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Kimpton Hotel & Restaurant Group Strives for Perfection! FYIWhen investment banker Bill Kimpton traveled to Europe, he liked staying in small hotelswith personality and personalized service rather than big hotels owned by big chains.Adapting the “boutique” hotel idea, he bought and renovated an older San Francisco hotelwith architectural charm and a central location. It reopened in 1981 as the Clarion BedfordHotel and featured each room decorated in an individual style rather than all being identical,as in most hotel chains. It also offered a complimentary wine-tasting hour to bringguests together in the lobby for a bit of socializing every evening.Little by little, Kimpton and his investment partners bought and renovated other hotelson the West Coast and, later, across the country. Now, more than 30 years later, thecompany that Kimpton founded has grown to more than 100 boutique hotels and trendyrestaurants in North America. It employs more than 7,200 employees and rings up annualrevenue of more than $700 million.Kimpton Hotel & Restaurant Group is a limited-liability company (LLC), a form ofbusiness ownership that allows it the financial and management flexibility to work withdifferent investment partners on different hotel and restaurant properties. The companyalso partners with different chefs to create specialty restaurants where the chef, not thehotel manager, is in charge. This unconventional approach led to Kimpton partnering withWolfgang Puck, among other well-known chefs, to open restaurants inside or alongsideKimpton hotels.Kimpton’s boutique hotels are always adding special touches to make guests feelpampered. For example, under the “Guppy Love” program, the hotels will put a fishbowl stocked with goldfish in a guest room by request. The idea is to “provide little fishfriends to anyone who [wants] a pet companion,” explains Niki Leondakis, Kimpton’spresident. Employees further personalize the hotel experience by helping guests “live likea local, offering tailored recommendations from staff picks to one-of-a-kind experiences,”Leondakis adds. Whether they’re talking about a unique historical site or giving directionsto a local art gallery, Kimpton’s employees are “proud to be the cultural ambassadors oftheir city.”1Bill Kimpton started the Kimpton Hotel and Restaurant Group—the companyprofiled in the Inside Business feature for this chapter—with one goal in mind:He wanted customers to have a unique and memorable experience. Over thenext 30 years, with the help of investors and partners, Kimpton created more than100 boutique hotels and restaurants that ring up annual revenue of more than $700million and employ more than 7,200 employees. Pretty impressive achievements for acompany that must compete with larger corporate hotel and restaurant chains.For Bill Kimpton, deciding to start a business was only the first step. It takes hardwork, and there are many decisions that you must make to build a successful business.For example, you must choose the right type of business ownership. Kimpton chose thelimited liability company (LLC) form of ownership because it allows the financial andmanagement flexibility to work with different investment partners on different hotelsand restaurant properties. And yet, as you will see in this chapter, there are other popularforms of ownership including sole proprietorships, partnerships, and corporations.We begin this chapter by describing the three common forms of business ownership:sole proprietorships, partnerships, and corporations. We discuss how these types105of businesses are formed and note the advantages and disadvantages of each. Next,we consider several types of business ownership usually chosen for special purposes,including S-corporations, limited-liability companies, not-for-profit corporations,cooperatives, joint ventures, and syndicates. We conclude the chapter with a discussionof how businesses can grow through internal expansion or through mergers with othercompanies.Sole ProprietorshipsA sole proprietorship is a business that is owned (and usually operated) by oneperson. Although a few sole proprietorships are large and have many employees, mostare small. Sole proprietorship is the simplest form of business ownership and the easiestto start. In most instances, the owner (the sole proprietor) simply decides that he or sheis in business and begins operations. Some of today’s largest corporations, includingWalmart, JCPenney, H.J. Heinz Company, and Procter & Gamble Company, startedout as tiny—and in many cases, struggling—sole proprietorships.Often entrepreneurs with a promising idea choose the sole proprietorship formof ownership. Annie Withey, for example, created a cheddar cheese–flavored popcornsnack food. Annie’s popcorn, called Smartfood, became one of the fastest-selling snackfoods in U.S. history. After a few years, PepsiCo Inc.’s Frito-Lay division bought thebrand for about $15 million. Ms. Withey, an organic farmer and mother of two children,went on to develop an all-natural white-cheddar macaroni and cheese product.This venture was also a success. Today even though her firm, Annie’s Homegrown, hasgrown and become part of a larger conglomerate, Annie remains the entrepreneurialheart of the company and still thinks like a sole proprietor.As you can see in Figure 4.1, there are approximately 23 million nonfarm soleproprietorships in the United States. They account for 72 percent of the country’sbusiness firms. Although the most popular form of ownership when compared withpartnerships and corporations, they rank last in total sales revenues. As shown inFigure 4.2, sole proprietorships account for about $1.3 trillion, or about 4 percent oftotal annual sales.Sole proprietorships are most common in retailing, service, and agriculture. Thus,the clothing boutique, corner grocery, television-repair shop down the street, and small,
independent farmers are likely to be sole proprietorships.
Relative Percentages of Nonfarm Sole Proprietorships, Partnerships,
and Corporations in the United States
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