Strategic Growth Planning and Funding for Aroma Cafe Business

This report provides a comprehensive analysis of growth strategies for The Aroma Cafe, a coffee shop based in London. It begins by examining key considerations for evaluating growth opportunities, including Porter's Five Forces and PESTLE analysis. The report then applies Ansoff's matrix to evaluate market penetration, product development, market development, and diversification strategies. Furthermore, it assesses various funding sources such as crowdfunding and business loans, highlighting their benefits and drawbacks. The report also includes a business plan for growth, outlining financial information and strategic objectives. Finally, it explores exit or succession options for small businesses, discussing their advantages and disadvantages. The report aims to provide a strategic roadmap for the cafe's expansion and financial sustainability.

PLANNING FOR
GROWTH
with references to Origin
coffee roasting are mentioned
below:

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 Analyse key considerations which will help an organisation in evaluating growth
opportunities...........................................................................................................................1
P2 Apply Ansoff's matrix to evaluate opportunities for growth which available for
organisation............................................................................................................................4
P3. Assess the potential of funding sources which are available for business activities and
mention the benefits and drawbacks of each source..............................................................6
P4. Business plan for growth with financial information and strategic objective for scaling up
a business. ..............................................................................................................................7
P5. Assess exit or succession options which are available for small business explain the
benefits and drawbacks.........................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning is key to success for any business organisation; this is because future is always
unpredictable. However, within an organisation planning for growth plays a very essential role. It
is a strategic process which enable the owners of respective business to plan and formulate
several standards in order to attain organic growth (Arend and et.al., 2017). Through this process
business organisation allocates their limited resources towards a particular direction in order to
accomplished desired objective. The main focus of planning is to generate more and more
revenue in long run. This report is on The Aroma Cafe coffee shop which is based in London,
England. The company was founded in 2000 by Sergio Gratton. It basically provides coffee,
espresso, tea and pastries. Therefore, this report will basically cover the following aspects which
will directly help the respective organisation in achieving the desired business objective within
specified time phase. It will primarily evaluate opportunities for growth through implementation
of Ansoff's growth matrix. The potential sources of funding which can be made available to
business are identified. Furthermore, a business plan will be made in order to communicate
intend of respective organisation. Lastly, several exit or succession strategy will be adopted in
order to identify key benefits and drawbacks of each strategy.
MAIN BODY
P1 Analyse key considerations which will help an organisation in evaluating growth
opportunities.
There are several opportunities which a small business organisation can effectively adopt
in order to capture reasonable market share in the potential market. Therefore, in order to
effectively analyse marketing situation a proper analysis of business environment shall be made.
Through this analysis, exact needs of potential customers are identified. However, in order to
effectively find out key considerations The Aroma Cafe might adopt porter five force model and
PESTLE analysis to identify the current opportunities which are available in the market.
Porter's Five Forces model: Porter's Five Forces is a model which is used to identify
and analyse the five competitive forces that guides to shape industry and determine
organisation's strengths and weaknesses (Benner and Pastor, 2015). This model was published by
Michael E. Porter in 1980. These forces are used by Aroma Cafe to measure competition
intensity, quality and profits of an industry. The Porter's Five Forces factors are:
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 Bargaining power of Suppliers: Coffee and beverage industry usually faces weak forces
of bargaining power of suppliers. This is basically because there is large availability of
suppliers within this industry. Wherein each of the suppliers compete with each other in
order to generate revenue and several strategies are implemented by them. In context to
Aroma Cafe the company faces difficulty and has to purpose raw material at higher cost.
This usually weakens the overall supply.
 Bargaining power of Buyers: Moderate force of buyers bargaining power is
experienced under coffee and beverage industry. Therefore, due this force several
company under this industry have to drive down the prices in order to attain the desired
business revenue with efficiency. With references to Aroma Cafe if the prices are adopted
keeping in mind needs of the customers then more customers would be attracted towards
the cafe.
 Threats of new entrants: High force of new entrants within coffee and beverage
industry is identified. This is basically because new competitors easily entrants this
industry which eventually reduces the profitability of all the existence companies.
