Start-up | |
Requirements | |
Start-up Expenses | |
Legal | $0 |
Stationery etc. | $50 |
Brochures | $100 |
Consultants | $0 |
Insurance | $500 |
Rent | $450 |
Research and Development | $400 |
Website Development | $500 |
Office Equipment | $400 |
Expensed Equipment | $0 |
Other | $0 |
Total Start-up Expenses | $2,400 |
Start-up Assets | |
Cash Required | $44,600 |
Other Current Assets | $0 |
Long-term Assets | $13,000 |
Total Assets | $57,600 |
Total Requirements | $60,000 |
AEU will position itself as a niche service provider within the hard-adventure market. It will offer high-quality travel packages for extreme sporting trips. To begin AEU will offer six trips: helicopter-skiing trips to Canada, India, and New Zealand, white-water rafting trips to New Zealand and Costa Rica, and a mountain biking trip along the Great Divide from Montana to New Mexico.
The target market will be made up of young professionals who work and play hard. These people can afford to play expensively, and are willing to buy time in the form of our services. AEU will serve the hard-adventure niche market as a top quality, full-service provider. AEU defines quality by the unique aspects of the services offered. Those aspects include booking group or custom trips, assistance with passports, providing top-of-the-line equipment and supplies, and a superior service offering with access to better terrain, luxury accommodations, entertainment, celebrity exposure, and gourmet food.
The tours to be offered are as follows:
A comprehensive map system has been created by Adventure Cycling and is currently available for purchase. The map clearly indicates the route, places to camp, stores for food and laundromats. Leadership training for the guides will be developed in-house using some outside material. There are many similar organizations that will be good sources of information. The products needed for this trip are for the most part already manufactured. One item that needs to be designed and built is a privacy compartment for the solar shower. This will be designed by Jordan and manufactured in-house. A cookbook collection of simple recipes, including some personal favorites, will also be assembled. Professional cooks will be provided, and flown in if necessary.
AEU will not send clients to places we ourselves would not go. All service providers will be top-notch professionals with accomplished backgrounds. They will be medically trained, and evaluated for knowledge and ability to ensure safety and high-quality service. If they fail, at any time, to meet our rigid standards of quality, they will not be used. If quality falls, another provider will replace them. These activities take place outside of the United States and therefore we will hire local guides to accompany our professional guides and service providers.
Travel industry is an upward growth industry. There are several reasons for this increase. First, a relative healthy domestic economy over the last several years and the devaluation of currency in other regions has made travel less expensive for U.S. residents. Pleasure travel has increased by 3.2% in 1999 and is predicted to grow 2.0% in 2000. Second, the healthy economy has increased business, which in turn boosted domestic business travel 4.8% in 1999 with an estimated increase of 3.6% in 2000.
Adventure travel is a growing segment of the travel industry. One theory of the recent increase in extreme sports has to do with the strong competitive nature of younger Americans. Statistics show that 8,000 U.S. companies (that offer adventure packages) generated $7 billion in 1999. There also has been a 66% increase in executive participation between 1996 and 2000 (or an increase of 2,000 participants)(La Franco, Robert. Forbes, Feb 9, 1998 v161 n3 p168(3)).
Some quick facts:
AEU’s target customers are high income (min. $75,000 for single person), health-conscious individuals interested in popular hard-adventure sports such as skiing, white-water sports and mountain biking. The major purchasers are located in urban areas within these United States cities.
Customer Location (within the United States):
Hard-adventure travelers are more likely to be men. Therefore, AEU’s primary target market for hard-adventure sports is men between the ages of 18-34. However an increasing number of hard-adventure travelers are women (some statistics suggest that women comprise 49% of the hard-adventure market). Men, on average, spend more than women on their adventure travels.
Customers will be reached through traditional marketing communication methods. Information has been located relating to specific profiles of both hard- and soft-adventure travelers, where they live, work, what they do, etc. Research suggests that many of our target customers, and travelers in general, are Internet savvy. As such, the Internet will serve as an appropriate and effective medium of communication. Many adventure travelers purchase over the Internet or buy through travel agents. Purchase decisions are influenced by the amount of disposable income held, family issues, and the economy of a given year.
AEU will be targeting two specific groups:
The common elements between these two groups are money and a love for adventures. Group one has a lot of money from income that they earn. Group two has a lot of disposable income because the money was given to them, typically by members of their family. The second group, the trustafarians, is a very small group relative to the first group.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
High-income Health-conscious Individuals | 12% | 1,300,000 | 1,456,000 | 1,630,720 | 1,826,406 | 2,045,575 | 12.00% |
Young, Active Trustafarians | 5% | 500,000 | 525,000 | 551,250 | 578,813 | 607,754 | 5.00% |
Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
Total | 10.19% | 1,800,000 | 1,981,000 | 2,181,970 | 2,405,219 | 2,653,329 | 10.19% |
AEU will promote/position itself as a differentiated provider of luxury hard-adventure travel, and will price accordingly within the chosen service niche.
AEU is targeting this special population for several reasons:
Methods of communication will include direct mail, magazine advertising, personal selling and WWW presence. Continuous magazine advertising will be costly. Initially the use of direct mail, and personal selling will be employed. These methods of communication will be tailored to reach our target segment.
As operations progress, AEU will continue to measure our progress relative to competitors and to the growth of the market(s) in which we operate. Though the primary target market has been defined, there may be new possibilities to serve additional segments. As the product is defined, and the strategy differentiation is defined based on competitive strengths, AEU will be better able to determine whether adjustments in positioning are necessary. Access to important information concerning the market, competitors, etc., is available. However it is not free. For the purposes of this project, we feel it is unnecessary to incur additional expense.
The marketing strategy will be to develop long-term relationships with customers. We will keep a database from which to obtain important demographic and psychographic information. As the business becomes profitable, plans will be implemented to expand. There is virtually no limit to the number and variety of trips AEU can provide. Trips can take place on every continent and in most countries. The goal is to establish AEU as an international provider of top-of-the-line hard-adventure travel.
