The Greener World Travel Agency Business - Example

Executive Summary The tourism industry has been experiencing rapid growth over the last few years boosted by the emergence of a borderless world as well as increased access to information about various tourist attraction sites. Some of the emerging trends in tourism include eco-tourism or green tourism that aims at combining tourism and environmental conservation. This is the concept that The Greener World Travel Agency Business Plan plans to introduce in Australia and will be first among travel agencies. This is in a bid to take advantage of the increasing environmental awareness and hence attract customers who are environmental conscious to seek and use our services. The concept includes providing green services to all our customers from the time they leave the airport up to the time they return to the airport to leave Australia. We will mainly target holiday makers and businesses that are keen on sustainability. In this regard, the concept will involve organizing conferences, tours and holidays in green environment. This will involve our travel agency picking the customers from the airport with ‘green’ (environmental friendly vehicles, booking them in green hotels and taking them for tours in eco-friendly places so as to ensure they appreciate the role of environmental conservation. During the tours, tourists will be encouraged to participate in environmental friendly practices such as tree planting and they will in turn be issued with appreciation cards for engaging in an eco-friendly tour. Thus, this business plan present the company’s concept as well as how we intend to establish it from its inception. In addition, the plan presents the company’s feasibility including its financial projections. It is hoped that readers will find the business viable and hence partner with us in this nobble idea. Table of Contents Executive Summary 1 Business Model Canvas 2 Market Feasibility 3 Technical Feasibility 5 Financial feasibility 8 Start-up capital and equipment 9 The possible sources of financing 9 General Financial Numbers that would indicate attractiveness of venture 9 Human Resource Feasibility 11 Owners of the business 11 Ownership structure 12 Manpower requirements 12 The company’s growth strategy 14 Appendix 1 16 Appendix 2 18 Business Model Canvas The following is the business model canvas for our proposed company The Green World Travel Agency Business Model Canvas Partners Airlines Rental car agencies Green Hotels Airport transport/Limos Resorts Tour operators Insurance providers Activities Sales CRM Marketing Training Value Proposition All-inclusive travel package Custom travel package Add-on service , Seasonal offerings Standard average pricing personal agent services Customers Retail travel customers Price aware Want personal assistance Service oriented Segments Business tours and travel Holiday makers Resources Skilled employees Reputation and brand name Channels Online sales portal Head office sales Branch and hotel sales Cost structure Head office salaries IT systems Marketing campaigns Rent and utilities Revenue streams Travel service revenue Hotel commissions Market Feasibility The Australian Travel and tourism industry in which the Greener World Travel Agency will operate in has a big potential. During the year ended March 2017, there were 8,365,400 visitor arrivals which was a 9.1% increase over the previous year. This growth is expected to continue increasing in the coming years to surpass 10%. Of this, 4,259,300 arrived for Holiday while those making business trips were 833,100 (tourismaustralia.com, 2017). These are the two segments the company aims at targeting and hence there is a huge business potential. It is worth noting that the market has not reached its full potential. More and more visitors are including various tourist attraction sites in Australia in their preferred destination lists with service providers such as the travel agencies becoming more and more innovative (ibisworld.com.au, 2017). For instance, the concept of green travelling which is what we aim to offer is relatively new and people are increasingly embracing it. As such, the market potential can only continue evolving providing even more interesting opportunities in future. Currently, there are many providers of tours and travel services in Australia. However, not many of them have adopted the green travel concept that we aim at offering the Australian Traveller. Ours is a more innovative concept that aims at promoting travel and environmental conservation at the same time thus resulting in wonderful experiences as well as change of attitude towards environmental conservation. As such, we feel that we don’t have strong direct competition although great indirect competition exists (rezdy.com, 2017). Our customers are all over Australia and in the entire world. Every Traveller who comes to Australia for Business or holiday tours is our target