Therefore, in reference to Aroma cafe the company shall implement several strategies so
that new cafe do not enter the market easily.
 Threats of substitute products: Strong force of threat of substitute within coffee and
beverage industry is analysed. This because there are several competitors which provide
similar product into the potential market. (Geneletti and et.al.,2017). Aroma cafe shall
aim at making an extraordinary product so that no substitute for those products are
available in potential market. This will effectively help in increasing the overall
profitability.
 Competitive rivalry: Coffee and beverage industry faces strong force of competitive
rivalry this is because there are vast coffee chains which are operated under UK market.
These chain usually impacts the overall profitability. In context to Aroma Cafe the
company should effectively aim at capturing a particular segment in market and satisfy
the needs of the customers so that they become brand loyal through which the company
can achieve growth.
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Therefore, through adoption of porter's five force model the company can effectively
understand the opportunities which can be adopted in carry out carry out business operation
property.
PESTEL Analysis: In an organisation, PESTEL analysis is performed to identify the
macro environmental factors. It is a tool or framework used to analyse and monitor macro
environmental factors that may have impact on organisation. PESTEL analysis is used to
evaluate political, economic, social, legal and others which are analysed to understand working
conditions and take corrective actions. PESTEL analysis of The Aroma Cafe Coffee Shop, UK
are as follows:
Illustration 1: PESTEL analysis
Sources: What is PESTEL and how does it help your organization succeed, 2019.
 Political factors: These factors determine the government and government policy's
impact on an organisation. In this factors which included are such as political policies,
trade, fiscal and taxation policies also. Political condition of United Kingdom is stable
and fair which help The Aroma Cafe Coffee Shop to conduct their business at respective
place effectively. At UK private enterprises are get encouraged which seems as
opportunity for this cafe to run as well as retain their business properly.
 Economic factors: Economic factors includes interest rates, employment or
unemployment rates, exchange rates etc. Economic condition of United Kingdom is fast
growing which help The Aroma Cafe Coffee Shop to operate at respective place in
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effective manner as well as respective country economy also provide them growth
opportunities which leads to retention of business for long run.
 Social factors: These factors include changing family demographics, cultural trends,
change in lifestyle etc. The social factor of United Kingdom is based on western life style
as well as they have traditional eating habit which mostly include breads and coffee. This
is a major opportunity through which Aroma cafe can expand its business operations.
This will also help them in gaining high profitability ratio and market goodwill.
 Technological factors: These factors include technological innovations and creativity,
changes in research and development which can effect working of coffee industry. United
Kingdom a technology friendly country which is beneficial for The Aroma Cafe. This is
so by adopting advance technology for promotion and advertising they able to attract
customers and encourage them to visit at their place.
 Environmental factors: These factors include climate, carbon credits, waste disposal
and sustainability. These factors highly impact the overall sales of the coffee shops. This
Coffee shop has to focus on Corporate Social Responsibility(CSR) and public welfare
programmes which helps to change the mind of customers (Kanwar and et.al., 2017).
 Legal factors: Legal factors are those factors which are developed by government of
country. This will provide guideline to industry so that they can operate their business in
legal and appropriate manner. It basically includes copyrights law, patents right,
trademarks and several other factors. The government of United Kingdom develop
several regulations related to operating coffee shop which provide proper guideline to
The Aroma Cafe Coffee shop in order to operate their business in effective manner.
Therefore, after both of the above analysis respective company is well aware about each
and every aspect related to their business operations. Furthermore, after this the company shall
adopt several measure in order to effectively improve it weak points.
P2 Apply Ansoff's matrix to evaluate opportunities for growth which available for organisation.
Ansoff Matrix is basically a strategic planning tool that helps a business to determine its
product as well as best market growth strategy. This matrix basically helps business to suggest
several growth strategies which an organisation can adopt in order to achieved the accomplished
business objective. Therefore, four different strategies of Ansoff's matrix with references to
Origin coffee roasting are mentioned below:
4

 Market Penetration: Under market penetration strategy the firms basically aim at
increasing its overall market share. This can be done in several ways like company can
decrease prices of its existing products in order to capture new customers. Further it can
enormously invest in promotion as well as distribution so that large range of customers
are attracted. An organisation under market penetration can also acquire its competitors
in order to capture a reasonable market share. This strategy can be implemented by in
order to attain growth in long turn. The Aroma cafe shall reduce its cost of products in
order to attract new customers towards them and attain the desired profitably.
