SME Growth and Funding Strategies: A Business Report

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Introduction
The proposed report helps to collect knowledge about SME (small business enterprises). It also
tells about the establishment of SME and their growth. With the help of this report, leaner can
easily gain knowledge about the applied technique to find better opportunities. The financial
state of the same also shown, it also tells how to attract the investors towards their company. It
provides knowledge to maintain a bridge between the business and success. It also helps to
understand various points such risks and rewards to achieve the growth of the company.
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Table of Contents
Introduction.................................................................................................................................................1
LO1 Analyze the key considerations SMEs should consider when evaluating growth opportunities..........3
P1 Analyse key considerations for evaluating growth opportunities and justify these considerations
within an organizational context..............................................................................................................3
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.................................3
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organizational context..............................................5
D1 Critically evaluate specific options and pathways for growth, taking into accounts the risks of each
option and how they can be mitigated.....................................................................................................6
LO2 Assess the various methods through which organizations access funding and when to use different
types of funding...........................................................................................................................................7
P3 assess the potential sources of funding available to businesses and discuss the benefits and
drawbacks of each source........................................................................................................................7
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate source of
funding for a given organizational context..............................................................................................8
Government-guaranteed lending scheme: to start some new business the UK banks provide till 75
percent of loans to start the business....................................................................................................9
D2 Critically evaluate potential sources of funding with the justified argument for the adoption of a
particular source or combination of sources, based on organizational needs...........................................9
LO3 develop a business plan (including financials) and communicate how you intend scaling up a
business.....................................................................................................................................................10
LO4 Assess the various ways a small business owner can exit the business and the implications of each
option........................................................................................................................................................12
P5 Assess exit or succession options for a small business explaining the benefits and drawbacks of each
option.....................................................................................................................................................12
M4 Evaluate exit or succession options for a small business comparing and contrasting the options and
making valid recommendations.............................................................................................................12
D4 Provide critical evaluation of the exit or succession options for small business and decide an
appropriate course of action with justified recommendations to support...............................................13
Conclusion.................................................................................................................................................16
References.................................................................................................................................................17
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LO1 Analyze the key considerations SMEs should consider when evaluating growth
opportunities
P1 Analyse key considerations for evaluating growth opportunities and justify these
considerations within an organizational context.
There is a cafe shop which name is Terry's cafe, initially which was run by the family. If Terry's
cafe is decided him to achieve the maximum growth than they have to set their work priority and
to achieve the goal they have to make a paper perfect plan. While achieving the growth there are
a lot of risks but with the help of perfect strategy will provide better stability to reduce the risk
factor, also it enhances the security and profit gain for a long time period. If the owner of Terry's
cafe will find the strength, opportunities, weakness and some other threats which affect the
business (Chang et al., 2019). That can be handled by evaluating the below-shown points:
 The cafe has to ask for themselves that "the need for the growth in the business".
 By consolidation of the present performance of the cafe and their employee.
 There are various options to grow their business such as increasing the market capital and
share in the market, selecting only that options by which will help to make maximum
profit and grow the business.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix
The Ansoff's vector matrix is a way of presentation for any product and also provides the choice
facility to their customer. With the help of below matrix the Ansoff's matrix can be understood in
a better way:
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Figure 1 the four growth strategies Ansoff's matrix
(Source: https://www.kgmoore.co.uk/strategy-tools-use-the-ansoff-matrix-for-evaluating-
growth-opportunities/)
 Market presentation: it is a very simple marketing strategy where the existing products
will be selling to their customer. To apply such strategies Terry's cafe has applied to
expand their business to grab more customers which will be for a lifetime. With the help
of this the food supply and management team.
 Market an analysis: this is the best way to engage their employee over existing products
of the organization. For the new customers, the southern business technologies can share
their geographical detail to provide enough information to the customer.
 Development of the products: in thisphase, the company will plan to develop some new
products for better engagement of their employee. Terry's cafe owner can introduce some
type of coffees and all.
