With about 20% of new companies failing every year, investing in the right business sector is challenging. That is why every budding entrepreneur or potential business owner needs to identify which industries offer them a higher chance of success, and that’s the information which this article provides. However, it’s essential to note that the sectors mentioned are part of the fastest growing and not necessarily the largest business sectors. So, are you planning on venturing into a new business? Are you looking for the right industry to launch your business with higher chances of success? Then consider these sectors before you begin.
1.Hospitality industry
The hospitality industry includes restaurants, hotels, and leisure facilities and offers a wide range of opportunities for aspiring entrepreneurs. It is a sector that keeps evolving to meet the new and changing demands of its consumers – a situation that also offers new business opportunities. As the potential consumers’ spending power continues to grow, it creates more avenues for as many future investors interested in this sector. Start-ups with innovative ideas can find many businesses in this sector ready to enter a partnership with them. You’ll have a higher chance of success investing in this sector if you first have a better understanding of what the hospital industry is.
2. Technology industry
The technology industry has become one of the main driving forces in almost every business sector- so it is with little wonder it makes it onto this list. Technology is at the heart of nearly everything we do. For example, a simple-looking electric cylinder can be used in different motors to power or run machines in various sectors. The growth of many online platforms has promoted the ease of doing business across physical boundaries. However, there is still a lot of room for improvement and even better innovations, as humanity keeps searching for ways to make life easier.
3. Healthcare industry
The healthcare industry is growing at a fast pace and has led to several breakdowns in the sector. Despite that, the breakdowns in this sector also present entrepreneurs and aspiring business innovators an opportunity to fill the gaps with innovative tech solutions. This means that a person does not need to have a background or training in health to impact this industry. The healthcare sector uses different kinds of software and hardware technologies that need constant changes and upgrading. This situation offers vast opportunities for software developers and programmers prepared to think outside the box and create new ideas for the healthcare sector.
4. Construction industry
From construction technology to extensive infrastructure and residential housing, the construction industry has grown steadily over the past decade. For most people outside the industry, the construction sector comprises giant bulldozers and building equipment, which require a lot of financial investment. But the industry also has more than enough space for different kinds of technology and innovations that will make construction more manageable and less time-consuming. Furthermore, as populations continue to grow worldwide, there is always the need for residential and other housing needs.
Apart from the sectors mentioned, entrepreneurs can make a beneficial impact in any industry. If you have an innovative idea, do not be afraid to act on it- it would be a winning one.
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In business, most pertinent is to sell off goods and effectively market services as quickly as they are available on the market.
Some services and businesses offer perishable goods that can expire on the shelves. However, it’s different for the hospitality industry. While it is almost as though the services that hospitality businesses offer can never expire, this simply isn’t true.
There are periods where the usefulness of a service runs out as long as it remains unused. In the hospitality industry, services and products are only useful when utilized and, of course, paid for. Plane tickets, train tickets, hotel rooms, etc., are only useful if people pay for and use them.
However, these services’ market demand is not fixed and can go for long periods with minimal requests. The fixed prices of these services do not allow the business to make up for the losses incurred on days where demand is deficient.
To remedy this situation in the hospitality industry, a new pricing strategy was developed; the Yield Management strategy.
A simple answer will be that Yield Management is a pricing strategy developed for the hospitality, air travel, tourism, and related industries that helps to produce maximum returns from their services. However, that may be an answer that barely scratches the surface.
Yield management runs mostly on the tilt of the supply and demand of the market. When the demand exceeds supply, the prices increase, and when the supply exceeds the demand, it drops. It first began from the air travel industry.
Have you ever tried to book a flight at the last minute and found that the price of the ticket is now jaw-droppingly higher than it was a few days ago when you procrastinated on concluding your booking? You most likely have been affected by yield management.
Many passengers aboard the same plane are most likely not paying the exact fare for the flight. Many took advantage of some unique early-bird discounts and other special pricing plans offered to passengers for booking early.
Unfortunately, a few people would still have to pay higher than those who booked early flights.
Yield management involves strategically editing prices of goods and services in the hospitality industry to match with the right customer in varying instances of demand and supply.
