sep hats tours
DESCRIPTION
Business plan for tour companyTRANSCRIPT
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October 1999
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Table of Contents
Page 1
1.0 Executive Summary.............................................................................................................................1
1.1 Mission ........................................................................................................................................2
1.2 Objectives ...................................................................................................................................2
1.3 Keys to Success ........................................................................................................................3
2.0 Company Summary.............................................................................................................................4
2.1 Company Ownership .................................................................................................................4
2.2 Company Locations and Facilities ..........................................................................................4
2.3 Start-up Summary ......................................................................................................................4
3.0 Services................................................................................................................................................7
3.1 Competitive Comparison ..........................................................................................................8
3.2 Service Description ...................................................................................................................9
3.3 Macroenvironment ...................................................................................................................10
3.4 Sales Literature........................................................................................................................10
3.5 Fulfillment ..................................................................................................................................10
3.6 Technology ...............................................................................................................................11
3.7 Future Services ........................................................................................................................11
4.0 Market Analysis Summary................................................................................................................12
4.1 Market Segmentation ..............................................................................................................12
4.2 Target Market Segment Strategy...........................................................................................13
4.2.1 Market Needs .......................................................................................................................14
4.2.2 Market Trends .......................................................................................................................14
4.3 Service Business Analysis .....................................................................................................14
4.3.1 Distributing a Service...........................................................................................................14
4.3.2 Competition and Buying Patterns .......................................................................................15
4.3.3 Main Competitors .................................................................................................................15
5.0 Strategy and Implementation Summary ..........................................................................................16
5.1 SWOT Analysis ........................................................................................................................16
5.1.1 Strengths ...............................................................................................................................17
5.1.2 Weaknesses .........................................................................................................................17
5.1.3 Opportunities.........................................................................................................................17
5.1.4 Threats ...................................................................................................................................17
5.2 Marketing Strategy ..................................................................................................................18
5.2.1 Pricing Strategy ....................................................................................................................18
5.2.2 Promotion Strategy ..............................................................................................................19
5.2.3 Positioning Statement..........................................................................................................20
5.3 Sales Strategy..........................................................................................................................20
5.3.1 Sales Forecast .....................................................................................................................21
5.4 Strategic Alliances...................................................................................................................22
5.5 Corporate Social Responsibility ............................................................................................22
6.0 Management Summary ....................................................................................................................22
6.1 Organizational Structure..........................................................................................................23
6.2 Management Team .................................................................................................................23
6.3 Personnel Plan .........................................................................................................................23
6.4 Training .....................................................................................................................................24
6.5 Feedback and Control ............................................................................................................24
7.0 Financial Plan ....................................................................................................................................25
7.1 Important Assumptions............................................................................................................25
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Table of Contents
Page 2
7.2 Key Financial Indicators ..........................................................................................................26
7.3 Break-even Analysis................................................................................................................27
7.4 Projected Profit and Loss .......................................................................................................28
7.5 Projected Cash Flow ...............................................................................................................32
7.6 Projected Balance Sheet ........................................................................................................34
7.7 Business Ratios .......................................................................................................................35
8.0 Controls ..............................................................................................................................................37
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Sephats Tours
Page 1
1.0 Executive Summary
The tourism industry has undergone rapid growth of unsurpassed nature over the last several
decades. This has mainly been due to the advent of a 'borderless' world and increased
information dissemination about the majestic sceneries throughout the world, with the southern
African region being no exception.
We are on the brink of penetrating a lucrative market in a rapidly growing industry. The current
trend towards an increase in the number of tourists entering the country presents an
opportunity for Sephats Tours to penetrate the market. An opportunity for Sephats Tours'
success exists because the national tourism industry is growing at a rapid pace annually.
Sephats Tours is poised to take advantage of this growth and moderate competition in the city
travel portion of the industry, with a dedicated and experienced staff, excellent networking, and
effective management and marketing. Sephats Tours intends to provide travel and adventure
packages to tourists primarily in the Southern region, but also the whole of Botswana. Services
and products provided by Sephats will initially include pre-arranged tours, custom packages
according to clients specifications, travel consultation, and as time progresses making
reservations for lodging amongst other related services. Sephats Tours seeks to differentiate
itself as the premier adventure mobile operator in the greater Gaborone area.
Our services will be positioned very carefully: they will be of extremely high quality, comfortable,
informative and tailored to the clients needs such that they will enable individuals to have a
greater appreciation of the natural environment and its intricacies.
Our marketing strategy will be based mainly on ensuring customers know about our existence and
the service(s) we fulfill. Hence our intention is to make the right information available to the right
target customers. This will be done through implementing a market penetration strategy that will
ensure that we are well known and respected in the tourism industry. We will ensure that our
prices take into consideration peoples' budgets, that these people appreciate the service(s),
know that it exists, and how to contact us. The marketing will convey the sense of quality in
every picture, every promotion, and every publication. Our promotional strategy will involve
integrating advertising, events, personal selling, public relations, direct marketing and the
Internet, details of which are provided in the marketing section of this plan.
