What planning should I do?
It’s often said that businesses don’t ‘plan to fail’, they just ‘fail to plan’. However, Dwight Eisenhower is reputed to have said “ A plan is nothing; planning is everything”. In other words, it is not the written document that is crucial to your business future, but rather the process of planning, ie the research, thinking and evaluation.
- H. Stanley Judd
If you are seeking commercial finance to buy a tourism business the lending institution will require a detailed business plan. Their business advisor may be a good source of help to think through all the issues involved in establishing a small business and getting it through those crucial early years. A business plan is important not just for raising capital, but for the setting of short and long term goals
Even if you don’t need finance to start the business, it is still important to think through some key questions, of which the answers can form the basis of a business plan:
- What is my/our objective in starting this business?
- Who are the primary targets for the product or service?
- Is there a demand for the product – how do you know ?
- Is the market large enough and accessible enough to make the business viable?
- Will my product offering be diverse enough to withstand seasonal troughs and possible economic downturn?
- What is the level of competition in the region for the product; who else provides; how good are they?
- What will make the business stand out from the rest (ie the Unique Selling Proposition)?
- Are there complementary products in the area I can work with to improve my offering to the marketplace?
- What investment and working capital will be required to start the business and where will this be sourced?
- How will I support myself/ my family until the business becomes profitable (typically 3-5 years)?
- How can I cost-effectively get my promotional message to the target market/s?
- Will the money I need to start and operate the business provide a better Return-on- Investment than other investments?
These questions are just a starting point.
Click here to download a template for preparing a typical business plan (186kb).
Click here to obtain more information about a 21 hour program that teaches how to develop a business plan.
The Australian Tourism Accreditation Program is a self-completion, externally verified program, which leads operators through a structured approach to business and marketing planning. It is an effective, low-cost internal business development tool. Completion of the 21 elements of the program creates the basis of a Business Plan for you, as well as provides your business with the nationally recognised accreditation tick for use in all publicity material.
Click here to obtain more information about the Better Business Tourism Accreditation scheme
You need to determine your ‘break-even point (124kb)’ as part of the initial planning. That is, the number of sales you need to make just to cover your costs, but before you start to make any profit.
Cash flow (124kb) is the lifeblood of a business, irrespective of its profitability. You need to carefully map when your income will be received and when your outgoings need to be paid to ensure that the business does not run out of cash. This simple but invaluable business planning document projects surpluses and shortfalls of cash.
Start with the end in mind – this is not a negative, but an important part of business planning. Even though your choice to establish a tourism business may be driven by lifestyle, there will be an optimum time to sell the business, both for profitability and possibly also for your emotional well-being. The most successful business people often determine when they wish to sell before they open their doors. Setting a time frame for optimal selling not only helps to establish business milestones, but also emphasises the need to build a tradeable commodity.
This means that you need to separate your personal involvement from the success of the business as much as possible, through the development of systems and documented procedures. Remember, what is in your head cannot be sold to another person. Businesses reliant on one or two people to make them work often wither when those people are no longer part of it.
Well developed and documented systems can also help to free you from the day-to-day work of the business, as they inform others around you, or locum staff, of what needs to be done and how it is to be done. They can also help to avoid costly mistakes. They are well worth the one-off time needed to compile them.
Tourism isn’t different to any other business. The amount of accurate research and pre-planning you do will usually be reflected in the level of success and the time it takes to become profitable.
Case Study (126kb) : A tourism business that is guided by a strategically developed Business Plan and that regularly measures performance and adjusts the plan accordingly.