The word hospitality is used to generalize a variety of sectors that involve the commercial use of hotels, restaurants, and bars (Lashley 2014, p. 160). The hospitality business is now one of the leading income generating sectors of many countries. The industry is considered to be one that requires little skills. However, even the large economies rely on the industry (Buam 2002, p. 343). Several businesses are involved in hospitality. Travel and tourism, food and beverages, accommodation, and food and beverages are some of the companies in the hospitality sector.
The creation and development of a micro hospitality business require consideration of various factors. A vital factor to consider when starting such a business is that the hospitality industry is judged by people who use their disposable income and have free time to enjoy themselves (Caan 2014). Other factors to consider in the creation and development of a micro business related to hospitality are discussed further in the report.
Starting a business is usually one of the most challenging aspects of the firm. Several factors regarding the ventures must be weighed. The blueprints of the company have to be laid out and the plans set in motion. The first factor that should be considered is the structure of the business. Different structures have different roles and responsibilities. Various liabilities come with different structures. The best structure is one that enables more profit than expenditure. For a small business, the structures to be considered are either a sole proprietor or a partnership. A micro business occupies less area, and thus a sole proprietor can manage its operation as compared to a limited company which requires a board of directors. A sole proprietorship has minimum legal costs, few formal requirements, no corporate taxes, and the sole proprietor has complete control over the business (all business 2017).
The next step after deciding on the type of business is to source the money required to start the firm. There are various sources of capital that a sole proprietor can access. Bank loans and overdrafts, personal savings, and government loans and grants, are some of the sources of money for a starting a small business. Another developing source of capital is the angel investors. These are third parties who invest in a new business and who put between $10,000 and $100,000 (Iskold 2017). Capital is required to purchase the necessary equipment for the firm, and for leasing or construction of the business premises. The next step after acquiring the starting capital is starting the business operations.
Business processes involve daily transactions, purchase of material from the suppliers, focusing on proper customer service especially in the hospitality sector. A small business will not have a significant clientele as compared to an already established firm. The few clients that the enterprise receive from the foundation of the small company and the level of service delivery will determine if they will be regulars or not. Customer feedback is invaluable for a small business. Such information helps the company improve on services offered. The business operations also involve paying off bills and staff. Business records have to be updated and the funds properly managed. The scale of operations of a new small business is small, and the money in circulation in the firm is manageable by one or two people.
Branding and marketing is the next step as the business continues to grow. A business identity is required to differentiate the business from the competition. Branding does not only involve the name and logo of the firm; it is the means through which the customers identify the firm. Branding, in the hospitality industry, is what sets apart the top companies from the rest. Giving the business a unique identity not only helps the customers to identify the business, but it also helps the business connect with the customers emotionally.branding also helps the customers know what to expect since it will be easy to choose from a range of other products.It also helps in attracting top talents and build trust with different stakeholders.(Amanda 2016).
Marketing is the efforts directed to increase the revenue in the business. Marketing activities involve selling out the business’ products and services (learn.org 2003). Marketing aims at attracting new customers and maintaining loyalty. In marketing both print and digital platforms should be engaged to stand out in the face of competition. For hospitality sales, marketing involves the selling of both tangible such as meals, and intangible products such as ample parking, fun atmosphere. Hospitality marketing in most cases is the sale of services rather than goods. Marketers will want to maintain the portion of revenue from their regular customers and also improve these revenues from new clientele. This aim will be accomplished through ensuring the brand recognition exists. Therefore their strategy will be split between maintaining their regular customers and seeking out new clients.
The marketing strategy will employ various methods to ensure brand success:
Research- customers opt the business for various reasons. For instance, the availability room service, availability of parking space, or a calm atmosphere with a beautiful view. Marketers are supposed to identify these factors for them to achieve customer satisfaction. By speaking to different clients and reviewing their website, they can determine their response on what makes a hospitality company stand out or on what areas to improve.
Awareness- the information about the business and what it offers should be available to the public, and it should be up-to-date. Customers cannot purchase what they don’t know. Therefore the need to create awareness of the services offered is essential to target new clients. The can also buy an advertisement space to make their business public.
Promotion- this includes giving offers and incentives to their customers. In hospitality, offers can be provided when the business is in the off-peak season, for example, spa for weekends only. The company can also offer price discounts to their regular customers, or a group such as a family.
Relationships- an excellent customer rapport should be created and maintained, this will improve customer loyalty hence a stable revenue. The regulars can also refer their friends and family to the business thus improving sales through increased purchases (Hussung 2016).