It is important to recognize that we do not intend to just take individuals on sightseeing
excursions, but also to ensure that they appreciate nature through informative briefings on
objects' origins. This element will assist in differentiating us from our competitors and contribute
towards the development of a sustainable competitive advantage. Hence we need to engage the
right people in the right place at the right time if we are to ensure optimum growth. We intend to
develop our team so that our people can grow as the company grows - a mutually beneficial
relationship.
We project sales to increase from more than P350,000 (Botswanan Pula [P]) the first year to
more than P556,500 the second, and P630,000 in the third year.
In a nutshell, we do not just intend to market and sell our service, but to market and sell travel
solutions and a total-quality environment. This will ensure we establish a reputable corporate
image.
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1.1 Mission
Internally we intend to create and nurture a healthy, exuberant, respectful, and enjoyable
environment, in which our employees are fairly compensated and encouraged to respect the
customer and the quality of the service we intend to provide. In addition follow-up will be
mandatory so as ensure customer satisfaction and make any improvements as recommended by
the customers in future. We seek fair and responsible profit, enough to keep the company
financially healthy for the short and long term, and to fairly remunerate employees for the work
and effort.
1.2 Objectives
Our business strategy will revolve around the need to provide quality service to our various
target customers, in the process fully satisfying their needs. This shall be undertaken through
recruitment of a professional team and the provision of good quality custom-designed travel
packages, catering to the client's particular needs.
With time our marketing campaign will increase the awareness of our services in the various
market segments we shall be targeting. This is particularly so with the organization looking at
establishing a clear advantage(s) in an increasingly competitive market. We will provide clients
with the opportunity to focus on their core activities whilst their transportation side needs are
fully satisfied. Marketing material shall be professionally done so as to be reflective of our
intended image and reputation. We shall position ourselves as a quality commercial
transportation operator that provides customer-need fulfillment, enjoyment, reliability and a good
image. We intend to establish a good rapport with all the relevant stakeholders, especially hotels
and travel agents.
We also intend to have well-designed brochures and other promotional material that will enable
clients to have an understanding of the types of services we offer and advantages of utilizing
them. In addition well-done, informative brochures, fact sheets and business cards often have a
triggering effect on clients contemplating utilizing our services. Hence this will undoubtedly
generate increased sales of our service.
In summary we intend to attain the following objectives:
Continuously provide enjoyable quality excursions/trips on time and on budget.
Develop enthusiastically satisfied customers all of the time.
Establish a market presence that assures short-term and long-term profitability, growth and
success.
We are fully committed to supporting growth and development in the tourism and overall
economy of Botswana.
Contribute positively to our communities and our environment.
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1.3 Keys to Success
The keys to Sephats Tours success will undoubtedly be effective market segmentation through
identification of several niche markets and implementation strategies. Along these lines the
company intends to implement advertising, personal selling and direct marketing strategies to the
target markets. Our personal selling marketing strategies will rotate around keeping in touch with
hotels and travel agencies for major customers, and advertising for more individual customers.
Hence our key success factors will include the following:
1. Excellence in fulfilling the promise: We intend to offer completely enjoyable, comfortable
and informative travel excursions that will ensure that travelers are thoroughly satisfied and
appreciative at the end of their trip.
2. Timely response to customers' requests: We cannot afford to delay our clients for
whatever reason, as this will have a negative bearing on our image and reputation, including
future business. Hence we need to be continually communicating with the client, including
hotels and lodges so as to ensure that we are constantly available to the client meeting
their expectations.
3. Solid and fruitful strategic alliances: Considering the nature of our services and our
relative infancy on the market, we realize the importance of establishing and maintaining
fruitful strategic alliances with various stakeholders, including hotels, lodges, and travel
agencies, amongst others, so as be assured of a constant flow of customers, fulfilling their
needs at every opportunity.
4. Marketing know-how: As a relatively new company on the market there will be a need to
aggressively market our business and the services we provide so as to be continuously at
the top of our prospective clients minds. This will also act as a temporary deterrent for
companies contemplating entering our market. Advertising shall be undertaken on a regular
basis.
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Sephats Tours
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2.0 Company Summary
Sephats Tours intends to provide individual and group travel to leisure clients. Services and
products provided by Sephats will initially include pre-arranged tours, custom packages
according to clients specifications, travel consultation, and as time progresses making
reservations for lodging amongst other related services. Sephats Tours seeks to differentiate
itself as the premier adventure travel company in the greater Gaborone area.
As it grows it will take on people and expand into related markets and services. It will also look
for additional leverage by establishing relationships and representations with appropriate
strategic allies.
2.1 Company Ownership
Sephats Tours is a Private Limited company incorporated at the Registrar of Companies in
October, 1999, through the foresight and vision of Mr. X and Mrs. Y. It is a 100% wholly owned
Botswana firm.
2.2 Company Locations and Facilities
At present the company offices are located at Plot Number 28338, Block 3, Belabela road
opposite Gaborone Television Station, near Hill Crest Primary School. However, as time
progresses the intention is to move into more accessible and attractive offices in a prime area.
This regardless of the fact that our type of business is not too dependent on office location and
size.
2.3 Start-up Summary
Thus far the directors have contributed one hundred and sixty seven thousand pula (P167,000)
to purchase a Mercedes Benz mini bus currently in its possession and P30,000 for cash expenses.
