Tina Weiss, CTC
Are you thinking about a career in the travel industry? Sounds exciting, doesn’t it. It is. A career in the travel industry can be very rewarding! A career in travel, opens the door to an incredible number of options. The primary focus of this paper is the entrepreneurial option.
Many of us are seduced by the thought of owning our own business; primarily to be in control of our own destiny. While choosing the entrepreneurial path in the travel business can be very exciting, rewarding and challenging, you should follow some basic entrepreneurial rules to significantly increase your chances of success. In a nutshell they are: Know your Options. Protect your Interest. Stay Focused. Develop a Business & Marketing Plan. Market, Market, Market. Lastly, work with a Mentor and/or a Coach.
1. Know your Options – As many of you know, there are quite a few ways enter the travel consulting business. You’ll even want to put some thought into what you want your title to be! Do you want to be identified as a Travel Consultant, a Travel Agent or possibly a Travel Planner? You may already have a company name in mind. If not, I would recommend waiting until you do some homework.
Speak with as many people in the industry as possible. Ask a lot of questions. Gather recommendations for Host Agencies, Consortiums and local travel agencies. Remember the saying, “it is better to measure twice and cut once.” The same reasoning applies to choosing the right type of entity to align with initially. Call these entities and interview them. Find out what the differences and similarities are. Inquire about how they operate and what their compensation structure is. Sign up for travel publications to educate yourself. If you are able to attend an industry conference sponsored by Travel Weekly, Home Based Agents or another organization, that would be extremely helpful. Knowledge is a powerful thing. Informed decisions bring higher returns and can save you a lot of time in the long run.
While you are at the conference, talk to as many tour operators as you can. Make sure to take advantage of lunch time and social time to get to know other travel professionals. Pick their brain. My goal at conferences is always to get at least one golden nugget from every conversation, no matter how small. A golden nugget is a piece of information that is new to you, that you might be able to use in your business in the future. Carry around a notebook to write these nuggets down. Here’s a brief, but not exhaustive, description of some of the entities a new entrant might want to align with in the travel business.
A. Host Agency – This is where you typically operate as an independent entity known as an Independent Contractor or IC. Most Host Agency’s allow you to choose a name for your company. There are legal rules that classify you as an IC versus an employee but they are beyond the scope of this writing. The benefits of working under a Host Agency include access to ongoing training programs/conferences and earning higher commissions (because of the volume of business all of the IC’s associated with the Host Agency produce). You should have access to business tools such as CRM’s (Customer Relation Management) and booking engines. On the downside, Host Agencies will take a percentage of your commission in exchange for the services they provide for their IC’s. In addition, IC’s will usually have to pay a monthly or annual fee to have access to some of the business tools offered by the Host Agency.
B. Consortium – A Consortium allows independent agents to align with a much larger organization but still operate under their own identification number. The Travel Professional operates their own business and does not typically have to share their commissions with the Consortium. The Consortium benefits from membership fees paid by the member agents/agencies. The members benefit from higher commission structures paid through preferred tour operators. Members also benefit from additional training, seminars and conferences.
C. Employee – It seems like this option is becoming increasingly less popular. Traditional “Brick and Mortar” or Storefront Travel Agencies will still hire employees. Even though you would not be considered on the entrepreneurial path with this option, I included it because it may be the right option for you to start your career.
These employees are issued a W-2 Form versus a 1099 that the independent contractor would receive to account for their compensation for tax purposes. Since they are classified as employees, they may be subject to more restrictions on how and whom they conduct business with.
2. Protect your Interest – Once you have decided on the best way for you to initially enter into the travel business, you will want to properly set up the business. If you are an employee, you will probably need to sign an employment agreement. The Independent Contractor or Independent Travel Agent has to think about a few more things to protect their business interest. Here are a few critical items to consider when setting up your business:
A. Business Entity – It is a good idea to meet with an Attorney to help you figure out the proper way to structure your business before you begin selling travel. One common way to protect your private assets in our industry would be to set up a Limited Liability Corporation or an LLC. “Incorporating or forming an LLC allows you to conduct your business without worrying that you might lose your home, car, or personal savings because of a business liability.” [1] If you are working with a partner, you will want a separate partnership agreement that spells out exactly how you would either dissolve the company or buy the other out if something in the Partnership relationship changes.
B. Client Agreement – There are quite a few resources and/or organizations that are willing to share templates for Client Agreements. This allows you to manage expectations and establish parameters for your services. It helps minimize misunderstandings and possible disappointment during the travel planning process. A Client Agreement is even more important when working with groups. This is in addition to the Contract that you would want your client to sign in a group situation.
C. Errors & Omission & Insurance Coverage – Some Host Agencies provide coverage as part of their package. There are quite a few companies that offer packaged plans to the Travel Entrepreneur to protect you in the event that you are sued. It is imperative that you have protection in the event that you or your company is sued.
3. Stay Focused – Avoid the Shiny Object. This is the hardest advice to follow, but the track that will make your life the easiest in the long run. It will also help you to propel your business. It will help you to establish yourself as an expert in your field. What does this mean? We are all seduced by the ability to book almost any type of travel. Many of us continue to accept requests that offer little return and require lots of time to research. This may be an option when your first begin, however, it will not serve you in the long run. Believe me!
Take time to think hard about where your passion lies. What type of travel most aligns with your interests? What demographic do you relate to? Do a lot of homework.
What are Millennials looking for? Is River Cruising opening up to a younger demographic? Do you want to appeal to the Luxury Traveler? Define the type of travel that you would like to focus on and then do just that.
