Cooking Up a Storm: Overview of Hospitality Small Businesses in Victoria and Elsewhere

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Commissioned by

1. Introduction

1.1 Objective and background Heathcote Harvest is a recently opened small business based in the remote town of

Heathcote in rural Victoria. They run a cafe and produce store in the middle of their

operational pig farm, which also includes crops and other animals bred for consumption.

Heathcote Harvest’s objectives are to provide ethically grown and produced food, or to be

as locally sourced as possible. They also plan to be an operational restaurant sometime in

the future.

1.2 Purpose Heathcote Harvest has commissioned this report to outline successful business strategies.

There is a concern that inexperience might be the business’s downfall, and hope that there

will be easy to understand recommendations to help them. Furthermore, the prospect of

an apparent dying market for small business has shaken the owner’s confidence.

Therefore, this report will look at how hospitality businesses are successful in regional

areas, but will also investigate the state and country for context. Outlines of poor business

practices, both hospitality orientated and otherwise, will also be explored. Effective

marketing techniques will be investigated to show what best suits Heathcote Harvest.

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1.3 Small businesses in Victoria Generally speaking, Victoria has a thriving small business culture (Key Statistics and

Analysis, 2012). In 2009, during the midst of the Global Financial Crisis, the state had

494,993 registered small businesses and made up 96% of the overall job market. (Small

Business in Victoria, 2010)

There are currently 2,100,162 active businesses, of which 97% are small businesses (ABS

Counts of Australian Businesses, 2015), showing strong adjusted growth in a time of

economic instability.

1.4 Hospitality small businesses in rural Victoria More than 28 percent of small businesses in Victoria are regionally based, making up the

largest proportion of business in its regional area. (Small Business in Victoria, 2010)

Victoria has the second largest hospitality industry in Australia. (Victorian industries —

hospitality, 2008) While cafes and restaurants are prevalent in regional cities (Melbourne

Hospitality Strategy, 2008), rural Victoria has a strong food and wine emphasis. Heathcote

Harvest’s region, Heathcote, cites wineries as being its largest tourism industry (Bendigo

Tourism, 2015)

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2. Discussion of Failure

2.1 Small business failure rates in Australia The failure rates of small businesses are often exaggerated. Arguments put forth are often

evidence based (Herald Sun, 2013), but arise due to misreading of data. The most

common reasons that businesses are perceived to have failed are as follows:

1. Small businesses can be assigned a new code “due to changes in legal form,

ownership, or main industry.”

2. Small businesses “may be sold at a profit or voluntarily closed without financial loss.”

(Key Statistics and Analysis, 2012)

By the time nascent firms emerge as young firms, the risk of failure is reduced to 10%.

(CAUSEE, 2012) However, the data shows that the first four years are crucial, with a

termination rate slightly above the operational target.

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1.3 Small businesses in Victoria Generally speaking, Victoria has a thriving small business culture (Key Statistics and

Analysis, 2012). In 2009, during the midst of the Global Financial Crisis, the state had

494,993 registered small businesses and made up 96% of the overall job market. (Small

Business in Victoria, 2010)

There are currently 2,100,162 active businesses, of which 97% are small businesses (ABS

Counts of Australian Businesses, 2015), showing strong adjusted growth in a time of

economic instability.

1.4 Hospitality small businesses in rural Victoria More than 28 percent of small businesses in Victoria are regionally based, making up the

largest proportion of business in its regional area. (Small Business in Victoria, 2010)

Victoria has the second largest hospitality industry in Australia. (Victorian industries —

hospitality, 2008) While cafes and restaurants are prevalent in regional cities (Melbourne

Hospitality Strategy, 2008), rural Victoria has a strong food and wine emphasis. Heathcote

Harvest’s region, Heathcote, cites wineries as being its largest tourism industry (Bendigo

Tourism, 2015)

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