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Bed & Breakfast Business PlanSample Business Plan | Risk and Mitigation Strategies







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EXTRAVAGANT LUXURY BED & BREAKFAST, CONFERENCE CENTRE & RESTAURANT
Sample Business Plan


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Business plan outline
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10.    RISK AND MITIGATION STRATEGIES



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:

  • People in charge of operations should be knowledgeable enough about food handling procedures and hygiene
  • All ill employees should be restricted from handling food
  • Employees that prepare food have to wash their hands when required
  • Employees that prepare food should  restraint from touching food that is ready to eat with their bare hands
  • All raw meats should always be cooked to a safe temperature
  • Food made ahead of time should always be reheated rapidly
  • Cross contamination between uncooked and ready-to-eat foods should be avoided
  • Any equipment or utensils that come into direct contact with food should be duly cleaned and sanitized.
  • Label cleaners and other toxic chemicals have to be used properly



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