Trading Scents: Growth Strategies, Funding, and Exit Options

This report provides a comprehensive analysis of Trading Scents, a distributor of cosmetics, perfumes, and skincare products. It begins by outlining key considerations for evaluating growth opportunities, including Porter's Generic Strategy and PESTLE analysis, and discusses the use of analytical frameworks to demonstrate competitive advantage. The report then applies Ansoff's growth vector matrix to evaluate growth opportunities and examines potential sources of funding available to businesses, including internal and external sources, with a focus on the benefits and drawbacks of bank loans. Furthermore, the report includes a business plan for growth that incorporates financial information and strategic objectives for scaling up the business. Finally, it assesses exit and succession options for a small business, explaining the benefits and drawbacks of each option, providing a complete overview of growth strategies, funding, and exit plans.

Planning for Growth

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Key consideration for evaluating growth opportunities....................................................3
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix..............5
P3 Potential source of funding available to businesses and discuss benefits and drawbacks 7
TASK 3............................................................................................................................................8
P4 Business plan for growth that includes financial information and strategic objectives for
scaling up a business..............................................................................................................8
TASK 4 .........................................................................................................................................11
P5 Exit or succession options for a small business explaining the benefits and drawbacks of
each option............................................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
In order to achieve high success and growth, it is necessary for every business
organisation to develop and implement proper plans so as to attain goals and objectives in a
proper manner. Therefore, Planning is an important aspect for every company to achieve
competitive advantage and effectively competes in the market place. It also assists in enhancing
the growth of the nation. In addition to this, SME's also plays an important role to plan growth of
their business by framing proper strategies. Present report is based on Trading scents which is a
leading distributor of cosmetics, perfumes, skin care products from Iver, Buckinghamshire,
United Kingdom (Abolhasani and et. al., 2016). This report will throw highlights on key
considerations of evaluating growth opportunities and different methods of funding. Along with
this, business plan is also developed that includes financial information and strategic objectives,
hence it also assess exit and succession options for small business.
TASK 1
P1 Key consideration for evaluating growth opportunities
Planning for growth is a vital component for the business organisation to develop and
grow their business and maintain its sustainability in the long run. This will assist the respective
company to frame effective strategies and captures larger market share. In context to Trading
scents, which is small company provides cosmetic, perfumes and skin care products, its main
focus is to provide products to the customer according to their demands and requirements and as
per the changing trends in the market. This determines the respective company to evaluate key
considerations for the growth opportunities. These are discussed as follows-
Porters Generic Strategy
It is an effective model which assist the business to frame and develop proper strategies by
analysing the level of competition. This model consists of four strategies which can be used the
small business in order to enhance their performance and captures larger market share. Strategies
within the model is described as follows-
 Cost Leadership- It is a type of strategy in which company provides quality products to
the customer at a lower rate, as to make the products affordable to them. This will assist

them in attracting larger customer base and attains competitive advantage from its rivals.
In context to Trading scents, it can provide products at a lower rate, thereby reducing the
extra charges and tax on the product so as to grow their business by enhancing market
share.
 Differentiation- In this strategy, company provides highly unique and differentiated
products so as to gain attention of larger customer and therefore maintains growth of their
business. In such case, Trading scents can provide unique and differentiated products as
per the customer needs to capture larger market share.
 Cost Focus- In this strategy, main focus of the company is to provide quality products at
a lower cost to fulfil needs and requirements of niche market targeted customers.
Therefore, Trading scents can target specific niche customers and provides products at an
affordable price (Ahmed and Bramley, 2015).
 Differentiation Focus- Under this strategy, firms seek differentiation of its product in its
target segment. This assist the respective company to provides differentiated products
focusing on specific market. This will assist the firm to maximize its profitability and
captures the segmented market.
As Trading scents is a small business it can adopt cost leadership strategy by providing quality
products at an affordable rate and can enhance the market share and develops their business. As
with this strategy firm can acquire and sell the product to the individual customer which will
over reduce the per unit price of the product and attracts large customers.
PESTLE analysis
PESTLE analysis
This is also an effective model, through which Trading scents can analyse the external
environmental forces and frame proper strategies to grow and develop its business. This is
described as follows-
 Political- It is concerned with the political condition of country which has effect on the
operation of the business activities of Trading Scents. There is stability of the political
rules and regulations which allows respective company to grab various opportunities and
develops and grows the business to gain competitive advantage.
 Economic- As with the effect of Brexit, it led to open various opportunities for small
business to operate effectively and provide the products without facing much issues of

