It’s Not Too Early to Plan for 2021’s Finances
September usually means back to school and new routines. While this year may look a bit different, it’s a good time to review goals and objectives and to move forward. Most of us are eager to see 2020 in our rearview mirrors!
For many, this time has offered the opportunity to push the reset button. In some cases, it means starting brand new. With that in mind, one objective should be strategizing for your 2021 budget and business plan. It’s hard work, no doubt, but very valuable work. For some guidance and education on this topic, consider our Financial Planning course.
Now, more than ever, you need to be intimate with your financials, and you must continue planning. Here are some areas to focus on as you plan:
Efficient decision making. With better financial information, you can develop better business plans. Knowing your employee productivity and product line profitability can lead to improved efficiencies and better sales. In downtimes like these, knowing your business at this level of detail can help you avoid future unprofitable activities and costly miscalculations.
Cost savings. A company that has good financial information and control over finances can save money in accounting and legal fees. An agency also can improve office efficiency by having data easily accessible for answering staff members’ or clients’ questions. This is when streamlining processes and procedures becomes critical to your business. Know where you are spinning your wheels and fix the issues so you’re not spending extra or unnecessary money.
Financial control. It is essential to account for every dollar coming in and going out of your agency. You must have full accounting of every commission, override, service fee, and cost, for example, social media ads, technology costs, business cards, etc. Understanding how money is processed by travel businesses is vital to their success. Some aspects of your overall business strategy can facilitate financial control, such as emphasizing credit card payments or other forms of electronic payments.
Tax issues. Because all businesses must file state and federal tax returns, you must keep accurate accounting records to submit those returns and provide other requested information. With all the current grants and loans provided by governmental agencies and other entities, it is critical to have this information detailed and accurately documented for your accountant to process your taxes accordingly in April.
The Covid-19 pandemic changed everyone’s travel business; it was a deviation no one could have predicted. While it will take a while to get back to “normal” (although we are hearing good news of 2021 bookings), a good financial plan will help you prepare for future deviations. More importantly, a good plan will help you get back on track faster. And, as you start to prepare your 2021 budget, you simultaneously must work on your 2021 business plan.
Here are questions for you to consider. These are hard questions with hard answers. Take your time to strategize, plan and execute.
- Where do you want to be? What are some of your initiatives, goals, objectives, and strategies?
- What is or will be the source of your revenue stream? Is it commission-based only? Should you add service fees? What about other sources, including overrides, markups, and miscellaneous income from the sale of travel-related items or services?
- What new segment of the travel market should you tap into?
- Should you develop a new niche, expertise, or certification?
- Who are your ideal clients? Where can you find them?
Recently, Anne Smith, CTIE presented a two-part webinar titled Don’t Let Your Agency Go Dormant While This Virus Is Active. For those of you with Premium Access, this two-part series is included free of charge as one of your benefits. Here are two of Anne’s suggestions as you look ahead:
- Streamline and automate processes and procedures that are pain points in your agency. Fix what’s broken. Don’t know how to fix it? Get the help you need. This will save you time and money in the long run.
- Take an online course that benefits your agency’s objectives and goals and grows your specialties and services.
Finally, the following are three important and practical action steps you can consider taking right now:
- Start charging fees for services (research, risk assessment, cancellations, etc.)
- Sell preferred suppliers whenever possible/realistic because those extra dollars go straight to your bottom line. Fixed expenses don’t change, so a higher commission is significant when you budget for 10% and receive 12%!
- Try a niche because groups are profitable, and most success stories are the result of “being” your market. When you do this, selling is easier. Find customers and know exactly what words and events will attract.
This is one of those roll-up-your-sleeves types of projects. It can be scary, and it’s hard. But don’t give up. Continue looking for opportunities and silver linings. Continue strategizing, planning and executing. Continue reaching out to your clients, being present and improving on areas you need to. You soon will be back stronger than before. Sometimes a reset button clears the old and makes room for the n