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Half of failing hospitality businesses down to inexperienced owners

Published:  08 December, 2010

Hospitality business mentor, David Hunter, has revealed that around half of failing businesses within the hospitality sector are owned by individuals who have no prior experience.

Hunter, of the business advisory firm The Bowden Group, has observed that 45-55% of people who want to try their hands in this sector are highly successful entrepreneurs running successful businesses in other sectors, but then fail because they don't understand the specific issues of the hospitality trade.

"The hospitality industry may look very appealing and easy to manage, but it is one of the most challenging areas to run a business. Most people who invest are highly enthusiastic, but they don't have any knowledge about hospitality management."

Hunter added: "These owners, who come from different business backgrounds don't implement controls and systems that are necessary to ensure smooth operations and profits. They tend to rely on appointed managers and staff that are not well managed."

He maintains the hospitality industry is a vast and a tricky area. "It is not just about having a great looking pub, but among other things, it involves having a sound knowledge about the market, customer preferences, trained staff with the right attitude and a good marketing strategy."

In addition, Hunter reveals that when investors appoint managers, they do not check that those managers have the skills needed to run a business.

"Across the UK, we are seeing lots of pubs and restaurants closing down due to the recession. However, things could be set right and a large number of businesses can be saved if the owners have a better understanding of the commercial and management aspects, and get the basics right."