How well do you know your business?

And I mean, how healthy financially is your book of business or your bricks and mortar travel agency?

When I owned my own agency in the ‘90’s, like many entrepreneurs who own a small business, I admit that I often was ‘flying by the seat of my pants”.  I was doing my best to work ‘on’ my business and not ‘in’ my business but I had not yet grasped the importance, until the next decade 2000–2010 of completely understanding my back office numbers. I took pride in the strength of my back office team and the accuracy of our income/expense and balance sheet financials every month. However, as my experience grew as a business owner, so did the importance of examining every line item of the monthly financials.

I didn’t know the financial picture as well as I should have. There is a reason that larger companies have financial forecasts and budgets. For one thing, if the agency achieves these goals, it can celebrate the success of that achievement. Without a goal, it’s often never good enough so as long as the numbers are realistic, the team effort to reach those goals can be inspiring.

Agency management would benefit by:

  • Creating a cash flow analysis and updating it at least twice a month.
  • Review each consultant’s performance and understand the contribution he/she was making tothe bottom line;
  • It is crucial to stay current. Just because it worked 5 years ago, doesn’t mean the financial model works now.
  • Accept that long term employees ‘peak’ and review what steps can be taken to manage this fiscally while staying respectfully within Employment Standards guidelines.

An independent consultant and I had a conversation the other day and it was confided to me that a marketing opportunity had been lost with a website that was believed to have generated significant revenue annually. When I asked how much exactly? The consultant was not able to answer me, except to say, ‘a lot’. My recommendation was to know exactly what that number looked like and that would better able us to determine how that revenue could be created in a different way and how much had to be spent in order to generate that revenue.

Independent Consultants would benefit by:

  • Creating a cash flow analysis and updating it at least twice a month which would include anaccounts receivable section for commissions sold but not yet received.
  • Have a full understanding of all reports received from the host agency and ‘pour’ over eachdetail. This is not about questioning the integrity of the reporting system – by focussing on thenumbers, it will undoubtedly help you grow your book of business.
  • Again, stay current. Do you need to charge a higher service fee? What would an hourly fee be? When can you charge it and feel confident about doing just that.

When do you know that it’s time to go?

I’ve had many conversations over the past six years with travel agency owners across our wonderful country on this topic. Those of us in the industry talk often of the connection to travel; that it is ‘in our blood’; once you are in the industry, it is almost unimaginable to leave it.

The best part of our job is usually working with our clients. The satisfaction we feel when we are recognized for our work makes it worthwhile (most of the time).

And yet, the parallel discussion is often, “I’m stuck. I don’t know what to do next. The agency isn’t making a profit. I generate the most sales in my office and yet, I subsidize staff’s salaries as I have all this overhead.”

The discussion usually turns to me asking, “if you had a magical buyer out there would you want to sell and for how much?”

When do you know that it’s time to go?
Is it time to look at what our goals are for at least the next couple of years?
Are you already disengaged?
Is our perception of life right now, the way we want it to be?
Can we dip our toe in the water and see what else might be out there?

Firstly, what are the options?
Is anyone buying smaller agencies?
How do you evaluate your business?
Whose book of business is it, the agency’s or the agent’s?
Is it going with the host agency model which continues to generate greater market share in Canada?
Is it a succession plan with a family member and/or an employee whom you can trust to look after your clients with every last detail?
How do you find that travel consultant who should probably be younger, faster, more familiar with technology and yet, has a high level of customer service.

It seems daunting.

There are answers and options to all of these questions. It is not a cookie cutter approach and like all major decisions in life, it takes planning, talking, thinking and having a strategy to move towards your goals and not away from them.

Is it time to take your questions to an expert in transitioning?