4. Develop a Business and Marketing Plan – A Business Plan will focus more on the operations of your business. “Business Planning encompasses all the goals, strategies and actions that you envision taking to ensure your business’s survival, prosperity, and growth.” [2] Literally, what do you plan to do with the business in 1 year, 3 years and even 5 years out. Take the time to develop a Mission Statement and write down your Core Values for your business. The Mission Statement should reflect your Core Values and be something that you refer to in all of your business dealings. It should be the compass for all that you do.
The Business Plan should be re-visited once a month or once a quarter. It should be considered a living, breathing document. It should be subject to change as you and your business grows. As a new entrant, you will not have a frame of reference or past experience to base a budget off of. You might begin with a Zero Based Budget. This is where you pull from many resources to develop a budget. In this scenario, you do not have prior data for your business, so you are making projections based on all of the external & industry information you’ve gathered. You will also factor in your time commitment to your business and goals into the projections.
The Marketing Plan will focus more on how you are going to get your name and your services out into the Universe! It doesn’t have to be complicated, but it should be thought out. “You should allow yourself a couple of months to write the plan, even if it’s only a few pages long. Developing the plan is the “heavy lifting” of marketing.” [3]
How do you plan to tell your target market what you do? The easiest and most effective way to begin is to send out some type of Announcement Letter to people you know. You may also want to identify key demographics in your community that would be a perfect fit for your services. Clearly lay out a timeline for the year for all marketing efforts and their corresponding costs. Brainstorm, get creative!
Spell out the types of marketing that you will execute. If you are tech savvy and would like to focus your efforts on social media, you will need to do the research that will help you identify and reach the market you desire. This may be on Facebook, LinkedIn, Snap Chat, Twitter, Pinterest, YouTube, Instagram, most likely a combination of many of them will be most effective. Are you an extrovert? You may want to host a Mexico or Cruise Night. Write down suppliers that fit with the demographic you are targeting. Contact those suppliers. Many will be willing to work with you. The creative process leaves all options on the table. Vet all options and then narrow down the ones that will serve you best.
5. Market, Market, Market – Be Consistent in all that you do! This is where we all fall into the trap. We get caught up in the day to day operations and lose sight of the very activities that will keep us in business in the long term. Depending on your personality type, this could be very challenging. Refer to your Marketing Plan. Put it in writing and then put the plan into action on a consistent basis. Plan to be wrong. Plan to be flexible when you are. Be on top of your marketing so that you can track what works and what needs tweaking. Keep your ego out of it. We all make mistakes. Learn from them. If learning from your mistakes causes you to take a different action leading to better results, then you will end becoming successful. I like to think we grow more because of our mistakes, then in spite of them. I know it is difficult, but try to embrace the adversities and use them to your advantage.
6. Find a Mentor and/or a Coach – A properly structured Mentor/Protégé program has been shown to benefit both parties within a company. The Protégé benefits from the experience offered from his/her Mentor. The benefits of this type of relationship can be applied to the new Travel Business owner with an experienced person in the travel industry or successful business owner in another industry. “…according to a 2014 survey by The UPS Store, 70 percent of small businesses that receive mentoring survive more than five years – double the survival rate of non-mentored businesses.” [4] Establishing a Mentor/Protégé relationship will help a new business owner navigate unknown territory. A Mentor can help problem solve and ask questions that will help guide you in your decision making process along the way.
A Coach in the travel industry is usually someone who has been in the business for a while. They may have been in the same exact position you are now. Be prepared to pay this person for their services, unlike a Mentor. Their job is to teach you specific skills and hold you accountable for certain follow up actions. Generally, the goal is to increase sales and learn to manage our travel business more efficiently. There may be some duplicity with the Mentoring relationship, but since you are paying a coach, you can be more demanding of their services. Both relationships can be of great value to you.
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In conclusion, pursuing a career in travel offers tremendous rewards. Almost everyone loves to talk about their travel experiences! People love to see pictures and hear stories of your journeys around the world. It is okay to be seduced by all of this, but if you are to be successful in the biz, treat it like a business!
Take the time to learn about your options of entry before diving into the travel business. Find the right fit for where you are. Options are always open as you move along. You may find that you want to change from being part of a Host Agency initially to joining a Consortium after you’ve had a few years in the business.
By setting up your business as a legal entity, you are protecting and separating your personal assets from your business. Just as you should take the time to research who you should align with in the beginning of your travel journey, you should also take the time to focus on the type of travel that you want to sell. The next step is constructing your Business and Marketing Plans. If River Cruising is the direction you want to go, your Business and Marketing Plans should reflect thoughtful projections for this market.
You need to follow some simple rules and take little steps each day that support your Business and Marketing Plans. Little steps translate into big results. Market consistently to your target audience. Before you know it, you will be on the journey of a lifetime in more ways than one!
Endnotes
[1] Retrieved September 30, 2016 “Five Reasons Why a Small Business Should Incorporate” from http://www.foxbusiness.com/features/2013/01/31/five-reasons-why-small-business-should-incorporate.html
[2] Retrieved September 30, 2016 “Business Planning Definition” from https://www.thebalance.com/business-planning-definition-2947994
[3] Retrieved September 30, 2016 “How to Create a Marketing Plan” from https://www.entrepreneur.com/article/43018
[4] Retrieved on September 30, 2016 “Why a Mentor is Key to Small Business Growth and Survival” https://www.sba.gov/blogs/why-mentor-key-small-business-growth-and-survival-0