Strengths and weaknesses of the competitors:
Companies that offer higher-priced, more luxurious packages generally provide a “soft” adventure. The activities are more along the lines of sightseeing and low-risk alternatives. The advantages these companies have include established reputations, extensive knowledge of the industry, and key personnel and management. Some have been in operation for more than twenty years. They are familiar with local service providers and have established strategic relationships.
Disadvantages to us:
Closely related competitors:
Abercrombie & Kent: A well-established, international travel provider. Their focus is mainly on “soft” adventure packages such as safaris, river tours (e.g. Amazon), trekking, sightseeing, etc. However they do offer a “Connoisseur” line of packages. These are generally priced starting from $4,000-7,000. Some of their packages include white-water activities and hiking, however most are touring packages.
Competing or substitute products:
There are many activities and types of travel available to people contemplating a vacation. Theme parks, motorhome trips, and cruises are just a few. Substitutes could include less expensive, self-planned trips, trips geared towards soft-travel, adventure trips involving hunting or fishing as primary activities, or exclusive adventure trips such as personal submarine tours of the Titanic or a trip around the world in a Leer Jet. Many activities that take place outside and involve some level of risk could be seen as hard-adventure competition.
Another alternative is to do nothing. Consumers do not have to vacation. They may opt to spend the money they would have otherwise spent on a vacation on something else.
Adventure Excursions Unlimited will be going after the upper-end of the hard-adventure market. This market up until now has been underserved, there are hard-adventure tour companies, but none that are catering to the high-end spectrum. With the adventuring traveling industry steadily increasing, AEU sees a unique opportunity.
AEU’s main objective in its marketing and sales activity is to make the impression on prospective customers that AEU offers a higher level of service relative to any other provider of hard-adventure tours. This will be communicated through all of the different media that we use. If AEU can make the impression that our trips are truly different and superior, then our research indicates that there will be steady demand.
Once AEU has clients signed up and participating on our trips, it will rely on superior customer attention and service to impress and retain clients for future trips. Developing long-term relationships will be the key to steady growth.
The competitive edge in our services is the access we provide to popular “hard” adventure sports without the budget constraint of typical travelers. That is, most travelers are looking to spend less than “hard” adventure sports without the budget constraint of typical travelers. The majority of providers cater to these people. Adventure Excursions Unlimited intends to use the same service providers but provide more exclusive trips. Accommodations will be primarily in small luxury hotels and resorts. Meals will be exceptional, more like gourmet cuisine. In addition, the adventure activities will be better than average because the clients have more money. They won’t get stuck with people they don’t like; they will get access to the best terrain, sections of rivers, etc. AEU’s activities are very popular. AEU’s target market has no problem spending $4,000 per week on heli-skiing. Moreover, they generally make this type of activity an annual event.
The sales strategy is to create long-term relationships with customers through superior service. The intent is to initially target the primary customer group. This group has been defined as persons who have purchased, or are likely to purchase, a “hard-adventure” vacation for over $2,500.
The trips planned are designed with the wealthy adventure traveler in mind. Later marketing efforts may include trips geared towards corporate clients, Eco-tourism or hard-adventure trips for people who want to spend less money. Target customers will be identified through standard research methods. There are a number of publications available that contain profiles of Adventure travelers.
Methods by which we will contact customers will depend on results of marketing/sales research. We will likely use trade or special interest magazines, direct mail, Web-based communication, and personal selling. In addition printed materials will be made available to customers through travel agencies that cater to the adventure target market. Initially, service will be introduced regionally, and possibly nationally. Sales will be extended into the global market within a few years of operation.
Our services are seasonal. Recurring revenue will be dependent upon successful trips involving a variety of activities offered year-round. We hope to promote out of season services through frequent customer contact and our own publication, most likely a magazine of some sort. We will review up-and-coming trips, offer highlights of past trips and try to do other creative articles, giveaways, customer profiles, etc.
Most sales will occur at the retail level. The sales that occur between customers and travel agencies will be discounted appropriately, approximately 15%. Transactions will occur as the result of customer contact in response to communication efforts. In addition, AEU will engage in personal selling.
The following charts and table shows AEU’s expected sales forecast.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Heli-skiing | $360,000 | $500,000 | $570,000 |
White-water Rafting | $140,000 | $260,000 | $310,000 |
Mountain Biking | $100,000 | $200,000 | $240,000 |
Other | $0 | $0 | $0 |
Total Sales | $600,000 | $960,000 | $1,120,000 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Heli-skiing | $0 | $0 | $0 |
White-water Rafting | $40,000 | $70,000 | $78,000 |
Mountain Biking | $28,000 | $50,000 | $64,000 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $68,000 | $120,000 | $142,000 |
Adventure Excursions Unlimited will have several milestones early on:
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business Plan Completion | 1/1/2001 | 1/21/2001 | $0 | Jordan | Marketing |
Office Set-up | 1/1/2001 | 2/1/2001 | $0 | Jillyn | Department |
Develop Leadership Training Program | 2/1/2001 | 3/1/2001 | $0 | Jordan | Department |
Completion of First Trip | 4/1/2001 | 5/1/2001 | $0 | Loren | Department |
Completion of 20th Trip | 4/1/2002 | 5/1/2002 | $0 | Loren | Department |
Totals | $0 |
Jordan Stephan, VP, Corporate Council, Business Development, and Mountain Biking Activity Supervisor : Jordan received his Bachelor of Arts in philosophy from Washington and Jefferson College in Washington, PA. While there, he was president of the Washington and Jefferson Cycling Club and Team for two years. He completed his Master of Business Management/Doctor of Jurisprudence, joint degree program at Willamette University where he has served as the secretary of the Environmental Law Society, and chairperson for the Willamette University Public Interest Law Project (WUPILP). As chairperson, Jordan supervised twenty-five staff members and raised $14,000. Jordan has also managed a bicycle shop for two years. Following graduate school, Jordan worked for Counterclaim.com where Jordan did business development, organizational development, and other management activities. He is responsible for all logistics on the mountain bike trips.
