BUSINESS PLAN — Safari Tours 1

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    Undergraduate
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    5
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    3476

BUSINESS PLAN – Safari Tours

BUSINESS PLAN – Safari Tours

Executive summary

Safari Tours is a tours firm that seeks to be established in Australia. In this study, there is the development of the factors that pertain to the establishment of the firm. This is based in the belief that it will be a feasible investment that will bring with it great returns to the investment. This is due to the increase in the firms that offer tours services in the country. Based on this, there are some plans that seek to be put in place in the establishment. They include the market trends and patterns. This is through the feasibility analysis, the technical analysis and the financial analysis. Through this, the market trends are analysed and the suitability of the venture to the market and the industry. The sources of financing are also mentioned.

Table of contents

  1. Executive summary…………………………………………………………..1

  2. Introduction………………………………………………………………………2

  3. Market feasibility analysis………………………………………………….3

  • Industry analysis

  • External industry factors

  • Barriers to entry

  1. Technical feasibility analysis………………………………………………..4

  • Service delivery

  • Regulations involved

  1. Financial analysis………………………………………………………………..5

  • Investment analysis

  • Business risks involved

  • Ratio analysis budget

  1. Human resource feasibility analysis………………………………………..6

  • Recruitment process

  1. Conclusion

  2. References……………………………………………………………………………7

  3. Appendix ……………………………………………………………………………..8

BUSINESS PLAN

Introduction

Safari Tours is a hotel and tours firm that seeks to be established in Australia. With its location preferred to the city of Queensland, this would derive many benefits in its operations. The Australian market is characterised by several aspects. They include the renowned beaches, national parks, mountains and other tourism attraction sites. Based on this, the firm seeks at the capitalising on the many attractions that exist in the market. The tourism market has also been on the rise over the recent past. (Nicole, 2013) This can be attributed to the measures that have been put in place to ensure the proper management of the tourism system. Through the analysis, the business is a suitable undertaking that will make great strides and success in its operations. Thos is attributable to the growth that is currently ongoing in the sector. Some of the challenges and benefits of operating in the market are analysed in the study. In this, the company also sets out the measures that it will pit in place to see to it that it is well positioned in the industry. (Nicole, 2013)

Market feasibility

Tourism is one of the biggest industries in the country of Australia. This is due to the returns that it brings to the country and the effects that it has on the GDP and economy of the country. As by the year 2015, tourism alone accounted for 4.4% of the GDP of the country. This was also in returns that exceeded $47.5 billion. With the largest portion of the tourism in the country being domestic tourism at 73%, there are huge returns that will be derived by Safari Tours from the focusing on the domestic tourists. The industry has been on the rise and as of the year 2015, it recorded a 3% growth rate. The market operations are currently not in full capacity. (Oliver, 2013) With this, there is a high demand for firms that offer tours and hotel services. It is through this that the company will be entering into a market that it will hugely influence. Currently, there are many players in the market. They however, are not able to fulfil the demand that exists in the market. Most operators also in the market have not diversified theory products. Unlike the competitors, Safari Tours seeks at offering both tours and hotel services to the services. With this, they will be able to transport the tourists to the destinations and back to the hotel for rest. Through this, the sources of income will originate from the tours and from the accommodation that will be offered to the people. Profitability in this case will be increased. The reason behind the customers placing their preference on the company is that the company will focus on the rendering of exemplary high quality services to them. The services will also be offered at affordable prices to cater for both the low and high-income earners. (Oliver, 2013)

Industry analysis

Currently, it is estimated that the Australian tourism industry will grow to a total worth of $140 billion. This has been attributed to the increased foreign tourism from such countries as China. This will be not only in the returns but also in the goodwill and growth. Through the increasing of the number of branches of the business and adequate marketing, it will be able to impact in the country. It will in respect to this become the most preferred option for the local people in terms of tours services. This will also be to the better of the business. (Nicole, 2013)

