Hospitality business is a very broad business that encompasses different fields within the service industry and this industry helps to solve the dire needs of people. Do you want to start a small business in hospitality with small capital investment? read this article to get ideas on how to start.
The business provides vast services which includes broadly restaurants, restaurant chains, food services, hotels, transportation, photography, business and leisure travel, holiday destinations and activities, camping, cruise industry etc.
The travel & tourism sector has developed into an industry with an annual economic impact of around 6.5 trillion U.S. dollars worldwide and the industry is growing.
- 1 Steps to follow when starting a hospitality business:
- 1.1 Step One: Register Your Business With CAC
- 1.2 Step Two: Select The Hospitality Business Ideas That Interests You
- 1.2.1 1a. Hotel business
- 1.2.2 1b. Bar Business
- 1.2.3 2. Food And Beverage Business
- 1.2.4 3. Event Planning Business
- 1.2.5 4. Transportation Business
- 1.2.6 5. Recreation Center
- 1.2.7 6. Travel and Tourism
- 1.3 Step Three: Draft A Business Plan For Your Hospitality Business
- 1.4 Step Four – Acquire Funding For Your Business
- 1.5 Step Five – Hire Competent Staff
- 1.6 Step Six – Promote Your Hospitality Business
- 2 Pros of Starting a Hospitality Business
- 3 Cons of Starting a Hospitality Business
- 4 Conclusion
Steps to follow when starting a hospitality business:
Step One: Register Your Business With CAC
Gone are the days when it’s ok to run an unregistered business in Nigeria. Nowadays, customers want partner with structured businesses. They believe that registered businesses are credible and trustworthy.
In Nigeria, the body responsible for business registration is the Corporate Affairs Commission (CAC). You can visit CAC’s website and follow the guidelines for business registration. It will depend on the type of registration you are going for.
Note that many startup get stuck on the way trying to register themselves. Therefore, it is advisable to get an expert to get the registration done for you.
Step Two: Select The Hospitality Business Ideas That Interests You
Below are some of the hospitality business ideas.
1a. Hotel business
Starting a hotel business in Nigeria can be tasking but it doesn’t have to be if you take your time to learn about the business. The hotel business is a subdivision of the hospitality industry specializing in accommodation. Apart from accommodation, standard hotels tend to offer almost every complimentary goods and services in the hospitality industry. It includes sales of food and drink, lodging, and wellness.
The more the rooms in your hotel, the more the revenue you’ll command. Aside from making money from the rooms, a hotel owner also makes revenue from food and alcohol sales, conference and meeting rooms rental, and so on.
Below are list of cost to consider when starting a hotel business
- Cost of acquiring a land or purchasing a building
- Hotel maintenance
- Lighting, heating and fuel
- Repair, replacement and renewal cost
- Housekeeping cost
- Stationery and administration cost
- Sales/marketing cost
- General hotel maintenance cost
- Registration and government license cost
- Accounting and Inventory cost
Obviously, starting a hotel is capital intensive but the profit involved is worth the expenses.
Another thing to take seriously is the issue of people who visit hotels to perpetrate crimes like murder, criminal acts of rape, drugs, etc. So, it is expedient that you put proper security measures in place when designing your business plan.
1b. Bar Business
Bar business is not as capital intensive as the hotel business. Usually, bar business involves the sales of alcohol, soft drinks, pepper soup, stick meat, and the likes. This business operates best in the evening and at night. You can begin a bar business on a small or large scale depending on the type of customers you intend to attract.
There are different types of bar business:
i. Neighbourhood Bar
You can find this on your street or the next street close to you. They are small establishments where locals come for a round of drinks at night
ii. Sports Bar
This is quite different from the neighbourhood bar. The sports bar offers a wider range of food on the menu – sandwiches, pizza, pepper soup and other appetizers to keep the crowd full while watching sports matches.
If you are considering a sports bar, you’ll have to invest in big-screen TVs, satellite TV, decent audio, video games, etc. The location, capacity, and concept of a sports bar will determine the profitability of the business.
iii. Specialty Bar
This type of bar focuses on a certain theme (e.g. cigar bars) or certain types of drinks (wine, martini bars). Additionally, specialty bars also offer a vast variety of products to keep their customers filled.
2. Food And Beverage Business
To be successful in breaking into the food and beverage industry, the entrepreneur must be able to devise a way to compete with several brands already in the business. The interesting thing about food and drink business is that you can start small and anywhere.
The profitability of the drink business actually depends on the number of customers you have. The profit on each park or crate of drink may be small but the turnover is what makes the difference.
Food, on the other hand, is essential for everybody every day. So, there’s a ready market for every food business both in Nigeria and beyond.
Here are tips to help you succeed in the food and drink business:
- Start small, then scale gradually
- Build a formidable team (remote and mobile team that will help in food and drink distribution)
- Develop a workable sales plan
- Design great packaging
- Get involved in strategic advertisement
- Move with the trend
3. Event Planning Business
Here’s another hospitality business idea you can start in Nigeria. When you attend any event in Nigeria, there is always someone behind the beauty, glamour, and atmosphere you see. Event planning is one of the businesses that would rake in cash for you almost every week.
