Business in Hospitality and Catering Industry - Case Study Example

Business Plan in hospitality and catering industry Executive Summary The main purpose of this project is to develop a plan regarding business to business (B2B) service in the hospitality and catering industry in London. Considering it is an entrepreneurial approach to the business, the researcher has applied a holistic approach in determining the plan taking in account all the possible facets of a new business. Various sectors of the plan explain briefly about functioning of the business, followed by discussion on financial and non-financial resources and their sources, the risk involved in the industry and necessary hurdles that the firm would face during the start-up. The current project will also explain the sales strategies as well as give an outline of the initial financial projections. Table of Contents Introduction 4 Role of entrepreneurs in creating value for themselves and others 4 The business plan case study: AR recruitment consultancy 4 Catering 5 Critical analysis of the business plan 7 I.Sales Management Plan 7 II.Financial Projections 9 Conclusion 10 Reference List 12 Introduction With growing impact of globalisation, the role of entrepreneurship has gained higher importance in a country’s economy. Entrepreneurship is no more limited to a particular segment or section of business; in reality, it has spread across all the business areas in an economy. Entrepreneurs are increasingly entering in B2B, B2G (business to government) and B2C (business to consumer) sectors. With growing involvement of entrepreneurs, the competitive level of these sectors has improved substantially, resulting in better services for consumers (Audretsch, Keilbach and Lehmann, 2006). From a buyers’ perspective, a buyer can be of two types: final consumer and those who buy for future sale. In B2B activities, the buyer is not the final consumer. In this sector, commercial transaction takes place between two or more businesses such as, transaction between manufacturer and distributor, distributor and whole seller and distributor and retailers. B2B transactions are comparatively higher in volume than that of B2G and B2C, which is why scope of earning profit in this sector is also greater for entrepreneurs (Bussler, 2003). In present day scenario, hospitality industry is growing at the fastest pace as demand for service sector is outperforming that of manufacturing industry. Service sector not only delivers profitable growth, but also help to develop better-quality strategic positioning of the company (Getz and Petersen, 2005). The paper is about setting up recruitment consultancy for catering to needs of the hospitality industry in London. Role of entrepreneurs in creating value for themselves and others The term entrepreneur is derived from a French term ‘enteprendere’, which means to undertake. In a broader sense, an entrepreneur is any person who initiates a business or activity, gathers resources related to it, arranges funds for the venture, takes in account risk and uncertainties and convert the opportunities into profit (Bula, 2012). Entrepreneurship, apart from personal development, result in economic development by generating wealth for those who are directly and indirectly associated with the venture. The strength of an entrepreneur lies in his ability to take risk and innovate. One of the major benefits of entrepreneurship that an economy enjoys is that of creating employment (Cuervo, Ribeiro and Roig, 2007). As an entrepreneur recognises an opportunity and undertakes efforts to convert it into a profitable venture, he hire employees under him to pursue various activities related to the same. Entrepreneurship results in value or wealth creation. For instance, when a venture is successful, the shareholders earn dividend, the bank and financial institutions earn interest, employees receive bonuses and incentives and a greater share of employment is generated. In addition, raw material suppliers are also benefited as demand for their services increases (Audretsch, Keilbach and Lehmann, 2006). In context of the business plan for setting up a recruitment agency, the proprietor is acting as an entrepreneur. He, from his personal experience and knowledge, has recognised lack of formal recruitment channels in the hospitality industry as an opportunity. As he sets up his business, the employees working under him are benefitted through job creation. This is advantageous for client companies as hassles and hurdles regarding recruitment will be minimised. Unemployed individuals and other job seekers can avail direct recruitment services of the consultancy. Presently, most of companies rarely consider the resumes that are uploaded by individuals on their websites and candidates are also unsure about ways to determine vacancies in their area of interest. In this regard, the consultancy services will prove helpful to both companies and candidates as it will place right candidate in the right company (Getz and Petersen, 2005). The business plan case study: AR recruitment consultancy 4 Catering In developed economies such as, London, understanding and recognising an opportunity is a critical step. London being one of the busiest business locations in the world provides huge business opportunities to consultancy and agency owners, given that majority of the companies outsource their operational activities such as, recruitment. AR Recruitment Consultancy is about to start-up its business as a recruiter for hospitality industry in London. The role of an external recruiter is not an easy task as he has to deal with lives and careers of individuals. The proprietor has a unique advantage in this regard as he has worked for a long period in the management sector and recruitment was his field of expertise. Changing labour market scenario has diluted the concept of full-time employment as individuals as well as companies are seeking flexibility in their employment activities. AR recruitment consultancy is planning to serve the industry by providing complex blend of employment services. The company will cater to hospitality businesses such as, hotel industry and aviation industry, by connecting them to professional workforce. Furthermore, the company will charge minimum fees for delivering services that are not provided by other employment agencies (Storey, 2001). AR recruitment consultancy is a local firm and its costs are less than that of international agencies and consultancies while providing equivalent or better quality of services. The company’s vision and mission is to cater to both short and long term recruitment needs of companies with a simple system of billing and payment. After conducting a market analysis, the proprietor proposed certain reasons for businesses to approach AR recruitment consultancy for services: Increasing work load Tremendous expansion of business in areas, where in-house human resource system fails to meet requirements Leaves for uncertain period such as, pregnancy or chronic illness Increase in business post layoffs Under-stuffed small businesses The company targets various businesses within the hospitality industry such as, food and beverage, travel and tourism, accommodation, education and healthcare sectors. The employee target market includes fresh graduates and unemployed individuals who have pursued hospitality management courses and/or have experience in this sector (Storey, 2001). The strength of AR recruitment consultancy’s management acts as one of its major advantages. The knowledge of the proprietor in this sector and his contacts is