Jordan’s expertise in mountain bike trip logistics comes from years of cycle touring. Jordan has cycled across the country and around the Upper Peninsula of Michigan and Vermont. Jordan has also done a great deal of backpacking, backcountry hiking and snowshoeing. He has served as a consultant on many long-distance bicycle tours in the United States and abroad. In addition to his role as logistical planner, Jordan will be responsible for part-manufacturing for the mountain bike trips as he has manufacturing expertise from several years of design and improvement experience with outdoor gear.
Jordan’s extra curricular activities are based upon his love for the outdoors. He has been a competitive cyclist and runner for the last five years. He competes in cycling road races, endurance mountain bike races, and road/trail running races up to half-marathons. His current favorite activity is the duathlon or run/bike/run events. He would like to combine his experience and education with his love for the outdoors. The AEU business concept is a reflection of this desire.
Jillyn Certo, VP, Human Resource Manager/Corporate Trainer, and Ski-trip Coordinator : Jillyn graduated with two Bachelor of Science Degrees, one in corporate and industrial fitness and the other in occupational safety, from Oregon State University in 1991. Jillyn completed her MBA work at Atkinson Graduate School of Management in 1998. She has six years experience in the field of safety. After Atkinson Jillyn worked at Nike as a human resource specialist. Her interests include scuba diving and downhill skiing. Jillyn has competed in track & field as well as in horse shows and barrel racing. Along with her interest in sports, Jillyn has a variety of experience with business and pleasure travel. Jillyn will supervise the training of our leaders.
Loren Harlo, Marketing Manager and White-water Adventure Coordinator : Loren is twenty-seven years old. He received his Bachelor degree in psychology from Western College and graduated Magna cum Laude. He will complete his Master of Business Administration degree (with an emphasis in marketing) in 1998. Following graduate school, Loren worked for Burley Cooperative as a marketing manager. Loren has been active in athletics for twenty-years. He played football at the grade school, high school and college level, as well as basketball, track and field, and competition karate. He is an avid outdoorsman with a passion for water sports, skiing, hiking, hunting and fishing. He has recently taken up kayaking. Loren gained self-employment and management experience as an independent contractor for the Union Pacific Railroad. He has also managed and operated a small restaurant. He has always planned to own his own business and realized, while working independently, that he needed the knowledge of business management that an MBA program could provide.
Though the founding members intend to take an active role in the operation of AEU, additional management will be sought out. AEU is open to assistance from experienced managers associated with venture capital providers.
The following table shows the personnel plan for AEU.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Jordan Stephan | $30,000 | $30,000 | $30,000 |
Jillyn Certo | $30,000 | $30,000 | $30,000 |
Loren Harlo | $30,000 | $30,000 | $30,000 |
Mountain Bike Trip Personnel | $70,000 | $150,000 | $170,000 |
Heli-skiing Personnel | $120,000 | $170,000 | $200,000 |
White-water Adventure Personnel | $70,000 | $125,000 | $155,000 |
Secretary | $18,000 | $0 | $0 |
Total People | 4 | 19 | 19 |
Total Payroll | $368,000 | $535,000 | $615,000 |
The following subtopics will provide more financial information.
The following chart and table indicates projected cash flow.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $600,000 | $960,000 | $1,120,000 |
Subtotal Cash from Operations | $600,000 | $960,000 | $1,120,000 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $600,000 | $960,000 | $1,120,000 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $368,000 | $535,000 | $615,000 |
Bill Payments | $168,145 | $245,468 | $305,745 |
Subtotal Spent on Operations | $536,145 | $780,468 | $920,745 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $536,145 | $780,468 | $920,745 |
Net Cash Flow | $63,855 | $179,532 | $199,255 |
Cash Balance | $108,455 | $287,987 | $487,243 |
See the following table for general assumptions.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 25.42% | 25.00% | 25.42% |
Other | 0 | 0 | 0 |
This Break-even Analysis table and chart, below, project the figures for monthly sales break even.
Break-even Analysis | |
Monthly Revenue Break-even | $43,114 |
Assumptions: | |
Average Percent Variable Cost | 11% |
Estimated Monthly Fixed Cost | $38,228 |
The following table indicates the projected profit and loss.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $600,000 | $960,000 | $1,120,000 |
Direct Cost of Sales | $68,000 | $120,000 | $142,000 |
Other | $0 | $0 | $0 |
Total Cost of Sales | $68,000 | $120,000 | $142,000 |
Gross Margin | $532,000 | $840,000 | $978,000 |
Gross Margin % | 88.67% | 87.50% | 87.32% |
Expenses | |||
Payroll | $368,000 | $535,000 | $615,000 |
Sales and Marketing and Other Expenses | $21,000 | $0 | $0 |
Depreciation | $4,332 | $4,332 | $4,332 |
Leased Equipment | $0 | $0 | $0 |
Utilities | $0 | $0 | $0 |
Insurance | $4,800 | $4,800 | $4,800 |
Rent | $5,400 | $5,400 | $5,400 |
Payroll Taxes | $55,200 | $80,250 | $92,250 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $458,732 | $629,782 | $721,782 |
Profit Before Interest and Taxes | $73,268 | $210,218 | $256,218 |
EBITDA | $77,600 | $214,550 | $260,550 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $17,825 | $52,555 | $65,122 |
Net Profit | $55,443 | $157,664 | $191,096 |
Net Profit/Sales | 9.24% | 16.42% | 17.06% |
The following table will indicate the projected balance sheet.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $108,455 | $287,987 | $487,243 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $108,455 | $287,987 | $487,243 |
Long-term Assets | |||