Marketing is all activities that will enhance sales and include advertisement, promotion, and public relations. These activities are important to a business in the following ways:
Improve sales- marketing will attract new customers to the company and will also improve loyalty from regular clients, this will improve the business’s sales.
Allows competition with large enterprises- marketing provides a platform for small businesses to compete for a market share with the already established big firms. Their commitment to their clients will give them an added advantage since they can offer personal attention to clients need and complains. Their undivided attention to providing satisfaction to their customers is a good reputation that will draw more customers to the business.
Creating awareness- marketing is a way of making a business known for the products and services they provide, it also provides their location. Marketing also provides an in-depth explanation of how the company operates. (Sims 2013). Potential clients learn about the business through the marketing process. Marketing provides the clients with the information they require on the product. SSSSCreating awareness helps the business identify the customers’ needs through their feedback.
Strategies to Ensure Success of a Hospitality Business
Once the firm is established, and it has a significant customer base, the next step is developing the firm. Development will involve expansion of the firm regarding the scale of operations and services provide.expansion of the firm will take into account various strategies which include.:
Diversification- the firm should develop new products and services to attract a larger clientele. A wide range of services offered will expand their target population since the firm will cater for more customer needs.
Markert development- market development involves modifying the existing products and services. It also involves invention of new products into the market. Creativity and innovation of the staff are paramount to the aspect of market development.
Product development- the firm should introduce its products to new markets. The markets could be related to the hospitality industry, or the products of the form could fit those markets.
Employees are the heart of any organization. For the firm to develop it will be required to invest in the employees, investment can be through training and business workshops. Development of the employees results in better performance of the business enabling the growth of the firm. Techniques to develop employees are explained below.
Talent management and identification- talented workers, are invaluable to any organization. The firm should identify employees with skills that fit the hospitality industry, for example, an employee who can speak several foreign languages. During recruitment, the firm should look out for talent. The business should aid the employees to develop their talents through training and exposure.
Staff training- the firm should also invest in training their staff to provide professional services. Training can be an everyday activity, or they can undertake a short training session before they start working. Training employees will enable them to provide quality services, and it will also enhance their presentation. Staff should be trained on the use of recent technology installed in the firm and any other relevant technology in the hospitality industry.
Employee involvement- employees perform better when they feel they are part of the company. Involving employees in firm’s affairs and decision-making creates the feeling of belonging to the company. The firm should assign more responsibilities to their employees. More responsibilities instill the sense of accountability in the workers who are crucial to employee development.
Encouraging good industrial relations- the relationship between the employees and the management influences the functioning and the development of the business. Good employee relations allows interactions between the management and the employees. The interactions allow the management to note the weaknesses of their employees and help them rectify. The employees also get to know the views of the management and understand the vision for the company.
Rewarding employees- reward can take various forms, for instance, incentives, promotion, recognition for work well done among others. Employees that feel appreciate are motivated to perform better. Rewarding employees also creates healthy competition amongst them; it will also improve their creativity and innovation. Competition enables the workers to perfect their skills while trying to out-do each other.
Setting standards- the company should set standards that each employee is required to attain. These standards should be based on the services delivered to the customers. The standards prompt the employees to work hard into being a better service provider.
Issues that Impact the Operation of a Small Hospitality Business
Business environment refers to the total factors, both internal and external that affects the functioning of a company. The business environment affects a small hospitality business in different ways. The factors that affect the functioning of the firm are as discussed below.
The external environment comprises of those factors that the company cannot control directly. It is critical for a business to recognize such factors in order to identify the opportunities and threats that can affect the operations of the business which are critical for its success. Just like any other business, the hospitality industry is affected by political, economic, social and technological factors.
These are factors that are controlled by the government. They include legislation, tariffs, and taxes. An increase in tax requirements in the hospitality industry will negatively affect the small firms. Government incentives help reduce the cost of production of the small firm. The political stability of a nation is also a factor to consider. In an unstable nation, the first sector to be affected is tourism. Without tourists, hotels and other hospitality amenities are likely to suffer a big blow. A country like the United States, for instance, is likely to give travel advisory to her citizens when a country is suspected to be politically unstable. According to Perkins (2017), heated competitions during an election season, for instance, pauses a challenge to the hospitality sector by creating a negative atmosphere. The fear or uncertainty about the safety and economic condition reduces spending by several people. More people are likely to stay indoors when there is an atmosphere of negativity and thus, depriving the hospitality sector of customers and consequently, a drop in revenues.