expected to prove useful for the company. Moreover, the proprietor is planning to hire two experienced recruitment professionals who have good knowledge of the industry and have ability to deliver best performance. Since it is a new and small business, the proprietor has decided to hire less, but efficient employees. Apart from the recruitment professionals, the company will have a public relation representative, who will act as a channel between client companies and the consultancy as well as monitor the company’s marketing activities. Alongside, the company will hire a receptionist, an accountant and executives for business development activities. As a part of the financial plan, the proprietor will place the office floor in a cost effective location, which is near to business zone of London. Furthermore, the proprietor will bring in initial investment as capital and will also apply for a small loan in bank. The financial details have been explained elaborately in following sections of the business plan (Price, 2011). Critical analysis of the business plan I. Sales Management Plan The sales management plan of AR recruitment consultancy includes market segmentation and market penetration activities. The market segmentation includes classification of employers and current and potential job seekers in hospitality industry and further classifies them in respective sectors. The company will approach different colleges and universities in London so as to have a list of fresh graduates and unemployed graduates. Besides that, the company will also gather information about requirements of teaching staff in these organisations. As a part of the sales strategy, the company will have an online portal where fresher and experienced individuals can register and update their resumes. The public relation representative of the company will approach different companies operating in hotel, aviation and other service industries for obtaining a list of their requirements, in terms of recruitments. The initial step of the company’s sales plan includes approaching small businesses that have employee requirement, but does not have a competent recruitment system. The next step of the company is to join various business groups so as to have better access to resources. The third step is cold calling. Information obtained through cold calling is vital for the company as it include requirement details of the clients among other data. (Chathoth and Olsen, 2003). In any business, especially for B2B activities, trust is very important. Since the consultancy will deal with clients as well as potential employees, it must treat both of them with integrity. The strategy of the company is to have clear communication with both parties regarding requirements, activities, payments and follow-ups. Also, the management will ensure that clients and potential employees are able to communicate with AR recruitment consultancy through traditional as well as technological methods such as, letters, brochures, e-mails, faxes and telephone. The client companies can also write to AR recruitment consultancy their requirements through the company website, where separate section will be available for business related queries. Alongside, potential candidates can also send their resumes to the company along with details of the kind of employment that they seek, such as, full time or part time, temporary or permanent and so on. As a part of sales strategy, the proprietor’s experience and contacts will be utilised in order to build a database of clients. The company will initially inform those firms, where the proprietor is well-known and the public relation representative can then take reference of more companies from the initial clients (Vargo and Lusch, 2011). The sales strategy of the company can be explained in the following steps: The business executive of the company will complete and update professional form in the database regarding the candidate In this process, the executive will screen the experience level, knowledge and educational qualifications of the candidate necessary for the sector of his/her interest A folder will be created that will have all the paperwork, along with a copy of the profession’s form If the details matches, the company will send details of the professional to the client company and discuss all formalities and policies regarding his/her new role If the candidate’s qualifications fail to match the requirements of clients, then the company will keep track of the candidate till relevant requirements occur (Storey, 2001). II. Financial Projections Financial projection and budgeting is an important part of organisational planning. The company must have an idea about its expenses and source of earnings before commencing business. In addition, it should decide upon its sources of financing as well (Will, Subramanyam and Robert, 2001). The following section shows forecasted balance sheet and profit and loss statement for AR recruitment consultancy: Table 1 (Source: Author’s creation) Table 2 (Source: Author’s creation) The projected balance sheet shows that the company has not invested in any kind of fixed asset and has taken a loan from bank, along with capital that has been brought in by the proprietor. From the projected profit calculation for the first year, it is expected that the company will perform better and earn more profit in future. In the profit and loss statement, gross profit that the company is expected to earn is acceptable. However, due to operational cost and other charges, the net profit is comparatively low. It is expected that in coming years, the company’s recruitment and placement fees will increase, while the operational cost may face substantial decline, thereby resulting in further increase in profit. Conclusion The paper focuses on preparing business plan for AR recruitment consultancy as an entrepreneurial endeavour. The researcher has briefly explained role of entrepreneurs in value addition in the context of this business plan. The researcher has further discussed various marketing and placement strategy that the company will undertake for facilitating business growth. In addition, projected balance sheet and profit and loss statement have been attached as a part of financial planning. Reference List Audretsch, D. B., Keilbach, M. C. and Lehmann, E. E., 2006. Entrepreneurship and economic growth. United Kingdom: Oxford University Press. Bula, H. O., 2012. Evolution and Theories of Entrepreneurship: A Critical Review on the Kenyan Perspective. International journal of business and commerce, 1(11), pp. 81-96. Bussler, C., 2003. B2B integration: Concepts and architecture. USA: Springer. Chathoth, P. K. and Olsen, M. D., 2003. Strategic alliances: a hospitality industry perspective. International Journal of Hospitality Management, 22(4), pp. 419-434. Cuervo, A., Ribeiro, D. and Roig, S., 2007. Entrepreneurship: Concepts, Theory and Perspective. Introduction in Entrepreneurship, pp. 1-20. Getz, D. and Petersen, T., 2005. Growth and profit-oriented entrepreneurship among family business owners in the tourism and hospitality industry. International Journal of Hospitality Management, 24(2), pp. 219-242. Price, A., 2011. Human resource management. UK: Cengage Learning. Storey, J., 2001. Human resource management: A critical text. USA: Thomson. Vargo, S. L. and Lusch, R. F., 2011. Its all B2B… and beyond: Toward a systems perspective of the market. Industrial Marketing Management, 40(2), pp. 181-187. Will, I., Subramanyam, K. R. and Robert, F. H., 2001. Financial statement analysis. New York: McGraw-Hill International. Read More