Small Business Growth Strategy: Case Study

Phoebe has managed to operate her small sandwich company successfully for five years. She wants to expand her business by renting space near a shopping center and the suburbs and expects to make more profits. Surely, if Phoebe manages to grow her business, she will likely have larger yields and a more significant customer base. In that case, she has to be prepared to deal with the difficulties of having a larger company and manage her workers and finances well. A growth strategy, in this case, will serve as a map of where phoebe’s business is going and it will also keep her focused on her business (Kurtz, 2010). Phoebe ought to also consider the business form she will adopt in her new business, her financial and organization structure and staffing needs. It is also worth considering the customers and the promotion strategies that she will adopt. Lastly, the business has to have some ethical considerations and ways of being socially responsible.

Growth Strategy

Have a Value Proposition

For phoebe to have a sustainable long-term growth, the first step she ought to take is having a value proposition. The value proposition gives an objective to the business and why customers may choose her products over the rest (Collins & Shemko, 2009). Phoebe ought to constantly ask herself why she is in business and how she can improve the customer’s welfare to have a competitive edge. In this case, phoebe may realize that she offers good tasty and fresh sandwiches at a reasonable price. It is, therefore, advisable that she maintains the quality and even improves at the same or a higher slightly price.

A Mission Statement

A mission statement will communicate to the clients the reasons why phoebe is in the food business and her objectives. Phoebe should have a mission statement that directs her to the path her new expanded business will take. Having a mission statement will hence enable Phoebe to consider having a sustainable long-term growth amidst the many challenges existing in the business environment (Kurtz, 2010). If phoebe decides to merge with another successful company, then she ought to ensure that their mission statement aligns with that of her business (Collins & Shemko, 2009). Although expanding the business would be profitable in the end, it is important to ensure that the two businesses have the same values.

Understand the Revenue Streams

Phoebe ought to evaluate the revenue that she currently gets from her mobile business and compare it with the forecasted earnings from the expanded business. Phoebe should ensure that the income generated from the new business must be sustainable enough to cater for the increased expenses (Collins & Shemko, 2009). Phoebe could also research on the foods that she can begin offering her clients to make them profitable. She must constantly ask herself how she can improve her services to gain more customer audience and get more profits.

Develop a Contingency Plan

A bigger business automatically translates to having more risks. In this case, therefore, phoebe must have a plan that will alleviate her business from probable risks. It is important that phoebe comes up with scenarios that would potentially risk her business. Establishing a probable risk will hence enable her to develop a plan on how she can counter the risk and save her business from failure (Kurtz, 2010). Some of the risks surrounding a business include a major catastrophe like earthquakes, flooding, political imbalance, currency fluctuation and economic recession (Collins & Shemko, 2009). For instance, if the value of the currency devalued, customers would find her services expensive. Phoebe may, in this case, have to develop ways of obtaining her resources cheaply so that she can maintain the low prices.

Business Form

Business Form

Advantages

Disadvantages

Sole proprietorship

Enjoys all companies profits

Quick decision making

Easy to establish

Fewer regulations

No corporate income tax

Limited form of financing

Increased business risks

Owner caters for all business obligations

Unlimited liability

Partnership

Easy to form

It is easy to get capital

No corporate income tax

Partners cater for all business obligations

Slow decision making

Unlimited liability

Limited company

Various options of raising funds

Transfer of ownership from one shareholder to another

Limited liability

High business regulations

High corporate taxes since dividends are not taxed

It would be advisable for phoebe to sustain her sole proprietorship form. To begin with, phoebe will make all the decisions in her business on financing, expansion and even the location of the business (Kurtz, 2010). Phoebe will also make quick decisions regarding the business as opposed to having a partnership or a limited company. Most importantly, phoebe will enjoy all the profits generated from the business.

Financing Assistance

Phoebe may realize that she requires extra finances to successfully expand her business. Ways in which she can acquire finances include getting a bank loan, asset financing, using one’s savings or getting money from goodwill. Phoebe could consider getting asset financing for the equipment that she will need in her new business. The asset financing will offer her flexible mode of payments and rates which will be favorable for her (Kurtz, 2010). Savings is also a good form of financing because it means that phoebe will not have to regularly pay interests to a bank (Collins & Shemko, 2009). However, the savings may be depleted which can be disastrous in the future when the restaurant need more finances. In this case, it would be advisable for phoebe to obtain a bank loan because it is reliable and it will also offer her some tax relief. The bank loan would be paid in regular installments and the rate can be adjusted depending on the financial position of the company. Phoebe will also have the option of topping up the finances in the future in case she decides to further expand her business.