governmental rules and regulations. This assist the company to grow its business and
maintains their sustainability.
 Social- As with the ongoing change in the customer behaviour, taste and preferences it
also leads the company to provides products accordingly and meet their satisfaction level.
This leads Trading scents to provide cosmetic products according to the existing trend in
the market so as to attain the competitive advantage and develops their business.
 Technological- This factor determines that with the advancement in technology, it is
necessary for Trading scents to adopts the latest technology in supplying products to the
customer. This will allow Trading scents to provide products to the customers at the
faster rate and therefore assist in their development of business (Beatley, 2014).
 Legal- It is concerned with all the legal laws and legislations that assist the working of
small business in UK. Therefore, legislations of the UK government provides support to
the small business to develop and grow business and maintains sustainability in the
competitive business environment.
 Environmental- This factor is concerned with providing and manufacturing goods by
reducing the impact on the environment and its market place. Therefore, Trading scents
should follow all the environmental laws in providing goods to the customers in such a
way that doesn't harms the environment.
M1 Discuss the options for growth using a range of analytical frameworks to demonstrate the
understanding of competitive advantage within an organisational context
There are various analytical frameworks such as Porters Generic model and PESTLE
analysis which assist the company to determine its external forces and therefore develops
effective strategies in order to grow and develop their business. Therefore, these model gives an
insight about the existing trends and allow the firm to gain competitive advantage over its rival
companies. There are various growth options but if the company adopts to cost leadership
strategy it can minimise the cost of production and selling and thereby attracts larger customers
and enhance growth of business.
P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
In order to achieve high growth and development of business, it is necessary for the small
and medium sized enterprises to analyse the outside environment so as to identify the
opportunities and develops proper strategies for maintaining growth of their business. Therefore,

Ansoff's Matrix is an effective tool which provides strategic direction to the company so as
contribute towards the success of the business. Moreover, this matrix will allow Trading scents
to analyse and grab the future opportunities in market. These strategies are discussed as follows-
Market Penetration- In this strategy, respective company focuses on providing existing
products to the customers in the existing market. This will allow the respective company to
enhance their profitability level, without investing in R&D and analysing customers demand and
taste. For example, if Trading scents decreases their prices of their cosmetic products, or by
increasing their promotion, etc. then they will successfully be increasing their existing market
share with their current products and services.
Product Development- In this strategy, company provides the new innovative products
to the customer in the existing market so as to meet their demands and requirements and
therefore assist in enhancing larger market share. This assist the company to gain competitive
advantage by meeting the requirements and expectations of the customer (Eyvindson and
Kangas, 2015). For example, decision of expansion of business by the management of Trading
scents in different nations can help them in increasing market share.
Market Development- Under this strategy, organisations can provide existing products in
the new target market so as to enhance their market share and improve their profit margins. It is a
growth strategy in which respective company can promote its products in the new market and
maximise its profitability. This will also assist in enhancing sales of the company products. For
example, conducting proper research to identity the needs and requirements of targeted
customers assist Trading scents in enhancing their market share with improved profit margins.
Diversification- This strategy is concerned with innovating and developing new product,
with the aim of expanding the business as well as to capture larger market share. This is the
riskiest strategy and requires more investment in order to promote its products in the new market.
Trading scents tries to achieve growth in new markets by introducing new cosmetic products and
services to targeted customers in different nations where the demand of their products is more.
From, all these strategies, Trading scents can use Diversification strategies so as to
provide new products to the new target market so as maximise its profitability and gains the
attention of larger customers. This assist the company to enhance its brand image and therefore
provide differentiated product and gains competitive advantage from those of its rivals (Huang
and Zhang, 2014).

