Soul Heaven Saloon: Funding, Growth, Investor Plan and Exit Strategies

This report analyzes Soul Heaven Saloon's strategic options for growth, focusing on funding sources, investor plans, and exit strategies. The report begins by evaluating potential funding sources like personal savings, bank loans, angel investors, and government grants, assessing their benefits and drawbacks. It then recommends a combination of personal savings, government grants, and bank loans. Task 2 presents a coherent plan to entice investors, including an overview of the business, vision, mission, strengths, growth opportunities, financial projections, and stakeholder analysis, using the Ansoff matrix to recommend market development and diversification. Finally, the report assesses exit or succession options for a small business, identifying suitable options for Soul Heaven. The report provides detailed financial analysis and strategic recommendations to enhance the salon's competitive edge and achieve its business objectives, including increasing sales, market share, and building a sustainable competitive position.

Planning for Growth

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
1.1 Critically evaluating potential sources of fun ding that can be accessed by Soul Heaven
................................................................................................................................................3
1.2 Assessing funding options which Soul Heaven’s should undertake along with
justification.............................................................................................................................6
TASK 2......................................................................................................................................7
Preparing a coherent plan for enticing investors that how strategies will contribute in the
attainment Soul Heaven ‘s goals and objectives....................................................................7
TASK 3....................................................................................................................................10
3.1 Assessing exit or succession options that available for a small business......................10
3.2 Critically evaluating and identifying suitable option for Soul Heaven in relation to exit
or succession........................................................................................................................13
CONCLUSION........................................................................................................................13
REFERENCES.........................................................................................................................15

INTRODUCTION
In the competitive business arena, al the organizations are placing high level of
emphasis on capitalizing opportunities that available for growth at marketplace. In this
regard, manager plays a vital role in assessing options that can be undertaken for the
company’s growth and success. Moreover, in the dynamic business area, desired level of
outcome can be attained only when firms make focus on the adoption of innovative business
practices. This report is based on Soul Heaven Saloon which offers retail products or services
at suitable prices. It will provide deeper insight about strategic options which Soul Heaven
Saloon should undertake for getting competitive edge through the applicability of Ansoff
matrix. Further, report will develop understanding about sources that helps Soul Heaven in
fulfilling monetary requirement. Report also presents coherent business plan that need to be
followed by Soul Heaven for the execution of panning pertaining to growth. Along with this,
it also highlights varied succession and exit options that can be used by business unit.
TASK 1
1.1 Critically evaluating potential sources of fun ding that can be accessed by Soul Heaven
For increasing customer base and thereby both sales as well as profitability, Soul
Heaven has developed strategy in relation to diversifying & exploring business operations.
For this purpose, business entity requires enough funds so that plan can be implemented
effectually. There are several sources of finance which can be undertaken by an entrepreneur
for raising funds for business expansion such as:
Personal savings
With the motive to capitalize opportunities and for converting dreams into reality
every entrepreneur focuses on saving money from earnings (Murzacheva and Levie, 2020).
Accordingly, for expansion and diversification owner of Soul Heaven can use personal
savings.
Bank loan

It is one of the most effectual sources which entrepreneurs prefer to undertake for
enhancing funds. Usually, banks also place emphasis on providing loans to the businesses
which are highly growing. Moreover, interest is recognized as the main source of income for
bank (Lynn and Rosati, 2020). Due to this, financial institution is highly interested in giving
both secured and unsecured loan to the business entities. Hence, by applying to the financial
institutions owner of Soul Heaven can generate funds.
Angel investors
They are known as private investors who provide small businesses with financial
backups or assistance. Now, there are several angel investors who support entrepreneur or
small businesses in monetary terms. In against to convertible debt or equity angel investors
invest their money in the innovative business operations.
Government grants
In order to encourage small sized businesses government has also taken initiative by
offering financial assistance at concessional rate. UK government encourages banks to
sanction most of the loan that applied by small businesses. On the basis of this, by presenting
innovative business idea and coherent plan to the concerned authorities business entity can
get desired level of funds.
Viability of funding sources can also be evaluated through the means of investment
appraisal techniques. It mainly includes payback period, net present value, average and
internal rate of return which helps in assessing the extent to which potential investment will
prove to be beneficial for the firm. Moreover, payback period clearly presents time within
which initial investment will be recouped. In this way, it highlights period after which
business unit will start to earn profit. On the other side, NPV furnishes return, in monetary
terms that firm will get after specific time frame. NPV method has greater importance in the
current times as it presents solution by taking into account time value of money concept.
Thus, by using capital budgeting tools business entity can appraise investments in the best
possible way.
Personal savings
Benefits
 This source of finance is free from obligation pertaining to excessive paperwork.

