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Tourism business planning

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