TRM 213

Hospitality Small
Business Operations
Ms. 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: ButterworthHeinemann.

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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-cafehostel.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
Business
Lecture 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?
Under 20 employees Very small
20-99

Small

100-499

Medium

500 or more

Large

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EU:
34% of workforce is less than 10 people

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

Service

Profit
Social
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Growth

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=6
15&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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