Financial Planning and Prudence in Travel Agency – Lessons from Covid 19 Pandemic

            Starting a travel agency business can help you accumulate wealth over time. However, it is worthy of note that the travel agency business is a particularly remarkable one. While it is a very lucrative business, the peculiarities of the industry make it imperative for business owners within the space to possess some level of financial intelligence. For profits to be maximized, then the rate of spending has to be as low as possible. Once the money is wasted, profit becomes lean.

            While the theory of keeping spending on the low has been around long enough; the Covid 19 pandemic reemphasized the extent to which this theory must be adhered to. While the pandemic created a paradigm shift in the way businesses are done around the world, its effect on the travel space cannot be overemphasized.

Nowadays, many criteria must be fulfilled before one embarks on a journey – especially by air. Similarly, the pandemic has caused the world to embrace virtual meetings, conferences and webinars. These – alongside a host of other conditions – have slashed the numbers of people who travel around the world. The shortfall of travellers has caused the revenue that accrues to travel agencies to dwindle.

Luckily, there are a number of measures that can help to keep finances in check. Here are some tips that can help you maintain prudence within your travel agency.

• Staff up slowly

One of the biggest expenses that companies incur is payroll. Beyond just paying employees’ salaries; taxes, bonuses and other benefits that accrue to employees also add up to the cost of running your business. Hence, it is imperative to ascertain that you can keep employees engaged and cater for them before bringing them up full time. Rather than being in a hurry to bring up new staff during holidays and other busy periods, engaging workers on a contract or part-time basis can make all the difference. This would save you from having to pay idle employees when the holidays are over.

When starting out as a small company, outsourcing professional services like human resources, public relations or accounting can also help to cut costs. The ultimate decision to hire can come when these services are required on a day-to-day basis in your operations.

• Start with the minimum-viable office space

It is very nice to have a magnificent office space. But if you’re starting small and it costs a fortune to keep up with it, then you may need to reconsider. The bundle you’re paying for the office space can limit your financial capacity to invest in opportunities. You are better off getting a decent and affordable space and spicing it with affordable amenities that fit the vibe of your brand.

One of the ways of reducing the cost of office space is to have your employees work from home. The pandemic has made this a new norm and you should embrace the opportunities it presents. Once you set clear goals and follow up with employees regularly, productivity can be derived from employees regardless of where they work.

• Understand the tax system

Once you generate revenue in your business, you are bound to face tax bills. While it is imperative to pay your tax, paying more to the government than you should will reduce the disposable profits you have available to reinvest. This is especially true in jurisdictions where taxes are on the high side.

Taxes are one of the reasons why you must invest in finding an experienced accountant. The accountant would help you plan and monitor your tax bills throughout the year. It is also a smart move to seek automated to track your spendings and tax deductions.

• Practice open-book management

Oftentimes, employees do not understand how the different pieces of the business puzzle come together to make the whole picture. Hence, it beckons on you to help them see beyond their individual roles and make them realize to what extent their decisions and actions can influence the bottom line. This knowledge can motivate them to find means of cutting costs or generating more revenue, with the end goal of increasing profits. To keep up the drive, you should ensure that they enjoy the benefits they contribute from helping to generate revenue or cut costs. Once there’s a transparent plan as to profit-sharing when an employee helps to cut costs or generate revenue, they are encouraged to do even more.

Open book management does not necessarily mean opening up on every aspect of your finances. Employees must not be privy to information on how much other employees earn or other sensitive financial data.

In all, it beckons on you as a business owner within the travel space to plan and be prudent in managing your finances. This would help you build the capacity to invest in other opportunities as they arise.

Always remember; it’s not what you make, it’s what you keep.

For more insights, reach us via +234 803 270 5319 (Call/SMS/WhatsApp), or send us an email at info@travelhubng.org.