Smug: Planning for Growth: Business Strategy and Funding Analysis

This report analyzes Smug, a company specializing in personalized, handmade clothes, and explores its growth potential. It begins by evaluating growth options using the Ansoff matrix, focusing on market penetration, product development, and diversification. The report then examines potential funding sources for small businesses, including personal savings, bank loans, angel investors, and crowdfunding, with a focus on the options most suitable for Smug. A detailed business plan is developed, including an executive summary, vision, mission, objectives, STP segmentation, situation analysis (SWOT and PEST), and funding options. Finally, the report considers exit and succession strategies available to small businesses, providing a comprehensive overview of Smug's growth and strategic planning.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
Key consideration for evaluating the growth option...................................................................2
TASK 2............................................................................................................................................4
Potential sources of funding........................................................................................................4
TASK 3............................................................................................................................................6
Business plan...............................................................................................................................6
TASK 4............................................................................................................................................9
Exit and success option available for a small business................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning for growth helps companies to identify the market which is growing and makes
it easier to build revenues. In the same way, the current study will help to determine the gain
clear picture from competitors. The chosen firm for this study is Smug who offer personalized
design handmade clothes to their customers. The study will critically evaluate the specific option
for growth by using the range of theory. Further it also evaluates the potential sources of funding
with argument. Further report will develop a business plan and determine the exit and succession
option for a business.
TASK 1
Key consideration for evaluating the growth option
By using the Ansoff growth vector matrix, there are various growth opportunities
evaluated for Smug. These are mention below:
Market penetration: this quadrant is mainly focus upon increasing sales of existing
products to an existing market. It is consider one of the simplest strategies that helps to grow the
existing market. Through this method, company tries to increase the market share in currents
scenario (Loredana, 2017). This can be attaining by price decreases and increase the promotion
as well as distribution support within same market.
Product development: in this strategy, company tries to create new product as well as
services in the new market in order to attain the growth. Such that investment in research and
development department for offering additional product to the customer will help to meet the
demand of customer. This is considered as most common method among all and used by many
companies as well.
Market development: under this, market tries to expand into new market by using
existing offerings with minimal product and services. Hence, this is accomplished by different
customer segments and it is successful by offering unique product technology. This will help to
creates benefit from economies of scale and also increase the output.
Diversification: It tries to grow its market share by introducing new offerings in new
market and it is consider one of the most risky strategy because both product and market

development in required and sometimes it affect the results in negative manner as well
(Meierkord, 2017).
Among all, Smug uses product development as a strategic option in which company
offers clothes made up of bamboo in which assist to protect environment and this in turn affect
the results in positive manner. Further it is also analyzed that with the help of this strategy
company generate new market and it is accomplished by different customer segments as well.
Apart from this, there are various key consideration which needs to be consider while
choosing the best strategic option for the company such that:
Political factor: Due to instability in the political condition of the country, it affect the
entire performance of the company in opposite manner. Such that, offering new product in
market which in turn creates risk and as a result, customer did not interested in order to purchase
the product which affect the outcome in opposite manner.
Economic Factor: Fluctuation in the economic performance of the country will lead to
affect the performance of a business (Perera, 2017). Such that due to inflation rate, customer did
not spend the amount to purchase new product and this in turn reduce the performance of a
business in opposite manner.
Social factor: It is deal with perception of a people, which keeps changes due to change
in market trend. In the same way, offering new material will help to attract the customers
because the material did not affect the environment and grab attention of many customer as well.
Technological Factor: It is deal with implementation of advance technique at workplace
and for that the company may use promotional tool that assist to promote the business product at
further level. Moreover, it is also analyzed that due to facing tough competition it is quite
necessary for the business to improve the results (Shtal and et.al., 2018).
Legal factor: It is deal with laws and regulation prescribe by the government and this in
turn cause positive impact upon business. Such that in order to introducing new variety of
product by Smug, there is a need to comply with range of laws that assist to improve result such
that employment law, equality law etc.