This business is more than just planning. It involves music, colors, decoration, etc. Both individuals and corporate organisations are always in need of an event planner at one point or the other.
Even during the economic meltdown, event planners still have product launches and weddings to plan. So, this business is in high demand.
How to start event planning business
- Get the required skills needed to get started (creativity and good organisation skill is must have)
- Choose a profitable and suitable niche (weddings, corporate events, product launches, etc) and build your professionalism around it
- Develop relationships with vendors (caterers, hotels, photographers, party equipment rentals, florists, etc)
- Brand yourself
- Advertise your business
4. Transportation Business
The transportation business is also one of the hospitality business ideas you can invest in. Nigeria has a population of about 180million people and a large percentage of the number move from one place to the other. It is safe to say that 70% of the Nigerian population uses public transport.
If you are familiar with Lagos, you will discover that there are more people in need of a means of transportation than the available buses or cars. In a time like this where bikes and tricycles have been banned in some areas in Lagos, you will agree that there’s no better time to invest in transportation business.
Here are some of them:
- Try-cycling (Keke napep)
- Car town service (taxi)
- Motorcycling (Okada)
- Haulage transport service
- Commercial luxury bus or mini-business
5. Recreation Center
A recreation center is one of the hospitality business ideas that offers opportunities for children, and sometimes adults. It helps them catch fun in a cozy, safe and conducive environment. Starting a recreation center may be difficult, but it is also financially rewarding once set up. A recreation center should be located in an environment that is easily accessible to prospective customers.
To be successful in this business, you will need to be creative in your approach. Set up play areas, games, and court on your property, decorate your recreation center to attract customers. To acquire customers, advertise to local schools, clubs, organizations, parents, and the likes.
6. Travel and Tourism
This is also one of the hospitality business ideas gaining ground in Nigeria. Travel agencies make traveling much easier for customers by eliminating all hassles attached to the purchasing of tickets and other logistics.
Travel and tour business is lucrative in Nigeria because of the rate at which Nigerians travel round the world. Whether you are setting up an online travel agency or a conventional offline agency, you need to follow some basic rules to succeed.
Step Three: Draft A Business Plan For Your Hospitality Business
Check the list above for the hospitality business idea that catches your fancy, then create a business plan that best projects your long and short term plan.
A business plan is a document setting out your business’s future objectives and strategies for achieving them. This step is important because it contains detailed information that will help improve your business’s chances of success.
Here are the basic information your business plan should have:
- An overview of your hospitality business
- Executive Summary
- General company description
- SWOT analysis
- Market Research
- Your Strategy
- The Team
- A marketing plan
- An operational plan
- Financial projection
- An appendix
Step Four – Acquire Funding For Your Business
You need funding to run most of the businesses explained here. You may be starting on a small or large scale but ensure you have a funding strategy in place. If you want to work from home, probably your family members can support. But, if you are going into any of the businesses full-fledged, you may need to apply for a commercial loan or find investors.
There are several investors and venture capitalists in Nigeria looking to support businesses. However, if you have adequate savings on the ground, you can convert the savings to start-up capital.
Step Five – Hire Competent Staff
This is very integral if you wish to run a successful hospitality business. Having the right staff contributes to productivity and business growth. If you are not experienced with recruitment, you can outsource your hiring to a recruitment agency.
Outline the job description and the qualities you are looking for in a prospective employee clearly. The recruitment company will do the job for you. Once you hire, onboard, and invest in training your staff so they can do their job with little or no supervision.
Step Six – Promote Your Hospitality Business
Take advantage of different effective marketing channels to market your hospitality business. If you do your marketing right, your business will get the visibility it needs. You can also pay a marketing agency to handle the advertisement aspect of your business.
Other than that, there are several means to market your business these days. Some of these include social media marketing, Google ads, networking, referral, word of mouth, etc.
Pros of Starting a Hospitality Business
Apart from the profit involved in hospitality business, here are other pros of starting a hospitality business:
1. Social interaction
If you love interacting with people, the hospitality industry allows you to interact and meet new people from all spheres of life. And don’t forget that opportunities are in people.
2. Job Opportunities
Hospitality business helps you create job opportunities for people and contribute to Nigerian economy as a whole.
3. Creates Comfort For People
Hospitality, as the name implies, takes away the stress from customers. Hotels, for instance, help guests put away the stress of housework such as cleaning and laundry because those services are provided when they lodge.
Cons of Starting a Hospitality Business
1. No fixed shift
In the hospitality business, sometimes, you may have to work round the clock.
2. High working hours
This is similar to the first. You’ll sometimes need to work for longer hours in this industry.
The hospitality industry thrives well where there is great customer service. Therefore, ensure you establish a strong customer relationship culture and integrate your employees into the system.