Long-term Assets | $13,000 | $13,000 | $13,000 |
Accumulated Depreciation | $4,332 | $8,664 | $12,996 |
Total Long-term Assets | $8,668 | $4,336 | $4 |
Total Assets | $117,123 | $292,323 | $487,247 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $4,080 | $21,617 | $25,444 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $4,080 | $21,617 | $25,444 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $4,080 | $21,617 | $25,444 |
Paid-in Capital | $60,000 | $60,000 | $60,000 |
Retained Earnings | ($2,400) | $53,043 | $210,706 |
Earnings | $55,443 | $157,664 | $191,096 |
Total Capital | $113,043 | $270,706 | $461,802 |
Total Liabilities and Capital | $117,123 | $292,323 | $487,247 |
Net Worth | $113,043 | $270,706 | $461,802 |
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 4725, Tour Operators, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 60.00% | 16.67% | 4.00% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 42.80% |
Total Current Assets | 92.60% | 98.52% | 100.00% | 65.80% |
Long-term Assets | 7.40% | 1.48% | 0.00% | 34.20% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 3.48% | 7.39% | 5.22% | 33.10% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 16.40% |
Total Liabilities | 3.48% | 7.39% | 5.22% | 49.50% |
Net Worth | 96.52% | 92.61% | 94.78% | 50.50% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 88.67% | 87.50% | 87.32% | 40.10% |
Selling, General & Administrative Expenses | 79.51% | 71.08% | 70.16% | 30.80% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 0.80% |
Profit Before Interest and Taxes | 12.21% | 21.90% | 22.88% | 1.20% |
Main Ratios | ||||
Current | 26.58 | 13.32 | 19.15 | 1.66 |
Quick | 26.58 | 13.32 | 19.15 | 1.29 |
Total Debt to Total Assets | 3.48% | 7.39% | 5.22% | 49.50% |
Pre-tax Return on Net Worth | 64.81% | 77.66% | 55.48% | 2.70% |
Pre-tax Return on Assets | 62.56% | 71.91% | 52.58% | 5.30% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 9.24% | 16.42% | 17.06% | n.a |
Return on Equity | 49.05% | 58.24% | 41.38% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 42.21 | 12.17 | 12.17 | n.a |
Payment Days | 33 | 18 | 28 | n.a |
Total Asset Turnover | 5.12 | 3.28 | 2.30 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.04 | 0.08 | 0.06 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $104,375 | $266,370 | $461,798 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.20 | 0.30 | 0.44 | n.a |
Current Debt/Total Assets | 3% | 7% | 5% | n.a |
Acid Test | 26.58 | 13.32 | 19.15 | n.a |
Sales/Net Worth | 5.31 | 3.55 | 2.43 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Heli-skiing | 0% | $0 | $0 | $0 | $0 | $0 | $120,000 | $0 | $0 | $120,000 | $120,000 | $0 | $0 |
White-water Rafting | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $70,000 | $0 | $70,000 | $0 | $0 |
Mountain Biking | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $50,000 | $50,000 | $0 | $0 | $0 | $0 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $0 | $0 | $0 | $0 | $0 | $120,000 | $50,000 | $120,000 | $120,000 | $190,000 | $0 | $0 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Heli-skiing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
White-water Rafting | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $20,000 | $0 | $20,000 | $0 | $0 | |
Mountain Biking | $0 | $0 | $0 | $0 | $0 | $0 | $14,000 | $14,000 | $0 | $0 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $14,000 | $34,000 | $0 | $20,000 | $0 | $0 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Jordan Stephan | 0% | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Jillyn Certo | 0% | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Loren Harlo | 0% | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 | $2,500 |
Mountain Bike Trip Personnel | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $35,000 | $35,000 | $0 | $0 | $0 | $0 |
Heli-skiing Personnel | 0% | $0 | $0 | $0 | $0 | $0 | $40,000 | $0 | $0 | $40,000 | $40,000 | $0 | $0 |
White-water Adventure Personnel | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $35,000 | $0 | $35,000 | $0 | $0 |
Secretary | 0% | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Total People | 3 | 3 | 3 | 4 | 4 | 9 | 9 | 14 | 9 | 14 | 4 | 4 | |
Total Payroll | $7,500 | $7,500 | $7,500 | $9,500 | $9,500 | $49,500 | $44,500 | $79,500 | $49,500 | $84,500 | $9,500 | $9,500 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
Tax Rate | 30.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | 25.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $0 | $0 | $0 | $0 | $0 | $120,000 | $50,000 | $120,000 | $120,000 | $190,000 | $0 | $0 | |
Direct Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $14,000 | $34,000 | $0 | $20,000 | $0 | $0 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $14,000 | $34,000 | $0 | $20,000 | $0 | $0 | |
Gross Margin | $0 | $0 | $0 | $0 | $0 | $120,000 | $36,000 | $86,000 | $120,000 | $170,000 | $0 | $0 | |
Gross Margin % | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 100.00% | 72.00% | 71.67% | 100.00% | 89.47% | 0.00% | 0.00% | |
Expenses | |||||||||||||
Payroll | $7,500 | $7,500 | $7,500 | $9,500 | $9,500 | $49,500 | $44,500 | $79,500 | $49,500 | $84,500 | $9,500 | $9,500 | |
Sales and Marketing and Other Expenses | $0 | $0 | $0 | $0 | $0 | $5,000 | $1,500 | $3,000 | $5,000 | $6,500 | $0 | $0 | |
Depreciation | $361 | $361 | $361 | $361 | $361 | $361 | $361 | $361 | $361 | $361 | $361 | $361 | |
Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Utilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Insurance | $400 | $400 | $400 | $400 | $400 | $400 | $400 | $400 | $400 | $400 | $400 | $400 | |
Rent | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | $450 | |
Payroll Taxes | 15% | $1,125 | $1,125 | $1,125 | $1,425 | $1,425 | $7,425 | $6,675 | $11,925 | $7,425 | $12,675 | $1,425 | $1,425 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $9,836 | $9,836 | $9,836 | $12,136 | $12,136 | $63,136 | $53,886 | $95,636 | $63,136 | $104,886 | $12,136 | $12,136 | |
Profit Before Interest and Taxes | ($9,836) | ($9,836) | ($9,836) | ($12,136) | ($12,136) | $56,864 | ($17,886) | ($9,636) | $56,864 | $65,114 | ($12,136) | ($12,136) | |