Total start-up expenses covered (including legal costs, business plan compilation, license costs
and related expenses) come to approximately P5,000.
NOTE: All currency values in the charts and tables are expressed in Botswanan pulas (P).
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Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal $1,000
Stationery etc. $500
Brochures $700
Consultants $1,200
Insurance $800
Rent $500
Other $300
Total Start-up Expenses $5,000
Start-up Assets
Cash Required $30,000
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $167,000
Total Assets $197,000
Total Requirements $202,000
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Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund $5,000
Start-up Assets to Fund $197,000
Total Funding Required $202,000
Assets
Non-cash Assets from Start-up $167,000
Cash Requirements from Start-up $30,000
Additional Cash Raised $0
Cash Balance on Starting Date $30,000
Total Assets $197,000
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabil ities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabil ities (interest-free) $0
Total Liabil ities $0
Capital
Planned Investment
Investor 1 $100,000
Investor 2 $102,000
Additional Investment Requirement $0
Total Planned Investment $202,000
Loss at Start-up (Start-up Expenses) ($5,000)
Total Capital $197,000
Total Capital and Liabil ities $197,000
Total Funding $202,000
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3.0 Services
Sephats Tours is a travel company that intends to deliver leisure travel excursions to customers.
Sephats intends to guide customers in selecting a trip(s) based on pre-defined vacation criteria.
This analysis will be based on user profiles, set by the consumers, which includes preferences
such as:
Budget
Activities sought
Destination, and
Time of Travel
A traveler will hence be able to select areas of interest based on their preferences and
subsequently identify destinations to visit. The intention is to provide customers with access to
exclusive travel destinations, service to fully appreciate destinations through information
packages, not just sight-seeing, and access to special interest travel according to the
group's/individual's preferences.
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3.1 Competitive Comparison
There are presently few competitors offering services similar to ours. However considering the
pace of change and current growth rate of the tourism industry luring many companies into the
sector, this may be short-lived. Hence there will be a need to not only firmly establish ourselves
on the market, but also strongly differentiate ourselves from these other businesses. However on
a broader scale our competition comes in several forms:
1. The most significant competition are hotels and travel agencies offering travel excursions to
their clients. They undertake this service in order to establish a competitive advantage over
their competitors. However, instead of directly competing with them we intend to establish
good working relationships in the form of strategic alliances such that we are able to offer
the service for their clients and thus enabling them to concentrate on their core activities
whilst ensuring customers are fully satisfied. Our key advantage in this regard will be our
specialty of the service and hence wide knowledge ensuring customer satisfaction at all
times as well as flexibility in providing the service.
2. Existing hotels, lodges and travel agencies may identify the opportunity to diversify into our
intended services utilizing their current client database. Naturally, existing clients will be
inclined towards utilizing these familiar companies due to the fact that a good relationship
may have already been nurtured over the years during their business dealings. This presents
a potential challenge to us, as we need to aggressively market our services and expertise in
the field.
3. Existing safari operators that mainly focus on the remote environs such as Maun and Kasane
are at times able to compromise, offering excursions in and around Gaborone, though very
rare. Hence we intend to focus on this market.
An analysis of competition is provided in the Market Analysis section of this plan.
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3.2 Service Description
Sephats Tours intends to offer the service and knowledge a discerning leisure traveler seeks
whilst on vacation, with the intention of seeing and appreciating the numerous sights in the
area. Keeping in mind the comforts of a tourist, our fleet shall be very well maintained and
designed as per customer standard and expectations. However not wanting to limit ourselves we
intend to be open to special hire by churches, organizations, groups, schools and sports teams,
amongst other related groups.
The game reserves and lodges that we intend to be our main destinations are:
Mokolodi Nature Reserve
Goborone Game Reserve
Gaborone Dam
The Oodi and Mochudi Craft Villages
Kolobeng and Thamaga
Khutse Game Reserve
Below is a briefing of several places of interest and their various attractions.
1. Mokolodi Nature Reserve: Set in a wide valley just 10 minutes drive from the city, this
scenic reserve offers a well-developed network of game drives and stone and thatch chalets
overlooking a water hole. Mokolodi also offers the rare opportunity to track rhino or to walk
through the bush with young elephants. These excursions offer excellent photographic
opportunities. Evening drives can include a bush braai giving visitors the chance to see the
more unusual nocturnal creatures.
2. Gaborone Game Reserve: This 550 hectare reserve provides an ideal get-away for tourists
who can see a remarkable range of wildlife in the park including rhino, eland, zebra, gemsbok,
wildebeest, kudu, ostrich and impala, all on well-maintained bush roads that are designed for
easy access. Bird watching in the Gaborone Game Reserve is excellent, particularly along the
eastern edge, bounded by Notwane River, and it typifies the incredible diversity of bird life to
be found throughout the Gaborone area.
3. Gaborone Dam: On the south bank a remarkably rich variety of bird and wildlife can be
seen, including herds of impala, kudu and scuttling families of warthog. New picnic sites,
which are currently under development will also provide places of interest. The Gaborone
Yacht Club is the main attraction on the dam with its swimming pool, bar and wide verandah
overlooking the water off a rocky koppie in the middle of the dam which often becomes an
island in the wet season.
