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The Critical Importance of Business Planning

Written by Adrian Caruso, CEO/Master Business Coach of TA Fastrack

Quite simply, a business plan is critical to achieving consistent growth in any travel business or ANY business. The sad fact is, most small to medium sized businesses don’t have a business plan and if they do it’s not recent and it certainly isn’t communicated clearly to the staff on whose shoulders the successful execution of the plan resides.

In order to go from being a small travel business operation with small profits to a large travel business with large profits you need to do the things large successful travel businesses do now.

The benefits of a business plan are also realized immediately through the process of just thinking clearly about your travel agency for an extended period of time. Focus is what is missing in our day-to-day lives generally. Doing a business plan will force you to focus and through that focus, you will re-ignite your passion and energy for what you are doing. How many times have you heard the loser recount…….. ‘I just seemed to lose sight of what was important to me.’ Planning is an essential element in success of every kind.

One of the most famous business philosophers of our time, Mr James E Rohn says…..

‘If you want to turn your life or business around, then don’t start a day until you’ve finished it on paper. If you want to be really successful, then don’t start your week until you’ve finished it on paper. If you want to be a star then don’t start your month before it’s finished on paper. If you want to retire rich and happy in record time, then don’t start your year until you’ve finished it on paper.’

Great advice from an extraordinary businessman.

A plan will also help you sell your travel company when the time comes because at the end of the day, all businesses should be sale ready, even if the owner does not intend to sell. This type of planning will illuminate the areas of your business that are far from in order and cause you to fix them now. A sale ready business means your investment is liquid and it does not require you to be there in order to work. This kind of company is valuable and owning valuable assets is what wealth creation is all about.

The rewards however will far outweigh the investment.

Quick questions. ..

In what capacity will I use this business plan if I have no intention of raising funds to float the travel agency or sell the business?

The first benefit will be that you will focus on areas of your agency you didn't even know were important. It is recommended that every member of your agency has a copy of your (their) plan. How you can expect your team to get behind a plan they don't have? Once you have this document, if you do need capital to expand, it will be much easier to secure because business plans are the passport necessary to the land of funding. No passport, no funds.

Our company is 10 years old. Isn't a business plan just for companies that are getting started?

NO! You need a business plan more than ever! The process of writing a business plan will give the opportunity to review the way you do business. How many times have you thought to yourself, ‘these guys are still in the dark ages?’ Maybe that's what people think when they visit your business. Would you invest in a business with no plan?

Will it need updating?

YES! Continually. You will actually need to update it as you finish various sections throughout this system. Updating is simple though and requires little time if managed well.

Developing your business Plan

Summary of why you should have a business plan?

A business plan provides you with the road map that you need in order to run your business.

• It assists in financing.
• Establishes a system of checks and balances for your business so that you avoid mistakes.
• Sets up bench marks to keep your business under control.
• Forces you to analyse the competition.
• Forces you to analyse your own business.

The Business Plan – What It Includes.

The body of the business plan can be divided into four distinct sections:

• The description of the business
• The Marketing Plan
• The Financial Management Plan
• The Management Plan

The Description of the Business

When describing your Travel Agency, generally you should explain:

• Legalities – proprietorship, partnership, franchise.
• What licences or permits you hold or require.
• Business type – service.
• What your range of products or services are.
• Is it a new business, takeover, expansion, franchise?
• Why your business will be profitable.
• What are your growth opportunities?
• Operating hours.
• Location – shopping centre, CBD, strip centre, country, customer access, public transport, street lighting, market shifts or demographics shifts occurring.

The Marketing Plan

Marketing plays a vital role in a successful Travel Agency. I always had a Marketing Plan and knew what I was doing at least 9 months ahead in marketing my agencies. However, the key element of a successful marketing plan is to know your customers. Develop a marketing plan for your agency by answering these questions.

• Who are your customers? Define your target market(s).
• Are your markets growing? Steady? Declining?
• Is your market share growing? Steady? Declining?
• How will you attract, hold, increase your market share?
• What is your pricing policy?
• How can you maximise your marketing dollars?
• What is XYZ Travel advertising and how can you maximise this?
• Do we have a promotional calendar?
  

Competition

Competition is a way of life. We compete for jobs, in sports and in almost every aspect of our lives. When considering this and other factors, we conclude that any business and especially the travel business, is highly competitive. Because of this, it is important to know your competitors. Questions like the following can help:

• Who are your three nearest direct competitors?
• Who are your indirect competitors?
• What have you learnt from their operations? From their advertising?
• What are their strengths and weaknesses?
• How does their product or service differ from yours?

Start a file on your nearest competitors. Keep copies of their advertising and promotional material and their pricing strategy techniques. Review these periodically to determine when and how often they advertise, sponsor promos and offer sales.

Pricing and Sales

Your pricing strategy is another marketing technique you can use to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with competitors.

A key to success is to have a well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits.

Advertising, Marketing & Public Relations

Having a good product or service and not advertising is like not having a business at all. Many travel agency owners/operators believe that a travel agency will promote itself and do not budget to include advertising costs. Or their Franchise Head Office will look after it all. Advertising and promotions, however, can be the lifeline of a travel agency and should be treated as such.

If you are a franchisee, there are usually guidelines and standards to be adhered to when advertising under the Franchisors banner. Please contact your Franchise Operations Manual or Franchisor for more information.

The Financial Management Plan

How well you manage the finances of your business is the basis of every successful business venture. You will need to identify and implement policies that will lead to and ensure that you meet your financial obligations.

To effectively manage your finances you will need to plan a sound, realistic budget. Using the financial models that are readily available to greatly assist you in determining the operating costs required to run your business, as well as the productivity required from your staff to meet these costs.

It is also important to identify and measure your K.P.I’S. (Key Performance Indicators).

The Management Plan

Managing a travel agency requires more than just the desire to be your own boss. It demands dedication, persistence, decision making, and management of people and finances. Your management plan should answer questions such as:

• What are our strengths, weaknesses, threats and opportunities? (S.W.O.T. Analysis)
• Who will be in the sales team?
• What are their duties and are these clearly defined?
• Who will manage the operation?
• What business experience does the team have to succeed?
• What training may be required?
• What day will we dedicate to our team meeting?
• What are our short and long term objectives? Who will be responsible? How will we measure them?

Involve your team with the development of your business plan. Use it, change it and most importantly implement it.

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email, 07 3630 1298, http://www.tafastrack.com