 Diversification: it helps to sell the new product with maximum risks. a good strategy
maker or consultant can easily manage the business. The Diversification works over the
situation where the business fine and strong foundation to manage the organization.
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M1 Discuss the options for growth using a range of analytical frameworks to demonstrate
the understanding of competitive advantage within an organizational context.
For business review there a lot of corporate solution and analysis framework available:
 Poster's five forces: the structure conduct performance (STP) was introduced in 1940 it's a
type of framework. It is a market analysis tool. But nowadays the STP does not use so
widely, therefore it has converted into Poster's five forces. This was introduced by the
Michel poster to analysis market or business (Huda, et. al., 2019). Therefore it is also a
market analysis tool/ framework. The Poster's assumptions were depends below
mentioned five points (Rawhouser et al., 2019).
1. Suppliers
2. Buyers
3. Substitutes
4. Internal Rivalry
5. The ability for a new entrant
 Review for industry's lifecycle: it is part of assumption and analysis for sales and
profitability of a business. It follows a predefined predictable pattern. Also in the below
section, there are five stages are shown for better development.
- Growth
-Maturity
-Introduction
-Decline/termination
-Saturation
 Strategic group analysis: at the end of a group analysis will be done by a manager in a
strategic way. To compete with each other the organizations uses group analyses which
are in the same industry. There are conceptual methods to identify a strategic group also it
helps analysis in a better way to understand the competition in the same industry within
the same company.
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D1 Critically evaluate specific options and pathways for growth, taking into accounts the
risks of each option and how they can be mitigated.
Terry's cafe owner can use following growth points to make their business large and expend its
next level:
 Terry's cafe can grow their business in organic form to achieve better highest level within
the industry.
 If there is need than the owner of Terry's cafe has to ready for taking step to get exit from
the market and took out the market capital from the industry.
 Try providing products at a lower cost. From such a method, Terry's cafe can gather more
customers at a single time.
 if there is no need to take further risky step than avoid that
 Try to find some external growth; it can be done by opening Terry's cafe outlets from
outside of the state (Chang et al., 2019).
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LO2 Assess the various methods through which organizations access funding and when to
use different types of funding.
P3 assess the potential sources of funding available to businesses and discuss the benefits
and drawbacks of each source
There are various ways to find funding to start a new business. There a lot of ways to find better
funding such as debt financing, private equity, loans, and, etc. the six common factors are
available for funding but it comes with both its pros and cons:
Type of funding Pros Cons
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Small Business Administration
(SBA) Loans: it is provided by
the government of the state to
make the business more at a
strong level. The provided
23% of loans are get rewarded
by the govt.
It can be done proper way to
enhance the loan receiving
chances business by the govt.
at the lower interest rate.
There some strict law to get
funding in the form of SBA
such as it looks previous last
2-3 years bank statement. It's
very hard to obtain from
young companies.
Angel investor: angel investor
is the type of human who
invests over the startups to
provide funding them without
any charge, but he took some
equity share from the
company. The funding
provided by the angel investor
is usually less than 1 million.
He has a great experience in
such industries, therefore, he
can provide better guidance to
the business
Sometimes you have to give
up your idea because you have
to evaluate the risk factor also.
Friends and family: to be an
entrepreneur you can borrow
money from your friends and
family members
It can be raised quickly
without any delay because it
depends on your current
relations
If you didn’t refund the money
on the time it will because of
disputes in personal relations
M2 Evaluate potential sources of funding and justification for the adoption of an
appropriate source of funding for a given organizational context.
There are various business funding ways of the basis of market, a partner in the form of acuity
share are below shown with their pros and cons.
Venture capitals: it is a type of funding where the money provided in the form of equity stakes to
achieve the highest growth of the company. This is the best way to raise funding in the UK.
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There are a lot of ways to develop the business in a better way such as: using digital media, with
the help of real-life sciences, internet and technology and many more
Government and UK’s banks: there a lot of ways to gain funding for the business such as they
can collect directly from the government of the state or country. But there great computation to
get the loan from the government because it is not repayable to them. The process of loan
approval is to take. But the government doesn’t make any interruption of your business.