External business factors

External factors affect the operations of the business. The first factor that will affect the operations of the business is the government controls and regulations. These are done through such things as taxation and other restrictions that are imposed on the operations of a given entity. With this, the operations of the business will be regulated as to such things as the quality of the services that are rendered to the customers. There are also regulations in place in terms of the security mechanisms that will be employed. The licensing is an aspect that will be used by the government. The changes that occur in the regimes such as the policies that are implemented by new regimes affect the operations that the business will carry out. The industry dynamics also affect the business performance. This is in such things as the quality of the services that are rendered to the customers. The prices also should be average to those in the market. This is because the charging of higher prices would discourage the customers from t using the services of the company. Very low prices on the other hand raise doubts among the customers as to the quality of the services that are being rendered to them. (Kotter, 2012)

Barriers to entry

The market despite being very fertile has many barriers to the firms that intend to enter the market. Some of the barriers include the high initial costs that are required in the start up of the business. However, in the case of Safari Tours, the sources of funding that will be put into use will see to it that the company operates in a manner as to favour the expansion and settlement into the market. This acts as the sole leading barrier to entry. Costs include the cost of purchase of equipment, assets, licensing, development and marketing of the company. It is through this that many companies are locked out from the company since they cannot raise the amounts of capital required. (Kotter, 2012)

Technical feasibility analysis

Technology application is one of the leading factors behind the success stories of the firms. This is because it aids in the improvement of the rate of completion of activities. This has the effect of reducing the time that is spent in the activities. In the case of Safari Tours, it will aid in the increase in such things as the application and bookings by customers online and payments for the services. This will aid in the increment in the number of customers that book for the services of the business. This will therefore be a beneficial factor to the business growth. The technological development option that would be best for the company will be the customer-based approach. The customers are the people who are affected and impacted on by the services of the company. As such, they know the best ways to serve them better. The options and improvements will be done based on their preferences. (Oliver, 2013) Through setting the business to become customer oriented, the chances of growth and expansion will e very high.

Service delivery

The service that is being rendered in this case should be developed in house. With this, the firm should be responsible for all the undertakings that occur within itself. The sales and distribution of the services, which in this case is the brand name of the company, should be carried in a combination of all the areas. (Kotter, 2012) These are the in house systems, licences with marketing firms and partnerships. Through this, the brand name will be spread across the world. The awareness that this will create on the brand is crucial in that it will increase the amounts of the sales that the company will make over its time of existence. This will only be possible with the relevant resources in place. (Nicole, 2013) Some of the resources that will be needed for the successful operations of the company include;

  1. Human resources – the business needs people to work in all the departments. They include the drivers, the caterers, tour guided and managers among others

  2. Equipment – the business will also need infrastructure in place. They include hotel rooms and tour vans. There are also different electrical items such as computers that are needed to facilitate the operations.

  3. Distributors – the company needs people who will be able to market it to the local and the international market. Through this, it will gain popularity and returns will in respect to this increase.

  4. Capital – the business needs capital as the most important resource. This is because it runs all the activities and operations of the company. Without capital, the company cannot be able to operate in an efficient manner. Capital is therefore very necessary and crucial to the company.

Regulations involved

In order to operate successfully in the market, there are several regulations that the company should abide to. The first regulation is that it should have an operational business permit from the local council authorities. The company should also have a licence from the food management bodies. This is in terms of the hygiene at the facilities and the food that will be offered. The other regulation that will be required is in the security of the business premises. This is in order to reduce any chances of insecurity to the tourists. The idea therefore fosters the development of the local tourism. (Robert, 2013) This will in turn improve the economic development and stability of the country. Through this also, there will be the creation of employment to the local people.

Financial feasibility analysis

Following the analysis of the costs and the incomes from the operations f the business, the projected revenues for the company will amount to 1000 customers in the first year. With the rooms charging at a total of $99 per person per night exclusive of the tours. (Louise, 2012) This will be encouraging to the visitors as it includes the meals that they consume in the facility and other amenities of the hotel such as the swimming pool, the spa and the gym. This is therefore the accommodation cost per night per person. The travels and tours costs vary depending on the destination. Far destinations will require more amounts while the close ones will be cheaper. There will also be discounts for the people who have made early bookings and the people who visit as groups. The costs for the tours will range from $49 – $299 depending on the distance. The number of visitors is however expected to grow over the years at an average annual rate of between 6.5% and 9 % depending on the effectiveness of the marketing campaigns. Through this, the revenues and profitability will improve over the years. This will also be to the better of the company. (Johnson, 1992)