and hence a potential customer. In this regard, we are optimistic that our firm will have the potential of attracting 4,000 customers to travel with us for the first year of operation with this number expected to increase at 5% annually afterwards. This is realistic since it is only a small percentage of the numbers mentioned above. There are many external factors that affect service delivery in our target industry of operation. There are various regulations that have been put in place by the government to regulate the industry which must be adhered to. However, it is worth noting that the government has provided a relatively good operating environment for the sector thus ensuring many people choose Australia as their preferred destination owing to good attraction sites as well as the prevailing peace. The economic climate prevailing in the country also affects the industry since people and businesses will only travel if they have some extra money after their various needs have been met. As such, a good economic environment with global economies growing at high rates is a boost for our company since travel numbers would be boosted. It is also worth noting that travel is also affected by seasonality of conditions. People mostly travel during warm climatic conditions. In addition, events like public holidays and religious festivities like Christmas favor travelling. On the other hand, holiday tours are not likely to happen during the school calendar. For our case, the increased environmental awareness will serve as a boost to our customer numbers since we are promoting environmental awareness in travel and hence we hope that many people will adopt our service. Other external factors include market needs and customer service preferences. In this regard, we aim at having a strong customer relationship and marketing teams that will always be updated on customer needs and preferences. Technical Feasibility There are many options for delivering the travel agency services to our customers. However, we realize that we cannot deliver quality services to our customers if we do it alone. As such, we have established a strategic partnership with various green hotels and accommodation providers who will be our partners in service provision. In addition, we aim at purchasing off the shelf technology solutions that will help us to better serve our customers. We have already contracted Toyota to provide us with green travel solutions that will see our customers travel in ‘green’ vehicles and stay in ‘green’ hotels while visiting areas considered green to ensure that they have a green experience. As such, our product though in-house developed will be provided through a combination of partnership with various travel sites, hotels and other service providers to ensure that our customers have a memorable experience. In a bid to facilitate sales and distribution of our service, we will use a combination of means. Our information technology team has developed a company website that will be used as a marketing tool to increase awareness of our company's existence. The team will also ensure our presence in the social media sites such as Facebook and twitter. In addition, we have joined the Australia travel agencies umbrella body and hence we can now be found in their site. We have also employed a strong sales and marketing team that will be found in all the hotels and travel attraction sites we are partnering with. Their responsibility will be that of aggressively marketing our company. The sales representatives will also have presence in major travel facilities such as the airports. Another strategy that we aim to employ is partnering with marketing companies who will aggressively market us through the media as well as other channels. We have also partnered with green hotels such as Best Western and Green Gateways Australia where they will issue every visitor with our branded T-Shirt so that they can carry our names wherever they go wearing the T-shirts. In developing the Greener World Travel Agency’s service offerings, we need a variety of skills, raw materials, components, suppliers, facilities and equipment. We need management skills, customer service skills and experience in the travel industry among other valuable skills. Fortunately our CEO and chairman have many years of experience in the travel industry and are hence well placed for the company’s takeoff. We also aim at recruiting highly experienced employees as far as various skills are concerned so as to ensure no skills deficit. Raw materials will include the high quality services we intend to offer while we also need the vehicles mentioned above. Already, the supply contract for the first two vehicles has already been signed and these will have been supplied by the time we start operations. We have also made contacts with suppliers for various services including advertising and accommodation services who will be ready to supply the services whenever