This works in such a way that businesses can balance their lost revenue by tweaking their prices when demand is less than supply and vice versa.
Factors that may help to influence yield management
One factor that influences yield management is the weather. For example, you would find that Uber prices get spiked when it’s raining because everybody is looking to be dry and safe in a vehicle and still get to their destinations.
Paying a little bit extra for this service that would ease their inconvenience at that moment would seem insignificant. The time of the year is also another critical decision-influencer when it comes to the prices of many services in the hospitality industry.
During Christmas, passengers are willing to pay exorbitant prices as long as it guarantees that they would get home to celebrate festivities with their families. Another one is the level of demand.
Tell people that only two available planes are willing to take them out of a virus-ridden town and watch flight tickets get sold out in minutes, no matter the price cap.
Competitors can also create a distortion in the level of demand for a product or service. Is there a new company on the block offering similar services like yours? Depending on the glitz and affordability attached to that new company, yours might suffer a drop.
With yield management, you can rectify the situation and show the new kid on the block who’s the boss. In a nutshell, yield management offers different clients different prices for the same product at different times based on varying factors to maximize business returns.
How do you implement yield management in hospitality businesses?
Find an equilibrium price zone where you can maximize your revenue
Yield Management has a very streamlined focus and approach to profit-making in business. It ensures that you get the best possible revenue or returns by critically analyzing your volume of sales and selling price.
In the hospitality industry, businesses use this demand-forecasting technique to determine how to offer prices to their customers and still make the highest profit possible. Many companies offer the highest prices to customers and examine how many clients are still able to book for their services despite that high price.
If they find that the demand for the service drops below the supply, they modify the price again to accommodate more customers who can afford the new, reduced price.
To be a great yield manager, finding an equilibrium price zone where you can maximize your revenue is key. Once you’re able to get this equilibrium price, your business is already working at its max capacity.
The best way to do demand-forecasting is not by guesstimating but doing thorough research from existing data and trends gathered from customer behavior and purchase patterns. Using historical data to calculate how much price should vary to accommodate fluctuating demand should be your go-to strategy.
It helps to effectively predict and make demand-forecasts so that you can strike a balance between the availability of your product/service and the price.
For hotel managers, cab hire services, tourist agencies, etc., being able to manage your yield effectively can not be overemphasized. It has so many benefits for your business that boosts revenue significantly.
Let’s examine a few of them below:
1. Flexibility of pricing
Yield management boasts of a flexible nature, and this affects both customers and the business positively. Suppose there’s a drop in demand for any product or service, with accurate yield management, the company can modify its rates to an equilibrium price to accommodate more bookings or orders.
This way, you can serve more clients and bring in revenue at the same time. Offering discounted rates or double-service in one package at a slightly reduced price can be an effective way to entice your customers back.
While you may not make as much as you would during a busy period, you’re able to make some revenue, unlike when there are no bookings at all. You also manage to satisfy your clients who may feel like they got a great package at lesser rates. It’s a win for both ends.
2. Improved seasonal pricing
This is also an offshoot of the flexibility of this concept.
Because customers are willing to do anything for some particular services in some peculiar seasons, a hike in price during these periods will not affect demand, such as high costs of flight tickets and hotel rates during the rush-hour Christmas season.
In this period, where the business is in high demand, you can make more revenue than when there was lesser demand for the service. Customers can also receive the services they need, howbeit that they have to pay slightly higher for it.
3. Enhanced forecasting skills
WIth accurate historical data analysis and customer purchasing patterns, your business is able to accurately demand-forecast. This way, you learn to know how to better prepare for times where business may not function at a high.
By using automatic forecasting strategies and techniques to keep track of the different parameters or factors that affect demand, you are able to make more accurate predictions. Tracking these parameters by hand may lead to errors or inaccurate data.
You would find useful cloud solution software like Bedvine.com to help you monitor a wide range of these factors simultaneously for the best results.
4. Enhanced coordination among sales channels and the customer relations team
With accurate yield management, there becomes uniformity across board, from the front desk to the prices on the different sales channels. There’s no case of one price from the customer relations team and a different one at the website or on the travel advisory.