EBITDA | ($9,475) | ($9,475) | ($9,475) | ($11,775) | ($11,775) | $57,225 | ($17,525) | ($9,275) | $57,225 | $65,475 | ($11,775) | ($11,775) | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Taxes Incurred | ($2,951) | ($2,459) | ($2,459) | ($3,034) | ($3,034) | $14,216 | ($4,472) | ($2,409) | $14,216 | $16,279 | ($3,034) | ($3,034) | |
Net Profit | ($6,885) | ($7,377) | ($7,377) | ($9,102) | ($9,102) | $42,648 | ($13,415) | ($7,227) | $42,648 | $48,836 | ($9,102) | ($9,102) | |
Net Profit/Sales | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 35.54% | -26.83% | -6.02% | 35.54% | 25.70% | 0.00% | 0.00% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $0 | $120,000 | $50,000 | $120,000 | $120,000 | $190,000 | $0 | $0 | |
Subtotal Cash from Operations | $0 | $0 | $0 | $0 | $0 | $120,000 | $50,000 | $120,000 | $120,000 | $190,000 | $0 | $0 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $0 | $0 | $0 | $0 | $0 | $120,000 | $50,000 | $120,000 | $120,000 | $190,000 | $0 | $0 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $7,500 | $7,500 | $7,500 | $9,500 | $9,500 | $49,500 | $44,500 | $79,500 | $49,500 | $84,500 | $9,500 | $9,500 | |
Bill Payments | ($976) | ($1,427) | ($952) | ($1,227) | ($1,493) | $183 | $27,193 | $19,514 | $46,704 | $28,451 | $53,668 | ($1,493) | |
Subtotal Spent on Operations | $6,524 | $6,073 | $6,548 | $8,273 | $8,007 | $49,683 | $71,693 | $99,014 | $96,204 | $112,951 | $63,168 | $8,007 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $6,524 | $6,073 | $6,548 | $8,273 | $8,007 | $49,683 | $71,693 | $99,014 | $96,204 | $112,951 | $63,168 | $8,007 | |
Net Cash Flow | ($6,524) | ($6,073) | ($6,548) | ($8,273) | ($8,007) | $70,317 | ($21,693) | $20,986 | $23,797 | $77,049 | ($63,168) | ($8,007) | |
Cash Balance | $38,076 | $32,003 | $25,455 | $17,182 | $9,175 | $79,492 | $57,799 | $78,785 | $102,581 | $179,630 | $116,462 | $108,455 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $44,600 | $38,076 | $32,003 | $25,455 | $17,182 | $9,175 | $79,492 | $57,799 | $78,785 | $102,581 | $179,630 | $116,462 | $108,455 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $44,600 | $38,076 | $32,003 | $25,455 | $17,182 | $9,175 | $79,492 | $57,799 | $78,785 | $102,581 | $179,630 | $116,462 | $108,455 |
Long-term Assets | |||||||||||||
Long-term Assets | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 | $13,000 |
Accumulated Depreciation | $0 | $361 | $722 | $1,083 | $1,444 | $1,805 | $2,166 | $2,527 | $2,888 | $3,249 | $3,610 | $3,971 | $4,332 |
Total Long-term Assets | $13,000 | $12,639 | $12,278 | $11,917 | $11,556 | $11,195 | $10,834 | $10,473 | $10,112 | $9,751 | $9,390 | $9,029 | $8,668 |
Total Assets | $57,600 | $50,715 | $44,281 | $37,372 | $28,738 | $20,370 | $90,326 | $68,272 | $88,897 | $112,332 | $189,020 | $125,491 | $117,123 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $0 | $943 | $1,411 | $1,879 | $2,613 | $29,921 | $21,281 | $49,134 | $29,921 | $57,773 | $3,346 | $4,080 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $0 | $943 | $1,411 | $1,879 | $2,613 | $29,921 | $21,281 | $49,134 | $29,921 | $57,773 | $3,346 | $4,080 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $0 | $0 | $943 | $1,411 | $1,879 | $2,613 | $29,921 | $21,281 | $49,134 | $29,921 | $57,773 | $3,346 | $4,080 |
Paid-in Capital | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 | $60,000 |
Retained Earnings | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) | ($2,400) |
Earnings | $0 | ($6,885) | ($14,262) | ($21,639) | ($30,741) | ($39,843) | $2,805 | ($10,610) | ($17,837) | $24,811 | $73,647 | $64,545 | $55,443 |
Total Capital | $57,600 | $50,715 | $43,338 | $35,961 | $26,859 | $17,757 | $60,405 | $46,990 | $39,763 | $82,411 | $131,247 | $122,145 | $113,043 |
Total Liabilities and Capital | $57,600 | $50,715 | $44,281 | $37,372 | $28,738 | $20,370 | $90,326 | $68,272 | $88,897 | $112,332 | $189,020 | $125,491 | $117,123 |
Net Worth | $57,600 | $50,715 | $43,338 | $35,961 | $26,859 | $17,757 | $60,405 | $46,990 | $39,763 | $82,411 | $131,247 | $122,145 | $113,043 |
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Travel Agency
Back to All Business Ideas
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on December 13, 2021
Investment range
$2,150 - $10,600
Revenue potential
$78,000 - $300,000 p.a.
Time to build
0 – 3 months
Profit potential
$62,000 - $90,000 p.a.
Industry trend
Starting your travel agency? Here are the most vital considerations:
The Journey of Building a Premier Travel Agency with Casey Halloran
Interactive Checklist at your fingertips—begin your travel agency today!
You May Also Wonder:
Is a travel agency profitable?
If you run your online travel agency from home, you could have profit margins of up to 80%. Costs to run your travel agency are very low, and you’re paid around a 10% commission on everything that you book. As a home-based, one-person show, you could make $60,000 per year to start, and much more once you’re established.
Should I rent an office space for my travel agency?
Consumers are turning to online travel agencies more and more, which you could easily run from home. If your business grows fast and you need to add staff, you may want to have an office.
How can my travel agency compete with Expedia?
Some consumers prefer the personal service of a smaller online agency that can offer more local, personal insights about travel destinations. The key is to differentiate yourself in some way. You could specialize in certain locations, a specific type of lodgings, such as cabins, or in a type of vacation such as corporate retreats.
What are the main activities of a travel agency?
Travel agencies engage in activities such as providing travel advice, booking travel arrangements, managing logistics, and offering specialized services tailored to clients’ needs.
Is it hard to run a travel agency?
Running a travel agency can have challenges due to intense competition, evolving industry dynamics, regulatory considerations, seasonal fluctuations, and the need for customer satisfaction and crisis management.
