Are you on top of your business’s business? | TravelResearchOnline

Are you on top of your business’s business?

Lately, there have been many discussions about the ability of a travel salesman versus the knowledge of a travel agent. They are two distinct people and when you marry them, you get a travel professional. After all, all of the destination and product knowledge in the world will not close a sale. It is up to the salesman to do that! For eons, there have been arguments about who is more important to a business—management, production, or sales. Each one can provide good arguments as to why they are more important. But, my position is that they are equally important. Without sales, there is no need for management or product. Without product, there is no need for sales or management. Without management… hmm, let me think about that for a minute.  But seriously, many (if not most) travel agencies will fail; and I might suggest the primary reason is that they lost sight of one aspect of their business—sales, management, or product. Take a look at your own business and see if you might be participating in your own demise.  Here are ten areas that tend to trip up most business owners.

Focus – Do you have it? Most agencies today do not have the financial resources to capture multiple markets. Typically, when they try, their focus and mission gets lost. By specializing in a destination, type of travel, lifestyle, or niche, you will simplify your life and maximize your profits. You will never be able to be all things to all people. Recognize that and your clients will appreciate it!

Selling – Do you spend enough time selling? Probably not. And this is a huge problem for the single person agency. A good rule of thumb is to spend 25% of your time selling. Selling is not necessarily marketing. Your marketing efforts are for naught if you receive no sales. Make it a goal to contact at least three to seven new prospects each week. Maybe grab the email addresses of the people who responded favorably to your last newsletter and send them personalized emails. Follow up on inquiries with a phone call. Ask a current client for the name of a prospect.

Planning – Where is your plan? I am talking your business and marketing plan—yes they are separate. Your clients don’t take a vacation without a plan or itinerary to show them where they are going, so how can you expect to run a business without a roadmap? Major decisions in your business must be documented in your plan. If you decide to expand or grow and need access to some capital, do you think a bank (or your mother) is going to loan you money without a plan?

Bookkeeping – Keeping good accounting records is a must. All of your major business decisions must involve a financial impact analysis to determine if it makes sense and more importantly if it makes cents. Have you ever driven a car at night without the headlights?

Pricing – Stop short selling yourself. You do not have the expenses and perks of Orbitz, YTB, or Billy-Bob’s Bait, Tackle and Travel. Set your prices based on the value you bring to the customer rather than what you think they are willing to pay. If you can be profitable on commission alone—great; if not, you need to add ancillary revenue—fees! Deliver a quality product at fair price. And remember, you can’t be all things to all people.

Customer – Do you know your customer? Not just the stranger who calls you on the phone, but the person behind the voice? If you do not know your customer and their wants and needs, you will fail. Investment in a CRM tool is essential in today’s marketplace. When you call Domino’s Pizza they ask you if you want the large pepperoni again. And if you do not have a specialization, define your ideal customer and market to them.

Repeat Business – The best customer is the repeat customer, and more importantly, the repeat customer is the most profitable customer. Finding new clients is expensive. It is much easier to sell to an existing client because the trust and relationship is already established. Mine your CRM for your client’s preferences and figure out how to sell them more.

Employees – Wait a second, I am only a one man business! Well, yes and no. Just as you can’t be all things to all people, you are probably not the jack of all trades you like to think you are. Determine what it is you do best and consider hiring people to do the rest.  You might outsource data entry, web design, or social media. You may hire a bookkeeper. But there are two traps of which you need to be mindful. First, take the time to hire the right employee. I just recently hired a new IT consultant and it took nearly a month to make my decision—and it wasn’t based on price! When you hire the wrong person, mistakes will cost you dearly, both emotionally and in your wallet. Second, after you hire someone, be very clear as to responsibilities and job descriptions.

Technology – Next to employees, your best productivity boost will come from maximizing your use of technology. If you are weak in the areas of word processing, spreadsheets, bookkeeping, or building and maintaining web pages, take classes. While these can certainly be outsourced, mad computer skills are now a must-have for any business owner. Know your CRM inside and out. Take the time to learn it. It was designed to make you money—use it to its full advantage. And, if you do not have a web presence, you might as well turn off the lights, lock the door and head to the mall to see if they are hiring.

Moolah – Finally, make sure you have enough capital to personally support yourself and to get your agency off the ground. Don’t be lulled into the trap of foregoing a paycheck now for some anticipated return later. The rent still needs to be paid and creditors don’t care. Use the tools at your disposal to project your needs (CRM, accounting, etc) and understand that there will come a time when you will need to tap into your reserves to keep your head above water. All it takes is a mistake or two resulting in reparations to a client for a few grand to put a huge dent in your plan. In travel, we deal with the unforeseen all the time—SARS, wars, Norwalk, terror, weather, politics, economies, etc. There will be dry spells.

I am not suggesting that you must have complete control of all of these areas. But I am suggesting that these are the typical pitfalls that may be lurking in your future. Be aware of them and do what you can do now to mitigate them.

  4 thoughts on “Are you on top of your business’s business?

  1. Geoff Millar says:

    I agree 150%. I used to rank the 3 things taht make a successful travel business as
    1. priduct knowledge
    2. Sales ability
    3. Customer service

    Since then I have come to realize that all 3 are equally important. They are the things that are going to set you apart from the competition.

    You can no longer sit back and wait for clients to buy from you. There are too many options available to them in todays world.

    It is interesting that we have 3 ICs and none of them had industry knowledge but were all top sales people in their field. They now sell in excess of $500,000 a year in travel sales.

    As far as funding a business, a statistic from the Harvard Business Review states that 80% of all new businesses fail within the first 2 years due to under capitalization.

  2. denyse says:

    Excellent article!

    I’ve come to learn the hard way that sales is just as, if not more, important than product knowledge. I can google product knowledge but once I have it, if I don’t close the sale it means nothing!

    YTB???

  3. Is isa just me, or are the articles in this column becoming more and more “Home Based” and start ups? So much of the recent chat is HB this and HB that. What about the 15-20 year succesfull B&M’s? We have 3 1/2 year rooki9es (age 25, less) doing 1 million plus, but we could still use some info on expanding, etc.

  4. John Frenaye says:

    Hi Steven–if it is it is unintentional, but now that you mention it, I will keep an eye peeled for it. You are right, there are many thriving B/M agencies out there.

    However, the majority of the travel industry today (in terms of locations and employees) is indeed home based. I remember attending a show in 2004 or 2005 and was shocked that 80% of the room identified themselves as home based.

    As to this particular article, these are traps that will catch anyone!

    ~JWF

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