Unit 33 Small Business Enterprise Assignment


Small business enterprises (SBEs) constitute an integral part of both developing and developed economies. These enterprises, often founded by passionate entrepreneurs, contribute significantly to economic development (Tolstoy, 2014, pp.17-35). Even during economic downturns, SBEs continue to thrive, generating employment opportunities and fostering economic stability. This assignment delves into the realm of change management, focusing on the processes required to assess and enhance the performance of a small business enterprise.

Task 1

1.1 Profile of Naked Wines

To grasp the significance of SBEs, it’s crucial to delineate the parameters that define them. In the context of the UK, the Companies Act 2006 classifies a small company as one with a turnover not exceeding £6.5 million, a balance sheet total below £3.26 million, and fewer than 50 employees. To illustrate the concept, Naked Wines serves as an exemplary SBE. Naked Wines, an online wine retailer, emerged amid a severe economic recession in December 2008. Its unique business model involves funding independent winemakers globally in exchange for exclusive wines at wholesale prices (Daniel et al., 2014).

Naked Wines serves multiple functions. It functions as a social platform where customers rate wines, share comments, and interact with fellow enthusiasts and wine producers. Its distinctive strength lies in providing a direct interface for winemakers to engage with consumers, thereby eliminating intermediaries and reducing marketing costs. In essence, Naked Wines serves as a crowdsourcing platform for winemakers worldwide (Kotelnikov, 2014).

Nonetheless, one significant weakness of Naked Wines lies in its dependence on the wine market. While some perceive this as a strength, it’s imperative for an SBE like Naked Wines to diversify its product offerings to ensure sustained growth. Its uniqueness lies in bringing a traditionally brick-and-mortar product, wine, into the online sphere and creating a social community around it. However, the dearth of substantial funding, even after six years of operation, could potentially impede future growth. Naked Wines was founded by Rowan Gormley and earned recognition as one of the top 1000 companies inspiring Britain by the London Stock Exchange Group in December 2013.

1.2 Comparative Analysis of Performance

Performance evaluation constitutes a critical aspect of assessing an SBE’s achievements. Performance is measured against internal expectations or competitors’ performance. Since its inception in 2008, Naked Wines has experienced robust year-on-year growth. In the 2014 fiscal year, it reported an impressive 40% growth, surpassing the £50 million milestone in turnover (Naked Wines, 2014).

Naked Wines, which successfully integrates wine retailing with social media and crowdfunding to support independent winemakers, reported a global turnover of £53 million in 2013, up from £38 million in 2012. In the UK, its operating profit nearly doubled to £2 million. Growth is evident from the increasing number of Wine Angel Investors, who invest a set monthly amount, totaling over £5 million per month, to finance winemakers in return for wholesale prices. The number of Wine Angel Investors doubled to 220,000, surpassing the break-even point of 185,000. The company now ships 25,000 bottles of wine a day (Sahut & Peris-Ortiz, 2014, pp.663-668).

Naked Wines has also expanded successfully in international markets, securing a £6.4 million ($10 million) investment in 2013 to boost its international presence. Notably, it entered the US and Australian markets in 2012, after its UK launch in December 2008. Another indicator of its performance is profitability. After achieving its maiden profit in 2013, Naked Wines shared a combined profit of £1.2 million among its workers, with 34 staff receiving £35,000 each after the profitable year. Naked Wines has not only grown but also achieved profitability, a crucial milestone for SBEs (Sahut & Peris-Ortiz, 2014, pp.663-668).

Task 2

2.1 Recommendations to Overcome Weaknesses

Naked Wines, despite its success, faces challenges that need addressing for sustained growth.

Diversification: Naked Wines should diversify its product portfolio to reduce over-dependence on the wine market. While wine has been its primary focus, expanding into other alcoholic beverages could tap into new customer segments and markets. For example, incorporating craft beers or artisanal spirits would diversify the product range while leveraging the company’s reputation and customer base.

Physical Stores: Contrary to its online nature, Naked Wines could consider establishing physical stores in select prime locations. This strategic move would capitalize on the brand’s appeal and create a presence in the brick-and-mortar retail sector.

