Operating a Small Rural-Based Business - Essay Example

Running Head: Operating a Small Rural-based Business Operating a Small Rural-based Business [Institute’s Operating a Small Rural-based Business It has been observed that the economy of the United Kingdom has been contributed by the small and medium business firms significantly. Particularly, products, services, and new ideas and concepts have been provided to the economy by these SMEs. In addition, thousands of jobs have been created due to these firms, which have reduced the rate of unemployment in the country, and have strengthened the economy of the country. According to a survey, it was noted that approximately 3.7 million small and medium business enterprises have been established in the United Kingdom since last two decades, and GDP of the country is contributed by forty percent due to these small firms. (Landstorm, pp. 13-14, 2005) In particular, SMEs play a significant role in the contribution to rural economy. Since few years, sector of rural-based tourism has developed and grown progressively in the country. Certain limits related to the annual turnover or the number of employees have been defined and described in every country, in order to identify the definition the small and medium enterprises. However, every country has its economy, and thus, definition of the abovementioned term has been provided by various trade organizations according to their terms and conditions. In this regard, these enterprises have been abbreviated by SME by some of the major trade organizations, as well as, unions, such as, the World Trade Organization, the World Bank, and the European Union. For instance, a limit of five hundred employees was put on the German companies according to their traditional definition. On the other hand, a limit of only hundred employees was the standard for becoming SME in the Belgium. (Hall, pp. 49-50, 1997) In this paper, we will try to discuss different steps that can be taken to establish and operate small rural-based business in particularly, tourism sector of the United Kingdom. Every business confronts different threats and weaknesses during various business processes; however, establishment of a business brings new opportunities and strengths that will be discussed in this paper as well. The importance of the small business sector in tourism sector of the country will be highlighted during this paper, and few implications will be provided during the study. In the United Kingdom, magnitude of the annual balance sheet, annual turnover, and number of employees are considered during the evaluation of a small business firm statistically. In detail, small business firms have been categorized according to their volume. For instance, companies having 0-9 employees have been considered as micro firms, whereas, companies with approximately fifty employees have been deemed as small firm. However, companies with more than fifty and less than two hundred fifty employees have been categorized as medium firms. In the United Kingdom, the Companies Act has provided criteria, which should be met to fall under the category of the SMEs. In particular, a limit of two hundred fifty employees has bounded the UK firms, in order to describe them as small and medium enterprises. Moreover, annual turnover of eleven million pounds should not exceeded by these firms, and thirdly, assets of five million should not be exceeding in these firms. These three criteria have been provided by the Companies Act, which requires fulfillment of two criteria for becoming a small business firm. (Hall, pp. 53-58, 1997) Rural tourism is one of the most progressing sectors in the United Kingdom, particularly due to a huge wooden region in the United Kingdom. In this regard, individuals operating or establishing small rural-based business in tourism sector of the country are able to acquire a number of opportunities in terms of availability of a wide range of variations in the sector. In this regard, a variety of countryside activities can be provided and offered by rural-based SMEs in the tourism sector. Statistics have indicated that some of the major places where local, as well as, foreign tourists are likely to spend their money are restaurants, tourist guides, crafts and souvenir shops, catering businesses, accommodation facilities, camping related enterprises, rent-a-cars, and a number of other business establishments in different rural areas of the country. In this respect, an optimum form of business organization required for operating such enterprises in tourism sector may include a variety of employment policies, ranging from ten employees to fifty. For instance, a pub or restaurant can easily be run with ten employees; however, an accommodation or hotel related business might need approximately twenty to thirty employees for effective establishment and operations in rural region of the country. Since few years, a significant growth has been observed in the development of rural-based regions of the country that has resulted in a considerable requirement for places that may cater small meetings and conferences needed by various firms and organizations. In this regard, establishment of such a rural-based conference center may be run effectively by ten or twenty employees. However, provision of enriched experiences should be the primary objective of an SME operating in a rural area, as it is one of the major goals of rural tourism in the country besides enhancement of quality of rural life and maintenance of cultural, as well as, natural environment of the region. According to the studies, countryside is considered one of the most visited regions in the United Kingdom in terms of rural tourism with annual amount of approximately eleven billion pounds of tourism spending. On annual basis, more than twenty-five thousand accommodation businesses are established in such regions of the country, and thus, establishment of similar enterprise should be done after detailed analysis of the region. Another noteworthy area that has developed significantly is provision of cultural and natural heritage to the visitors. Establishment of such nature of business requires a lot of intellectual human resource, rather than just few tour guides. In brief, an optimum force for operating a small rural-based business in the tourism sector should be around twenty to forty employees. It has been noted that a number of organizations are being operated by entrepreneurs or proprietors solely; however, expansion of an existing company may require a lot of capital that can be achieved by partnerships as well. In the following section, the paper will try to identify and discuss some of the threats confronted by rural-based businesses, as well as, opportunities that support these enterprises in running their different business processes in an effective manner in tourism sector of the country. It is noted that rural-based businesses in tourism sector confront a number of eco-related issues that result in huge losses and often compel