK Coffee Shop it is necessary
that market research or investigation is conducted. The organisation must analyse the demand
of the customers in the market and must act in a way so that the clients can be appealed. It
will aid the organisation to engage its customers effectively thus increasing the revenue that
it generates.
 Relationships: It is necessary that UK Coffee Shop analyses the relationship that it has with
its customers so that proper plans can be formulated as well as implemented in order to
enhance the operation of the organisation and increase the revenue that it generates
(Business2community.com, 2019).
 Management of flow of cash: The analysis of the flow of cash of the organisation will aid to
look for proper opportunities for investment. The management of flow of cash in turn will aid
the organisation to expand its operations. The organisation will also be aided to make
modifications in its business plan so that the organisation can sustain or run even after a
particular period of time.
 Persistence and passion: it is necessary that the organisation analyses the persistence as well
as passion that the employees working in it possess so that further opportunities of growth
can be figured out and proper steps can be taken.
 Management of skill sets: It is necessary that the management of the organisation figures out
the skills that will be required for the successful operation of the organisations. The
organization UK Coffee Shop will be aided in this way to hire people having particular skills.
Ansoff growth vector matrix
The Ansoff growth vector matrix is toll that is used for analysing the data that is associated with
various aspects of an organisation so that it can successfully attain the objectives formulated.
Ansoff growth vector matrix consists of several elements like product development, product
diversification, market development, and market penetration. The opportunities of development
or growth for SMEs like UK Coffee Shop has been analysed below:
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Figure 1: Ansoff Matrix
(Source: Corporatefinanceinstitute.com, 2019)
 Product development: It is necessary that the organisation develop their commodities as well
as services so that the needs of the customers can be fulfilled effectively (Yin, 2016). The
UK Coffee Shop can devise several strategies in order to make its products unique and
increase its customer base. It is recommended that UK Coffee Shop uses brewed authentic
coffee or uses Lavazza coffee in order to offer differentiated form of coffee to the customers
so that they can be attracted.
 Product diversification: It is necessary that the organisation makes sure that it offers a
variety of food items to the customers because every customer is one of their kind and each
customer can be satisfied. It will aid the organisation to increase its customer base thus aiding
the organisation to increase its profit.
 Market development: The development of market involves the variety of strategies of
marketing or promotion that an organisation uses. In the present scenario, it has been
observed that more than 85% of people have their presence online on different social
websites. Therefore, it is necessary that UK Coffee Shop uses various techniques of online
promotion in order to attract more customers (Sande, 2019). The organisation can also
organise several campaigns in order to promote the food products and other services that it
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offers. The organisation can offer discounts or use customer loyalty cards in order to promote
its products and increase its sales.
 Market penetration: Market penetration is about increasing the sales of an organisation in
the current market. Market penetration will aid UK Coffee Shop to upscale or expand itself in
the long run (Mazzarol and Reboud, 2019). In order to penetrate the market, it is required
that the organisation invest on its expansion that is opening new coffee shops in other new
places and offer the food items as well as services that it already offers.
In order to understand the competitive advantage of UK Coffee Shop in the market with respect
to its rivals, Porter’s Five Forces can be used. Porter’s Five Forces is helpful in order to analyse
the competitive environment of an organisation. The elements of Porters Five Forces are threats
imposed by new entrants, threats imposed by substitutes, negotiation power of the buyers,
negotiation power of the suppliers, and the competition in the market. The competitive advantage
of UK Coffee Shop has been analysed below:
Figure 2: Porter’s Five Forces
(Source: Visual-paradigm.com, 2019)
 Threats imposed by new entrants (HIGH): The government of the UK supports SMEs to be
established in every sector or industry therefore the threat due to the emergence of new
entrants in the market is high with respect to UK Coffee Shop (Mathooko and Ogutu, 2015).
 Threats imposed by substitutes (LOW): UK Coffee Shop has low risk from substitutes
because the organisation provides or offers unique food items as well as services to the
customers that make it different from other organisations in the food and beverage industry.
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He organisation also offer a variety of food items that makes its different from other
companies or businesses in the UK market.
 Negotiation power of the buyers (HIGH): The customers have a variety of options to choose
in the food and beverage industry in the UK therefore the negotiation power of the customers
is high in this case (Zhao et al., 2016). Thus, it is required that UK Coffee Shop offers its
products and services at competitive price.