Government-guaranteed lending scheme: to start some new business the UK banks provide till
75 percent of loans to start the business.
D2 Critically evaluate potential sources of funding with the justified argument for the
adoption of a particular source or combination of sources, based on organizational needs.
Most of the research is made in the universities over funding and sponsor support; it also
supports various types of research, service, and training with the help of various agreements.
There is two types of proposal shown in below section to gain better funding:
-Solicited Applications/Proposals
-Unsolicited Proposals
 Contracts
 Cooperative Agreements
 Grants
 Fellowships
 Fellowships
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LO3 develop a business plan (including financials) and communicate how you intend
scaling up a business
Terry cafe is an southern business technologieswhich provides food service to the customer with
good quality in product the strategic planning for introducing the quality product for the
consumer. Business plan for the erry Café is:
Finding the need: As the market is changing day by day due to which market demands are also
changing. Southern business technologiesneeds to understand those demands according to the
profile of the organization. Terry café need to enhance their service quality which is a priority in
the field of the café business (Rawhouser et al., 2019).
Developing product and service: After finding the need of the market it is necessary for the
Terry café southern business technologiesto develop the product according to the need so that it
can increase the market base of the organization.
Selection of staff: As Terry café is a small southern business technologieswhich needs less staff
but the staff must be highly skilled who can fulfill all the required demand.
Improving taste in food: The southern business technologiesneeds to improve the taste of the
food products sothat the customer can be attracted.
Implementing strategies: After analyzing the entire requirement it is necessary for the southern
business technologiesto implement the proposed strategies (Kanda et al., 2019).
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M3 Develop an appropriate and detailed business plan for growth and securing investment,
setting out strategic objectives, strategies and appropriate frameworks for achieving
objectives.
The southern business technologiesprovides food service and work in a small town with a small
customer base. It is important for the southern business technologiesto improve the southern
business technologiesstrategies to acquire the market base.
 Improving the service quality of the organization.
 Improving the work environment for a better opportunity and systematic work.
 To introduce a variety of products.
 To provide training to the staff for improving their skills.
 To determine the customer requirement and fulfill them.
 To retain regular customers by providing better service and product each time.
Using all the above key points Terry Café can enhance the market base for the growth of the
southern business technologies(Huda, et. al., 2019)
D3 Present a coherent and detailed business plan that demonstrates knowledge and
understanding of how to formulate, apply and achieve business objectives successfully.
 Measuring the daily customer base.
 Finding regular customer.
 Analyze the existing policies.
 Improve the strategies and planning accordingly.
 Fulfilling customer demand.
 Capturing market base with a variety of products.
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LO4 Assess the various ways a small business owner can exit the business and the
implications of each option
P5 Assess exit or succession options for a small business explaining the benefits and
drawbacks of each option.
Terry’s Café is a family run business means the successor of the café house will be the successor
of the family itself so to develop an exit plan there are several methods which can be discussed
while considering the impact of these exit methods on the long term goal of the business and the
financial condition and growth of the business (Rawhouser et al., 2019).
As terry’s house is a family run café so the owners of the café are family members so to increase
the enterprise value of the café house some family members can sell their shares to another
family member this will increase the enterprise value of the business for acquisition and mergers
transactions.
M4 Evaluate exit or succession options for a small business comparing and contrasting the
options and making valid recommendations
Steps for developing an exit plan for Terry’s Cafe:
 Preparing the finances- As terry’s café is a successive family business so solving and
sorting the financial issues will be a major part of developing an exit plan because there is
no single owner of the café house it’s profit is distributed among the family members, so
to make an accurate account of the finances the permission of all the family members is
required, because the finances are not only professionally sometimes they may be
personalized as well. List of finances will show how and where the expenses need to be
taken care of and should be reduced to the maximum possible. The proper list of
expenses will be the most important tool when an exit plan is being discussed because it
will give the exact idea of the money the café house is producing.
 Considering the options- As there are two types of exit strategies can be best suited for
the terry’s café are merger or acquisition and succession within the family with their
benefits and disadvantages are discussed briefly-
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