4. The Oodi and Mochudi Craft Villages: In Oodi the main attraction will be the Lenstwe-la-
Oodi weavers. In Mochudi apart from traditionally decorated Setswana architecture, the
tourists will find the most southerly baobab trees in Botswana and traditional crafts including
the Ithuteng Tin Workshop and Ikgabiseng handmade jewelery. The Phuthadikobo Museum in
Mochudi will also be an attraction site.
Other sites will include Matsieng Foot Point, Gemsbok National Park, Mabuasehube Game Reserve,
Legaga la ga Kobokwe, Central Kgalagadi Game Reserve, Nxaii Pan and Khama Rhino Sanctuary.
Integrating the above places of interest into our tours we intend to be offering the following
tours:
1. "Capital Crusade" - City Tour: This will be a professionally guided tour around the city
centre including visits to the Main Mall, Finance Mall, National Museum, City Council Library,
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Gaborone Station, and House of Parliament including others. These tours shall be eye
opening in terms of the normal Botswana town folk life style providing knowledge and
information throughout the guided tour. Included in this package will be refreshments and
information folders detailing the main sites and history of Gaborone. This tour will cover
approximately 50 kilometers taking about half a day to complete. Cost: PX per person.
2. "Cultural Enrichment" - Cultural Tour: This shall involve tours to the main historical and
cultural sites in and around Gaborone including Mokolodi Nature Reserve, Oodi and Mochudi
Craft Villages, including the cultural dances. This tour shall reveal the 'Kgotla' - cultural
villages, traditional paintings and art, as well as the traditional lifestyle. Obviously baobabs
will make for good viewing. The tour package will include an information folder, guided tour
and refreshments. This tour will cover approximately 200 kilometers taking the whole day to
complete. Cost: PY per person.
3. "The Essence: Past & Present" - City & Cultural Tour: This will be a combination of the
cultural tour and city centre excursion. This will be marketed as a "total package" enabling
tourists with very little time to appreciate the Botswana lifestyle, both in the present and
past. This tour will invariably take the whole day and cover approximately 250 kilometers.
The tour package will include the information folder, guided tour, refreshments and a picnic
lunch. Cost: PZ per person.
3.3 Macroenvironment
At a large scale research demonstrates that tourism is undergoing a rapid growth of unsurpassed
nature. Generally there is a trend towards shorter stays but increased visits, as individuals strive
to experience as many cultures as possible, including seeing as many attractions as possible.
Increasingly Botswana is being marketed as "one of the few places in Africa where game
sanctuaries have remained completely unspoiled. A destination that unlocks the mystery of
nature - an oasis in a wilderness which is an ideal escape for nature lovers. Very little of this
fascinating country has seen human habitation - this is true Africa in all her remoteness and
authenticity." With such marketing in place the number of tourists entering the country is bound
to increase, presenting a larger potential market for ourselves. This potential market is what we
seek to tap.
3.4 Sales Literature
The business will begin with a general corporate brochure establishing its position on the market.
This brochure will be developed as part of the start-up expenses including the business cards
and Company Profile, mainly for the large organizations that often recommend services to
potential customers. Compliment slips are also intended so as to raise awareness of the company
and its services. We also intend to have information pamphlets that will provide information on
our various tour packages.
Literature and mailings for the initial market forums will be very important.
3.5 Fulfillment
1. The key fulfillment and delivery will be provided by the employees of the company. The real
core value will be professional expertise, provided by a combination of expertise, experience,
hard work, and education (in that order). Hence we intend to ensure that the work we
undertake is always thorough and relevant to the clients' needs.
2. We will turn to reputable companies for supplying the necessary individuals and groups for
our services. Hence the need to establish good relationships with our strategic allies.
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3.6 Technology
Sephats Tours will strive to ensure that it contains the latest, or extremely recent personal
computer including relevant software so as to ensure that the company is continuously at the
forefront in our market arena. The one certainty in our industry is that technology will continue
to evolve and develop, changing what we market as well as how we market it. Our aim will be to
be aware of the implications of this new technology and utilizing it in our existing framework
where possible. However it should be noted that as we are new on the market it will take some
time before we have in place our own website and other multimedia presentations. With time we
also intend to have the latest and most efficient software in place to enable smooth operations.
3.7 Future Services
In putting the company together we have attempted to offer enough services to allow us to
always be in demand by our customers and clients. The most important factor in developing
future services/products is market need. Our understanding of the needs of our target market
segments shall be one of our competitive advantages. It is critical to our effort to develop the
right new services. In the future, Sephats Tours intends to broaden its coverage by expanding
into additional markets. One of the main services it aims at providing is to become a destination
management company that brings alive the magnificence of this country to the traveler. This will
be done by co-coordinating the traveler's entire experience from hotel bookings, safaris and
tours, greeting and porter services, and to tour packages and incentives. However in doing so
we will strive to ensure that it is compatible with the existing products and company personnel.
As time progresses the intention will to provide a Southern Africa tour package covering the
whole of southern Africa.
