TRM 213 Hospitality Small Business OperationsMs. Elaine Yang Chiao Ling

Who are you?

Intro

Why are you here?

What do you want to do in the future?

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Your experience with small business

Pen & Paper Please.

Your original interpretation of small business

What have you learnt in previous lecture?

What is your expectation to future lectures?

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Prescribed Texts

Lecture

Byrd M. J., & Megginson L. C. (2013). Small Business Management: An Entrepreneurs Guidebook (7th ed.). New York, NY: McGraw-Hill.

Tutorial

Lee-Ross D., & Lashley C. (2011). Entrepreneurship & Small Business Management in the Hospitality Industry. Oxford, UK: Butterworth-Heinemann.

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Example of Small Business (Container Hotel)

http://www.youtube.com/watch?v=MMXiPVRto9g

http://www.containerhotel.com.my/about.html

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Examples of Small Businesses

Rain Forest Bed & Breakfast

http://www.youtube.com/watch?v=ta6G2qj1u9g

http://www.rainforestbnbhotel.com/

Baboon Caf

http://zanephotoz.blogspot.com/2011/10/baboon-house-cozy-cafe-hostel.html

Limau-limau Caf

http://limaulimaucafe.blogspot.com/

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Stop. And Think!!!

List out 5 small business enterprises

List out 5 small business hotels and/or F&B outlets

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Introduction to Small BusinessLecture 1

Learning Objectives

Define what is small business

Describe the characteristics of small business

Discuss where the opportunities are for small businesses

Explain some of the current problems small business face

Explain why people start small businesses

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Its a perfect time to study small business

The number of small businesses is growing rapidly Greatest economic power in the world

5 out of every 100 adults

The public favors small business Freedom, risk taking, initiative, hard work..

There is increasing interest in small business entrepreneurship at high schools and colleges HEIs explores startups and business plans

There is a growing trend toward self-employment Self-employment is safer than working for big corporation lay off)

Entrepreneurship is attractive to people of all ages

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SME in Malaysia

97% of total businesses

32% of total GDP

19% of total exports

60% of total workforce

The BIGGEST business community in Malaysia

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Define Small Business

At least two of the following features:

Management is independent

Ownership is held by individual or a few individuals

Area of operations is primarily local

Business is small in comparison with the larger competitors

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What is Small?

EU:

34% of workforce is less than 10 people

Under 20 employees Very small

20-99 Small

100-499 Medium

500 or more Large

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What is Small in Malaysia?

New SME Definition

Manufacturing sector, sales turnover not exceeding RM50 million OR full-time employees not exceeding 200 workers

Services and other sectors, sales turnover not exceeding RM20 million OR full-time employees not exceeding 75 workers

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I. ACCOMMODATION & FOOD SERVICE ACTIVITIES

55 Accommodation

551 Short term accommodation activities

552 Camping grounds, recreational vehicle parks and trailer parks

559 Other accommodation

56 Food and beverage service activities

561 Restaurants and mobile food service activities

562 Event catering and other food service activities

563 Beverage serving activities

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Entrepreneurial Ventures VS Small Business

Entrepreneurial Venture

Main objectives are profitability and growth

Innovative strategic practices and products

Small Business

Independently owned and operated business

Principal purpose of furthering personal goals

Might never grow large

More relax and less aggressive

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Contributions of Small Business

Encourage innovation and flexibility

Maintain close relationships with customers and community

Keep larger firms competitive

Provide employees with comprehensive learning experience

Develop risk takers

Generate new employment

Provide greater employee job satisfaction

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Why People Start Small Business

Satisfy personal objectives

Achieve independence

Obtain additional income

Help their families

Provide products not available elsewhere

Necessity is the mother of invention

2.5 times new ideas

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Why People Start Small Business

Achieve business objectives

Objectives are the goals toward which the activities of the business are directed

Profit

Service

GrowthSocial

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Service Objective

To serve customers

Small business must set service as the primary objective but seek to make a profit as a natural consequence

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Profit Objective

Profit is the revenue received by a business in excess of the expenses paid.

Profit motive is entering a business to make a profit, which is the reward for taking risks.

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Social Objective

Goals regarding assisting groups in the community and protecting the environment

Social responsibility & ethics

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Growth Objective

Will I be satisfied for my business to remain small?

Do I want it to grow and challenge larger firms?

Do I seek a profit that is only satisfactory or do I seek to maximize profits?

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Characteristics of Successful Entrepreneurs

Desire independence

Have a strong sense of initiative

Are motivated by personal and family considerations

Expect quick and concrete results

Are able to react quickly

Are dedicated to their businesses

Enter business as much by chance as by design

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Steve Jobs was a 21-year-old college dropout living with his parents in Los Altos, Calif, where

he and two friends, Steve Wozniak and Ronald Wayne, would hang out in the garage.

