Creating Your Travel Agency Business Plan
Many travel agents cringe when confronted with the idea of creating a business plan. In fact, if you Google “Business Plan Software” you can easily see why. Most business plan tools are focused on developing thorough and complex business plans for the purpose of obtaining investment or funding.
Unless your idea is to develop a business plan for the purpose of obtaining an investor, oar lender to fund your ideas, forget all about using one of these tools as a guide to evolving your specific business plan. It is highly unlikely that you will need to develop an Executive Team Summary, Industry Analysis, Competitive Analysis, 5-year Cash Flow Projections and many of the other elements a formal business plan may require to be completed.
In fact, the very worst time to lock yourself into a long term business plan is while you are starting your agency. You probably have a general idea of what you want to accomplish and some ideas of how to do it. But, to commit yourself to details that may unfold sometime in the future without having a history of what is working and what isn’t could be detrimental to the success of your venture.
So here is how to compile a beginning business plan as you are starting your travel business.
Start With Your Business Statement
Assuming that you have read our article and viewed the video on “Developing a Travel Business Concept” and have focused on a specific niche business and have formed your business statement, here is where you want to start.
“I am going to sell river cruises to folks in my local senior communities”. “I am going to specialize in selling Hawaii SUP and Yoga retreats”. “I am going to sell corporate travel to the businesses in my area”. “My business is to specialize in taking groups to Bali, Indonesia on buying trips” “I am going to escort dive trips throughout Micronesia”.
These are all simple statements of a business idea. They may be based on expertise that you may already possess, or define a passion that you may want to develop. But, you should be able to state your business concept in one single sentence. Once that is done, you will apply the “5-Ws”, Who, What, When, Where and Why. So let’s look at how we develop this information and why it is important to do so.
Who?
Who is going to be your primary market? Who are going to be your primary supplier partners? Who is going to be your host agency? Who will be your marketing partners? Having a keen understanding of who will be your suppliers, host agency, potential clients and marketing partners will go a long way to guaranteeing your success. While this aspect of your business plan may be more difficult than other aspects, it is well worth the effort to define this part of your plan. You should be able to define the “who’s” portion of your plan in one or two sentences that are concise and focused.
Understand that your actual business will morph into what it becomes and the “Who” element will likely change considerably as you gain more understanding of the intricacies of your business as it takes shape. This is just one of the reasons to avoid creating a business plan that is set in stone. One thing that the COVID pandemic taught us is that flexibility and being able to pivot are key to success.
What?
What is it that you are going to market? You should be able to clearly define the products and services and understand the economic viability of your business concept. What is the internal yield (commission) generated by each sale? What income to you want to produce? What kind of sales volume are you going to have to generate to achieve your income objective? What are your start-up costs going to be? What monthly expenses will you need to cover? What training / mentoring / education / experience do you need to get to become competent at selling your chosen products?
Be as concise as possible and reduce your “What’s” into a sentence, or two. Remember that this plan is yours alone and you will never have to show it to anyone unless you want to. Understanding exactly what your business is going to be is the first step towards success. Don’t make the mistake of thinking you cannot change your “What’s”, As your business matures (especially during the first year) you may find you missed the mark on what you wanted to sell and stumble over something much more viable. Again, flexibility is the key to success.
When?
When are you going to start your business? Part-time or full-time? When will you start implementing your marketing plan? When will you commence the education and experience activity that you need to fulfill your Unique Value Proposition? When will you measure your progress towards your financial goals? When will you review and adjust your business plan based on information and experience that you have acquired?
Creating a timeline for the length of your business plan is critical to its success, as is scheduling a periodic review session where you stop to measure your success in all aspects of your plan and modify it based on the realities discovered along the way. As we have seen with the COVID pandemic, we are not in control of events that may affect the timetable of our business growth.
Where?
Where are you going to operate your business from? Where are you going to acquire your business tools from? Where are you going to get your education and experience from? If you are going to be home-based, where is your office going to be and what are you going to have to acquire to make it a reality? Defining the “Where’s” for your business seems easy, but you should think it all the way through and sum it up in a single concise sentence.
Why?
Why will customers purchase their vacation or travel from you, rather than anyone else? Do you offer a level of expertise or experience that makes you unique? Do you offer a special service that other agents don’t? Are you in a unique location to serve clients? This is where your UVP (Unique Value Proposition) becomes extremely important to your success. If there are elements in your UVP, say education or experience that are necessary to gain the level of expertise necessary to fulfill your UVP promise, these should be spelled out in great detail in your “why” section of your plan, A great example would be becoming a river cruise expert. What certifications do you need, what river cruises do you need to take and what port information do you need to acquire?
Building your educational and experiential requirements into your business plan is the surefire way to make sure it gains the necessary priority to keep your plan on track.
Compile Your Business Plan
Remember that your business plan is for your own use as a road map to where you want to take your agency and should reflect your own thoughts and direction. There is no right or wrong way to put a plan together, as long as you come to an understanding of your expectations and the steps necessary to get under way. Here are three things that might help you establish yours.
Establish a Timeline
Let’s say your business plan is for a one-year period. You can easily go over the answers to the above questions and start scheduling actions to take over a 12-month (or 52-week) period. Include the most important ones first and then the things that are of secondary importance. The important items should be in the first row followed by the others on a second row. Creating a checklist for the week or month is one way to make sure that everything gets accomplished as scheduled. Never waiver from the important tasks to achieve your business plan. However, if you find that instead of specializing in river cruises, you really want to specialize in Asian river cruises, you can easily see how you would make the change to your plan.
Review Your Business Plan Monthly
The very first thing that you should do on your timeline is to schedule one-hour review sessions each and every month for the full 12-month timeline. This is to measure the results that you have achieved as compared to your business plan. You can easily identify what is working and what is not. This information is critical to your success and you should amend your business plan to accentuate your successes and downplay areas of poor performance. After your first year in business, I guarantee you that your business plan will not look anything like when you started. Exploiting opportunities and ceasing activities that do not work is the only way to success and having a monthly review session is really mandatory to make sure you stay on track.
Prepare Monthly Income Statements
Even if you are on an accrual accounting basis, prepare cash on cash income statements for each and every month that measures how much cash you have taken in and how much you have spent. This is the only way that you can tell where you are in your business. Use this information to measure your progress towards your financial goal for the year and modify it each and every month by updating your business plan.
And, never lose your focus on your overall objective. If things are not working the way your thought they would, change the way you are doing it, but never lose focus on your overall objective. If you waiver, you might as well close up shop and try something else. Most businesses need to meet critical mass, or a combination of expertise, experience and marketing refinement before they start performing well. If you maintain your focus until you meet the critical mass for your niche, you will succeed.