D1 Critically evaluate specific options and pathways for growth, taking into account the risks of
each option and how they can be mitigated.
There are some specific options of growth such as with the product development strategy
firm can introduce new products and provide it in the existing market thereby meeting customer
demands and requirements. Risk is that whether the new product will meet customer
requirements and enhance growth and sales of company products. Business enterprise can adopt
to diversification strategy by providing different products in the different markets, but is the
riskiest strategy as it leads huge time for the company to enhance its sales and profit margins.
This risk can be mitigated by using various promotional tools so as to create awareness of its
products in the target market and enhance its sales.
P3 Potential source of funding available to businesses and discuss benefits and drawbacks
Finance acts as a backbone of every organisation in order to function its business
activities in a proper manner. It is considered as an important process for the acquisition and
management of the funds so as to run their operational activities in a proper manner. There are
some internal and the external sources of funding which will help Trading scents to run and
function its business activities in a proper manner. All these sources are discussed as follows-
Internal sources- These are the sources which are present within the organisation and
helps in functioning the business activities in a proper manner (Janssen and et.al., 2014). It
includes sales of assets to raise funds as well as reducing the working capital and retained
earnings.
External sources- These are the sources of raising funds outside the organisation an
includes bank loans, leasing and venture capital, angel financing etc.
 Bank loan- This is the most effective way of raising funds from outside the organisation
as it provides adequate amount of funds to the organisation to function their business
activities in a proper manner, with a minimum rate of interest for a specific time period.
This allows Trading scents to raise funds from bank and meet their requirements and
thereby provides products according to customer needs and requirements.
Advantage
 It is a cost effective option as bank loans have cheaper rate of interest over overdrafts,
which allows business activities to work functionally.
Disadvantages

 In order to raise funds there are some strict requirements such as collateral security, it is
difficult to get loan without providing any security.
Angel Financing
It is a most effective method for acquisition of funds, in which investor invests adequate
amount of finance in order to attain the equity position. This helps the company to function
business activities in proper manner and thereby improves the performance level. In context to
this, Trading scents can take support from angel investors when it need the requirement of
finance to perform its business activities in a proper manner.
Advantage
 This is the most efficient method in order to raise funds and therefore is less risky method
to raise funds as compared to other sources.
Disadvantage
 Disadvantage associated with such source is to provide shares of the company to many
investors and can be costly process for the company.
OVERDRAFT - it is an extension from the credit from a lending institution and is granted
when the amount reaches zero.
 Advantage- It allows the respective company to raise funds from bank despite
having zero balance in its accounts.
 Disadvantage- Overdraft facility is provided when the manager within the respective
company has its current account with the bank.
Crowd Funding- it is a practice of funding by raising small amounts of money from
large number of people typically via the internet.
 Advantages- It is the fastest way to raise funds without paying any fees or security.
 Disadvantage- It is a not a easy process as well as damages reputation of the business.
M2 Evaluate potential sources of funding and justification for the adoption of an appropriate
source of funding for a given organisational context.
There are different sources of funding such as overdraft, Bank loan as well as angel
financing, but from all these, bank loan is the most efficient way to raise funds as respective firm
can get adequate amount of finance with a minimum rate of interest as well as no risk is
associated while raising funds (Leigh and Blakely, 2016). As angel financing is company has to
sell lots of shares with the customer.