Organizational Structure and Staffing Needs

Organization Structure

Evaluating the organization structure will be a great step towards maintaining growth in Phoebe’s business. The organization structure will indicate how decisions are made within the form, the leadership role and the responsibilities of every employee (Kurtz, 2010). The organization structure details the way the employees and the management view the business and its future growth. Phoebe ought to take a managerial stand to effectively lead her team towards this new growth. Phoebe ought to decide on the steps that the company will take when it comes to making decisions within. In this case, a top-down approach may not be effective as it may bear resentment and also bar the employees from making suggestions that may improve the services offered by the company (Collins & Shemko, 2009). It may, therefore, be advisable for phoebe to develop a horizontal approach to allow her to receive worthy recommendations from her staff and successfully run her business.

Staffing Needs

It may be advisable for phoebe to establish whether it may be better to acquire more employees or train the current ones on how they can manage her expanded business (Collins & Shemko, 2009). Phoebe may, however, realize that there is a need to hire more workers to cater for the increased numbers of customers. More employees, in this case, translate to more expenses for her in terms of salaries. Phoebe, therefore, ought to hire competent staff that will help her actualize her financial objectives. Phoebe should organize for a formalized training before opening her business to equip her workers with the right skills needed in running that big business. Phoebe should also offer on the job training to her staff to enable them to acquire the right skills. Besides, on the job training is effective because it ensures that the workers can learn from their mistakes while still offering value to the restaurant.

The employees are the backbone of any business. Phoebe ought to realize that the kind of people she employs in her business will impact on the returns that she makes (Kurtz, 2010). In this case, she ought to hire employees that stand for the same values and who are passionate about growing the business. In this case, phoebe may have to have detailed discussion with her employees to assess their attitude towards the new business and their commitment to work. Phoebe ought to also develop some retention and motivation strategies to ensure that the employees always deliver their best (Collins & Shemko, 2009). Phoebe may choose to upgrade the employees’ salaries and offer them incentives in terms of having some holidays and even shopping vouchers. Phoebe should finally establish a management team and ensure that it is fully working towards a profitable and a successful business.

Customers/Promoting the Business

Word of mouth is definitely the best and most affordable ways of getting. By offering good services to the customers, phoebe can be assured that they will always refer new customers to her business which will enable her to make more profits (Collins & Shemko, 2009). The word of Mouth can go well with social media. Phoebe could hence continue using Facebook to advertise her services to her customers and at that ask her clients to review the company for the public to see.

Phoebe would also use posters to direct her customers to her new business. The posters will detail the types of food that she offers within the company and their price range. Posters are affordable and also easy to spot. Besides, Phoebe can put up the posters in designated public places to grab the customer’s attention. Phoebe could promote her business by actively getting involved with selling the food. Finally, offering discounts on a regular basis will also attract customers to the business.

Ethics and Social Responsibility

Phoebe ought to make some ethical considerations in her expanded business. The food industry is quite sensitive and phoebe owes it to the customer’s good and healthy food (Broni, 2010). Phoebe should be clear about the ingredients they use in her restaurant and be considerate of any health issues with their customers. Phoebe ought to ensure that she complies with the laws of the land. In this case, phoebe should file the restaurant returns and submit the statutory deduction on time. Moreover, treating the employees with fairness and openness will ensure that phoebe runs her company ethically and reduce instances of getting into lawsuits (Broni, 2010).

According to Broni (2010), being socially responsible means preventing negative externalities and reinforcing the positive ones. Phoebe should ensure that her business contributes to the positive welfare of the environment that she is in. For example, phoebe could choose to continue buying local materials and even supporting the orphaned children within her periphery. It would also be considerate to offer food once in a while to the homeless to keep up the good will. Phoebe can also be socially responsible by being fair while recruiting and reducing the rate of discrimination (Broni, 2010). The restaurant should hence give equal chances to the job applicants and pay them salaries that are commensurate with the work they do.

Summary

Indeed, phoebe has taken a great step in choosing to expand her business. Moreover, she may realize that expanding her business will have to involve some careful steps that will prevent her from a probable loss. Phoebe has to have a growth strategy that details the steps that she is going to take to expand her business, maintain her profits and her customers. A sole proprietorship would be best suited for her since she can make all the decisions for her restaurant. It would be best to get a bank loan to expand her business because it is reliable and she can also obtain it in the future. Phoebe ought to ensure that the new hires have the same values in her heart to make the business succeed. A horizontal structure would be best to prevent rigidity at the restaurant and also enable employees to develop ideas that can develop the company. Phoebe could use Facebook, incentives, and personal selling to retain the customers and at the same time ensure that she follows ethical concerns. Finally, phoebe must take care of the society in which she operates in by ensuring there is zero pollution and also using natural and locally made materials in her restaurant.

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References

Broni, J. V. G. (2010). Ethical dimensions in the conduct of business: business ethics, corporate social responsibility and the law. The“ ethics in business” as a sense of business ethics. In International Conference On Applied Economics–ICOAE (p. 795).

Collins, K., & Shemko, J. (2009). Exploring business. Toronto: Pearson Canada.

Kurtz, D. L. (2010). Contemporary business. Hoboken, NJ: Wiley.