Environment factor: The current factor deal with environment protection and in order to
comply with the same, quoted firm offer eco-friendly product in the market. Hence, it is clearly
reflected that company comply with sustainability act in order to improve the results.
TASK 2
Potential sources of funding
There are various option available for funding for small business and some of them are as
mention below:
Personal saving: One of the simplest option available for small business in order to
introduce any new thing. The person may use own savings in order to introduce new product in
market because if there will be no return then it will not affect highly.
Advantages: A person know how much amount need to be invest to run a business and there is
more control than other finance options. Owner will retain full ownership which means 100%
full future profit (Pros and cons of using personal funding source, 2020).
Disadvantages: Uncertainty of cash flow is the key problem and this may hit the business in
order to start producing revenue quickly. There is no one who provide personal expertise and
chances of failure increase when difficulties exist.
Bank loan: This option is suitable for the business who needs only temporary cash and in
the same way, Smug is also wants for temporary basis. That is why, it may take a loan for a
specific time period that helps to move ahead (Carpenter, 2019).
Advantages: it provide money at cheaper interest rate and flexibility is another advantage of
using it as a source of option. It is so because when a business receive bank loan then bank
provide a structured set of rules that help how to spend money.
Disadvantages: high interest rate is consider a con of this source of option because it is tough for
a business to make monthly repayments if there is a fluctuation in cash-inflow. The risk of
foreclosure is another disadvantage of choosing this option.

Angel investor: They are the professional investor who invest either a small part or their
entire wealth for growth of innovative companies. Therefore, it is equivalent to three times to the
venture capital and that is why, most of the companies uses this method, thus they find
interesting in order to invest the amount in other business.
Advantages: the professional are willing to take risk and for the business, money is not a loan.
Along with this companies may also take an expertise from angel investor in order to increase
the contracts. Hence it is examine that success of a business increases by using this option
(Demidenko, Malevskaia-Malevich and Dubolazova, 2018).
Disadvantages: Business may loss the complete control as a part of owner because they will
receive a portion of profit when the business is sold.
Crowdfunding: Another option available for the company in which business uses a small
amount of capital from a large number of individuals in order to finance a new business venture.
Through this option, company may easily use the accessibility of vast network and increase the
performance.
Advantages: it is consider as a fast way to raise finance who no upfront fees because money is
generating from an online platform that helps to provide funding to a business.
Disadvantages: Failed in the business may affect the reputation in negative manner. It is quite
time consuming method because company did not easily identify which option is best for
sourcing a finance (Ahnert, 2018).
From all the above option, Smug uses personal saving and bank loan as a source of
financing because it is easily available for the business. Through this option company may easily
increase the brand reputation and this will affect the result in positive manner. For example,
company use bank loan in which loan is grant for a specific time period i.e short term span and
amount is repayment and interest rate that helps to financing the business in better manner. Also,
by using the personal saving option, company is also able to meet the define aim and if business
may fail then it did not cause such a huge impact upon the business. Hence these two options of
source of financing are consider the best among all that helps to meet the define aim.

TASK 3
Business plan
Executive summary
The current business plan is based upon Smug which is a small company who offer range
of clothes and deal in retail industry. Further the study will provide the viability of a selected
products i.e. offer clothes made up of bamboo which do not cause any negative impact upon
environment. Study will provide situation analysis of the selected product in which model are
used. Further, it provide financial detail and monitoring technique in order to increase the
performance of a company.
Vision
To sustain a brand image of the company at international level by offering eco-friendly
product in market.
Mission
To stay ahead in the competition by offering the high quality product to their customers.
Objectives:
 To offer the clothes (material used i.e. bamboo) in order to meet the demand of
customers.
 To increase the sales up to 10% within next 3 years.
STP
Segmentation: Company segment the business on the basis of demographic in which it target
people on the basis of age, gender and income as the selected product is bamboo cloths, hence
Smug segment the people by considering their characteristic.

Targeting: Smug will uses the differentiated target marketing strategy in which organization
uses different market strategy in various market segment. Therefore, the target market for the
company will be upper and middle class people whose age is in between 15 to 50.
Positioning: Offering new and eco-friendly cloth products to their customer is consider the best
positioning strategy that will help to meet the define aim.
Situation analysis
SWOT analysis
Strength Weakness
 Smug have a strong presence in market.
 It offer innovative cloth product that
help to grab attention of many
customer.
 Quoted firm also uses variety of
marketing tools to attract the customer.
 The research and development
department did not focus upon the
specific things.
 The financial performance may affect
by fluctuation in
Opportunity Threats
 Offering innovative product will help to
increase the business in different
country.
 Company face strong competition in
market and this in turn affect the
overall performance.
PEST analysis
Political factor Due to fluctuation in the political situation of the country, company’s
performance got affected. Such that new policies and fluctuation in the
political performance may affect the overall performance
Economic factor Changes in economy of the country will affect the performance of the
business. Such that due to inflation, customer did not spend their amount
which in turn affect the overall performance of a business.
Social Factor Changes in the perception of a people will also affect the overall business in
negative manner. But comply with the same will help to lead a business at