Pros and cons.
Every business has its pros and cons, and a travel agency is no exception. You should weigh these carefully to decide if the business is right for you.
The US travel agency industry expanded an impressive 75% in the decade leading up to 2020, which saw a massive pandemic-driven downturn.
In 2021, many travel agents saw a surge in business as travelers unsure of all the constantly changing Covid-19 rules and restrictions turn to them for help, rather than booking their own trips. Global travel advisor InteleTravel experienced a 35% increase in business, not from the disaster year of 2020, but from 2019, which had set records.(( https://www.nytimes.com/2021/04/14/travel/summer-vacation-travel-agents.html ))
Consumers are also turning more and more to online travel agencies, with a study by Expedia showing a 25% increase in the use of online agencies in 2020 alone. Brick-and-mortar agencies seem to be a dying breed, with British travel icon Thomas Cook closing in 2019.(( https://advertising.expedia.com ))
Trends in travel agency industry include:
Challenges in travel agency industry include:
The startup costs for a travel agency range from about $2,000 to $10,000, with an average of around $6,000. The high-end includes the rental of office space and a larger marketing budget, but you could easily run your online travel agency from home to cut costs.
Startup Costs | Ballpark Range | Average |
---|---|---|
Setting up a business name and corporation | $150 - $200 | $175 |
Licenses and permits | $200 - $300 | $250 |
Insurance | $100 - $300 | $200 |
Business cards and brochures | $200 - $300 | $250 |
Website setup | $1,000 - $3,000 | $2,000 |
Location security deposit | $0 - $5,000 | $2,500 |
Initial marketing budget | $500 - $1,500 | $1,000 |
Total | $2,150 - $10,600 | $6,375 |
The commission paid to a travel agency by travel vendors such as airlines and hotels is generally about 10%. Some travel agents also charge a nominal consultation fee for each booking, typically between $30 and $50. Those will be your two revenue streams.
The average cost of a one-week domestic vacation is $1,500 per person. The profit margin for a home-based travel agency is usually about 80%. With an office and staff, your margin will likely drop to about 30%.
In your first year or two, you could work from home and sell five two-person vacations each week. At a 10% commission, this would mean $78,000 in annual revenue. You’d have about $62,000 in profit, assuming an 80% margin.
As your brand gains recognition, sales could climb to 1,000 two-person vacations a year. At this stage, you would rent an office and hire staff, reducing your profit margin to 30%. With expected annual revenue of $300,000, you would make about $90,000.
There are a few barriers to entry for a travel agency. Your biggest challenges will be:
Step 2: hone your idea.
Now that you know what’s involved in starting a travel agency, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
As a travel agency, you need to find a way to differentiate yourself from the competition. Research online travel agents and booking platforms to see their offerings and prices, while keeping an eye out for something that might be missing.
Perhaps you could specialize in travel to an under-appreciated region, such as Southeast Asia, and build a network of relevant contacts and vendors. Or you could focus on finding travelers the most incredible home-stay rentals at the best prices.
You could specialize in family vacations, corporate retreats, or honeymoons. The potential niche options in the travel industry are nearly endless.
Travel can involve many facets, and you can handle some or all of them, in addition to flights, lodgings, and car rentals. These might include:
Travel vendors, such as hotels, airlines, and car rental firms, pay a commission to travel agents that’s generally about 10% of the booking. For instance, if you book a $1,200 flight on Turkish Airlines for your client, Turkish Airlines will give you, the travel agent, a $120 commission.
As a result, booking flights with a travel agent sometimes costs the traveler slightly more than booking directly with the airlines or through a travel site like Expedia or Orbitz. Thus, to attract customers and boost sales travel agents rely on discounted travel packages.
For instance, a return flight from Chicago to Cancun and a 6-day stay at a four-star all-inclusive resort, plus ground transport, might cost a traveler $1,000 or more to book directly. But travel agents get significant discounts from vendors because they place volume orders, so you’d be able to offer this trip as a $599 package deal.
Even after paying your commission, the traveler still saves a chunk of money by using your services, rather than booking themselves. And keep in mind, the discounts offered by vendors are likely to increase as you become a more established agent. You may be able to negotiate commissions from tour operators and excursion companies as well.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on the concept you’ve chosen for your agency. If you’ve decided to specialize in family vacations, you’ll be targeting parents. You might find them on sites like Facebook or LinkedIn, rather than Instagram or TikTok.
In the early stages, you may want to run your business from home to keep costs low. But as your travel agency grows, you’ll likely need to hire workers and may need to rent out an office. You can find commercial space to rent in your area on Craigslist , Crexi , and Commercial Cafe .
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Find a Domain
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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to travel agencies.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your travel agency will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.
Choose Your State
We recommend ZenBusiness as the Best LLC Service for 2024
The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist , and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a travel agency. You might also try crowdfunding if you have an innovative concept.
Starting a travel agency requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account .
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your travel agency business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software to manage bookings and scheduling, such as TravelPerk , TravelCEO , and TravelOperations .
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Your website should showcase your offerings, customer testimonials, and detailed information about destinations.
Your clients are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your travel agency meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your travel agency could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a travel agency, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in travel agencies for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in travel. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a travel agency would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Owning a travel agency means sharing the joy of travel for a living. What could be more fun? It’s also a huge, high-growth industry that you could tap into and grow a profitable business. Startup costs are low, and all you need is a simple accreditation — there’s no real training required. You just need a good concept for your agency and a great marketing plan. Having a strong online presence in this digital age is also an absolute must.
You’ve started off on the right foot by reading this guide, and now you’re ready to begin your trip to entrepreneurial success!
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Online Travel Website Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Online Travel Website Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Online Travel Website business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
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People always travel, and as such there frequently use online platforms in order to make arrangements for the travel. Over the past 15 years, a number of online travel websites have been developed so that they are able to provide airfare, hotels, cars, and other accommodations that are needed by business and personal travelers. This is a highly competitive industry, and many entrepreneurs need to find ways to differentiate themselves from other businesses in the market. The startup costs associated with these types of businesses typically runs anywhere from $100,000 to $500,000 for the technology and requires potentially several millions of dollars in order to execute a large-scale marketing campaign. Usually, it can take two to three years before these businesses become profitable and had a large user base. The technology that is used to develop an online travel website is now commonplace.
