Tourism Sector Entrepreneurial Advice - Essay Example

Entrepreneurship Tourism Sector Entrepreneurial Advice The report introduction section introduces the tourism sector and the challenges associated with conducting business in it. The areas to be tackled as per advisory report are also introduced in this section of the report. These areas are: methods to finance the construction, options of marketing and the customers to target with the business. In the financing of the construction camp, the report advises the use of two options. These options are loans from the banks and family and personal savings. It gives the reasons for why these options are the better ones. The report goes ahead to address the risks that are associated with the chosen financial options. The report recommends the use of all the marketing options given, but at restricted levels. The main aim for this is to ensure that the market is fully utilized. In reference to the customers to target, the report advises on targeting both the local and international customers. The main reason for this is to ensure sustainability of the business and limit resource waste. The section also gives the techniques that can be used to reach the local tourists and the importance to it. INTRODUCTION Starting a tourism business and ensuring that it succeeds is not an easy task, more so when the funds are so limited. To ensure success, therefore there will be a need for several considerations, including flexibility in the system arrangement. The fact that there is only one competitor in the country is a good thing viewed from optimistic view. On the pessimistic view, it will be a challenge to change the customer flow from the other organization to yours. This means that there is a need for strong determination and effective planning to ensure success of Rwanda Backpackers. This report will therefore issue advice in relation to three major sectors. The three sectors are: Construction Financing, Marketing Options and Customers to target (Getz, Carlsen and Morisson, 2004: 13). FINANCING THE CONSTRUCTION OF THE CAMP SITE AND ADDRESSING ASSOCIATED RISKS The fact there is a rush to beat the next tourism season that will happen after a duration of next sixth month is important. The first consideration would therefore be if there is a need for the hurry or the project can wait for the other season. This consideration will determine the financing options to go by (Bhatia, 2006: 31). The best combination will therefore be: Bank Loan and Family and Savings (personal). Bank Loan According to Bhatia (2006: 31) importance of choosing the bank loan is from the fact that it will give an immediate financial assistance. Added to the bank will give a loan worth the whole amount need for the construction ($ 19, 000). The collateral for the bank loan would be the land that is being used for construction or a piece of it depending on its value. If the value is above the value of Bawazir’s land, then that’s when bought appliances and equipments will be added to it. Approaching the BCR is of paramount importance since it will be an effective and efficient means of beating the ‘deadline.’ The fact that it supports business start- up and also participates in building commercial properties is a plus. These needs to be taken advantage of because it means the BCR bank mission support the activity. The fact that it supports both the business start up and construction can help in the borrowing of additional funds for the running of the business. During the loan application, it is advisable that the amount be slightly above $ 19,000. This will depend with the stability of the Rwanda currency in the world market. This will also serve as a proactive means to ensure that factors like inflation doesn’t affect the project. For example, if the total amount that is required for the project is $ 19,000 an inflation of 0.1% will increase the price. The increase will be worth $ 1,900 thus might bring short comings (Bhatia, 2006: 33). Addressing the Risk Associated with Bank Loans The fact that already half way in the financial statement and business plan, it means the completion will not take much time for completion. The process therefore needs to be hastened with the necessary resources being put in place. In reference to the annual interest rate (16.49%), there is need to consider the extension of the repayment period. Since the first year repayment period will cost $ 3,133; this can be paid through personal savings and loan from family. For example, businesses tend to struggle in the initial year of starting. It therefore means that the savings and loan from the family can bail the business in the first payment. This will ease the pressure on the business and it is the reason for combining the two financing options (Bhatia, 2006: 33). Family and Savings (Personal) It is important to take invest personal savings rather than loans when it comes to starting a business. This is because there is limited pressure from it and risk associated with it is of less impact. The $ 4,000 which is a sum investment of the two partners should therefore be saved in the Rwanda Backpackers account. Additional savings from the account should come from the family loans. The reason why the family loan is important is that there is no collateral needed and has less paperwork if any. Bawazir should therefore borrow $ 4,000 from the father. Davie should also look for additional funds through borrowing from friends and relatives (Bhatia, 2006: 37). Addressing the Risk Associated with Family Lending In addressing the risk associated with family lending, the two individuals should ask for a bigger grassing period. This will help to release pressure from them and also can assist to give the business time to pick. For example, a period of 3 years before starting the payments would see to it that the business has already picked (Bhatia, 2006: 36). MARKETING OPTIONS FOR REGULAR CUSTOMER BASE ATTRACTION Alchusova (2013: 47) believes that the main reason why one would like to start a business is normally to get profit. Profitability of the business depends on the customers in terms of number and how regular they are. This therefore makes marketing options the most important segment of the business. To ensure that a customer comes again, there is a need for the introduction of ‘after sale services’. Example of these services would include cultural entertainment activities like traditional dance and stories. This will ensure that they are entertained and be willing to come back. To ensure that the customers are exploited