Small Business Venture: Safaris Tours & Travel - Essay Example

Small Business Venture: Safaris Tours & Travel Student’s Name Institution Table of Contents Executive Summary The business under consideration: Safaris Tours & Travel will operate within the tours and travel industry. It will serve both corporate and individual clients in the Australian market. The firm will depend largely on personal savings to start-up. The human resource will be made up of 3 employees with 2 serving on full-time while 1 on permanent basis. The venture will be located in Sydney as it provides immediate markets by its rather stronger middle-income households that will pay premium prices. 1.0 A Description of the Idea The business idea under consideration is providing adventure touring services for potential clients; both corporate and personal. The business idea is solely focused on providing the service to these all of these sectors employees because of their limited time that is mostly spend in offices and executing business activities. They are considered to be the major potential clients due to their willingness and ability to pay for the service. The professional service entails providing adventure touring services to a large number of employees and self-employed people under both corporate and personal agreement and terms. The clients will be allowed to select their destination of choice and leave the rest of the logistics involved to the company: Safari Tours & Travel. 2.0 Description of the Industry The past financial year, which ended in 2014, was characterised by a great myriad of factors. For instance, it was within the year that there was the popularity of peer-to-peer travel whereby such popular events like the Football World Cup in Brazil provided sufficient levels of business opportunities. It was within this year that there was distinctive growth on mobile platforms. In fact it is estimated that about 25% of the US-based tourism activities were executed through mobile phone devices (The Telegraph, 2014). A larger portion of the companies operating within this industry have realised the relevance and reliability of mobile phone platform. This is attributed to the fact that almost all major and influential tours and travel companies have formulated and implemented mobile strategies. One of the most popular and effective mobile strategy is the Hotel-Tonight website that solely relies on their mobile application to conduct business. The use of mobile phone platform is an opportunity that can be used effectively to trigger impulsive buying for potential clients arriving in different cities and searching for professional touring services. In the Asia-Pacific industry there is the HotelQuickly that conducts its business successfully on the mobile phone platform. Another important opportunity presenting itself within this industry lies in the development of iBeacon technology; a technology that is focused on helping potential corporate clients to book services and continues with a similar technological device to seek accommodations (The Telegraph, 2014). The future of this industry is favourable and promising for that matter. There is possibility of further development that will be witnessed in regards to payment solutions, especially mobile phone solutions, to the customers within this niche. Subsequently, issues related to ground transportation whenever clients reach their destinations in a foreign country will also witness a significant paradigm shift. The key driving factors include; the improvement in the world household income for most of the developed and developing countries especially in Europe and the United States of America (The Telegraph, 2014). Notwithstanding, there has been increased desire to travel and explore the world. It is noted that there has been increased adventures to such once avoided areas like Africa and Asia regions. Furthermore, it is established that the entire economic environment is composed of a greater number of retired baby boomers that have enough time and money to spend in adventurous activities like Safaris and so on. 3.0 Description of the Target Market The best market segment profile to employ will be solely focused on the demographics of the potential clients. These clients should be aged between 18 and 60 with an annual income ranging between $45,000 and above. The market segment should be in dire need of finding an alternative to just participating in indoors activities hence explore outdoor based activities like travelling the world. The segment should also be in need of participating in luxurious activities and thus, be willing and able to purchase this service at a premium price. The bases for the purchase of professional touring services are focused on quality and convenience that comes with booking Safaris with the company. Price should not be an issue because the targeted market should be fairly positioned to pay premium prices for the services offered. The perceived need for outsourcing the service to such company as: Safari Travels & Tours lies in the convenience and reliability that emanates from seeking professionals within the industry. The current size of the industry is composed of about 174,500 major and businesses with annual revenues of $164 billion. The industry has continued to enjoy a 9.0% annual growth in the period between 2009 and 2014 (IBISWorld, 2014). Using this industry statistics, i believe that my business will post in excess of $100,000 in profits each year with a possible growth of about 6% and 7% each coming years of operations. In the period between 2009 and 2011, the industry witnessed a slower growth in revenues due to the global financial crisis that greatly affected the consumer spending habits. However, with current economic prowess, there seems to improved growth in the sector as demand for the service has shifted from seasonal to all-year round product. Consequently, the current socio-economic trend is focused on engaging in top notch activities due to curiosity and the desire to explore the untapped areas of the globe. This has the effect of promoting future tours and travels for a larger level of customer base. As earlier mentioned, the annual growth rate for the market segment is set to increase by about 6% and 7% in conformity with the current 9% global annual statistics (The Telegraph, 2014). 