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4.0 Market Analysis Summary
We are today experiencing a rapid growth in the economy of unsurpassed nature. This has been
brought about by, amongst other things, the relaxation of foreign exchange policies and
macroeconomic policies geared towards attracting foreign investors into the country. The fiscal
and monetary policies of the government geared towards maintaining growth with social justice
have largely contributed towards this, evidenced by our economy averaging a growth rate of 7%
since 1990 - very high by international standards.
The current drive and emphasis by the government on diversification of the industrial base away
from the minerals sector presents an opportunity for Sephats Tours to make a valuable
contribution towards achieving this goal. Having undertaken a thorough and comprehensive
research of the market we realized that there was a need for a tourist transport company that
focuses on providing leisure excursions to tourists. Though there are mobile operators currently
on the market, some of whom have been in existence for a relatively long period of time, we
believe that there is a market need for one that specializes on providing comfortable and
enjoyable transport to tourists and visitors. This, also considering the fact that, potentially
Botswana's richest natural resource, the tourism industry is becoming an increasingly important
player in the economy and may in the long term prove even more valuable than mineral resources
in earning foreign exchange.
Aware of the fact that operating in such a market is largely dependent on good networking, we
intend to establish networks and strategic relationships with various hotels, lodges and travel
agents to ensure a steady stream of clients. However in so doing we intend to ensure that the
service we provide is of extremely high quality and comfortable. Our initial overall target market
share shall be 10% of the market, mainly focusing on the greater Gaborone area and southern
Botswana.
We appreciate that entering such a market is not a 'bed of roses' and will require us establishing
strong links with strategic partners as outlined previously. Hence we intend to implement an
aggressive marketing strategy, well supported by the other business functions. The above
prognosis influenced our decision to enter the tourist transport industry.
4.1 Market Segmentation
We will be focusing on those foreign tourists seeking leisure travel and excursions whilst on
vacation in Botswana, with the intention of letting them see and appreciate the numerous
attractions in our country. Though we realize that the majority of our tourists come from South
Africa we shall be mainly targeting those from Europe and the Americas who often do not have
transport or adequate knowledge about the country, unlike their South African counterparts who
often do. Hence we shall be mainly targeting those who are not that mobile but wanting to see
as many sites as possible. These people often do not want to waste their money on hiring
vehicles to move about by themselves, but instead want to be escorted around places of
interest by a reliable source. Hence the need to professionally market ourselves and the services
we provide, offering a service of uncompromised nature.
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Table: Market Analysis
Market Analysis
1999 2000 2001 2002 2003
Potential Customers Growth CAGR
Tourists from Europe and
Americas
15% 124,000 142,600 163,990 188,589 216,877 15.00%
Tourists from South Africa 25% 400,000 500,000 625,000 781,250 976,563 25.00%
Total 22.85% 524,000 642,600 788,990 969,839 1,193,440 22.85%
4.2 Target Market Segment Strategy
Our marketing strategy will be based mainly on making the right service(s) available to the right
target customer. We will ensure that our services' prices take into consideration organizations'
and peoples' budgets, and that these people know that we exist, appreciate the value of our
services, and how to contact us. The marketing will convey the sense of quality in every
picture, every promotion, and every publication. Our intension will be to target those individuals
and groups looking for leisure activities and places to visit. We realize the need to focus our
marketing message and our service offerings. We need to develop our message, communicate it,
and make good on it. The decision to establish strategic alliances with several hotels, lodges and
travel agencies is aimed at tapping our target market effectively and efficiently.
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4.2.1 Market Needs
Though the tourism sector has undergone rapid growth over the last decade the vast majority
entering this sector have rushed to the North where we have the Okavango Delta, Chobe
National Park, and other sites as attraction points. Very few have focused on south and central
Botswana. With this in mind we intend to exploit the untapped market in this area so as to
provide our customers with a good service and realize our business objectives.
We understand that our target markets need more than just being shown the areas of interest
but also to be informed about their significance and origins. Hence we don't just intend to
provide a service(s), but to provide one of unparalleled nature relative to the market.
4.2.2 Market Trends
Of all the uncertainty surrounding this industry, one fact is certain: tourism is here to stay. The
only question is how large the industry will become and whether it can sustain, if not exceed, its
current growth rate. However large the market ultimately becomes, the company strongly
believes that travel will be an important component of this market place.
Tourism statistics provide a reliable guide as to the size of the market. According to the latest
tourism statistics total arrivals for 1998 amounted to 1,351,798 representing an increase of
approximately 12.65% from the previous year. Of the total arrivals in 1998 205,146 (15.2%) were
holiday/tourists whilst 319,440 (23,6%) were visitors, both groups of which constitute our target
market, totaling approximately 524,586 individuals.
Source: Tourism Statistics 1998 - Central Statistics Office.
4.3 Service Business Analysis
Potentially Botswana's richest natural resource, the tourism industry is becoming an increasingly
important player in the economy and may in the long term prove even more valuable than mineral
resources in earning foreign exchange. With this in mind Sephats Tours intends to play a
contributing role towards development of the tourism industry through provision of an impeccable
mobile service facility primarily directed at tourists.