 In this, firm has no responsibility in relation to paying fixed amount to others. Hence,
using this source business entity can enjoy whole profit amount solely.
Drawbacks
 For getting high returns companies prefer to invest personal savings in profitable
opportunities. Hence, amount that entrepreneur will loose from other opportunities
recognized as drawback.
 It limits long term growth in case business entity needs funds for opportunities that
come in near future. Moreover, in the upcoming time period, entrepreneur will have
no personal savings for investment purpose.
Bank loan
Benefits
Flexibility
Bank loan source offers more convenience to the customers for repaying debt amount
in terms of instalments. This in turn reduces financial burden of firm because instalments are
paid periodically as per the agreement.
Cost effectualness
In comparison to overdraft and credit card, bank loan is assessed as the cheapest
source of finance. Moreover, interest charged by bank on loan is lower than other sources
available. Along with this, interest charges are subject to deduction while calculating tax
liability (Advantages and Disadvantages of Bank Loans, 2020). Further, unlike angel
investor, in bank loan business entity is free from accounting in relation to sharing profit with
financial institution.
Drawbacks
Includes complications:
It is highly time intensive exercise due to the inclusion of excessive paper work which
limits significance.
Collateral

Irrespective of having good credit score bank asks for some collateral in against to the
loan granted. Hence, security aspect also creates difficulty in front of business entity.
Angel investors
Benefits
 It includes minimal paperwork and high networking opportunities support business
entity in operational aspects.
 There is no monthly burden in relation to making interest payment on funds provided
by angel investors (Angel Investors: Definition, Advantages and Disadvantages,
2020).
Drawbacks
 Likewise shareholders, angel investors also do interference in decision making aspect.
In this way, founder control is reduced when fund is generated from angel investors.
 Further, ambiguous terms and slow funding is also one of the main weaknesses that
associated with angel investors.
Government grants
Benefits
 In this, there is no pressure to relation to pay back money after specific time period.
 Easily available if business entity has sound and innovative business idea for the near
future (Advantages and disadvantages of government grants, 2020).
Drawbacks
 Irrespective of having innovative idea if an entrepreneur failed to present idea
effectually then it may result into disapproval of government grants.
1.2 Assessing funding options which Soul Heaven’s should undertake along with justification
By doing assessment of above mentioned sources, it has found that Soul Heaven
should give preference to personal savings, government grants and bank loan. The rationale
behind this, in the case of personal savings, business entity is free from interference in
relation to decision making aspect. However, it imposes opportunity cost in front of firm with

regards to loss of interest if invested somewhere. Nevertheless, in the initial period, there is
uncertainty for the generation of profitability. In this scenario, personal saving source helps in
limiting interest burden. Along with this, bank loan source of finance gives deduction to the
business entity in tax brackets (Moon and Bace, 2020). Further, in order to recover from the
situation of economic crisis government is also supporting small businesses financially. Thus,
by undertaking the combination of these sources Soul Heaven’s owner can limit liabilities
and increase margin.
TASK 2
Preparing a coherent plan for enticing investors that how strategies will contribute in the
attainment Soul Heaven ‘s goals and objectives
Overview of business
In order to get success business entity started Soul Heaven hair Salon in the year of
2015 that falls under the category of Afro and European. Currently, pandemic situation
COVID has affected business operations adversely. Hence, in order to recover from such
crisis Soul Heaven is focusing on employing wide range of strategic framework that
contributes in the success of business. Now, business entity is focusing on customer loyalty,
creation of own brand relating to nail services, men’s grooming and doing advertisements
through online mediums. Entrepreneur is focusing on all these aspects so that competitive
advantage can be built and sustained.
Vision
Soul Heaven’s vision is to become the first choice of customers by offering
outstanding services to them.
Mission
With regards to Soul Heaven, mission is to create highly satisfied customer base by
offering exception quality services.
Business strengths
Through doing analysis, it has found that Soul Heaven’s possesses several strengths
which help it in grabbing or capitalizing opportunities such as:

 Business unit has developed and maintained prominent relations with the customers
by resolving their queries timely.
 High quality service offerings are recognized as one of the main strengths of Soul
Heaven. For maintaining this, business entity has hired team of highly skilled and
professional personnel who can deliver quality services to the customers.
 It has expertise in relation to both Afro and Euro hair cutting services so that large
customer based can be attracted and served.
 Soul Heaven’s offers services from 10 am to 7pm which also offers high level of
convenience to the customers. Further, it also opens during weekends which further
add in her profitability.
Potential opportunities for growth and financial projections
Evaluation done through ansoff matrix clearly shows that Soul Heaven’s should
undertake market development and diversification strategies. On the basis of this, business
unit should employ intense advertising strategy. Along with this, for achieving goals related
to sales and profitability aspect owner of Soul Heaven should offer services to men as well.
Hence, by diversifying operations company can enhance customer base and thereby revenue
as well. In addition this, by developing and offering loyalty card schemes to the customers
Soul heaven can get competitive position over others. Moreover, due to COVID, disposable
income of customers has been affected adversely. For dealing with this situation, business
entity took decision in relation to offering quality services at lower prices that can be afforded
by people. Further, by offering nail services and own branded products owner of Soul Heaven
can explore business effectually.
Income statement
For assessing the extent to which proposed business idea offers suitable return income
statement has been prepared. It clearly presents return or income that Soul Heaven will
generate over expenses.
Capital structure
Particulars Amount (in £)
Government grant 10000