 Product Development: In a product development strategy that firm usually aims at
introducing a new product into potential market. The development usually involves
extensive research in order to effectively understand the expectation of company's
potential customers. This is usually adopted only when a company have strong
understanding of current market conditions. Product development can also be done in
several ways like company can implement strategic partnership with other firms in order
to gain growth (Lardy, 2017). Aroma Cafe can aim at introducing so that the overall sales
of the respective company tend to show increase revenue. Furthermore, Aroma cafe
under product development can introduce new variety of products which are not provided
by company's potential competitors. The cafe shall launch wide range of mocktails in
order to capture a reasonable market share.
 Market Developing: Under market developing strategy, firms basically enters into new
market with their existing products in order to increase their overall market share. In
market development the company usually expands its business operations into new
geographical areas. This expansion helps the increase the overall revenue. The Aroma
Cafe can also expand its business operation in several parts of UK so that the cafe
generates more revenue. Like the cafe can be opened in Liverpool, Bristol, York and
several other parts.
 Diversification: Diversification is a risky process. Under this an organisation usually
aims at expanding its business operation in different part with introducing new products
into the potential market.
Therefore, in order to capture reasonable market share into potential market Aroma Cafe
can adopt product development strategy in order to attain desired business objectives
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(Matsumoto and Komatsu, 2015). Under product development company shall usually make a
product which is exactly different from its competitors so that reasonable market share is attain
by respective company. In context to Aroma cafe the shall effectively launch different variety of
mocktails so as to capture reasonable market share.
P3. Assess the potential of funding sources which are available for business activities and
mention the benefits and drawbacks of each source.
Funding is a process of providing financial resources usually in the form of money or any
other value that provides assistance to an organisation. This word is generally used when a firm
requires cash in order to satisfy necessities of an organisations. However, there are several
potential source of funding which an organisation usually uses in order to effectively satisfy their
financial requirement. Some of the major sources of funding are mentioned below:
 Crowdfunding: Under crowdfunding the business are usually able to raise small
amounts of funds from several individual investors or purchasers. Moreover, this type of
fund resourcing is basically dependent on either reward crowdfunding or equity based
crowdfunding (Mokhber and et.al., 2017). It is an excellent form of funding for small
businesses. The main advantage of crowdfunding is that huge amount of attention is
created on social media platforms that help businesses to grow beyond. Furthermore, this
type of financing usually requires preparation and marketing in order to run successful
campaign which is the drawback because it is time consuming.
 Business Angels: Business Angels are basically private investors who are wealthy
entrepreneurs. They usually have lack of ideal fund with them, therefore in order to use
this their usually invest their funds in start-ups or small companies. Therefore, these
investors usually help small business organisation in several ways so that they can
effectively carry out their business operations in several parts of the country. The major
advantage of angel funding is that through it helps in accomplishing collection of revenue
injection which ultimately results in creating valuable investors for business. However,
the drawback of this funding is that the investors usually acquire the equity shares of the
company. However, with context to The Aroma Cafe the company make use of business
angels in order to expand its business operation in different locations.
 Venture Capital: Under this source of financing the company have to usually an equity
position in order to carry out business operations. It basically involves giving up
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ownership of an organisation to external parties. Through this source of finance, a healthy
return on investment is expected. Moreover, it is duty of firm to capitalise funds from a
well settled and stable venture. The prime benefit of venture capital is that borrowers are
not required to pay off on monthly basis. Whereas under this source of funding huge cost
is requirement which is a major drawback of venture capital.
 Peer to peer: Peer to peer lending is one of most common sources of raising funds from
external sources. This funding is usually carried out online using internet. Under this the
lenders provides money to borrowers online without direct interaction. Cash to business
corporation are sanctioned directly. This source of funding is also termed as crowd-
lending or social lending technique (Mosadeghi and et.al., 2015). The prime benefit of
this funding is that the lenders usually enjoys cost advantages on high skill. The main
drawback of this lending source is that peer to peer funding is quite risky because there
are no government interferences which can provide regulatory assistance. Therefore,
before borrowing funds through this source the company shall evaluate each and every
aspect in detail.