You’re also able to make planned and coordinated responses about prices when guests or clients call to place reservations or inquire about bookings. It helps to plan ahead to determine when there will be discounted prices or not and how much discounts to take off the prices.
Conclusion
It’s easy to make losses in the hospitality industry, and it’s also easy to make gains. When you realize that it’s impossible to run at the same demand level throughout the year, the need for a middle ground becomes essential.
Yield management serves as an in-between for customers and businesses where you try to create a balance between demand and supply.
The goal is to make a maximum profit in business while also satisfying your customers by offering a reasonable price in exchange for your services as the market demands.
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Every organisation is likely to face a crisis now and again. Significant problems may arise once or twice a year, with smaller issues appearing sporadically in the time in between. Predicting what a crisis will entail is impossible in many situations – but it’s how a team prepares and responds that can dictate whether and to what degree a business recovers.
The Covid-19 pandemic is one obvious example of an uncontrollable crisis affecting almost every industry in one way or another. While many wise businesses will have a crisis management strategy in place, it’s a situation few could have directly planned for.
The hospitality sector has been among the hardest hit. Unfortunately, it’s also likely to feel the situation’s impacts the longest due to ongoing social distancing rules and a consequential reduction in demand and revenue.
Sales slumped by 87% in the second quarter of 2020, and despite tentative signs of recovery, over half of small business owners in the sector fear the pandemic will force them to permanently close. The situation has forced many to pivot their approach in order to survive – but effective crisis management could allow some to emerge stronger.
Below we discuss other uncontrollable factors the hospitality industry faces, as well as the strategies businesses can implement to overcome them.
What uncontrollable factors affect the hospitality industry?
The aforementioned Covid-19 pandemic has severely impacted what is perhaps the primary uncontrollable variant for the hospitality industry – flow of tourism.
Accommodation providers, food and drink establishments and other leisure facilities all rely on visitor numbers, but tourism can be fragile even in the best of times. Weather, political events, area decline and the arrival of competitors can all lead to unpredictable cashflow and a variety of other challenges from one season to the next.
Another variant looming large over the sector is Brexit. The hospitality industry is a large employer of migrant workers, but new regulations are likely to lead to problems with labour availability. It remains to be seen whether abolishing freedom of movement will also turn international tourists away.
Strategies for overcoming uncontrollable crises
Periodically reviewing plans is one important strategy for managing crisis. By building in trigger points to assess factors such as operational and market performance as well as basic financial metrics, a company can assess whether a long-term plan is still fit for purpose. In light of some of the events discussed above, this process can be vital in adjusting to new parameters to keep a company on track.
There are other practical steps that can be taken to prepare for the eventuality of a crisis. Taking out hospitality insurance with Gallagher for example can protect against damages to a commercial property or other unforeseen disruptions.
When such a situation does arise, establishing an effective solutions team allows a business to focus the right people on the task in hand. Members should have a clear understanding of their roles and ideally some of their typical responsibilities will be delegated. Electing forward-thinking individuals will help generate the most positive and proactive response.
With a crisis management team in place, wider communication is essential in keeping everyone working towards the same goal. Creating a clear ‘change story’ that all workers can understand and get behind – from front of house staff to board members – can be an important step in establishing a collective sense of urgency.
The hospitality industry is undoubtably facing a crisis right now – but with the right team and strategies in place, many will already be on the road to recovery. If you have any additional insights, please feel free to share best practices in the comments section below.
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With about 20% of new companies failing every year, investing in the right business sector is challenging. That is why every budding entrepreneur or potential business owner needs to identify which industries offer them a higher chance of success, and that’s the information which this article provides. However, it’s essential to note that the sectors mentioned are part of the fastest growing and not necessarily the largest business sectors. So, are you planning on venturing into a new business? Are you looking for the right industry to launch your business with higher chances of success? Then consider these sectors before you begin.
Every organisation is likely to face a crisis now and again. Significant problems may arise once or twice a year, with smaller issues appearing sporadically in the time in between. Predicting what a crisis will entail is impossible in many situations – but it’s how a team prepares and responds that can dictate whether and to what degree a business recovers.
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