4.0 A Description of Competition High Low Diagram Analysis As can be seen from the above strategic marketing, Australian Pacific Touring and Group Voyagers are the main competition for Safari Tours and Travels. The larger size of the Australian Pacific Touring, it means that the firm is the substantial competitor commanding a larger market share due to its application of mobile strategies; it has effectively tapped the retired baby boomers that are willing and able to spend for overseas voyages (The Telegraph, 2014). Group Voyagers also enjoys the above factors in executing its tasks and since it has been around for a substantial period of time, it has gained a larger section of the market. Safaris Tours & Travels will thus focus on iBeacon technology and also, invest on mobile phone payment solutions in order to level the current operational environment to fit to its limited resources and clients. 4.1 Threats and Barriers The current industry is marred with enormous economies of scale that favours already established brands in the market like Australian Pacific Touring and Trailfinders in the United Kingdom with global operations (Andriotis, 2004). Another potential barrier to entry rests with higher switching costs especially for the buyer whenever faced with the challenge of seeking the best alternative in the market. Notwithstanding, there are substantial capital requirements facing potential entrants hence it will be a challenge to purchase large assets like a quality fleet of tour vans and professionals. 4.2 Pressure from Substitute Products Some of the substitute products that pose a threat to the company rest with lowly-priced domestic packages from other local firms as well as hotel facilities that provide intensive recreational activities (Andriotis, 2004). It is important to note that larger companies have always enjoyed economies of scale hence possess the ability to differentiate products in order to counter other premium-priced services. 4.3 Influence of Buyers & Suppliers For this industry, the buyer possesses a higher level of influence because the products offered are usually standards and unsubstantiated in nature. It is also powerful because the overall industry earns a significantly lower profit level (Andriotis, 2004). The suppliers related to this industry are deemed to be powerful in nature because only fewer companies dominate the market while their respective products and services are differentiated at all times. 4.4 Business Strengths and Weaknesses The business is fairly positioned in comparison to the major competitors within the industry. This is attributed to the fact that it has conducted extensively used social media platforms and other advanced and reliable mobile phone applications to reach a greater level of potential clients. Notwithstanding, the business enjoys informational intelligence that relates to effective R&D activities needed for exploring customer needs and preferences. Subsequently, the business is readily available to provide top notch customised services that guarantees of future repeat purchases from returning customers. One of the weaknesses that the business faces rests with limited resources especially money that is needed for acquiring substantial number of assets needed for conducting operations. Another weakness lies in its inability to cater for possible increase in future demand due to limited knowledge pertaining to industry operations. 5.0 Description of Services and Any Associated Products Tours and Travels: this is the fundamental service being offered by the business at hand. It involves providing corporate and individual clients professional touring services at a premium price. The services provided are deemed important because they allow the clients a good time to relax and explore the world. The premium price being charged matches the customised services that can be provided to clients. Customised services mean that the clients will be allowed to choose from a list for the places they will desire to visit and at their exact time frames. It involves limiting the numbers of clients that can visit certain places at a go hence ensure that quality service is adhered to at all times. Ticketing and Worldwide Hotel Reservations; this is important especially for potential clients that opt to visit foreign destinations since they will be assured of their accommodation regardless of their positions across the globe. This line of service is meant to trigger and formulate possible business partnerships across the globe hence enjoy certain discounts allowed for transactions made. The service will be solely conducted on an online platform in order to avoid possible losses. 6.0 Marketing Plan Both of the services being offered; Ticketing and Worldwide Hotel Reservations and Tours and Travels will adopt a premium pricing strategy with at least 5% mark-up on cost in relation to the prices offered by competition. The pricing model will be employed because it helps to portray services being offered as superior and reliable, although not true in most cases (Kotler & Armstrong, 2010). The targeted market lies in the middle-income categories that are able and willing to purchase such luxurious services at prices higher in comparison to existing competition. Subsequently, given the fact that most of the services on offer are customised the premium pricing will help to counter the high costs of providing the service to the potential clients at hand. Promotion of the services will be conducted using the social media platform as well as through company websites. This is in a bid to minimise the possible amounts that will be incurred in using the conventional models of campaign like television and radios. The firm will also utilise print media especially in local newspapers and magazines. Promotion Budget 2015 2016 2017 $ $ $ Launching cost 30,000 0 0 Website 2,000 900 900 Print Media 1000 1200 1200 Totals 33,000 2,100 2,100 In regards to the place strategy, Safaris Tours & Travel will avail its products and services in both a physical and online platform. Transactions will be conducted both at the physical and online platforms in order to maximise on consumer reach and distribution of services. 