 Negotiation power of the suppliers (HIGH): The negotiation power of vendors is high in
case of UK Coffee Shop because the organisation is small and the vendors have a number of
customers.
 Competition in the market (HIGH): There are several organisations in the beverage and
food industry in the market of the United Kingdom. Therefore, the organisation faces a tough
competition from its competitors or rivals in the market (Carraher, 2018).
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LO2 Assess the various methods through which organisations access funding and when to
use different types of funding
Funding is of huge importance with respect to the decisions that an organisation makes for
investment. The various or different sources that are available for funding are public funding,
lends, finance or sponsorship from different ventures, and bank loans. The various sources of
funding that are available in the market have been discussed below along with its advantages as
well as disadvantages.
SBA (Small Business Administration) loans
SBA is a government enterprise that is used to aid small organisations to become successful and
achieve their objectives.
Advantages:
 It increases the chances of an organisation to receive loans from banks (Roberts, 2017).
 It aids to enhance the relationship of an organisation with the local borrowers as well as local
lenders.
Disadvantages:
 SBA has strict policies that makes difficult for the organisations to obtain loans from it.
Angel Investors
The wealthy investors who finance an organisation in exchange for a part of equity in an
organisation are known as angel investors. The size of investment is less than approximately 1
million US dollars generally.
Advantages:
 Angel investors can provide proper guidelines to the organisations in terms of their operation.
 The business agreements are flexible with angel investors.
Disadvantages:
 The nature of the financers is risky.
 The financers need some authority in the business.
Friends and family
The investment that is made with the help of relationships that a person has with family and
friends falls in this (Cobb et al., 2016).
Advantages:
 Funding is received in less time.
 The terms of investment are flexible.
Disadvantages:
 Personal relationships can be hampered.
 Family and friends cannot guide will with respect to the operation of an organisation.
VC (Venture Capital) Funding
In this case, the investors can invest a huge amount of money in return for equity or share in the
business.
Advantages:
 The investors can guide with respect to the operation f the organisation.
 The credibility of an organisation increases instantly.
 It aids to build a huge network.
Disadvantages:
 The direct of movement of the organisation might not be in hands of the business owner as
the investors have more experience.
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 If ROI is not as per standards, the investors can eradicate the business owner from his or her
own company.
Bank Financial
The loans that are available from the banks are known as bank finances.
Advantages:
 The variety of funding available is huge as per the needs.
 The time of funds is instant if the policies of the bank are met properly (Kight and Perry,
2019).
 The owner of the organisation does not need to give up the share or equity of the
organisation.
Disadvantages:
 The criteria of bank loans change incessantly thus it is difficult to obtain.
 The owner needs to return the amount even if the organisation does not succeed.
 The process needs documentation that is tedious and consumes time.
 The options of finances are confusing.
Verifico.com finance professionals
Verifico is a digital marketplace that aids a person to search as well as connect with professionals
in finance.
Advantages:
 The process of verification reduces the chances of encountering fraudulent financial
consultants.
 The process of funding is streamlined thus it does not require to go to banks or leave office.
 The financial consultants use their knowledge as well as experience to make the organisation
successful so that the lender finds it appealing (Under30ceo.com, 2012).
 The financial consultants need to be paid only the business owner receives funding.
Disadvantages:
 The financial consultants need to be paid if the owner receives funds.
 The business owner is not connected directly with the lender.
Crowd-sourced funding
Crowd-sourced funding involves getting funds from a number of small investors. In this case,
every investors invests a small sum so that a huge sum can be created that would be offered by a
bank or investment firm (Smallbusiness.chron.com, 2019).
Advantages:
 Crowd-sourced funding is interesting as it will involve the process of convincing the
investors so that they pay.
Disadvantages:
 The investors might expect quick return against the investment they make.
With respect to UK Coffee Shop, it is recommended that it uses Angel Investors form of funding
in order to expand and develop itself. Angel investors source of funding is recommended
because the organisation will receive guidance that is in the way the organisation must operate as
the investors have experience in the field. Moreover, as the business agreements are flexible the
organisation will be aided to grow in this way and achieve its objectives.
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LO3 Develop a business plan (including financials) and communicate how you intend
scaling up a business
A business plan will be developed that will include the financials and the different steps are
utilised to communicate the ways by which the business can be scaled up. According to Tukker
and Tischner (2017), the business plan for the coffee shop will be developed by adhering to the
specific strategies and policies that have their relevance within the organisational sphere to
implement the activities and services that are going on within the coffee shop being developed.