The operations of the company are however based on the net margin per unit. This profitability is derived from each unit, which in this case is the number of customers that visit the hotel and use the tours services. The concentration of the forces of the company to the dynamics that have been set such as the costs and the quality standards will make the growth and development to increase from the projected 9% per annum. The economic advantage of this is that it will aid in the economic growth of the country and the societal development process through he creation of employment to the local people. (Balogun, 2002)

Investments required

The amounts of investments that are required to run the firm are generally high. The various amounts that are required include the following;

  1. Business premise annual lease — $10000

  2. Development activities — $30000

  3. Initial inventories — $5000

  4. Tour vans — $30000

  5. Legal costs — $1000

  6. Marketing costs and product development — $5000

  7. Other costs — $5000

  8. Business cash and bank account -$ 5000

TOTAL = $91000

Some of the operating expenses include;

  1. Salaries and remunerations

  2. Office expenses

  3. Internet charges

  4. Miscellaneous expenditure

Business risks

The carrying out of the start up of the business requires huge investments both in terms of cash and in terms of items that are required by the company. This is also prone to several risks in the operations. The business in its operations is prone to the risk of payback. This is the time that the business spends to pay back all the amounts of the invested capital. This is a risk in that the rate of tourists who visit the country is not fixed and it varies between times to time. Through this therefore, there is the risk as to whether the business will be able to recoup its investments in a profitable manner. (Balogun, 2016)

The business has sought to use two methods of financing in order to raise the required amount of $100000. This will be done through partly the use of debt financing and equity financing. Debt financing will cover 30% of the required capital while equity financing will cater for the rest amount remaining. This will be through the sale of shares of the company to potential shareholders for a fraction of the equity of the company. On the other hand, the shares of the company as the collateral and the assets will cover the portion that will be financed by the debt amount. The limitation of taking the assets of the company as collateral is that this eliminates the chances of the sale of the assets. The company can therefore not sell them until the loan amount is fully cleared. The business will have to give up the ownership and the control some of the assets of the company that have been secured as collateral for the loan amount.

Ratio analysis budgets

Based on this, the returns and the ratio analysis of the company would elicit the following results as according to the projections.

Gross margin – 26%

Net profit margin – 14%

Return on investment – 42%

Payback period – 2.324 years

Break even period – 18 months

Start-up Expenditures and Expenses Worksheet

Item Total Cost Cash Required

Land ____20000______ __________

Capital Equipment ______20000____

Computer ___15000_______

Beginning Inventory _____5000_____

Start up Supplies _______6000___ __________

Licenses and Permits ________5000__ __________

Leasehold Improvements _____5000_____ __________

Utility hook-ups & Installation ___5000_______ __________

Advertising (Preopening) _______5000___ __________

Insurance ________5000__ __________

Other _________4000_ __________

Total Estimated One-Time Cash Requirements _________100000———

Start-up Operating Expenses

Estimate No. of Months Total Cash

Item Monthly Expense X before Break even = required

Owners Salary __________40000 __________ __________

Employee’s salary, wages, benefits __________30000 __________

Rent __________10000 __________ __________

Promotion expenses __________ ___10000_______ __________

Supplies and postage _________500_ __________ __________

Vehicle Expenses __________ _____5000_____ __________

Telephone __________500 __________ __________

Travel __________ ______500____ __________

Interest __________ ________600__ __________

Maintenance __________ _______1000___ __________

Other __________ __________ _______2000___

Total Cash Required to Cover Operating Expenses _97100________

Plus: Total One-Time Cash Requirements (Previous Table) __100000________

Add 10% Safety Factor _____10000_____

Total Cash Required for Start-up ___207100______

Human resource feasibility

There are several requirements that are required for the people who apply for the vacancies in the business. The management staff should have at least 5 years experience in hospitality or tours related firm. They should also have the highest degree of integrity and ethics. They should also have a sense of direction and good in decision-making. Through this, they will be able to lead the company towards the right direction. On the part of the other staff, they should have at least 3 years of experience in the specific areas of operations such as in driving or cooking. Through this, they will be able to render services to the greatest levels possible. The owners of the business are the entrepreneurs who have invested their funds into the company. Their main role is in the decision making process of the company. They also act as an oversight as to the undertakings of the management. (Tony,2013) Recruitment process

In order to get the right people for the job, the company will embark on a massive recruitment campaign. In this, the applicants will be taken through a series of interviews and analysis to determine the best fit to serve in the company. Through this, they will be sure of getting a perfect match for the jobs that are in offer. The pay for the employees will be a combination of the production and the time of work. They will also be taken through a series of training to understand what the business entails. The employees will be motivated through such things as pay hikes, motivation speakers and bonuses to raise their morale.