D2 Critically evaluate potential sources of funding with justified argument for the adoption of a
particular source or combination of sources, based on organisational needs
Among the various sources of funding, bank loan can be considered as the most efficient
way to raise funds as it the simple way of get finance for performing the business activities in a
proper manner, but has disadvantage associated is that as company is required to pay some fix
collateral security while raising funds from the banks. As angel financing is a costly process to
raise funds compared as lot of shares are sold to the public.
TASK 3
P4 Business plan for growth that includes financial information and strategic objectives for
scaling up a business
Business Plan is a written document that lays down the marketing, financial as well as the
operational strategies which the business would adopt in order to realise the goals. This plan will
assist the organisation to meet their goals and objectives within the particular time frame. It
includes company vision, mission and goals and strategies so that it performs operational
activities in a proper time frame. This also attracts larger number of investors to invest huge
proportion of funds in company' shares.
Executive Summary- Trading scents is a small business company which provides scents,
cosmetics and other skin care products so as to maximise its profit margins and therefore aims at
capturing larger market share. Moreover, the company has an overdraft facility arrangement with
the bank to the tune of £2.0 million which they have never utilised. Therefore, it is required for
business organisation to make the use of funds in an appropriate manner so as to attract large
number of investor and thereby enhance the brand image of the company at the market place.
Company Description- Trading scents which is a leading distributor of cosmetics,
perfumes, skin care products from Iver, Buckinghamshire, United Kingdom
Products and Services- It provides cosmetics, perfumes and skin related products to
meet the requirement of the customers.
Vision- Vision of the Trading Scents is to attract the attention of various investors and
therefore enhance the brand image of the company by providing them quality products at an
affordable price to its customers.

Mission- Mission of the company is to provide high quality specialised products so as to
attract the attention of larger customers and therefore attains competitive advantage and
maintains sustainability in the competitive environment.
Objectives- SMART objective of Trading scents is to enhance market share by 20% in
the upcoming 3 years by providing them quality products.
STP- It is a three step marketing model which helps the business organisation to
effectively promote their offerings in the selective market segment. Therefore, market analysis is
an important part of the business so as to analyse the market demands and provide products that
meet the requirements of the customer. By conducting market research, it has been analysed that
along with body sprays, company is introducing new product that is hair sprays so that customers
can enjoy the sweet fragrance out of their hair and it will have manufactured using such
ingredients that would not have any side effects on the customer's hair. Therefore, for this new
product, company needs to conduct STP approach, which is as follows-
Segmentation- Under this respective company, segmentation of the consumer is done
according to the demographic factors of age of the people regarding their demand for cosmetic
and scent products. Therefore, for its new product market segmented is only for the young
generations who wants to take care of their hairs.
Targeting- It is concerned to targeting of specific number market segment in order to
maximise its profitability and improved sales. For this, company mainly targets customer
between the age group of 18 to 30 years of age (Liu and et.al., 2014).
Positioning- In order to enhance their brand image and attains a differentiated position in
comparison to its competitors, company uses promotional tools such as advertisements in online
and print media as well as adopts to product development strategy, in order to attract large
number of investors and customers by providing them quality products at an affordable rate.
Operational plan- The purpose of operational plan is to provide organisational
employees with a clear picture of their roles and responsibilities so as to attain goals and
objectives in a proper manner.
Human Capital- In order to perform the new project company requires additional
workforce so as to supply hair perfumes to its customers in an effective manner.

Risk assessment- Risk associated is that whether the new product will meet customer
requirements or not or whether the company will gain competitive advantage. There is financial
risk of gaining profits with the new product.
Financial Information- Finance is the major requirement of the business so as to carry
business activities in a proper manner. As Trading scents are introducing new products it
requires adequate amount of finance to to properly supply products in the market. Moreover, in
order to raise funds, respective company has various options such as through bank loans, agile
financing, overdraft facility. This will improve their profitability level and allows development
and growth of business enterprise. This requires the respective company to develop a proper
budget so as to determine the requirement of the funds (Miguez, Rezende and Veról, 2014).
Budget
Particular 31/12/18 31/12/19 31/12/20
Promotional
Expenditure
1200 750 450
Advertisements cost 600 500 650
Cots of adopting new
technology
2000 1600 1950
Catalogues 270 250 100
Total 4070 3100 3150
Therefore, with the help of proper budget it assist the respective company to function its
business activities in a proper manner and contributes towards the maximum profitability of the
business practice.
Cash Flow- It is the net amount of cash that the entity receives at the end of the period. If
the cash flow statement of the respective company is positive, it is analysed that respective
business is conducting its business activities in a proper manner and leading to higher growth
and success.
Cash flow statement of Trading scents is as given below
.