4.3.1 Distributing a Service
Mobile operations such as ours are sold mainly on a word of mouth and referral basis with
relationships and previous experience being, by far, the most important factor. Relationships in
this regard means establishment of links with the various hotels, lodges, and travel agencies who
often come into contact with our target customers. Invariably the experience a customer has
with us will go a long way toward influencing them in whether they should refer their friends to
use our service(s). To this end we intend to ensure we provide a luxurious, comfortable and
unforgettable experience to our customers that will only encourage them to pass on a good word
about us.
In the medium term we intend to be connected on the World Wide Web so that we can market
ourselves on the Internet, as well as enabling potential customers to make pre-bookings over the
Web, helping save time and money. This will also assist in widening our customer catchment area
increasing customers.
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4.3.2 Competition and Buying Patterns
The key element in service utilization decisions made at the company's client level is trust in the
reputation and reliability of the firm. The most important factor in this market will be the quality
of the service and places of excursion. This is particularly so considering the various interests of
individuals and groups as they strive to see as many places as possible. The very nature of our
services dictates that the pricing of our services will vary according to distance traveled, as
different customers opt to visit different areas and within specified time frames.
In our line of business, clients often compare travel companies directly, looking for two, or more,
possible companies. However, they usually follow word of mouth recommendations obtained from
hotels, travel agencies, government departments, car hire companies and other such related
companies.
4.3.3 Main Competitors
We have identified competing companies, some firmly established, that fill the same needs as
Sephats Tours. We intend to market ourselves in such a way that with time competitor
customers will choose our service over competitors' on the basis of our higher quality and
informative excursions. A more thorough outline of our main competitors including their strengths
and weaknesses follows:
1. XXX: Located on the first floor of the G Hotel, Gear Adventures specializes in tailor-made
safaris throughout Botswana and her neighboring countries. Gear Adventures offers Mobile
Wilderness Safaris, Weekend Adventures, One-day explorations and safari operators. Of
particular concern to us are the day tours around Gaborone that it offers to G Hotel guests.
Research indicated that Gear Adventures is the only operator that offers day trips in and
around Gaborone. Several of its services include: [details omitted].
2. YYY: Arguably one of the most reputable companies in our intended line of business. It has
a fleet of nineteen buses comprising two semi-luxury B7 Volvo train-buses, six semi-luxury B7
Volvo, five M/Benz, four Nissan and two DAF buses. All the Volvo buses have radio facilities,
and one of the train-buses has toilet facilities. With close to twenty years of experience Mr.
K supported by his wife, Mrs. K, are achieving most of what they envisioned when they
started their business-to provide a nation-wide road transport service renowned for its
efficiency and reliability. The recent launch of a new imported South American double-decker
luxury bus serves as testimony of their continued dedication towards providing a good
service to their clients.
3. ZZZ: Similar to YYY, Z is well respected in the market with a large fleet of buses. As well as
providing daily transport to Selebi Phikwe and several towns it also provides local and
international trips by hire. However they lack the marketing edge and foreign tourist focus
we intend to have.
Upon closer analysis of the above competitors it may be observed that the majority of these are
offering safari excursions, and this represents an opportunity to be realized by us. According to
the Central Statistics Office there are approximately 81 travel agents, tour operators and safari
operators in Botswana at present, the majority of which have a South African background either
in directorship or actual origin.
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5.0 Strategy and Implementation Summary
Initially Sephats Tours will focus on the local market in the adventure travel sector. The target
customers will mainly include foreign tourists intending on sightseeing various attractions.
Our marketing strategy will emphasize focus. We are a relatively new company on the market
and hence must focus on certain kinds of services with certain kinds of clients. Initially the
business will focus on the local market, expanding into the regional market as time progresses,
and as we gain the necessary experience. Therefore the initial aim will be to instill awareness
and confidence in our services. In order to achieve its goal of becoming the premiere mobile
operator, Sephats intends to adopt the following strategies:
1. Establish Sephats reputation as a differentiated, specialty provider of city/ adventure travel
and excursions. This will be accomplished through a diverse marketing communications
programme directed at Sephats target market, utilizing various media as well as the
establishment of strategic allies.
2. Provide unparalleled service to the tourists, local and international, of Botswana in order to
gain repeat business and build trust. This will include providing superior service in all phases
of the transaction, including timely follow-through.
3. Aggressively promote excursions as healthy, eye-opening and exciting activities with those
who participate in them as appreciative of the finer things in life.
4. We intend to build image and awareness through consistency and distinctiveness in our
service provision.
Our strategy is to grow the business by nurturing clients, differentiating the service from our
competitors, particularly through service and staff behavior. All criteria from customer
satisfaction, service provision, price competitiveness to staff attitudes are to be looked at
thoroughly in the initial stages as areas for improvement. Alliances and collaboration with hotels,
lodges and travel agencies are to be adopted as strategies for market penetration. Training will
be conducted on a regular basis to ensure that our staff is fully meeting customer expectations.
Through the implementation of a fair, effective and competitive remuneration policy we intend to
optimize our human resource output and advancement. We need the right people in the right
place at the right time if we are to ensure optimum growth. We intend to develop our team so
that our people can grow as the company grows - a mutually beneficial relationship. We are
currently vigorously searching and recruiting the right people for our organization.