Therefore, the company might attain funds through crowdfunding in order to effectively.
This because crowdfunding is an excellent source of funding for small business organisation like
Aroma Cafe. Through this source the company established objective can be easily attained.
P4. Business plan for growth with financial information and strategic objective for scaling up a
business.
Business Plan is a written document which basically describes future of an organisation.
It a document which usually identify what are the future plans of respective company are how
these plans shall be achieved in order to gain the desired profits. Business plan are inherently
strategic in nature. Through formulation of effective business plan an exact direction is shown to
the company and then they usually follow this path in order to achieve the desired objective.
However, in order to extensively grow business operation of Aroma Cafe the company
might adopt several strategies so that the over productivity as well as profitability tends to
increase (Na, 2015). Currently the company is providing different types of coffee as well as tea.
Therefore, the company shall launch its new product in potential market. It shall launch
Mocktails so that the business of company enjoys good amount of sales under every weather
condition.
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Executive Summary: Aroma Cafe was founded in 2000 by Sergio Gratton. It was
established in London, England. The company is involved in selling wide range of beverages
which includes: coffee, espresso, tea and pastries. Aroma has 13 cafe under UK market.
Vision: Vision of Aroma cafe is to serve happiness to their customers by providing them
delicious and fresh quality beverages.
Mission: Mission of Aroma cafe is to provide the café's potential customers with best
freshly roasted coffee with excellent service at reasonable prices.
Strategic Objective: The objective of company launch wide range of mocktails in order
to capture reasonable market share so that of operation are carried out effectively. The prime
aim of launching is to increase profitability of the company by 30%. However, in order to
achieve this desired objective with efficiency the cafe might adopt penetration pricing strategy.
Financial Plan: Following is the financial plan which the company needs to follow in
order to make the desired business objective within one year.
Pre launch cash
budget
Cash Flow budget
Particulars Jan Feb Mar Apr May June July
Cash inflows
Investment 8000
Credit sales 2000 3000 3000 4500 1500 3500 4200
Total inflows 10000 3000 3000 4500 1500 3500 4200
Cash outflows
Fixed : Equipment’s 2000 2500 1500 2000 1200 1500 800
Variable : Direct
material 300 300 200 300 150 500 300
Total outflows 2300 2800 1700 2300 1350 2000 1100
Net cash flow 7700 200 1300 2200 150 1500 3100
Opening balance 0 7700 7900 9200 11400 11500 13000
closing balance 7700 7900 9200 11400 11550 13000 16100
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August September October November December Jan
1000 2000 800 1200 1500 3600
1000 2000 800 1200 1500 3600
200 300 100 600 300 2000
400 500 100 100 400 300
600 800 200 700 700 2300
400 1200 600 500 800 1300
16100 16500 17700 18300 18800 19600
16500 17700 18300 18800 19600 20900
Feb Mar Apr May June July
3000 3000 4500 1500 3500 4200
3000 3000 4500 1500 3500 4200
2500 1500 2000 1200 1500 800
300 200 300 150 500 300
2800 1700 2300 1350 2000 1100
200 1300 2200 150 1500 3100
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20900 21100 22400 24600 24750 16250
21100 22400 24600 24750 26250 19350
Post launch cash
budget
Particulars Jan Feb Mar Apr
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000
Total inflows 9200 2000 7500 3000
Cash outflows
Fixed : Equipment’s 2500 1200 1500 2500
Variable : Direct
material 350 300 250 150
Total outflows 2850 1500 1750 2650
Net cash flow 6350 500 5750 350
Opening balance 0 6350 5850 11600
closing balance 6350 5850 11600 11950
May June July August September October November December
5000 6500 1200 3200 1500 8200 1250 3210
5000 6500 1200 3200 1500 8200 1250 3210
1100 1500 1200 600 500 500 1200 700
100 500 500 250 450 250 1300 500
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