called upon to do so. There are a number of Laws and regulations that govern the operation of a travel agency business in Australia. Some of the laws we will have to abide with include the tourism services act (2003) which is aimed at protecting tourists in their dealings with inbound tour operators and tour guides, standard business legislations such as the fair trading act and the work health and safety act of 2011. In addition, we intend to comply with environmental legislations such as the nature conservation act and the marine parks act as we will frequent these areas. In addition, we will have to obtain the normal business licenses while our employees and tour guides will have to be certified in accordance with the law. In other words, it is the intention of the company to comply with all necessary laws and legislations before we can begin operations (afta.com.au, 2017). We will also have to abide with all laws relating to intellectual properties such as trademarks and copyrights for the products and trade names that we will develop to ensure that they are adequately protected and to avoid legal tussles that relate to them. It is the intention of The Green World Travel Agency to conduct business in a moral and ethical manner. Throughout our research, we did not discover any moral or ethical issues that we are uncomfortable with except the rise of terrorism and related crime which may be a threat both to our business in terms of customer numbers. As such, appropriate measures will have to be taken to ensure our clients are always adequately assured of their security. In addition, there are major technological changes and emerging trends that may affect the business. Businesses are increasingly becoming digital and hence the need for us to incorporate this in our business. As such, if we do not become digital, we stand to lose a lot since it means that customers have to avail themselves for small issues to be addressed (Wedley and Robert, 2017). Furthermore, we realize this is a good advertising channel that we should take advantage of. As such, we have developed an e-travel portal that our customers will use to access various information regarding the services we offer, the destinations and the pricing and also be able to do their bookings online such that we will only interact with them when we eventually offer the service they have booked. The portal will also have chart services so that various issues that affect travelers may be sorted on the portal with only the most crucial cases requiring customers to physically avail themselves for their issues to be sorted. Financial feasibility The Greener World Travel Agency will generate revenues through the packages we will offer to our customers. The services will include the travelling expenses from the airport to the destination, the tour guiding costs and the commissions we will get from the hotels that will offer accommodation to our customers with the travel service charges depending on the distance covered. As such, the following financial projections have been made; Projected revenues from the sale of our services From our market research, we are optimistic that we can offer our services to approximately 4,000 customers during the first year with each customer paying $500 on average for the full range of service offered. The number of customers is expected to increase to 5,000 in the second year and 5,600 in the third year after which it is projected to increase by 5% annually. As such, our projections are as follows; Year 1 = 4,000 customers @ $500 each = $2,000,000 total revenue Year 2 = 5,000 customers @$500 each = $2,500,000 Year 3 = 5,600 customers @$500 each -$2,800,000 Start-up capital and equipment The startup costs and equipment/capital costs have been laid down in the table in appendix 1 and will amount to $500,000. Profit and loss statements for the first 3 years The company’s profit and loss statements for the first three years are laid down in appendix 2 The possible sources of financing The four directors of the company who are also its owners are expected to each contribute $37,500 towards the venture. There is 100 percent chance that this money will be availed since three quarters of the targeted contribution has already been contributed with promises of availing the balance one month before the commencement of operations. In addition, we expect to get a loan amounting to $350,000 to be repaid within five years at a 20 percent interest rate every year. An agreement has already been signed with the bank after the members availing various forms of collateral and the loan should be processed in the next few days. The collateral pledged include motor vehicles, a house and a piece of land. General Financial Numbers that would indicate attractiveness of venture Gross margin = Gross profit/sales Year 1 = $800,000/2,000,000 = 40% Year 2 = $1,150,000/2,500,000 = 46% Year 3 = $1,300,000/2,500,000 = 52% Net profit