Starting a new tourism business is a big commitment and often requires a lot of support and involvement from your family and close friends. Business ownership in the long term can offer fantastic returns, both financially and personally, if it is well planned and well managed, though it does involve investing a great deal of time and quite often some of your own money to get started.
Before starting a business it is important to plan. Planning involves research, thinking through your business idea, making sure it is going to have a good chance of success, and working out what you will need to do to make sure you are ready to go into business.
Once you have worked out what you need to do and how much it is going to cost to get started, you can investigate what your finance options are.
You may find that you would like some help with your planning and with the other business related aspects of starting up your tourism business. There are a number of options for assistance which include people who are able to give you advice, and programs which offer the services of a business mentor. Many of these programs are free of charge to help you get the best start possible.
Once you have worked out what you are going to do, how you are going to fund it, and who is going to help you, you may discover there are specific skills you will need run your business. Training options can include one day workshops, short courses, correspondence courses or university degrees to name just a few. Many training options do not require any previous knowledge or skills, and many offer subsidies or flexible payment options.
Ten steps to starting a new tourism business
- Define what you want to do, and why you want to do it. Do an initial feasibility assessment to make sure your business idea is likely to succeed. The NSW Department of State and Regional Development has a Business Check which provides some quick-and-easy steps to help you work out if your business idea is worthwhile.
- Write down your business goals to be clear about what you are planning to achieve and realistic about your timeframes. Allow sufficient time to achieve each of your goals, especially to complete all the necessary tasks in setting up your new business. Setting up a new business, with all of the associated paperwork, policies, procedures and registrations will usually take a minimum of two months (full time) to complete, longer if you are also applying for finance.
- Make sure you are personally suited to running a tourism business and check you have the ability, support and commitment to run a successful business:
- Investigate what is involved in running the business.
- Discuss your business idea with your friends and family.
- Decide what type of tourism business you would like to set up. You may look to run more than one type of tourism business, for example running a tour and a campsite.
- Research your business idea and make sure there is a demand for your proposed product.
- Work out your insurance requirements and find out your legal and regulatory requirements.
- Evaluate your financial position to see if you will need to borrow money.
- If you need to source additional funds, check out the funding options to find a suitable loan, grant or subsidy.
- Compile your ideas into a business plan. If you need help writing your business plan see what assistance is available.
- Sign up for the Indigenous Tourism Australia Newsletter to get regular updates, great ideas and useful information.
- Set a date and make it happen. Download the New to business checklist and work through it to get your business up and running.
Are you suited?
Starting and running a tourism business requires drive, determination, commitment, entrepreneurial flair, and a lot of hard work. It can be a very rewarding experience and provide great opportunities for you and your family if it is done well. If not, it can result in financial ruin and a great deal of stress.
You will need to think about your current commitments and the support you have from your friends and family for your proposed venture. If you are going to run a business from your home or community, you will also need to consider the impact this will have on your personal life and family time.
You will need to evaluate your financial position to ensure you have the resources to cover all of your expenses. Most importantly, as the business will involve you investing a great deal of your own time and money, as well as putting your personal possessions up as security for a loan (if required), you will need ensure that you are disciplined, and able to stick to budgets, to give yourself the best possible chance of success.
Running a business is about more than just spending time with visitors. For example, if you choose to run a charter boat, you also have to clean and maintain the vessel, scrub the toilets, wash dishes, cook lunch, do the book keeping, take the bookings and undertake marketing activities.
Often you will have to work long hours, and sometimes you will not make a profit for the first few years. Having your own business can give you a good future income and greater control over your own time, as well as giving you the opportunity to expand your skills and confidence. It is important to make sure you are personally suited and well set up before taking this step.
Funding your Business
There are a number of funding bodies set up specifically to assist small businesses get up and running. Some offer loans to applicants who may not be approved by mainstream banks, some offer low interest rates with flexible repayment terms, and some can even offer you a portion of your financial capital as a grant.