The business plan being devised for the setting up of the UK coffee shop will integrate the
necessary policies of the open market that ensures help to develop and design the specific
products that cater to the demands and requirements of the target customers availing the facilities
and services of the organisation.
According to Grant (2016), appropriate strategies that are specific for designing the coffee for
the target customers will be adopted and executed properly through the practices of the different
activities going on in the organisational sphere. Different flavours of coffee will be served to the
customers arriving at the coffee shop.
Overview
UK Coffee Shop located within the city of London in the country of UK tends to devise specific
marketing strategies and policies to develop the various flavours of coffee that caters to the needs
and requirements of the target customer groups. The coffee shop is located at the heart of the city
so that the people of all age groups can come to the coffee shop and avail the facilities and
services of the coffee shop. UK Coffee Shop tends to devise strategies and policies that help in
executing the operational and marketing activities going on in the organisational sphere. UK
Coffee Shop was founded by an entrepreneur who had skills to integrate the various specific
policies to design the coffee products and services within the organisational circle.
UK Coffee Shop will have more than 200 employees by devising the specific strategies and
policies that cater to the needs and requirements of the consumers.
Market and business activities
According to Steiss (2019), the market and business activities and services are executed with the
help of devising strategies and policies that are relevant within the organisational setup to be
executed and ensure the achievement of the targets and goals of the organisation. The UK Coffee
Shop will adopt the practices to implement the social media channels that would ensure the
smooth promotion of the different advertisements helping in the designing and development of
the products and services. UK Coffee Shop will be able to develop the specific activities that
helps to satisfy the demands of the customers.
Target Customer Segments
The target customer segments are the couples belonging to the age group of 20-50 years and the
youngsters of the age group of 18-30 years.
Products being offered
The products being offered by the UK Coffee Shop are the different flavours of coffee and other
additional services such as Cappuccino Coffee and Black Coffee alongside the provision of
cookies and confectionery products and services.
Revenues in the market
The market revenues of the UK Coffee Shop will rise to more than 40% and will help the
Company to expand its operations by getting into strategic partnerships and alliances that will
help in designing the varied range of products and services.
Budget
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Particulars Expenses (in GBP)
Developing specific marketing strategies 300 million
Utilisation of the modern technologies 250 million
Designing the new supply chain models 400 million
Buying the raw materials 500 million
Total 1450 million
Control
There exist different controls in the form of KPIs or key performance indicators that are utilised
within the organisation to assess the performance of the Coffee Shop in the market of UK. The
feedback being gathered from the customers through the help of social media sites and platforms
that provide the impetus to establish the specific operational activities and services in a
systematic manner.
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PART 2 - Developing an Exit Plan
LO4 Assess the various ways a small business owner can exit the business and the
implications of each option
Exit strategies can be defined as the plan an organisation adopts or the measures an organisation
takes to dissolve the business an entrepreneur is running. There are a huge number of strategies
for exit that are available to the entrepreneurs. The various strategies of exit that are available for
an organisation are as follows:
Liquidation
Liquidation involves selling the assets of an organisation and closing the organisation.
Liquidation is common for small organisations especially in cases when the organisation has a
solo owner.
Advantages:
 The process is easy and simple.
 The process does not take much time.
Disadvantages:
 The owner of the organisation gets the lowest return from the investment they make.
 The value of the assets that are sold is too low.
 The creditors if there claim money for the sales of the assets.
Liquidation or bankruptcy over time
Advantages:
 The debts which are outstanding are removed from the market.
 The actions pertaining to the legal matter is kept at a standstill
 The low expenses can be related.
Disadvantages:
 Accusations associated with implementing trading activities in a wrongful manner
 The overall assets associated with the business operations will be sold.
 The staffs or members will be made redundant or dysfunctional within the organisational
sphere.
Organisation in the family
Advantages:
 The business activities and services that are associated with family tends to possess the
much-needed stability within the organisational sphere.
 Commitment is established as a result of development of the organisation in the family.
 Flexibility among the activities is involved
 Long-term targets set up by the Companies tend to help in achieving the targets and goals
of the Company.
Disadvantages:
 The conflicts or problem issues arising within the organisations functioning in the family.
 The unstructured governance is also a thing of disadvantage
 High probabilities of different activities of nepotism affects the transparency of the
business actions and services of the organisation.
 Most of the businesses that are related to executing the different operations through the
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