margin = Net profit/ Sales Year 1 = $25,160/2,000,000= 1.26% Year 2= 275,450/ 2,500,000 = 11.02% Year 3 = 338,720/2,800,000 = 12.10% Return on investment = net profit/total investment Year 1 = $25,160/500,000 = 5.03% Year 2 = $275,450/1,100,000 = 25% Year 3 = 338,720/1,500,000 = 22.58% Payback period Profitability 1st year = $25,160 2nd year = $275,450 Total = $300,160 Investment = $500,000 Difference = $199,840 3rd year = $199,840/338,720 = 0.58 Thus, payback period = 2.58 years Break even The company will break even in the first year and even generate a profit of $25,160. Based on the above financial analysis, it is clear that the company will be profitable and hence the decision to go on with its implementation. Human Resource Feasibility To succeed in the industry, expertise in travel agency management as well as tourism management is of paramount importance. Fortunately, John Fahrenheit who is our acting CEO has several years’ management in the tourism sector and has also managed various tours and travel agencies. There is also need to have excellent marketing skills since this service mainly depends on our marketing efforts. Thus, we have recruited an experiencing marketing manager who will be in charge of business growth. Other skills required include financial management, driving and tour guiding. We have ensured the recruitment of highly experienced individuals so as to ensure that we provide superior customer service which will ultimately lead to the company’s success. Owners of the business The following are the owners of the business; Jenifer Weber - She is the designate company chairperson .She brings with her a wealth of managerial experience having sat on the boards of many companies and was the managing director for Ultimate Tours and Travel service for many years. Ertel Jones- he will be in charge of sales and marketing. She brings with her a wealth of sales and marketing experience having been a marketing director for many companies including Charleston Tours and Travel limited. Tracy Naporka – She is a certified accountant and will be in charge of company finances. John Fahrenheit –As stated above, he will be our acting CEO and he brings with him a wealth of managerial experience from the industry as explained above. Jared Johansen – He has been the human resources director for many companies with his last assignment being at Coles. Thus, he shall assume the role of human resources director. Ownership structure The Greener World Travel Agency is a limited company that is privately owned by the directors mentioned above. Each director has 1 share and the positions held have been assigned only on the basis of professional experience. Manpower requirements In order to meet our objectives the company will need to hire a number of employees to assist the directors. They include the accountant, the tour guides, the sales and marketing team, drivers, personal assistant to the CEO, cleaner, watchman and the mechanic. The human resources director has made an arrangement with the Manpower recruitment company to ensure that they recruit the right personnel and talent for our company. However, the company will also use important contacts that we have obtained from our previous working places to recruit those we think would be helpful in achieving our vision. We intend to compensate and remunerate our employees competitively. However, our starting salaries will be a bit lower than the market is providing but we will ensure employee salaries are increased by 10% annually. We intend to use a combination of rate pay per time and commission for sales as well as salaries in compensating our employees. However, the table below shows our starting salaries for the employees. 1st Year 2nd Year 3rd Year Accountant $20,000 $22,000 $25,000 Tour guides $10,000 $11,000 $13,000 Sales and marketing team $10,000 $11,000 $13,000 Driver $8,000 $9,000 $10,000 Personal assistant $7,000 $7,800 $9,000 Cleaner $6,000 $6,700 $7,500 Night Watchman $6,200 $7,000 $7,800 Mechanic $10,000 $11,000 In order to motivate the employees, we intend to treat them as valuable assets and as part of our company. Thus, they will be involved in decision making and their voice will be taken seriously. We also intend to appreciate them by recognizing their efforts through introduction of bonuses as the company grows while providing career growth paths (Osterwalder, 2013). Finally, we intend to introduce employee share plans as the company grows so that the employees may feel that they are working for their own company. Employees will be provided with continuous in-house training in a bid to equip them with necessary customer service skills while keeping them updated with customer tastes and preferences. External training opportunities will also be provided to those who want to further their careers. The company’s growth strategy We intend to offer high quality service to our customers in order to grow our business. In this