2.2 Ways to Maintain and Strengthen Performance

To maintain and strengthen its performance, Naked Wines should focus on several key areas.

Strategic Workforce Planning

Staffing Requirement: With current employment hovering around 40 employees, Naked Wines must plan for future staffing needs to support potential business expansion. Adequate manpower will be essential to manage domestic and international operations effectively.

Maintaining Market Leadership

Maintaining Market Position: Naked Wines has carved a unique niche in the market as one of the few online wine retailers. Maintaining this leadership position is crucial. A consistent focus on offering quality products and excellent customer service is vital to sustaining its brand reputation.

Financial Prudence

Cash Flow Management: Vigilant financial management is essential for an SBE’s sustainability. Naked Wines should maintain strict control over its finances, consolidating operational expenses and ensuring capital from investors is used efficiently.

Supplier Relations

Supplier Relationships: Naked Wines’ success depends on positive relationships with wine suppliers and manufacturers. Proactive measures should be in place to address any issues and ensure these relationships remain strong.

Marketing Investment

Brand Awareness: To sustain its competitive position, Naked Wines should allocate a significant budget for marketing and promotion. While word-of-mouth has been effective, targeted marketing campaigns will be essential to reach a broader audience.

2.3 Recommendations for Business Expansion

Naked Wines has several avenues for business expansion to further capitalize on its success.

Diversification of Product Range

Diversification: Naked Wines could broaden its product range beyond wine to include other alcoholic beverages like craft beers, artisanal spirits, or even non-alcoholic options. Exploring complementary products aligns with consumer preferences for variety.

Physical Stores for Tangible Experience

Physical Stores: Despite its online origins, Naked Wines could consider opening physical stores in strategic locations. Leveraging its brand reputation, these stores would provide customers with a tangible experience, fostering deeper connections with the brand.

Task 3

3.1 Existing Business Objectives and Plans

Naked Wines’ current business objectives center on providing a platform that connects wine enthusiasts with independent winemakers in a mutually beneficial environment. The company has also pursued international expansion, successfully establishing itself in the US and Australian markets alongside its strong presence in the UK. The business plan is organic, leveraging its strengths effectively (Naked Wines, 2014).

3.2 Revised Business Plans

Naked Wines’ existing business plan, while fundamentally sound, can be further enriched to enhance sustainability and foster growth. Two key elements that should be incorporated into the plan are:

1. Diversification Strategy: To ensure long-term sustainability and expand its market reach, Naked Wines should integrate a diversification strategy into its business plan. This strategy involves broadening its product offerings beyond wine. Specific goals and timelines for the introduction of new product categories should be clearly defined. This diversification could include the inclusion of craft beers, artisanal spirits, or even non-alcoholic options in its portfolio. By catering to a wider range of consumer preferences, Naked Wines can strengthen its position in the alcoholic beverage market and reduce its dependence on a single product category.

2. Mergers and Acquisitions (M&A): As part of its growth strategy, Naked Wines should consider mergers and acquisitions (M&A) within the online alcoholic beverage market. Identifying potential partners or acquisition targets, such as Drink Britain, could be a strategic move. M&A activities can help Naked Wines consolidate its market share, gain access to new customer bases, and acquire expertise from established players. This approach allows for rapid expansion and synergies that can be leveraged for sustainable growth.

Incorporating these elements into the business plan will provide Naked Wines with a more comprehensive and forward-looking strategy, ensuring its continued success and adaptability in a dynamic market.

3.3 Feasible Action Plan

To effectively implement the suggested changes, Naked Wines should adopt a comprehensive action plan spanning one year. This plan should include the following key components:

Market Research: Conduct extensive market research encompassing PESTEL (Political, Economic, Social, Technological, Environmental, Legal) and SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses. This research will provide insights into the current market position, potential opportunities, and threats. It serves as the foundation for informed decision-making.

Financial Estimation: Meticulously plan finances, considering the capital requirements associated with the establishment of physical stores and the diversification of product offerings. Accurate financial projections and budgeting are essential to ensure that the organization remains financially stable during the implementation phase.

Organizational Structure: Adjust the organizational structure to accommodate the new business areas resulting from diversification and the introduction of physical stores. This includes defining clear roles and responsibilities, creating reporting lines, and ensuring accountability throughout the organization. An optimized structure will facilitate a smooth transition.