For other trios, this would be the beginning of a rock band; but Jobs, "Woz" and Wayne had

other things on their minds.

Jobs and Wayne had both worked together at the gaming company, Atari, while Wozniak,

26, had worked for Hewlett-Packard. The three men incorporated Apple Computer on April

1, 1976.

While the two Steves went on to greatness as Apple's revolutionary approach to personal

computing bore fruit, Wayne sold his share of the newly created Apple for just $800 just three

months after its inception.

With Wozniak doing most of the building and Jobs handling the sales, the two made enough

money off the hobbyist market to invest in the Apple II.

It was the Apple II that made the company. Jobs and Wozniak created enough interest in

their new product to attract venture capital. This meant they were in the big leagues and their

company, Apple, was officially incorporated in 1977.

Steve Jobs was a month shy of his 22nd birthday and would be a millionaire by his 23rd.

The Keys to Success in Small Business

Serving an adequate and well-defined market

Acquiring sufficient capital

Recruiting and using human resources effectively

Obtaining and using timely information

Coping effectively with government regulations

Having expertise in the field both owner and employees

Being flexible

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Values

Mental Abilities

Attitudes

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Factors Affecting Business Trends

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Economics Gross national product, interest rates, inflation rates, stages of the business cycle, employment levels, size and characteristics of business firms and not-for-profit organizations, and opportunities in foreign markets.

Technology Artificial intelligence, thinking machines, Web 2.0

Lifestyle Career expectations, consumer activism, health concerns, desire to upgrade education and climb the socioeconomic ladder, and need for psychological services

Political-legal Regulations, environmental protection laws, tax, immigration laws

Demographics Population growth rate, age and regional shifts, ethnic moves and life expectancy, size and character of markets

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Where are the opportunities?

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Opportunities for Tourism & Hospitality in Malaysian

The second largest foreign exchange earner after manufactured goods and the seventh largest contributor to the Malaysian economy, the tourism industry raked in a Gross National Income (GNI) of RM47.2bil last year.

The industry experienced a remarkable growth and evolved to become one of the countrys fastest growing economic sectors, contributing RM60.6bil in tourist receipts, with tourist arrivals registering at 25.03 million in 2012.

Today, the business volume of tourism is equal to, or even more than that of oil exports, food products and automobiles.

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Reading

Problems of Small and Medium Budget Hotel Operator

Introduction

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Challenges Faced by Small Business

Inadequate financing

Inadequate management

Burdensome government regulations and paperwork

Poorly planned growth

Feeling trapped

Paradox: You own your business, yet you dont enjoy it.

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Weaknesses of Small Business

Too much was left to chance

Too many decisions were based on intuition

Crucial obstacles went unnoticed for too long

The amount of time and physical effort demanded was not recognized

The amount of capital needed was underestimated

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Reasons of Failure

Lack of managerial experience

Lack of financial backing

Poor location

Unexpected growth

Communication skills

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Threat of Failure

Discontinuance: A voluntary decision to terminate a business

Formal failures

Failure ending up in court with loss to creditors

Personal failures

The owner who cannot succeed voluntarily terminates the business

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Reading

Problems of Small and Medium Budget Hotel Operator

Discussion

Conclusion

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Business Incubators

Business plan competition

MIBPC Poster

Funding for SMEs

Special Fund For Tourism

http://www.smeinfo.com.my/index.php?option=com_content&view=article&id=615&Itemid=525

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Discussion

All of us have had personal experiences with small business. Explain one or more such experience you have recently had.

What comes to your mind when you think of a small business? How does your concept differ from what you have learnt in this lecture?

Distinguish between a small business and an entrepreneurial venture. If you were to start your own business, which would you wish it to be? Why?

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Discussion

What are the unique contributions of small business? Give examples from your own experience.

What are some problems facing small businesses? Give examples from your own experience.

Explain the interrelationship between the service and profit objectives.

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Case Study 1 The Big Wash

1. Evaluate Henry Gibsons approach to starting a new business.

2. Could there have been another source of funding? Explain.

3. How do you explain the fact that Big Wash has not been robbed?

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Case Study 2 The Windsor Hotel Ltd.

1. Discuss David and Gretas ability to spot an opportunity

2. How ambitious are this couple?

3. Can you identify some key entrepreneurial characteristics for David and Greta? Are they the same for each person?

4. How important was fate in David and Gretas entrepreneurial career?

5. How important are exit strategies in entrepreneurship?

6. Comment on whether David and Gretas businesses were lifestyle or growth.

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