Almost all online travel websites are developed with capital provided by a private investor. As such, an online travel website business plan is going to be required. This business plan should feature a three-year profitable statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. Most importantly, a thorough analysis of the burn rate should be included as well in order to showcase to potential investor how much money is going to be used before the business can become profitable. This should include discussing personnel, the overall marketing budget, and the ongoing technology cost faced by these businesses. Although it is expensive to do, many businesses will actually conduct a feasibility study Georgia further determine whether or not this is going to be economically viable venture.
An online travel website SWOT analysis should be produced as well in order to chart the strengths, weaknesses, opportunities, and threats that are faced by these businesses on an ongoing basis. As it relates to strengths, these businesses generate very high gross margins by being able to provide accommodations to people that are traveling throughout the United States and abroad. While the startup costs are high, once profitable – these businesses are able to generate a significant amount of income very quickly.
For weaknesses, these businesses are highly competitive and the entrepreneur must find ways that allows the online travel website to have a strong competitive advantage over other companies in the market. The operating expenses can be high especially as it relates to ongoing marketing.
For opportunities, these businesses can readily expand by simply increasing the scope of their marketing campaign, developing relationships with airlines, developing relationships with car rental agencies, and expanding the number of services of the offer.
For threats, these businesses can have issues when it comes to economic recession given that people will cut down on personal travel. However, provided that the online travel website has a substantial user base among business travelers – these risks are substantially ameliorated.
An online travel website marketing plan should also be developed in order to ensure that the business can be found quickly at the onset of operations. Given the competitive nature of this industry, many entrepreneurs will take to hiring a qualified online and traditional marketing firm in order to boost the visibility of the business from the onset of operations. A new online travel website can expect that almost half of its initial start up budget will be allocated towards marketing and advertising activities. Most importantly, the online travel website must find ways that showcases to the general public that specialized deals and substantial savings can be used by using the platform. On an ongoing basis, many online travel websites allocate 20% to 30% of their overall operating budget to ongoing marketing expenditures.
The demand for travel generally remains high in most economic climates, and online travel websites once they are established can be highly lucrative enterprises. While there is a very substantial my difficulty in getting these businesses off the ground, once profitable – they can command very strong valuations.
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Check the estimated wait time for a nonimmigrant visa interview appointment at a U.S. embassy or consulate.
Note: Please check the individual embassy or consulate website to determine if your case is eligible for a waiver of the in-person interview.
Applicants scheduling visa appointments in a location different from their place of residence should check post websites for nonresident wait times.
Nonimmigrant Visa Type | Appointment Wait Time |
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Interview Required Students/Exchange Visitors (F, M, J) | -- days |
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Interview Required Crew and Transit (C, D, C1/D) | -- days |
Interview Required Visitors (B1/B2) | -- days |
Interview Waiver Students/Exchange Visitors (F, M, J) | -- days |
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The estimated wait time to receive a nonimmigrant visa interview appointment at a U.S. embassy or consulate and is based on workload and staffing and can vary from week to week. The information provided is an estimate and does not guarantee the availability of an appointment.
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Wait times for applicants eligible for Interview Waiver are applicable only for locations where applicants schedule appointments to submit their passport and any required documents to a U.S. embassy or consulate. The wait time estimate does not account for the time required for a consular officer to adjudicate the application nor mailing time of passports or other documents. Refer to the website of the Embassy or Consulate Visa Section where you will apply to determine your eligibility for Interview Waiver and for instructions for submitting a nonimmigrant visa application. Note that applicants must be a national or resident of the country where they are applying to be eligible to apply via Interview Waiver.
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Consular sections overseas may be able to expedite your interview date if there is an urgent, unforeseen situation such as a funeral, medical emergency, or school start date. The process to request an expedited nonimmigrant visa interview varies by location. You should refer to the instructions on the website of the Embassy or Consulate Visa Section where you will interview, or on their online appointment scheduling site. You will need to provide proof of the need for an earlier appointment.
In all cases : You must first submit the online visa application form (DS-160), pay the application fee, and schedule the first available interview appointment. Only at this point will a consular section consider your request for an expedited appointment.
Note: Travel for the purpose of attending weddings and graduation ceremonies, assisting pregnant relatives, participating in an annual business/academic/professional conference, or enjoying last-minute tourism does not qualify for expedited appointments. For such travel, please schedule a regular visa appointment well in advance.
These estimates do not include time required for administrative processing, which may affect some applications. When administrative processing is required, the timing will vary based on individual circumstances of each case.
There are only two possible outcomes for U.S. visa applications. The consular officer will either issue or refuse the visa. If a visa applicant has not established that he or she is eligible for a visa, the consular officer must refuse that application. However, some refused visa applications may require further administrative processing. When administrative processing is required, the consular officer will inform the applicant at the end of the interview. The duration of the administrative processing will vary based on the individual circumstances of each case. At the conclusion of the administrative processing period, the consular officer might conclude that an applicant is now qualified for the visa for which he or she applied. The officer may also conclude that the applicant remains ineligible for a visa. Visa applicants are reminded to apply early for their visas, well in advance of the anticipated travel date.
Important Notice: Except in cases of emergency travel (i.e. serious illnesses, injuries, or deaths in your immediate family), before making inquiries about status of administrative processing, applicants should wait at least 180 days from the date of interview or submission of supplemental documents, whichever is later.
About Visa Processing Wait Times – Nonimmigrant Visa Applicants
Information about nonimmigrant visa wait times for interviews and visa processing time frames are shown on this website, as well as on U.S. Embassy and Consulate websites worldwide. It should be noted that the “Wait Times for a Nonimmigrant Visa to be Processed” information by country does not include time required for administrative processing. Processing wait time also does not include the time required to return the passport to applicants, by either courier services or the local mail system.
In addition, it is important to thoroughly review all information on the specific Embassy or Consulate Visa Section website for local procedures and instructions, such as how to make an interview appointment. Embassy and Consulate websites will also explain any additional procedures for students, exchange visitors and those persons who need an earlier visa interview appointment.