enterprises to close down their business processes. For instance, rural tourism was affected devastatingly due to outbreak of the Food and Mouth Disease in the year 2001. (Thomas, pp. 59-60, 2004) Thousands of SMEs in rural areas were closed down due to closing of trekking and hiking areas, as well as, a number of attractive localities, especially in the South East region of the country. Another threat confronted by rural-based enterprises in tourism industry is involvement of multi-national companies that often monopolize different business processes resulting in losses and unavailability of clients. Expansion of tourism industry is another threat for rural-based enterprises to some extent, as more and more companies are now taking interest in establishing rural-based businesses that has inflated the business environment in such regions. Studies have estimated that along with opening of approximately 25,000 rural-based businesses in this sector, around 5-10,000 businesses are closed down annually due to lack of capital and eco-related issues in the region. (Sawyer, pp.66-67, 2005) In this regard, a number of steps are being taken by the UK Government to ensure effective operation of SMEs in the tourism industry of the country. It is observed that tranquility of rural areas has been affected significantly by inappropriate advancement and expansion of rural tourism industry, as it has resulted in degradation of rural environment at a greater extent. (Hall, pp. 29-32, 2005) Moreover, a number of tourism-related businesses are unable to acquire good advice due to lack of identifying abilities that result in generation of a number of different threats. Another noteworthy threat in rural-based tourism is seasonal nature of some regions that does not allow operation of rural tourism-related enterprises during few months every year. Statistics have indicated that global warming has affected rural regions of the country as well that has deteriorated the environment in a significant manner. In this regard, rural areas of the country now confront more threats from unthinkable disasters and catastrophes that have resulted in huge losses. A number of attractive rural regions of the country have been modified into modernized and developed towns due to population overcrowding and residential requirements that have affected the rural tourism industry as well. Besides threats, rural-based medium enterprises get benefit from a number of opportunities provided by the government, as well as, natural environment of the rural areas. Since few decades, a significant role has been played by the UK Government to develop and promote rural tourism that has provided a number of opportunities to SMEs operating in rural areas of the region. One of the noteworthy developments is development of South East’s Gateway that encourages people to explore rural areas, and thus, has played a major role in contributing effectively to medium-sized enterprises. (Thomas, pp. 34-35, 2004) Higher expenditures and lower incomes in farming have compelled farmers to acquire an alternative source of income. Such need of farmers has provided a noteworthy opportunity to individuals interested in the establishment of businesses in such areas. (Landstorm, pp. 56-57, 2005) During the last few years, a number of national parks have been built by the government to promote rural tourism that has provided prospective opportunities to existing SMEs, as well as, individuals that are interested in operating a small rural-based business. Another noteworthy contribution of the government is its concentration on green issues that has improved lifestyles of local population of rural region, and has promoted and encouraged them in operating and running small-sized tourism-related businesses at their doorsteps. A number of private and public organizations have encouraged operating of small rural-based businesses by organizing cycling and trekking-related competitions that pass through rural areas of the country. Such competitions bring thousands of visitors to rural regions every year, providing an excellent opportunity to SMEs involved in rural tourism. Internet has now become one of the major tools of marketing business processes, and advancement of technology has provided immense opportunities to SMEs to market their products and services in a cost-effective manner. Nowadays, a number of rural-based enterprises are marketing their products and services on the internet, which allow them to provide an overview of their services to families, companies, and individuals living even thousands of miles away from the region. Besides internet marketing, a number of SMEs are now marketing their services by the provision of discounted quality packages with collaboration of different businesses that has promoted the rural tourism in an efficient manner. As earlier mentioned, a number of companies are organizing events and competitions in these rural areas, similar approach can be taken by SMEs on combined level, which may allow them to market their products and services at their doorsteps. Quality is one of the most important components of any tourism industry, and thus, provision of quality services is itself a marketing strategy to bring back existing customers, and get new customers by ‘word-of-mouth advertising’ strategies. Lastly, the globe is confronting economic recession that has affected most of the sectors and industries. Tourism is one of the sectors that have been affected by such economic recession in a drastic manner. In this regard, most of the SMEs are unable to tackle impact of economic depression in rural areas of the country, and thus, it is very imperative that such businesses should carry out detailed planning that may help them in running their small rural-based businesses in tourism sector in coming years. Establishment of communal-based business is an effective methodology to avoid any drastic effects of economic recession. (Sawyer, pp. 49-50, 2005) Partnership between different members of community allows families to grow and develop in a significant manner, as such partnerships provide the required amount for efficient operation of such businesses. Besides communal-based partnerships, government is playing a vital role in providing loans to rural-based businesses that should be utilized effectively. Conclusively, the paper has discussed some of the significant aspects of small rural-based enterprises in tourism industry of the United Kingdom. It is hoped that the paper will be beneficial for students, teachers, and professionals in better understanding of the topic. References Chris Hall. (1997). Globalization and Small and Medium Enterprises. OECD Online Bookshop. Derek R. Hall. (2005). Rural Tourism and Substantial Business. Channel View Publications. Hans Landstorm. (2005). Pioneers in Entrepreneurship and Small Business Research. Springer. Malcolm C. Sawyer. (2005). the UK Economy. Oxford University Press. Rhodri Thomas. (2004). Small Firms in Tourism. Elsevier. Total Words: 2061 Words Read More