If you were hoping to get a portion of your start up costs from a grant it is important to understand that you will need to commit a great deal of time to applying and satisfying the reporting requirements. There is also usually a significant financial or labour commitment required from you. Community Builders NSW provides helpful advice on writing funding submissions.
There are also a number of specialists who you can contract to help you write a grant funding submission, though this can be a costly and time consuming process, and you can never be certain of obtaining grant funds. It may suit your business needs better to consider a loan instead of a grant.
- Indigenous Business Australia (IBA) Enterprises provides finance tailored to the risk profile of each application. Reduced interest loans are available to Indigenous applicants including individuals, partnerships, companies and corporations (subject to approval).
- The Indigenous Stock Exchange advocates and supports Indigenous business development through trading floors which match Indigenous business with investors, mentors and supporters
- The Indigenous Capital Assistance Scheme provided by Westpac in partnership with the Department of Employment and Workplace Relations offers eligible Indigenous businesses financial and advisory support by way of reduced fees and subsidised interest.
- Search our database for a range of funding options including grants, loans and subsidies which may be suited to your business
Mentoring and Advice
There are a number of people and places you can go to for help with starting, running, growing and marketing your business. Assistance can include:
- Finding a mentor to help you set up and plan your new business, grow your existing business or help when things go off track
- The provision of a mentor to help plan your marketing and implement appropriate strategies
- Advice from a business assistance centre
- Websites you can view for ideas and assistance
- People you can ring for advice
No matter where you live there are programs that can assist you in running your business. Many of these programs are subsidised or free of charge, and some will send mentors to your business location, no matter where you are in Australia.
www.business.gov.au provides information on assistance programs offered in each of the states and territories, as well as information which you can access via their website to assist you in starting, growing or marketing a business.
Indigenous Business Australia (IBA) Enterprises provides business support to:
- develop your enterprise idea
- plan your enterprise
- facilitate training in how to manage and operate your enterprise
- develop a marketing strategy and products
- grow an existing enterprise
IBA contract a range of consultants with diverse skills to provide mentoring services.
To find out what assistance is on offer in your area, search in our assistance database.
Skills & Training
There are many skills are needed to start, grow and market a successful tourism business. Many people will not have all of the skills they need before starting a new business, and will need to seek out training opportunities and workshops to learn the necessary skills.
In addition to those skills associated with running your tourism activity (eg being a guide or knowledge of bush tucker), a wide range of business-related skills are also required. These skills include marketing, taking bookings, financial management, people management, and planning. You must have these skills, or be able to access them through training, recruitment or outsourcing.
Business.gov.au provides links to a number of checklists, check out their link to an informative guide called Are you ready for the challenges of business? which has a helpful section on assessing your business skills.
If you are unable to afford to hire staff or contract out specialised tasks such as book keeping or marketing, you may wish to learn how to do these things yourself.
A wide range of easily accessible courses are available right across Australia through universities, technical institutions, business advisory services and employment networks. If you live in a remote area, some courses can be done over the internet, by post or by travelling lecturers who will visit communities on request. Many courses are free of charge or may be subsidised.
To find training courses or workshops in your state or territory, search in our training programs database.
To find out about training subsidies or funding to pay for training, see funding options.
Evaluating your financial position
Before starting a business, it is vital to ensure you have sufficient financial resources to cover all of your expenses. First you need to work out your establishment costs, to do this:
- Work out how much working capital you will require until your business is making a profit:
To calculate your working capital:
- Work out how much money you will need to cover your personal expenses each month (including paying off any debts, rent, bills, entertainment, food etc) this will be your wage or drawings.
- Estimate your businesses monthly income and expenses (this should include your wage or drawings). If you have more expenses than income (which is likely for the first year or two) the shortfall is your working capital requirement.
- Add up your initial capital costs (purchasing any equipment you will need, land, buildings, vehicles etc).