Quality services are the basis for the founding of the company. With this, the company will use the management and the owners to oversee whether the operations are maintained at the highest levels possible. The company will also receive directions and feedback from the customers. This will aid it in knowing the areas, which it is faltering or failing. The company will increase the number of staff and structure with further growth to handle the increased customer numbers. We will therefore see to it that the people who work with the business have developed careers in their areas of specialization such as tours management. (Angela, 2011)

Conclusion

In conclusion, Safari Tours based on the analysis that has been undertaken and the plans that have been put in place is able to become one of the leading firms in the country. The focus on quality service delivery and at pocket friendly prices is also to the benefit of the firm. The returns that will be made by the firms will be great. This will be to the economic advantage of the society and to the country at large. Through the proper management plans that are in place to control the business flow and activities, it will be able to advance to even greater levels in terms of the goal attainment process. Creation of employment will also be in line with the economic development agenda.

References

.Angela S (2011). «Budget airlines slowly killing domestic tourism, expert warns» . news.com.au (News Limited). . Visa Options — Working Holiday Makers — Visas & Immigration».

Angela S (2011). «Chinese tourists want casinos, not koalas, international experts say» . news.com.au (News Limited).

Balogun, J. , Hope Hailey, V. and Gustafsson, S. (2016) Exploring Strategic Change, 4th edition, Prentice Hall

Hailey, V. H., & Balogun, J. (2002). Devising Context Sensitive Approaches To Change: The Example of Glaxo Wellcome. Long Range Planning, 35(2), 153-178.

Johnson, G. (1992). «Managing strategic change— strategy, culture and action.» Long Range Planning, 25(1), 28-36.

Johnson, G. (2000). «Strategy through a Cultural Lens.» Management Learning, 31(4), 403-426.

Kotter, J. (2012) Leading Change, Harvard Business Review Press

Louise W (2012). «Tourism Australia’s domestic tourism campaign» .Travel weekly. Stuart Innes.»Domestic tourism drives”. Adelaide Now (News Limited).

Nicole C. (2013). «Australia targets China for tourism boost”. ABC News (Australian Broadcasting Corporation.

Oliver M (2013). «Greg Hunt approves dredging off Queensland to create huge coalport”. The Guardian.

Robert U (2013). «What rich Chinese tourists want — and where they’re going to get it”. The Sydney Morning Herald (Fairfax Media).

Tony B (2013). «Uluru wins top tourism award”. Media Release. Commonwealth of Australia

Appendix

Start-up Expenditures and Expenses Worksheet

Item Total Cost Cash Required

Land ____20000______ __________

Capital Equipment ______20000____

Computer ___15000_______

Beginning Inventory _____5000_____

Start up Supplies _______6000___ __________

Licenses and Permits ________5000__ __________

Leasehold Improvements _____5000_____ __________

Utility hook-ups & Installation ___5000_______ __________

Advertising (Preopening) _______5000___ __________

Insurance ________5000__ __________

Other _________4000_ __________

Total Estimated One-Time Cash Requirements _________100000———

Start-up Operating Expenses

Estimate No. of Months Total Cash

Item Monthly Expense X before Break even = required

Owners Salary __________40000 __________ __________

Employee’s salary, wages, benefits __________30000 __________

Rent __________10000 __________ __________

Promotion expenses __________ ___10000_______ __________

Supplies and postage _________500_ __________ __________

Vehicle Expenses __________ _____5000_____ __________

Telephone __________500 __________ __________

Travel __________ ______500____ __________

Interest __________ ________600__ __________

Maintenance __________ _______1000___ __________

Other __________ __________ _______2000___

____________ __________ __________ __________

Total Cash Required to Cover Operating Expenses _97100________

Plus: Total One-Time Cash Requirements (Previous Table) __100000________

Add 10% Safety Factor _____10000_____

Total Cash Required for Start-up ___207100______