Sample
Business
Plan
| Risk
and
Mitigation
Strategies|
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EXTRAVAGANT LUXURY BED &
BREAKFAST, CONFERENCE CENTRE & RESTAURANT Sample Business Plan Current Page: 39 Business plan outline Page ... 31 32 33 34 35 36 37 38 39 40 » Next Page |
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| Potential
Risk |
Mitigation
Strategy
|
| Market
Risks
|
|
| Demand
|
The
size
of
the
market
for
the
product and services offered by the Bed
& Breakfast should be established in the form of a comprehensive
Marketing Plan and Strategy before the expansions and improvement
commerce. |
| Falling
or
prices |
Low
pricing
strategies
should
not
be
used
as a competitive Strategy by the
Bed & Breakfast. Other strategies such as product differentiation,
customer intimacy, operation efficiency and excellent customer service
should be employed as competitive strategies. |
| Seasonality
of
demand |
The
Bed
&
Breakfast
should
take
the
seasonality of demand for Tourism
and Hospitality products and services into account and embark on
promotions in order to stimulate demand during seasons when demand is
low. |
| Foreign
exchange
risk |
The
Bed
&
Breakfast
will
not
(to
a large extent) be exposed to foreign
exchange risks. |
| Increase
in
cost
of
inputs
|
The
entity
will
procure
its
supplies
from
a number of alternative suppliers
to avoid competitive pressure from other providers. |
| Operating Risks |
|
| Operating
cost
overrun |
Contingency
funds
will
be
set
up
to
minimize operating costs overrun as well as
Monitoring and Evaluation of operating costs of the Bed and Breakfast
on a monthly basis. |
| Failure
to
meet
operating
performance
criteria |
A
balance score card for the Bed and Breakfasts will be set up for all
management functions of the business. |
| Technology
risk |
The
entity will seek expert advice when it comes to Procurement of
technology needed for the front and back office operations of the Bed
and Breakfast. |
| Financial Risks |
|
| Inflation
risk
|
The
inflation
rate
will
be
factored
in
the financial Projections of the Bed
and Breakfast to ensure that the inflation risk in minimized. |
| Interest
rate
risk
|
A
combination
of
Government
funds
(set
aside
for the development of small
and medium sized entities) as well as private sector funds will be
utilized in order to minimize interest rate associated risks in the Bed
and Breakfast. |
| Cash
flow
issues |
Cash
flows
issues
could
result
if
the
occupancy rate is not improved to more
sustainable level. While all measures will be taken to manage cash with
the most care possible and to ensure continuous liquidity, the income
generating capacity of the Bed & Breakfast will be the most
determining factor for sustainable cash flows. Where serious cash flow
problems are incurred, the business will rely on an overdraft facility
from the bank. |
| Health
&
Environmental
Risks |
|
| Health & environmental related
risks |
This is mostly liked to
the catering/ restaurant part of the business. A restaurant is
generally a great consumer of fuel and oil, and this has the potential
to make it a great contributor to environmental degradation.
Furthermore, no specific health and occupational safety policy is in
place currently to address potential occupational health and safety
risk at the Bed and Breakfast. Although standard hygiene is a common
practice in a restaurant, it is recommended that manager looks into the
following for the purpose of documentation and effective enforcement
after the launch of the expanded Bed and Breakfast in order to ensure
that the restaurant is compliant with the recommended restaurant
operation standards:
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