further level of success. In the same way, Smug is also uses the same by
offering eco-friendly product to their customers.
Technological factor Advance technology will help the business to improve the functioning of a
business. Such that by offering new product and to let people know about the
new offerings will help the business to grow at further level of success. This in
turn improve the results.
Funding option:
There are two source of funding available for the company in which Personal saving and
bank loan options will be used by the firm. It is so because the method is good and flexible in
nature which in turn helps to improve the results. Moreover, through this source of funding,
Smug will lead to increase the sales and tries to attain the define goals in better manner. Such
that through personal saving company will uses £45 and bank loan £450 that helps to offer new
product in market. Only these methods are chosen over others because company is only invest
into new product which do not require high cost and that is why, through personal saving, the
owner of Smug will uses own personal saving that helps to deliver the product as per the need of
customers.
Marketing Strategies:
 Company will uses digital marketing platform in order to improve the results of a
company such that it uses social media tool like Facebook, Twitter and different platform
that assist to grab attention of many customers towards it.
 Moreover, company will also discount offers to their customer that assist to draw
attention of many customer towards it. Hence, this will increase the overall performance
of a company and let people know about new bamboo based cloths.
Financial information (in £)
Particulars November December January
Sales 256686 265587 289755

A 256686 265587 289755
Raw material 25646 26454 25145
Transportation 840 850 890
Bank loan 560 560 560
B 27046 27864 26595
(A-B) 229640 237723 263160
Monitoring
The business plan will be monitored within 3 months regularly and determine the
changes that are required in order to sustain the brand image of a firm. Such that by using
benchmarking strategy will help the business to set the target which needs to be attain. Also the
sales will be monitor in every months which reflected whether the aim and objectives are
attained or not.
TASK 4
Exit and success option available for a small business
Exit strategies for small business
Liquidation: It is all about to sell all the assets and close the shop. Through this option
company did not require any extra time and that is why, most of the small business uses this
option in order to get exit from their current business (Pickard, 2019).
Advantages:
 This method is simple to use and one of the most frequently used over others.
 The business can be easily wound up without any other risk.
Disadvantages:
 It provide lower rate of investment to the owner and creditor may first claim on funds
from asset sales.
 Second hand business asset value such as machinery and equipment can be low and this
is consider as a disadvantage for a company.

Merger or become acquired by another business: Through this option company may
easily take an exit from the current situation. In this, Smug may merge with another firm in
order to sustain a brand image or else may acquired by someone else (Koładkiewicz and
Wojtyra, 2016). Through this option, company easily save the time and able to develop new
business option too.
Advantages:
 This method provide a clean break from the existing options and this in turn generate
better option as well.
 Through merging, company may negotiate the terms, price and other details that helps to
exit from an existing option.
Disadvantages:
 The method is time consuming and costly, or else sometime it is even unsuccessful
process and that is why company did not use the same.
 Sometime, a business may also cease to exist because range of consequence are
associated with the action.
Sell a business to partner or investor: If the company’s legal structure is sole proprietor
than it is possible to take an exit by sell the business to partner or investor and this in turn helps
to did not depend upon the buyer and make decision by own (Exit strategy for small business,.
2020).
Advantages:
 The business legacy will remain intact and also company continue their own functions
 An individual may exit business fully and also earn a profit by sale own part of share.
Disadvantages:
 Sometimes, it is not easy to find out the buyer or investor who is willingly purchase a
share.
 The process of selling a business is long and may also cause range of problem too.

Succession option for small business
Selling a business to heir: Choosing an heir as a successor is considered as a popular
option for a business owners and the heir may be children or family members who working in
their own organization. Through this, owner may easily pass a business without any
complications.
Advantages:
 With the help of this option, previous owner may involve in the decision making.
 Through this, owner may provide instruction to them in order to be involve within a
business.
Disadvantages:
 Making business decision with a family may get messy and emotion can also run high
after untimely death (Onwuka and et.al., 2017).
Hiring outside management to run a business: In an organization want to get exit they
may sell their business to third party so that business operations will run smoothly. This will help
to get all the finance to check.
Advantages:
 It helps to make business more attractive and valuable to outside buyers.
 Also, run a business in proper manner and sustain brand image.
Disadvantages:
 It is not possible to predict the sales process within a store.
 The business will no longer be more valuable as an owner is anticipated.
Among all, Smug will uses the liquidation as an exit strategy in which company will sold
entire asset. Also, this method is simpler to use and provide clear solution as compared to other
one. Moreover, this method helps to define success in business and also investor know that
millions of people start a new business and that is why, it is more suitable option than others.