Growth Strategies for SMEs: A Case Study of SDK Jewelers

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PLANNING FOR GROWTH
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Table of Contents
Introduction.................................................................................................................................................3
Task 1...........................................................................................................................................................4
Task 2..........................................................................................................................................................5
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Introduction
To overcome competition in the market, firms are making strategies for growth and to
achieve competitive advantage. The following report highlights various options available
for growth of SMEs. SDK jeweler is the SME selected for understanding the concept.
Funding options with their benefits and drawbacks are explained in the report. Option
for funds that SDK jewelers should adopt is also explained with specified reason.
Business plan is very essential part for development or growth in an organization, thus
well structured business plan with all required components is explained in the given
report. Marketing plan and cash flow analysis is also highlighted in the following report.
Exit plans are very important concept for SMEs thus different exit plan strategies are
highlighted in case study. Benefits and drawbacks of the exit plan and the preferable
option for SDK jeweler is also explained.
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Task 1
Options for growth in an organization
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Task 2
Sources for funding
SDK jewelers is an established and successful firm of UK. In future for expansion of
business or to achieve goals for the firm it is necessary that company should have
necessary funding options available. Drawbacks of these funding sources should also
be identified by SDK jewelers so that better option for the firm could be selected.
Funding sources should be available for the companies so that growth of the firm could
be achieved. Various funding sources available for SDK jewelers are:
Loans – This option is available for the small as well as for large companies. Main
advantage of this source is its availability. Loans are easily available for the firms. In this
practice certain amount of money is given to the company, according to demand of the
company and time limit is set to give this money back to bank. The rule that has to be
followed while using loans as funding is, the money should be given back on time. In
few cases if money is not given back on time then the rate of loan is increased
according to extension of time and this is main drawback of this practice. For getting
loan SDK jeweler have to fulfill some requirements as some documents, receipt of
income or tax of the company etc. The amount of loan taken, can be given back on
monthly basis or whole amount can be paid effectively.
Overdraft – Overdraft is the funding source used by companies as a backup plan. It is
because the interest rate of getting this loan is higher then that of normal loan. SDK
jewelers is an SME thus these kinds of funding should not be preferred by them as it
can leads to economical instability for the company. overdraft is used on large scale
because it is very easily available and is quick source of funding. But small companies
should not use them as interest rate is very high in this case.
Business Angels – it is generally an equity investment in which the loan is given by the
intention of getting equal partnership in the company. Those parties having higher
amount of cash gives loan in order to gain money back with high interest rate. If the
partnership is given to the Invester in this type of funding then money is not return back
and the profits gained by the companies are distributed according to the partnership and
this is main advantage of this particular practice. Only drawback of this particular type of
practice is, hold of the business is distributed and in future if the business is sold then
money is distributed accordingly. SDK jewelers is performing well and is not in state of
taking risk for the form thus, this particular funding should be taken by them in
emergency and should not be preferred as only suitable option.
Venture Capitalist – The loan is given in this particular practice in order to achieve
equal shares in the company. SDK jewelers can use this source as large amount of
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money can be withdrawn from venture capitalist. Options for growth thus increases as
suitable amount of money is available in this funding source.
Crowd funding – In crowd funding large number of people or investors contributes for
the growth of the company. This funding is preferred when amount of money required is
significant. Due to availability of large number of investors the options increases for the
company to get funding. This practice is performed generally via internet. As in modern
time this type of options are preferred because number of options for getting loans are
increased. When the economical instability is their in any country and banks and other
options are not available for funding sources then this particular type could be adopted
as number of people and many small companies make their contribution to give funding
for required firm. Main advantage of crowd funding from other type of funding is it could
be easily available and amount of money is also more significant than other types of
funding sources. As other options this funding option also has drawback as if the growth
option or strategy does not become successful then large amount of money is given
back to various investors. One more drawback of this particular type of funding is it
becomes difficult to maintain accounts or receipts when money is taken from various
options. When funding is provided by one or two parties then it becomes easy to
remember amount of fund taken.
Hence there are number of options available for the firm to get funds. But the main thing
to be kept in mind is various drawbacks of these funding sources. After analyzing
drawbacks and benefits, funds should be taken. Analyzing of funding sources is
necessary so that entity can identify the best option available by the company for getting
funds.
SDK Jewelers is stable SME thus for funding any option that is risky should not be
preferred. Risky options can sometimes leads to economical instability and also effects
environment of work place. Hence SDK jewelers should take option that is suitable for
the company and does not creates any risk for the firm. According to above analyze the
best option for funding is getting loans from banks. If SDK jeweler decides to invest
money for growth of their organization, then they should take loans from Banks. This
option should be preferred as it minimize the risk of financial instability. The amount of
interest rate is also considerable in loans provided by banks. One more advantage of
this option is the hold of business is in hands of owner and investor cannot interrupt in
the practices performed by the company.
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