Implementation Team and Timeline: Assemble a dedicated implementation team consisting of individuals with the necessary expertise and skills to drive the proposed changes. Establish a phased timeline that outlines specific milestones and tasks to be accomplished at each stage of the implementation process. A well-structured timeline provides clarity and accountability, ensuring that the changes are executed efficiently.

By following this comprehensive action plan, Naked Wines can systematically and successfully implement the recommended changes, adapt to new business challenges, and capitalize on growth opportunities over the course of one year.

Task 4

4.1 Impact of Proposed Changes

The proposed changes are anticipated to yield the following impacts:

  1. Revenue Increase: The diversification into other alcoholic beverages is expected to have a positive effect on revenue. By expanding its product range, Naked Wines can tap into new customer segments and enhance its sales. It is estimated that this diversification could potentially boost revenue by approximately 5%, contributing to overall growth.
  2. Operational Expenses: While the opening of physical stores presents an opportunity for customer engagement and brand visibility, it will also incur additional operational expenses. These expenses may include rent for retail spaces, utilities, and maintenance costs. Naked Wines should carefully manage these expenses to ensure they do not significantly offset the revenue gains from diversification.
  3. Personnel Accountability: Implementing these changes will require a heightened focus on personnel accountability and efficiency. With the expansion of product offerings and the introduction of physical stores, employees will need to adapt to new responsibilities and workflows. Establishing clear roles, responsibilities, and performance metrics will be essential to ensure that the workforce remains aligned with the organization’s objectives and delivers optimal results.

These impacts reflect both the opportunities and challenges that Naked Wines may encounter as it moves forward with its proposed changes. Effective management and monitoring will be key to maximizing the benefits and mitigating any potential drawbacks.

4.2 Change Management Plan

Effective change management is crucial for Naked Wines. The following key steps should be taken:

  1. Ensuring Employee Awareness: Transparently communicate the proposed changes to all employees, fostering understanding and alignment with the organization’s objectives. Clear and open communication is essential to gain employee buy-in and mitigate resistance to change.
  2. Training and Skill Development: Provide targeted training programs to equip employees with the necessary skills to effectively navigate and operate within the new business processes. Ensuring that the workforce is adequately prepared for the changes is vital for a smooth transition.
  3. Regular Monitoring: Establish a comprehensive monitoring system to continuously track the progress of the implemented changes. This system should include regular check-ins, progress assessments, and performance evaluations. It will enable Naked Wines to identify and address issues promptly, provide feedback to employees, and make any necessary adjustments to ensure the success of the changes.

By following these steps, Naked Wines can effectively manage the transition and maximize the likelihood of successful implementation of the proposed changes.

4.3 Monitoring Performance

To ensure the successful implementation of proposed changes, Naked Wines should institute a robust monitoring system that includes daily, weekly, and monthly assessments over the course of the one-year implementation period. This comprehensive monitoring approach is essential for maintaining a firm grip on all activities related to the changes and promptly identifying any areas that may require adjustments or improvements. By regularly reviewing progress at different intervals, Naked Wines can proactively address challenges, ensure alignment with the established objectives, and fine-tune strategies as needed. This proactive monitoring will contribute to the overall effectiveness of the change management process and enhance the likelihood of achieving the desired outcomes within the specified timeframe.


Daniel, E. M., Di Domenico, M., & Sharma, S. 2014. Effectuation and home-based online business entrepreneurs. International Small Business Journal, 0266242614534281.

Kotelnikov, V. 2014. Small and medium enterprises and ICT.

Naked Wines. 2014. Naked Wines London Stock Exchange Group. [ONLINE] Available at httpwww.lseg.comonline-retailnaked-wines. [Accessed 02 November 2014].

Sahut, J. M., & Peris-Ortiz, M. 2014. Small business, innovation, and entrepreneurship. Small Business Economics, 42(4), 663-668.

Tolstoy, D. 2014. Differentiation in foreign business relationships A study on small and medium-sized enterprises after their initial foreign market entry. International Small Business Journal, 32(1), 17-35.

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