- Work out how much of the money that you currently have, that you can afford to put into your business – this will be your opening balance.
- Calculate if you have enough money to start your business, or if you will need a loan. To do this:
|Less||Establishment costs||$____________||(working capital requirement and capital costs)|
|Equals||Cash flow position||$____________|
If your cash flow position is negative, it is likely that you will need to borrow money to start your business, if this is the case, you will need to:
- Add up the value of your major personal assets (things you own that could be quickly sold for a reasonable sum of money) that you would be willing to use as security for a loan
- Add up your liabilities (money you owe)
- Review your own savings history and credit history
- Write a list of all of your personal assets that you currently own that would be used for the business. This is your equity.
It would be a good idea at this stage to seek some assistance or contract an accountant.
- Look for grants, loans and subsidies which may suit your needs.
- Check out the details of free or subsided business assistance and mentor programs available in your area.
- Look for an accountant:
Setting goals can help you to be clear about what you want to achieve, and at the same time give you a way to measure your progress. It can be helpful to break your goals up into short term (first year), medium term (2 – 5 year) and long term (5 – 10 year) goals.
Examples of short term goals include:
- Set up a campground with 15 camp sites which is ready for business by September 2007.
- Find a business mentor to help me write an effective business plan by June 2007.
- Save $2,000 by the end of this year to pay for the purchase of a new computer.
Examples of medium term goals include:
- Make a profit of $5,000 per year, by my second year.
- Employ my daughter full time to help me run the business once my turnover exceeds $25,000 per year.
Examples of long term goals include:
- Save $40,000 by my forth year to build two new cabins.
- Be able to employ someone so I can take weekends off to be with my family by year five.
Following the SMART formula can help you when setting your goals. SMART Goals are:
Specific – what exactly would you like to achieve?
Measurable – how will you know if you have succeeded?
Action oriented – does it have an action that you can actually ‘do’?
Realistic – is it really achievable?
Time bound – does it have a deadline?
Once you have set your goals, check that they follow the SMART formula.
For example, “I want to get rich” is not a SMART goal as it is not specific or measurable and it has no time limit. Also it may not be realistic!
Research is an important part of the business planning process, and can provide you with valuable information to guide you in what you need to do to be successful.
When starting a business it is important to find out as much as you can about your marketplace, competitors and potential customers. This is called market research. You may wish to find out:
- How much demand is there currently for your product or service?
- How much are people paying for other similar experiences in other places?
- How many people visit your town or community, and which times of the year are the peak periods?
- What type of people visit your area, what type of people are your customers likely to be?
- How will your customers get to you – what are the transport options to where you are?
- Is tourism growing or declining in your area?
- Who else is currently doing anything similar in your area?
- What are the other planned new tourism products or services in your region?
- Will any of the new planned tourism products or services compete with you or bring you more customers?
- What are the key success factors for similar successful businesses, locally, nationally and internationally?
Start by looking at the websites of your local visitor centre, regional tourism organisation, state tourism organisation and Tourism Australia.
Look for research and statistics on the following websites:
- Tourism Forecasting Council publishes forecasts of tourism activity across all tourism sectors.
- The Australian Bureau of Statistics (ABS) – Tourism is Australia’s official statistical organisation. Read the product summaries or click on the titles to read the free Main Features.
- The Cooperative Research Centre for Sustainable Tourism has a number of useful publications including specific research papers on indigenous and eco tourism.
- Tourism Research Australia publishes two major regular collections of tourism statistics – the National Visitor Survey and the International Visitor Survey. Results of these surveys are available in quarterly and annual publications.
Writing a Business Plan
A completed business plan is the written result of the planning process. The planning process enables you to take an objective look at your business idea, thinking through all aspects and examining the consequences of a range of strategies.
The process of preparing a business plan provides you with an opportunity to test your commitment and motivation. Once completed, it will provide the information needed by others to evaluate your business, especially if you will seek funding by way of a loan or a grant.