5.1 SWOT Analysis
We intend to enter a highly lucrative market in a rapidly growing economy. We foresee our
strengths as the ability to respond timeously to the market dictates and to provide custom
designed travel excursions to travelers. Our key personnel will have a wide and thorough
knowledge of the areas we intend to take travelers, which will go a long way towards
penetrating the market. Below are the summarized strengths, weaknesses, opportunities and
threats.
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5.1.1 Strengths
Diversified client base: This will reduce our dependency on one particular market.
Combination of skills in employees: The directors intend to engage well-qualified and
experienced employees to jointly develop business strategy and long-term plans, so as to
attain company objectives.
Extensive advertising and marketing: The company will undertake extensive advertising
and marketing, promoting both its name as well as service/product awareness. Hence an
aggressive and focused marketing campaign with clear goals and strategies shall be one of
our mainstays.
5.1.2 Weaknesses
Lack of a reputation in comparison to our competitors. This is due to the fact that we are
still new on the market. However this shall be addressed as shown in the marketing section
of this plan.
The introduction of new organizational practices and personnel who have not previously
worked together presents a challenge to the organization.
A limited financial base compared to the major players in the industry.
Lack of clear strategic allies.
5.1.3 Opportunities
Current drive by government towards encouraging the participation of indigenous
entrepreneurs in tourism presents an opportunity which we may fully utilize.
Current growth rate of tourism presents an opportunity for ourselves which we may take
advantage of. This is further supported by the current marketing campaigns by both the
government and regional tourism body, the Regional Tourism Organization of Southern Africa
- RETOSA, aimed at promoting tourism into the region.
Presently there is no reliable public transportation company to take tourists to areas of
interest.
International tourism trends indicate that today's traveler wants a more enriching experience
than that provided by conventional 'sun and sea' vacations.
5.1.4 Threats
The present growth in the tourism sector may result in an increasing number of firms entering
the market. This may led to increased competition emerging from a variety of given sources
including:
Established travel agencies, hotels and lodges may look at the development of new lines and
vertically integrate transportation so as to provide additional services to clients.
New marketing strategies and tactics by established companies aimed at providing excursions
of our intended nature.
Existing competition.
Other start-up travel companies generated by healthy nationwide economic and tourism
growth.
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5.2 Marketing Strategy
One core element of our strategy will be that of differentiation from our competitors. In terms of
marketing we intend to ensure that our name and services are marketed on an extensive basis
so that customers are aware of our existence. In price, we intend to offer reasonable and
competitive prices in comparison to competition and we need to be able to sustain that. Our
service marketing will strive to ensure that we establish long relationships with clients.
Marketing Expenses
Initial marketing and training expenses will be relatively high as we seek to become known on the
market and staff get trained in the professional provision of our services. This will be brought
about by the development of sales literature and advertising expenses. As our market share
increases and capital is generated, further marketing programmes and the expansion of those in
existence at the time will be undertaken, to ensure market development. However with time
these programmes will start generating revenue for the business, which we shall in turn reinvest.
5.2.1 Pricing Strategy
Sephats Tours will be competitively priced in relation to the dictates of the market. Due to the
introductory nature of our services we intend to implement a penetration pricing strategy which
will ensure that potential customers are not frightened away by our prices, up until our services
are appreciated and fully operational. However this will dictate that our costs are prudently kept
so as to ensure our financial goals come to fruition. This is reflected in our prices as stated in
the services description of this plan charging close to PX per kilometre per person. Each trip will
include an average of eight to ten persons.
We intend our income structure to match our cost structure, so as to ensure that the salaries
we pay to our employees to assure good service are balanced by the cost we charge to the
customer.
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5.2.2 Promotion Strategy
This strategy will be based primarily on informing potential customers of the existence of our
services and making the right information available to our target customer. The intention will be
to highlight the benefit of utilizing our service(s), which will include:
Access to exclusive travel destinations
Service to fully appreciate destinations through information packages, and not just sight-
seeing
Access to special interest travel according to the groups preferences
In such a market we cannot afford to appear in or produce second-rate material with poor labels
that make our services look less than they are. Hence we intend to leverage our presence using
quality brochures and other sales literature, including promotional material such as pens,
complimentary slips and pads. We intend to spread the word about our business through the
following:
1. Advertising: This shall be undertaken through trade and industry publications, which are
read by tourists, as well as the local newspapers. A constant look out will be made of any
special editions in the local newspapers, which may provide an opportunity for us to
advertise our services and business name.
Sephats Tours will also be advertised through professionally done brochures, and other such
sales literature, which allow enough detail to be communicated about the services offered by the
company. This literature will be mainly targeted at potential clients and placed or made available
at strategic points, such as travel agencies. With time we also intend to utilize billboards to
advertise ourselves, likewise located at strategic points. Hence we intend to design and put up
posters communicating the services we provide located around hotels, lodges, airports and other
such areas where tourists typically pass by. However in doing so we always intend to obtain the
consent of the respective authority.
