Let’s Talk Money!
Are you making money selling travel? If you aren’t sure, then it is time to plan. You’ve heard this famous phrase – If you don’t know where you are going, how will you know when you get there?
Whether you have a small or large travel business, you need to plan for success. Financial planning is the process of managing and controlling the flow of money, so you can determine if your business is staying profitable.
This can be scary to do, but it will be one of the most important steps you take in your business. To help you plan accordingly for the success of your business, The Travel Institute is excited to announce the launch of a NEW Travel Agency Finances course ($49), available in our bookstore or included in your Premium Access Library.
- What was the average gross profit percentage last year?
- What percentage of your sales is cash, and what percentage is credit?
- What percentage of commissions receivable went uncollected last year?
- What percentage of your total business comes from your top 10 accounts?
- Who were your top salespeople in total dollar volume and in gross profit generated?
- What was the average balance in your primary checking account month by month?
- Is your business meeting its goals?
- Are you selling your preferred suppliers over non-preferred suppliers?
- How much money do you have in outstanding commissions from suppliers?
- What percentage of your business is service fees?
- How much did you spend last year in marketing and promoting your business?
- What was your cost of sales for the previous year?
- How long did it take you to forecast last year?
- Do you have a budget and are you meeting that?
If you answered these questions quickly, you planned well and probably have a good accounting system in place. However, if you had trouble answering some of these questions, you may need to take a deeper dive into your finances and improve your planning. Being able to answer questions such as these is vital to running a successful business.
It may be time to review unprofitable situations before they cost you too much money. For example: Mr. and Mrs. Smith plan two yearly vacations that average a total commission of $480. However, when you analyze the amount of time it takes to research each of the vacations, make changes, book air, find just the right accommodations, etc., it takes you over 15 hours per vacation. The question you must ask yourself is whether that time investment was profitable or unprofitable. If it was unprofitable, what were the reasons? And how will you address them?
This is a great time of year to look at the questions above, review your financials, analyze your business and marketing plan, and forecast.
If you are starting a new business, look at the categories you want to focus on and identify how much money in commission you want to bring in and what actions you need to take to make that happen. Every minute spent going through this process will be worth your time.
At the end of the day, the message is: To have a successful business, you need to finance your strategy and then manage the money earned by the business!
We hope this tip started you thinking about your travel agency finances. Don’t be left behind. Enroll today in the NEW Travel Agency Finances course to chart your path and make money!