Best growth strategy for an entrepreneurial venture

business

Description

1. The best growth strategy for an entrepreneurial venture or a small business is a well-planned

one. What is your interpretation of this statement? Do you agree? Make two columns with one

column listing the reasons why this is a good description of a growth strategy and the other

listing reasons why it isn’t.


2. Why is it so difficult for many small business owners and entrepreneurs to raise the capital

needed to start, operate, and expand their ventures?


3. In the article evaluations, one of your classmates questioned whether small and family-owned

Do businesses really need to practice supply chain management? Is supply change management an

important activity for small and family-owned businesses?

4. What did you learn in/from this class? (small business management, the difference between an

entrepreneur and a small business owner, why is it important to have a business plan, type of

entity to choose…)

Case Analysis: A Fading Dream?

What recommendations would you make to the Greenbergs?

Ed and Nancy Greenberg, both retired school teachers, did what thousands of

Americans dream of doing every time they stay at a quaint bed and breakfast (B& B)

inn: They took their pensions and bought an inn of their own. The Greenbergs own

and operate the Admiral Peary House, once the residence of the man who first

trekked to the North Pole and now a charming five-bedroom bed and breakfast inn

located in Fryeburg, Maine (population 1,580). Each newly remodeled room in the

circa 1865 house is spacious, with an adjoining sitting room and a private bath.

Amenities include a basket of toiletries, a journal for guests to write in, a free

homemade breakfast, and lots of individual attention. " People want B& Bs to be

personal," says Nancy. " Otherwise, they'd choose a hotel." Outside, guests can

enjoy an outdoor hot tub, clay tennis courts, nearby lakes and snow skiing, and a

golf course just 15 minutes away. Room rates vary from $70 to $118 per night,

depending on the season. (Rates are highest in the fall foliage season and are

lowest in the winter.)

Although sales have grown steadily since the inn opened, its occupancy rate

averages just 20 percent. By comparison, the typical New England inn's occupancy

rate is twice that of Admiral Peary. During a recent winter, business was so

slow (nonexistent) that the Greenbergs closed the inn and took a five-week Florida

vacation. Annual revenues for the inn have never exceeded $31,000; the average

in of this size produces revenues of $75,000 a year. The largest profit the

Greenbergs have earned is just $3,100, although industry studies suggest that a

B& B the size of Admiral Peary should be able to produce an annual profit of

about $37,000, more than ten times greater. The Greenbergs continue to live off of

their savings. "But we're pretty confident we'll make it," says Ed. "We're getting


very positive feedback from our guests, and we already have 34 reservations

booked for next summer and fall." Customer satisfaction appears to be high; about

40 percent of the Greenberg's business is from repeat customers, compared to an

average of just 17 percent for inns this size. For the past three years, the Admiral

Peary House has earned a " A+ Excellent" rating from the American Bed and

Breakfast Association, which grants such status to only 15 percent of its 470

members. The Greenbergs, who run the B& B without any employees, are

surprised by the low sales but admit that they did no research before moving to

Fryeburg to open the inn.

To attract customers, the Greenbergs rely on word-of-mouth referrals from existing

customers, brochures placed in six tourist information booths throughout Maine,

and ads touting their inn as a country oasis for travelers to Boston or Portland who

want to explore New England. Recently, the couple teamed up in a cooperative

advertising campaign with seven other inns to run an ad in an annual tourist

publication that drew about 20 reservations, they think. " We're not very careful

about keeping track of how our guests find us," Ed admits.

As their savings dwindle, the Greenbergs fear that they will be forced to close the

inn unless sales pick up within the next two years. " For now," says Ed, "we're

hanging on and hoping that the inn continues to grow slowly as word spreads."

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