Personal savings 30000
Bank loan 25000
Profitability statement of Soul Heaven’s for the period of 2 years is as follows:
Particulars Year 1 Year 2
Sales revenue 200000 230000
COGS 70000 80500
Gross Profit 130000 149500
Less: Operating expesnse
Salaries 10000 11000
Promotional expenses 1700 2000
Miscellaneous expenses 2000 2200
Maintenance expenditure 2500 3250
Interest expenses 3000 2400
Depreciation on assets 2000 2000
Total operating cost 21200 22850
Operating income 108800 126650
Less: Tax @ 20% 21760 25330

EAT or net income 87040 101320
The above depicted income statement shows that business entity will generate
positive returns in the near future by exploring business operations and functions. Hence,
focus need to be placed by business entity on employing budgetary control tools and
techniques. Through this, business unit can exert control over expenses and thereby enhances
profitability.
Stakeholder analysis
Stakeholders Power Interest Engagement
strategy
Customers High moderate Advertisement and
loyalty card scheme
will be undertaken
for engaging more
customers.
Employees High moderate Effective and
leadership program
need to be organized.
Government low low Operations need to
be performed in an
eco-friendly manner.
Applicability of appropriate framework for the achievement of business objectives
Business objective of Soul Heaven’s are enumerated below:
 To increase sales and profit by 15% at the end of first quarter.
 To increase market share by 20 % in a year.
 To build and sustain competitive position at marketplace over rivals.

For the attainment of above mentioned objectives business unit will focus on
promotional aspects. By this, entrepreneur can entice customer decision making and
thereby achieve predetermined aim and objectives.
TASK 3
3.1 Assessing exit or succession options that available for a small business
There are several conditions such as changing business conditions, shortage of skilled
labour and resources etc in which firms prefer to employ exit strategy. In this regard, from the
following options firm can use the best one such as:
Exit Options
Liquidation
This is the simplest form of exit which small businesses undertake for exit purpose.
According to this, entrepreneur can close or wind-up business operations by selling assets at
marketplace. It is highly suitable for the business which is run by single entity rather than
others.
Advantages Disadvantages
 Simplicity, less time consuming and
paperwork
 Helps entity in shutting down
business quickly through the sales of
assets.
 Provide low return to the owner due
to the decrease in price of assets.
 In this, creditor’s settlement need to
be done first from the funds generated
(How to Pick an Exit Strategy for
Your Small Business, 2020).
Selling of business or acquisition
Soul Heaven’s business entity can exit by selling business to others at specific price.
Usually, entrepreneur or large sized business unit prefers to purchase business that is highly
growing. Moreover, with the motive to reduce competition and attain success large sized

firms focus on acquiring growing firms (Chirico and et.al., 2020). Hence, by selling business
in open market business entity can fulfil own motives.
Advantages Disadvantages
 Potential buyers can be attracted in
open market
 Offers high return when assets and
goodwill is valued for sale
 It is highly time consuming practice
because it includes negotiation and
detailed documentary formalities.
 Furthermore, cultural differences and
related aspects also have significant
influence on acquisition aspects.
Soul Heaven can use following options with regards to succession such as:
Strategic planning
Effective leadership is considered as the key for organizational growth and success.
Thus, by practising or adopting appropriate leadership style Soul Heaven can achieve
predetermined goals and objectives. Moreover, leader provides team with clear pathway that
need to be followed for organizational growth. With regards to succession, business entity of
Soul Heaven’s should undertake participative or democratic leadership style. On the basis of
this, by involving personnel in decision making aspect entrepreneur can motivate them
significantly (Römer-Paakkanen and Paakkanen, 2019). This in turn helps firm in delivering
satisfactory services to the customers. Moreover, satisfied and motivated personnel serve
customers effectually in comparison to others. Hence, by setting strategic direction and
implanting suitable leadership practices entrepreneur can fulfil goals to a great extent.
Advantages Disadvantages
 Facilitates retention of talented
personnel.
 Provides assistance in achieving
organizational goals and objectives.
 Specific leadership style is not
suitable in every business condition
or situation.
 Further, in this, leader faces issue in
getting consensus from all members.