7.0 Operations Plan The proposed location for the business is in Australia, Sydney. The advantage of setting the business in this city is because there is a higher probability of breaking-even at the shortest period. There is potential for growth and development within a shorter period of operations because the city enjoys substantial level of infrastructure, registered number of companies, as well as a higher number of employed middle-income personnel. Notwithstanding, is considered to be one of the most developed and most visited cities in the world meaning that setting a company there will translate to enormous exposure to the rest of the world (BIS Shrapnel, 2015). The major disadvantage of setting up location within this city rests with the fact that the estimated rental, purchasing or even purchasing of building in this city is relatively higher. Subsequently, the costs of attracting and retaining professional employees are also higher. 7.1 Acquisition of Premises The business will just lease the property instead of buying or building. This is because only few, about 2, offices will be needed as most of the transactions will be carried out on the online platform. The brick-and-mortar physical office will be leased at a cost ranging between $AUD 40,000 to $AUD 60,000 p.a. Leasing is considered to be the most affordable option because it is cheaper in relation to buying and purchasing premises. Subsequently, given that the business is still at its early phase, there idea of purchasing or even building will be inappropriate; especially since the resources are limited and might be best used elsewhere. 7.2 The Service Delivery Process Cust The service delivery starts with possible inquiries from potential clients that might have visited the company’s website or even the physical inquiry desk. The client is enlightened on the different packages being offered and customisation of service also made a possibility at this juncture in order to place the correct quotation and thus, prevents possible future confusion when it comes to billing. The end of the service delivery is focused on allowing the already served clients an opportunity to provide feedback regarding the entire delivery. This is meant to ensure that unsatisfied customers are evaluated on how best to improve the services in the future. Positive feedback will also be useful in enlightening management of the company an opportunity to know what methods work best for customers and thus, make decisions to improve them by way of increasing resources towards those areas. 7.3 Facilities for Operations i) 3 personal computers preferably laptops with updated specifications each bought at a cost of about $AUD 3,000 ii) Office furniture that will be also be bought for operations; $AUD 12,000 iii) Uninterrupted Power Supply bought at $AUD 300 iv) 5 tours vans bought for the operations at a cost of $ 35,000 for each of them. The maintenance of the computers will be outsourced to an independent dealer that will required to conduct weekly check-ups with monthly payments made to the company at an agreeable fixed rate. Purchase of worn-out machines will be conducted in accordance with the advice of the professional. Office furniture will be replaced at least twice a year in order to maintain a professional look. 7.4 Strategies for Managing Seasonal Demands It is important to note that the demand for tours and travels for the company and also, in relation to industry varies accordingly with different seasons. In order to ensure that demand for the service is distributed equally across all seasons, the company will focus on innovating and launching new products to the market like venturing into indoor activities whereby the firm organises for indoor activities for certain group of people. Notably, during the low season, the company will ensure to revise its pricing strategy to a discount pricing mechanisms with numerous special offers set in place to ensure that potential clients enjoy services at discounted rates. 7.5 Regulatory Frameworks The company will register as a limited entity with local Sydney government authorities and necessary payments made in order to secure licenses for operating the office and tours vans. The entity will also ensure to register with the tourism bodies in the country in order to ensure that they are protected from possible exploitation. It means that annual subscription fees will be offered in order to renew its membership statuses. 8.0 Human Resource Plan The business will actually have three employees; 2 employed at part-time basis while 1 on a permanent basis. The remuneration package for the part-time employees will be fixed at $AUD 800 per month while the part-time will be paid $AUD 1,500 monthly. All of these employees will be employed on employment-on-will framework just in case they are fired from work from lack of performance. There performance will be evaluated twice a year by the number of clients served, returning customers as well as their skills progress in managing related business activities. Partial training will be offered to strengthen college-degree on aspects like people skills and effective communication strategies with customers. 9.0 Management Team There will be no management for the firm but the owners who will enjoy at least 20% of the after-tax profits posted within any given year. 10.0 Market, Product & Technical Feasibilities of the Business Idea There is a ready market for the tours and travels services being offered. This is because of such driving factors like the current increased household income, technological advancements as well as a ready customer-base made up of retired baby boomers that are willing and able to spend. The business owner has access to sufficient levels of cash resources needed for purchasing equipment and leasing offices for operations. The finances are made up of personal savings as well as loan from financial institutions. Given that the substantial level of capital comes from personal savings, the business will have sufficient control of operations and thus, adopt pricing strategies that easily matches the cost of delivering the services to potential customers. References Andriotis, K. (2004). Revising Porter’s Five Forces Model for Application in the Travel and Tourism Industry. Tourism Today, 4(1): 131-145. BIS Shrapnel. (2015). Sydney commercial property 2015-2025. Retrieved on May 18, 2015 from http://www.bis.com.au/reports/syd_cp_r.html IBIS World. (2014). Global travel agency services: Market Research Report. Retrieved on May 18 17, 2015 from http://www.ibisworld.com/industry/global/global-travel-agency-services.html Kotler, P & Armstrong, G. (2010). Principles of Marketing 13E, Pearson Prentice Hall The Telegraph. (2014). Britain’s best tour operators. Retrieved on May 17, 2015 from http://www.telegraph.co.uk/travel/travelnews/11270766/Britains-best-tour-operators.html Read More