Show Me the Money
You love the travel business, and you work very hard to fulfill your clients’ dreams. And, if you have a passion for serving your clients, you have the potential to be wildly successful. But having your business and financial plans in place is vital for fulfilling your own dreams. That means you must get a handle on where your money is coming from and where it is going.
There are several sources of revenue for your business. Commissions on some airline tickets, car rentals, hotels, cruises, tours, rail travel, and travel insurance are major income-generators.
Other sources include overrides, fees and service charges, markups, and miscellaneous income from the sale of travel-related items — like travel guides, luggage, and passport photos — or offering special services — like pet-sitting and grocery-delivery.
There are three types of expenses: fixed expenses (like rent), variable expenses (like postage), and semi-variable expenses (like office supplies). But salaries — and the taxes and benefits tied to them — make up the largest expense for agencies.
A cost-benefit analysis helps businesses make decisions that will maximize income and minimize expenses. It compares the total costs of an item to its benefits to determine if it is worthwhile and a reasonable use of company resources.
Frequently used strategies for ensuring or enhancing profits are the consolidation of several small agencies, memberships in consortia, specialization, and reduction of expenses associated with salaries, often through the payment of employees on a commission basis and through the increased use of independent contractors.
To learn more about financial planning, enroll in the newly launched Business and Financial Planning module and register for tomorrow’s exciting and provocative webinar titled “Managing Your Revenue — a Slightly Different Approach” by Craig Baldridge
Information for this week’s Hot Tip Tuesday was taken from The Travel Institute textbook Travel Career Development.