Entrepreneurship & Small Business Management in the Hospitality

305 Pages·2008·3.93 MB·English

Entrepreneurship and Small Business
Management in the Hospitality Industry
The Hospitality, Leisure and Tourism Series
Butterworth-Heinemann’s Hospitality, Leisure and Tourism series
of books is aimed at both academic courses and management
development programmes. The series represents a planned and
targeted approach to the subject and the portfolio of titles provide
texts that match management development needs through various
stages from introductory to advanced. The series gives priority to the
publication of practical and stimulating books that are recognised as
being of consistent high quality.
The Series Editor
Professor Conrad Lashley is Professor of Leisure Retailing, Centre for
Leisure Retailing at Nottingham Business School, UK. His research
interests have largely been concerned with service quality management,
and specifi cally employee empowerment in service delivery. He works
closely with several major industry organisations including the British
Institute of Innkeeping, J D Wetherspoon Scottish and Newcastle
Retail and McDonald’s Restaurants Limited.
Entrepreneurship and Small Business
Management in the Hospitality Industry
Darren Lee-Ross
School of Business, James Cook University,
Australia
Conrad Lashley
Nottingham Business School,
United Kingdom
AMSTERDAM (cid:127) BOSTON (cid:127) HEIDELBERG (cid:127) LONDON (cid:127)
NEW YORK (cid:127) OXFORD (cid:127) PARIS (cid:127) SAN DIEGO (cid:127)
SAN FRANCISCO (cid:127) SYDNEY (cid:127) TOKYO
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ISBN: 978-0-7506-8448-4
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Printed and bound in Hungary
09 10 11 12 10 9 8 7 6 5 4 3 2 1
Contents
CHAPTER 1 Context, Theoretical Perspectives and Defi nitions . . . . . . . . . . 1
CHAPTER 2 Indigenous and Ethnic Entrepreneurship: A Cultural
Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
CHAPTER 3 Entrepreneurs and Small Firm Ownership . . . . . . . . . . . . . . . 49
CHAPTER 4 Creativity and the Entrepreneurship . . . . . . . . . . . . . . . . . . . . 67
CHAPTER 5 Innovation, Opportunity and Protection . . . . . . . . . . . . . . . . . . 93
CHAPTER 6 The Feasibility Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
CHAPTER 7 The Family Business: Who’s to Bless and Who’s to Blame? . .143
CHAPTER 8 Hospitality, Commercial Homes and Entrepreneurship . . . . 169
CHAPTER 9 Preparing a Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
CHAPTER 10 Leadership and the Entrepreneur: “I’m Right Behind You
Leading the Way” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
CHAPTER 11 Growth: the Harder I Work the Luckier I Get . . . . . . . . . . . . 245
REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
v
Preface
Entrepreneurship is a fascinating practical and academic area of study. As a
phenomenon it is has been around in one form or another since the earliest
civilizations including the Mayans, Ancient Greeks and Romans up to
relatively more recent times of the Renaissance (15th and 17th centuries),
Industrial Revolution (18th and 19th centuries) throughout the 20th century
up to the present day.
Interestingly, the number of entrepreneurs and establishment of small
fi rms has dramatically and uniformly increased globally over the most
recent 10 years. Reasons for this include globalization, liberalization of
labour markets and enactment of entrepreneur-friendly government policies
such as removal of barriers to competition and other trade restrictions.
The prospect of starting one’s own business is not as daunting as it used
to be. Free advice and start-up grants are now available from a variety of
sources including government agencies and non-profi t organizations. These
initiatives have helped a booming small to medium-sized sector create more
wealth than fi rms at any other time. This phenomenon can also be said of
new and emerging economies, ethnic groups within larger host nation states
and indigenous entrepreneurship. The latter developments are particularly
pertinent to the tourism and hospitality industry as many nascent nations
are recognising the role entrepreneurism plays in economic development and
the alleviation of poverty and dependence on public subsidy for citizens.
However, environmental enablers of entrepreneurship are only one side
of the story and this is where the more academically oriented perspective of
the phenomenon begins. Essentially, it is argued that entrepreneurs have
certain characteristics and which predispose them to behave in a particular
way. ‘Risk-taking’ and a ‘desire for achievement’ are often quoted as being
key necessary traits. In reality, the picture is rather more complicated, for
example, some individuals may have been ‘pushed’ into self-employment by
virtue of redundancy. Many of them could hardly be described as being risk-
takers yet there are many examples of resounding business success. Equally,
there are those spectacular failures who not only possess the appropriate
internal characteristics of entrepreneurs but have been ‘pulled’ into the fi eld
because of its perceived intrinsic benefi ts.
Beyond this question is the fundamental role entrepreneurs play in the
economy in terms of employment and wealth generation. Indeed, small
businesses are the backbone of the tourism and hospitality industry and,
depending on which statistics one uses, represent somewhere between
75 to 95 percent of all fi rms globally in this sector. It would be reasonable
vi to assert that the incumbent entrepreneurs are industrious, multi-talented,
Preface vii
creative and innovative. They work hard, weather signifi cant hardships
during business start-up and bear all of the risks involved in making such a
personal sacrifi ce.
The aims of this book are:
• To explore both the complexity of entrepreneurial theory and
practice applied to the tourism and hospitality industry. It does this
by exploring some key theoretical concepts and grounds them in a
number of practical real-life scenarios;
• To move back and forth between strategy and operations in order to
illustrate the linkage between the two areas and explain how both
perspectives are necessary for entrepreneurial success;
• To engender a sense of enthusiasm about the fi eld by not only
discussing some of the major challenges and opportunities but by
providing the knowledge and skills required to start a small business
and drastically improve the chances of sustaining it successfully.
