Tourism business planning

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Tourism business planning

  1. 1. Tourism business planning<br />online course in responsible tourism development session #05<br />Gerardine Parisi<br />
  2. 2. Agenda<br />From business idea to business plan<br />What is a business plan<br />How to write a business plan<br />Create your own business plan<br />A practical example <br />
  3. 3. From business idea to business plan <br />Create a successful business is a very difficult task. <br />You have to be strong motivated and very oriented to planning and scheduling.<br />Principal steps of an aware process:<br />How to start up your own business<br />
  4. 4. From business idea to business plan <br />The business idea<br />Your business idea can be based on a dream or an aspiration but you have to translate it in something of concrete <br />
  5. 5. From business idea to business plan <br />Planning and scheduling are key successful factors<br />Most common reasons of failure:<br /><ul><li>Lack or inadequacy of planning
  6. 6. Lack of market research
  7. 7. Overestimation of demand
  8. 8. Poor quality in the management of the business
  9. 9. Error in determining the selling price
  10. 10. Little attention to costs and expenses
  11. 11. Poor financial management
  12. 12. Insufficient sales
  13. 13. Startup capital deficient</li></ul>The importance of planning<br />LACK OR POORNESS OF BUSINESS PLAN<br />
  14. 14. What is a business plan?<br />Business planallowstoverify:<br />Market feasibility TO SELL<br />Organizational and technicalfeasibility TO MANAGE<br />Financial and economicfeasibility TO EARN<br />Business plan<br />
  15. 15. What is a business plan?<br />Aim of business plan<br />
  16. 16. How to write a business plan<br />Main questions<br />
  17. 17. Create your own business plan<br />1. Market feasibility<br />
  18. 18. Create your own business plan<br />2. Marketing mix<br />
  19. 19. Create your own business plan<br />Most important point to evaluate:<br />Special permissions to start up <br />Investmentnecessaryto start the business <br />Most appropriate legalformtomanage the business <br />3. Organizational and technicalfeasibility<br />
  20. 20. Create your own business plan<br />4. Financial and economicfeasibility<br />Year 1<br />Year 2<br />Year 3<br />Year……<br />Investmentcost<br />Operatingcost<br />Operatingcost<br />Operatingcost<br />Operatingcost<br />
  21. 21. Create your own business plan<br />Initial investment cost are all the expenses you will need to start up your business such as:<br />Immaterial expenses to start up the business, such as permission;<br />Material needs:<br /><ul><li>location or office;
  22. 22. special machine;
  23. 23. basic equipment.</li></ul>4.1 Initial investmentcost<br />
  24. 24. Create your own business plan<br />How can I get the money I need to start up my own business?<br />4.1 Initial investmentcost<br />
  25. 25. Create your own business plan<br />4.2 Break evenpoint<br />NO PROFITS NO LOSES<br />BREAK EVEN POINT<br />
  26. 26. Create your own business plan<br />To calculate the break even point it is necessary to know which kind of costs are related to your business.<br />Costs can be divided into four main categories:<br />Fixed cost<br />Variable cost<br />Financial cost<br />Taxes<br />4.3 Operatingcost<br />
  27. 27. Create your own business plan<br />Fixed costs are business expenses that are not dependent on the level of goods or services produced by the business.<br />4.3.1 Fixedcost<br />$<br />FIXED COST<br />UNIT OF PRODUCTION<br />
  28. 28. Create your own business plan<br />Variable costs, instead, are volume-related.<br />The sum of fixed cost and variable cost represent the total cost that is the total economic cost of production.<br />4.3.2 Variablecost<br />$<br />TOTAL COST<br />VARIABLE COST<br />FIXED COST<br />UNIT OF PRODUCTION<br />
  29. 29. Create your own business plan<br />Financial cost consists in interestswhich the entrepreneurhavetopaytobanksforloans<br />Taxes are calculated on the taxableincome and differ from country to country<br />4.3.3 Financial cost and taxes<br />
  30. 30. Create your own business plan<br />The other main point to calculate the break even is to define the price of product or service.<br />Price is influenced by internal and external factors<br />4.4 Pricingstrategy<br />
  31. 31. Create your own business plan<br />There are some criteria used to define the price. The principal are:<br />Cost plus pricing: the price isfixedcalculating the costof production and addingtoit a percentage<br />Competition-basedpricing: the price isdecidedtakinginto account the price adoptedbycompetitors<br />Objective profit pricing: the price is set at a levelthatallowstogain a certainlevelofexpected profit.<br />4.4 Pricingstrategy<br />
  32. 32. Create your own business plan<br />4.4 Pricingstrategy: 9 laws of price sensitivity & consumer psychology<br />
  33. 33. Create your own business plan<br />4.5 Turnover and net profit<br />
  34. 34. Gerardine bed and breakfast<br />A practical example<br />
  35. 35. Gerardine bed and breakfast<br />WHAT: Boutique, charming, eco bed and breakfast, 5 rooms, high level of standard.<br />Special offer for people interested in enogastronomy, tradition and mountain.<br />WHERE: Abandoned house of my grandmother in a rural area of Trentino, tourism not well developed<br />WHO: I will be the enterpreneur, this will be a second work<br />Business idea<br />
  36. 36. Gerardine bed and breakfast<br />Market feasibility<br />
  37. 37. Gerardine bed and breakfast<br />Marketing mix<br />
  38. 38. Gerardine bed and breakfast<br />
  39. 39. Gerardine bed and breakfast<br />How can I get the money I need to start up my own business?<br />
  40. 40. Gerardine bed and breakfast<br />Every year I have to sustain this cost:<br />Fixed cost: 5.000€<br />Variable cost: 30.000 (40€ for every host  750 arrivals for year)<br />Financial cost: 5.000€<br />Taxes: 6.000 (10% of 60.000€ that is the foreseen turnover)<br />
  41. 41. Gerardine bed and breakfast<br />Break evenpoint:<br />Cost/price = numberofhost 26.000€ / 80€ = 325 arrivals<br />Provisional net profit:<br />Turnover-costs = net profit  60.000€ - 46.000€ = 14.000€<br />
  42. 42. Thank you very much!<br />GerardineParisi<br />mail: gerardine.parisi@gmail.com<br />

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