to the maximum all the marketing options will be used. The use of these options will be restricted in terms of the available finance, for example, a Nissan can be hired to carry a number of backpackers as opposed to a bus. Local Partnerships The local partnership is of importance, but to ensure sustainability of the business, it shouldn’t encourage financial spending. It should mainly entail the exchange of services that are offered among the Backpacking industry. For example, Rwanda Backpackers can take their brochure to another company for advertisement in exchange that they do the same. Use of Lake Muhazi camping site as a bargaining chip is important, but there is a need to develop additional options. This will ensure that more businesses develop interest in the partnership. The cost of distribution should be minimized completely by using the avenues like networks and emails to pass the relevant information. For example, if a trusted friend heading to a given hotel passes by, he should be given the brochures and posters to take there. This can be followed by a call on the management in reference to the parcel and details related to it. This section should embrace technology too, and through this the cost will be reduced thus increased profits. The use of commissions should be discouraged as possible since as much as it improves the network, it is costly. For example, issuing 5% of each and every booking may increase the number of customers but reduce the profit margin drastically. This is not an appropriate method for a starting business that is struggling financially. It can be only introduced when the business has picked to increase its popularity (Alchusova, 2013: 47). Tourism Websites Use of the tourist sites for marketing the Rwanda Backpacking business is the most efficient of all options. It is reliable method and the costs are low when done properly. Since there is no cost in opening a website, the two partners should put much of their efforts and time in the websites. International websites that are used for booking like Hostels.com and HostelWorld.com should be fully utilized. To ensure success using this option, the structure of the campsite should be of great and unique design. For example, a campsite that integrates both tradition and modern life would be preferred to one that has only modern concept. The use of promotional tools that their statistical, financial gain cannot be identified is not appropriate for a starting business. For example, spending $50 each month yet you are not aware the number of additional guests it brings. For a starting business, risks should be limited as possible so as to ensure success possibility is increased (Alchusova, 2013: 48). Shuttle Services The fact that the Rwanda Backpackers camp site is interiorly located makes it important to have shuttle services. These services will enable the tourists who have no personal hired means to get to the site. For a start, it will be important to practice the hiring technique to avoid additional costs. For example, all tourists that are to come to the Rwanda Backpacker camping site normally book thus days are known. The day to which they are coming is when the shuttle is hired. The size of the shuttle that is hired will also depend with the number of the backpackers attending. This will reduce the costs that are associated with the shuttle services. Since the shuttles are to be used only at weekends, there is no need to buy a shuttle that will depreciate through wear and tear. But for efficiency reasons, the shuttle can be bought once the business has picked (Alchusova, 2013: 47). TARGET CUSTOMERS FOR BUSINESS SUSTAINABILITY The Rwanda Backpacker business should target both the international and local customers so as to ensure sustainability. The domestic tourism market is always open and will cost nothing when the business ventured into it. Given that there is the use of the same resources for both markets, there is need to address both the markets. This is in the fact that the process will be cost effective and efficient. Targeting the international backpackers only will mean that the business turns to be seasonal. For example, a business that depends purely on international guests will be effective to operate during winter mostly since that is when the customers travel. Addressing of the domestic market in tourism will therefore avoid time wastage (Krejic, 2013: 14). The fact that Rwanda has a broad range of middle income earners and some few high income earners should be taken advantage of. There are policies that support domestic tourism that would make the business to be relevant. Getting in both markets will not only increase the market for the products, but also improve the image of the business. This will allow the business to get recognized on several platform thus awareness creation. For example, a business that deals with both the international and domestic tourism will be often recognized by the government platforms as opposed to that dealing with a single market (Krejic, 2013: 12). The domestic tourists may be in the form of a school pupil or college students who want to go for picnic for example. The customers to the business may be in the form of a wedding that needs to be conducted close to nature. Customers might also come from a group of people who just want a weekend gate away. To promote this, the advertisement should be made in the local media and costs should be affordable (Krejic, 2013: 12). CONCLUSION This is a report that sees to it that the Rwanda Backpackers become successful and sustainable in the long run. The report gives advice in relation to the financial options that are viewed to encourage acts of sustainability as per the entrepreneurs’ situation. The marketing options are also considered in the report and how they can be effectively used. The report also gives a comprehensive opinion on the target customers. References Alchusova, L. (2013) ‘Challenges and Best Practices of Hospitality and Tourism Marketing and Management Tourism Based on Culinary Platform’, International Journal of Business Tourism & Applied Sciences, Vol. 1, No. 1, Jan- June, pp. 47- 53. Bhatia, K. (2006). The business of tourism: concepts and strategies, New Delhi: Sterling. 31 Getz, D., Carlsen, J., & Morrison, J. (2004). The family business in tourism and hospitality Wallingford: CABI Publishers.  Krejic, Z. (2013) ‘Rating Competiveness of Tourism Destination in the example of Pancevo’, International Journal of Business Tourism & Applied Sciences, Vol. 1, No. 1, January – June, pp. 12- 23. Read More