The chapters of this book invite readers to ponder their reading through
a series of refl ective activities. This allows them to both think actively about
themes, concepts and issues and then apply them to a number of suggested
scenarios. Authors have deliberately designed the book to actively engage
readers as refl ective practitioners. Refl ective practitioners are required by
modern hospitality and tourism organizations. The term describes managers
who are able to complete physical tasks as well as refl ect and think about
their actions. Reading this book, therefore is intended to be an active process
whereby readers think about the practical implications of what is being
communicated. The authors are informed by the work of Kolb who suggests
learning needs to engage actions as well as theorising and thinking.
Kolb (1983) states the most effective learning as involving all aspects of
the learning styles. They must refl ect on actions undertaken – see how these
refl ections fi t with theories – consider how they might need to alter future
actions, and then act.
For the purposes of this book, and for future activities, we suggest that
the process of learning needs to move through the stages outline on Kolb’s
model. Active experience needs to be followed by refl ection including
the critical evaluation of the experience; and consideration of how these
experiences inform or adapt theoretical understanding; and how this might
inform future actions. Traditionally this is shown as a cycle, however, it is
more accurately a series of spirals where the process of acting, refl ecting,
theorising and deciding of future actions leads to new learning situations
leading on from the past.
Chapter 1 discusses issues of historical and contemporary context of
entrepreneurship concluding that the global fi eld is vast and continuing.
viii Preface
Some defi nitions are explored concluding that entrepreneurs are diffi cult to
classify given their diverse backgrounds. Some key attributes of entrepreneurs
are explored including the ability to spot the opportunity and develop it
into a sound business proposal. Issues of personality and environment are
discussed. The quaint notion of running small hospitality fi rms ‘risk-free’ is
also introduced.
Chapter 2 scrutinizes entrepreneurship through a cultural lens discussing
and defi ning indigenous and ethnic dimensions and how they impact upon
small fi rms. The key developmental role of entrepreneurship amongst
indigenous societies is discussed together with an outline of the main
differences between indigenous and ethnic entrepreneurship.
Chapter 3 evaluates the meanings of the term entrepreneur, comparing
and contrasting ‘growth’ and lifestyle entrepreneurs in terms of their origins
and motives. The overriding pattern of small business ownership and its
impact on hospitality and tourism provision is then considered.
Chapter 4 considers the notion of creativity in an entrepreneurial context
and its relationship with innovation and how it impacts on the entrepreneurial
process. Emphasis is placed on the lifelong commitment to idea generation
in small hospitality fi rms along with some important techniques to develop
and enhance creativity within the individual. Ultimately, the relationship
between creativity and ‘mystery’ is debunked and the ability is advanced as
one that can be learned.
Chapter 5 defi nes innovation as a systematic logical exercise designed
to harness creative ideas and bring them to a successful entrepreneurial
conclusion in the marketplace. The chapter then discusses its role in the
entrepreneurial process and identifi es its relationship with creativity.
Opportunity spotting and the subsequent development of business ideas is
then introduced and the importance of a methodical systematic process of
environmental scanning and strategic and tactical planning is emphasized
in this context.
Chapter 6 explores the term ‘feasibility analysis’ and how it applies in
maximizing the chance of entrepreneurial success. Porter’s Five Forces is
identifi ed and applied as a suitable model. The prevalence of intuition and
gut reaction are discussed and their weaknesses identifi ed when planning to
launch new hospitality ventures. The chapter proceeds by outlining the role
and importance of research in entrepreneurial success.
Chapter 7 identifi es the inherent advantages family fi rms have over non-
family fi rms whilst recognising the roles of key individuals in the family
fi rm. Some of these include commitment, resilience and long-term stability.
The impact of confl ict on small family businesses in the hospitality industry
is outlined. The process of business transferral is discussed along with
the many accompanying challenges faced by entrepreneurs and second-
generation successors.
Chapter 8 discusses hospitality and hospitableness in the context of
small fi rms. It also introduces the notion of attractiveness of commercial
Preface ix
hospitality to owners/managers. The linkages between commercial homes
and hospitality businesses are evaluated. Tensions and dilemmas inherent in
commercial homes are also outlined.
Chapter 9 addresses the need for producing and working to a business
plan described as a working document designed to assist planning with sense
and realism, and through which to monitor performance against desired
objectives. The key activity of writing and presenting an effective business
plan is discussed together with the role of feedback and iteration during the
process.
Chapter 10 deals with the entrepreneur as leader and identifi es the
behavioural attributes of entrepreneurial leadership style. The changing role
of the leader/entrepreneur as hospitality fi rms developer is explored. The
assumption that successful entrepreneurs and sound leadership naturally
go together is discussed and challenged. Major theories of leadership are
explored as a basis for effective leadership. The chapter then introduces some
major intrinsic entrepreneurial characteristics said to detract from effective
leadership. An entrepreneur’s understanding of organizational culture is
then identifi ed as key for effective performance in small hospitality fi rms.
Chapter 11 outlines the major issues involved in the discourse of small
entrepreneurial and lifestyle hospitality fi rm growth. The strengths and
weaknesses of growth models are outlined together with a discussion of
the major components of expansion strategies for small hospitality fi rms.
‘Good fortune’ is explored and the role plays in entrepreneurial success. The
chapter then discusses the major challenges or barriers faced during growth
stages of fi rms.