* Calendar days refers to every day of the week, including days when embassies are closed (such as weekends and holidays).
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Conduct thorough market research to understand the current travel trends, competition, and customer preferences in the travel industry. Identify your target audience, their needs, and the niche you want travel company to focus on (e.g., luxury travel, budget travel, adventure travel, etc.). 2. Create a business plan.
The U.S. travel agency industry is valued at $48.5B with more than 90,600 businesses in operation and over 318,600 employees nationwide. Factors currently driving industry growth include an increase in domestic tourism and travel for overnight trips, vacations, and business purposes.
Get in Touch. Step 1. Finding your market. Just as any journey starts with choosing your destination, a new OTA usually begins with opting the market to operate on. At this stage, it is necessary to run a careful analysis and build an all-round understanding of your market and potential clients.
Travel Agency Business Plan Template. Written by Dave Lavinsky. Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their travel agencies. On this page, we will first give you some background information with regards to the importance of business planning.
How OTAs work. An Online Travel Agency or OTA is a website (or app) specializing in selling travel services to customers. There are OTAs that offer hotel rooms, flights, rental cars, vacation homes, tours, or all of those at the same time. They basically are distributors for hotels, airlines, and tour companies that profit by taking a fee for ...
Let's now dive into the top 7 steps that you need to take to start your travel agency business. This post can be a blueprint for launching your online travel agency. 1. Develop a Business Plan. Your online travel agency business plan will be a roadmap for establishing your idea. The document will showcase every aspect of your business ...
Specifically created for travel websites, this visually appealing and comprehensive template ensures your business plan covers all essential aspects - from a mission statement, business objectives, market and SWOT analysis, and sales forecast, to organizational management. Spruce up your presentation with striking colors, excellent fonts, and ...
Travel Agency Business Plan, Part 2: Business Foundations. This section of your travel agency business plan provides background information on your agency. If you're brand-spanking new, much of this information will be provided in the overview. If your business has roots, it may be a little more complex. This section can include:
Download this free travel agency business plan template, with pre-filled examples, to create your own plan. Download Now Or plan with professional support in LivePlan. Save 50% today . Available formats: What you get with this template. A complete business plan. Text and financials are already filled out and ready for you to update. ...
Importance of a Business Plan for a Travel Agency. Steps to Create Your Travel Agency Business Plan. Step 1: Executive summary: Step 2: Company information: Step 3: Offerings: Step 4: Market analysis for that Particular Service: Step 5: Plan of Action: Step 6: Team Management: Step 7: Financial Planning:
Select a business structure. Obtain business financing or capital. Set up accounting and bookkeeping services. Source specific travel equipment. Register your travel business. 01. Decide on a travel business niche. The first step to creating a travel business is deciding on the specific niche you want to target.
#2 Create an Effective Business Plan. Having an effective business plan is very important for effectively managing a business including an online travel agency. A business plan is a guide you will ...
How to Create a Travel Website (That Makes Money) Step 1: Choose a Niche (Start with a Defined Niche, Then Work Broad) Step 2: Figure Out What You Are Selling. Step 3: Choose a Platform. Step 4: Find Hosting. Step 5: Create Content. Step 6: Find Help & Scale. Step 7: Monetize & Improve. FAQ.
Well, here you go; download our free travel agency business plan template now and get started. This modern, user-friendly business plan template is specifically designed for travel agencies. With a step-by-step guide and example, it helps you write a professional plan without missing any crucial steps. Simply import data into your preferred ...
An online travel agency (OTA) is a website that acts as a search engine to book travel. They connect providers across the travel industry to help travelers easily plan their trips. On OTA sites, travelers can often access package deals with accommodations, airfare, cruises, rental cars, and more, leveraging last-minute deals and perks.
How to Write a Travel Agency Business Plan in 7 Steps: 1. Describe the Purpose of Your Travel Agency Business. The first step to writing your business plan is to describe the purpose of your travel agency business. This includes describing why you are starting this type of business, and what problems it will solve for customers.
Start now. 1. Perform market analysis. When starting a travel agency business, it's crucial to understand the market landscape to tailor your services effectively and identify your niche. A thorough market analysis will provide insights into customer preferences, competition, and emerging trends.
1.1 Objectives. Adventure Excursions Unlimited's objectives for the first three years of operation include: To create a service-based company whose #1 mission is exceeding customers' expectations. Capturing 25% market share of the high-end hard-adventure travel space. To develop a sustainable, profitable business.
Step 3: Brainstorm a Travel Agency Name. Here are some ideas for brainstorming your business name: Short, unique, and catchy names tend to stand out. Names that are easy to say and spell tend to do better. The name should be relevant to your product or service offerings.
The Online Travel Website Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start an Online Travel Website business. All business planning packages come with easy ...
Start Your Free Trial Now Or learn more about our solution here. 5. The strategy section. When writing the strategy section of a business plan for your travel agency, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.
Overall, you should do something unique to make a name for your travel agency in a saturated travel market. 03. Use A Host Agency. When you start an online travel business, primarily a travel agency, you should think of using a host agency. Most independent agents opt to go with a host agency.
More Than A Business Plan Template Claim Your Business Plan. Plannit.ai is an AI-driven business planning platform that helps entrepreneurs, business owners, students and business consultants create professional business plans in minutes. Answer questions about your vision and generate a full professional business plan.
Each transaction may only purchase a total of 9 tickets (not including infant tickets) and must contain at least 1 adult (over 16 years old), each adult may only bring 1 infant (Infant does not occupy a seat, and must be under the age of 2 while traveling.) and 1 child, or at most 3 children.
Advance travel planning and early visa application are important. If you plan to apply for a nonimmigrant visa to come to the United States as a temporary visitor, please review the current wait time for an interview using the tool on the page.
Online shopping has become a cornerstone of the 21st-century experience in multiple countries, and it's hard to think of life without it. Considering that eCommerce revenue is expected to surpass $6 billion by 2029, it's unsurprising that even more entrepreneurs and businesses are looking for opportunities in this space.. Besides the potential income, eCommerce stores are often much ...