Economic Factors
Macroeconomic Factors: These are factors that affect the whole industry and not an individual firm. Recessions and depressions are examples of macroeconomic factors. During recessions, a small firm suffers loss due to a low customer base as compared to a big firm.
Micro-economic Factors: These are factors that affect the business directly. They include suppliers and the market size of the firm. Failure by suppliers to deliver on time causes a lapse in business operations. Consistent delay by the suppliers may lead to loss of clients by the firm.
These factors include social relations that affect the small business. Change in consumer preference and choice and change in fashion are examples of social factors. A small firm may lose its clients due to its inability to change to the prevailing customer preference as a result of inadequate funds. The most crucial social factors that affect the hospitality sector are the demographic factors.
According to Vallabh and Mhlanga (2015), demographic factors such as gender, age, education, experience, and income have a significant impact on hospitality industry performance. There are products that female consumers prefer. Men also have different preferences. Social trends affect the hospitality sector. Vallabh and Mhlanga (2015) state that consumer preferences are shifting every year. The rise of sharing economy, for instance, has paused a challenge to established names in the hotel segment. The hospitality business should, therefore, acknowledge the consumer preference and ensure the products and services offered are favourable.
These are factors that involve technology advancement that can either be beneficial or harmful to a small business. The right technology can improve the products and services of a small firm resulting into an increased number of clients due to good service delivery.
According to Dragni? (2014), the management of the internal environment is related to the degree at which a business entity performs and achieves. The internal factors are those that are directly related to the functioning of the business.
The management of a firm determines how well it will perform. Management that misappropriates funds leads to the downfall or even the collapse of the firm. Proper management ensures proper allocation of resources including the capital. A small firm requires a sound management to ensure it develops and expands.
The skills that employees possess in their service delivery determines the rate of development of the firm. Skilled employees display professionalism and offer quality services. Incompetent employees offer poor services and discourage clients from acquiring services of the firm.
Innovation
Firms that are innovative develop at a faster rate. Innovation introduces new products to the market and improves standards of their and services. Improved products and service delivery build a firm reputation and attract more customers.
Capital Availability
The ability of the firm to access funds influences the firm’s performance. Firms that have access to a large pool of funds can develop at a faster rate because there’s no delay in business operations or procurement.
Conclusion
Overall, the business environment affects a small hospitality business depending on the changes. Positive changes in the business environment impact positive changes in the small firm while negative changes in the business environment impact relatively on the business. Technology and government policy are some of the external factors that will heavily affect small business. The small firm does not enjoy the economies of scale because it does not operate on a large scale.
References
all business., 2017. Advantages and disadvantages of sole proprietorships. [Online]. Available at: htttps://www.allbusiness.com/advantages-and-disadvantages-of-sole-proprietorships-3-875-1.html
Amanda., 2016. Why is branding so important for your business(+ real life examples).[Online] Available at: www.thebrandingjournal.com/2016/06/why-is-branding-important-business/
Baum T., 2002. Skills and training for the hospitality sector: a review of issues. Journalof vocational education and training, 54(3), pp. 343-364.
Caan j., 2014. Tosucceed in hospitality, focus on the customer. [Online] Available at: https://www.theguardian.com/small-business-network/2014/mar/05/succeed-hospitality focus-customer-james-caan
Dragni?, D., 2014. Impact of internal and external factors on the performance of fast-growing small and medium businesses. Management: journal of contemporary management issues, 19(1), pp.119-159.
Hussung T., 2016. Importance of marketing in the hospitality industry. [Online]. Available at: https://online.csp.edu/bloq/business/the-importance-of-marketing-in-the-hospitality-industry
Iskold, A., 2017. The seven sources of startup capital. [Online]. Available at: https://www.entrepreneur.com/article/2522676
Lashley, C., 2014. Hospitalityexperience:an introduction to hospitality management. Journal of tourism, 1(2), pp. 160-161.
learn.org., 2003. what is hospitality marketing?. [Online]Available at: learn.org/articles/what_is_hospitality_markrting_html
Perkins, C., 2017. Political Problems Affecting the Restaurant Industry. [Online]. Available at: https://smallbusiness.chron.com/political-problems-affecting-restaurant-industry-62098.html
Sims, L.M., 2013. Why marketing is so important for your small business.. [Online]. Available at: www.business2community.com/small-business/marketing-important-smallbusiness-061157#bbcjAuJzwCDwyBzf.97
Vallabh, D. and Mhlanga, O., 2015. Influence of demographic factors on business performance in small to medium tourism enterprises (SMTEs).
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