regard, quality will be managed by setting standards that must be observed by our employees in their service to the customers. Customers will also be asked to rate our service quality and also give suggestions on how to improve it. If we hit our quality targets, we will set new higher targets to be achieved. However, those who frequently flout our quality standards will be retrained and if this still continues, they will be laid off. The organizational structure will change as the business grows. Right now we only have one department with a lean structure. However, as we grow, we will establish various departments to offer differing services to the customers. In addition, we intend to go public as the company grows so as to raise more funds so that we can establish offices in various regions in Australia with each region being headed by its own manager. The branches will be semi-autonomous. At the moment, we don’t have any career paths for our employees. However, as the company grows, career paths will emerge. One will enter the company as an intern, become a normal employee and then an assistant departmental manager before becoming a departmental manager. Depending on the quality of service, one will have an opportunity to grow to a regional manager and even rise to the executive level as a functional director. References: Pinson, L2008, Anatomy of a business plan: The step by step guide to building a business and securing your company’s future, New York, John Willey & Sons. Wedley, W&, Robert, W2017, Factors related to venture feasibility analysis and business plan preparation, Retrieved on 18th May 2017, from; https://www.questia.com/library/journal/1G1-10360731/factors-related-to-venture- feasibility-analysis-and Osterwalder, A2013, A better way to think about your business model, London, Rutledge. ibisworld.com.au, 2017, Travel agency and tour arrangement services in Australia, Retrieved on 18th May 2017, from; https://www.ibisworld.com.au/industry-trends/market-research-reports/administrative- support-services/travel-agency-tour-arrangement-services.html rezdy.com, 2017, Travel Statistics for tour operators, Retrieved on 18th May 2017, from; https://www.rezdy.com/resource/travel-statistics-for-tour-operators/ afta.com.au, 2017, Starting a travel agency, Retrieved on 18th May 2017, from; http://www.afta.com.au/afta/starting-a-travel-agency Appendix 1 Start-up Costing for [Business name] - [Year] START-UP COSTS Cost ($) EQUIPMENT/CAPITAL COSTS Cost ($) Registrations   Business purchase price  - Business name  500 Franchise fees  - Licences  2,500 Start-up capital 352,000 Permits  2,500 Plant & equipment   Domain names  7,500 Vehicles  200,000 Trade marks/designs/patents 10,000 Computer equipment  12,000 Vehicle registration  5,250 Computer software  8,000 Membership fees  1,500 Phones 7,000  Accountant fees  6,500 Fax machine  5,000 Solicitor fees  10,000 Security system  5,000 Rental lease cost (Rent advance/deposit)  15,000 Office equipment   Utility connections & bonds (Electricity, gas, water)  2,500 Furniture  10,000 Phone connection  1,500 Start up cash  105,000 Internet connection  1,000     Computer software  8,000     Training  7,000     Wages  8,000     Stock/raw materials  -     Insurance       Building & contents  -     Vehicle  10,000     Public liability  10,000     Professional indemnity  -     Product liability  -     Workers compensation  7,750     Business assets  5,000     Business revenue  -     Printing  500     Stationery & office supplies  500     Marketing & advertising  25,000     Total start-up costs $148,000 Total equipment/capital costs $352,000 Assumptions: All figures are GST exclusive. Source: business.gov.au Appendix 2 Profit & Loss for [Business name] as at [Financial Year] PROFIT & LOSS Month 1 Month n Year 1 Year 2 Year 3 Sales      2,000,000  2,500,000 2,800,000 less cost of goods sold      $1,200,000  1,350,000 1,500,000 More…         Gross profit/net sales $0 $0 $800,000 $1,150,000 $1,300,000 Expenses         Accountant fees      20,000  20,000 22,500 Advertising & marketing      150,000  120,000 130,000 Bank fees & charges      1,200  1,500 1,500 Bank interest      70,000  70,000 70,000 Credit card fees      5,000  3,500 3,500 Utilities (electricity, gas, water)      7,500  7,500 8,000 Telephone      10,000  7,000 7,000 Lease/loan payments      140,000  140,000 140,000 Rent & rates      30,000  30,000 30,000 Motor vehicle expenses      50,000  60,000 70,000 Repairs & maintenance      5,000  5,000 6,500 Stationery & printing      7,500  5,000 5,000 Insurance      50,000  50,000 55,000 Superannuation      10,000  12,000 14,400 Income tax      8,640  118,050 148,380 Wages (including PAYG)      200,000  220,000 242,000 Others      15,000  5,000 7,500 Total expenses $0 $0 $774,840 $784,550 $146,130 NET PROFIT (Net Income) $0 $0 $25,160 $275,450 $338,720 Assumptions: All figures are GST inclusive. 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