2. Personal Selling: Undoubtedly customer solicitation face-to-face will be a powerful form of
promotion mainly due to the fact that its flexibility will enable us to match the customer's
needs to specific attributes of our services as well as giving concise details of what we have
to offer. Another important determinant in utilizing personal selling is the fact that we are
relatively new on the market. As such, potential customers/clients will, to a certain degree,
be skeptical towards the intended service(s) and how they are able to benefit from them.
In cases where the opportunity of obtaining a large order exists it may be necessary for the top
management to go out personally, especially considering the fact that we are still a relatively
new firm on the market. However this shall be the situation in the majority of cases due to our
relative infancy.
3. Direct Marketing: This will be used but only to a limited extent in the form of telemarketing
and informing potential customers and obtaining referrals where possible. In the case of
telemarketing it will involve our targeting potential customers of our services and informing
them of our existence and destinations. We may then arrange for an appointment with the
respective decision-maker, with the intention being to lure them into utilizing of our services.
4. Events: These are increasingly becoming important as more firms establish in the country
and hence the need to be known. The organization aims to promote itself through attending
trade shows and expositions. Not only will these increase awareness of our services and
business name, but also enable us to interact with potential clients who may decide to utilize
our service. Trade shows that come to mind include Botswana International Trade Fair
(BITF) and BITEC.
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5. Internet Marketing: The increasing growth of the Internet as an information source
provides an opportunity for ourselves that we may exploit. This is particularly so in view of
the increasing dissemination of information over the World Wide Web, as individuals and
groups look at obtaining the best deal possible. More often than not these individuals and
groups seek out information over the Internet due to its relatively low cost and ease of use
helping to minimize time wasting. However this will require adequate planning so as to ensure
that all information on the website is accurate and up-to-date, ensuring we market a
professional image. This will mainly serve foreign tourists and other interested stakeholders.
In all the above we intend to communicate our ability to deliver a good service that will satisfy
the customers needs. Hence our messages will influence the engagement decision of prospective
customers by emphasizing our customer focus and, persuade prospective clients that we are
different from our competitors. All the above promotional tools shall be well integrated and
utilized in tandem so as to maximize their effect.
5.2.3 Positioning Statement
Sephats intends to offer a unique service to all of its customers, primarily travelers, so as to
position itself as the premier travel provider in Botswana. This shall be undertaken through
provision of affordable, comfortable and luxurious transport as well as informative insights about
the various sights and areas. These excursions will be tailored to the individuals'/groups'
interests and thus providing enjoyment and satisfaction. Our competitive advantage shall be our
customer orientation and friendly staff who shall go at lengths to ensure the customer is served
and fully satisfied.
Through our reasonable charges and satisfying excursions we intend to attract a large portion of
the market, both directly and indirectly. Hence all promotional material and campaigns shall be
directed to fulfilling our intended positioning on the market.
5.3 Sales Strategy
For the short term at least, the selling process will depend on personal selling/networking and
advertising to lure and inform potential customers about the services we offer and the benefits
of utilizing our services. Our marketing does not intend to affect the perception of need as much
as knowledge and awareness of the service category.
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5.3.1 Sales Forecast
The following chart and table show our planned Sales Forecast for the next three years.
Table: Sales Forecast
Sales Forecast
FY 2000 FY 2001 FY 2002
Sales
All tourist services $350,000 $556,500 $630,000
Other $0 $0 $0
Total Sales $350,000 $556,500 $630,000
Direct Cost of Sales FY 2000 FY 2001 FY 2002
All tourist services $70,000 $111,300 $126,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $70,000 $111,300 $126,000
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5.4 Strategic Alliances
In today's competitive environment it is becoming increasingly essential for organizations to
concentrate on their core activities so as to gain and maintain a competitive advantage. This
brings out the advantage of undertaking strategic alliances with organizations that the firm may
benefit from and visa versa. Sephats Tours intends to establish strong partnerships with several
hotels, lodges and travel agencies so as to be able to deliver customer wants. These alliances
will assist in ensuring that we obtain a regular stream of customers from various establishments.
At this writing, strategic alliances with several companies are possibilities, given the content of
existing interest and discussions. However ultimately it is the quality of our service(s) and the
skill and experience of the staff that will attract customers. During the start-up phase word-of-
mouth from satisfied customers will play a large part in increasing awareness and gaining
exposure for our services.
5.5 Corporate Social Responsibility
Sephats Tours recognizes the fact that as it is involved in the tourism sector of the overall
economy there is need to be involved in a wide range of social responsibility engagement
programmes so as to invest back into the community in which we operate. We believe that
through our social responsibility programme we can indeed assist in improving peoples lives. We
believe that if we are to contribute to development in a sustainable way, we need to support
numerous projects.
However, before we commit ourselves to projects we intend to ensure that they will be
beneficial to the community, particularly in the long term. We know that we cannot address all
the development needs of our society. Where we can, we assist and sometimes may form
partnerships so as to increase capacity.
One of the ways the company intends to be involved in corporate social responsibility is through
organizing cleaning campaigns with various communities. Basically this will involve briefing the
community on the advantages of having a clean environment, now and in future. In order to
entice the community to get involved in these campaigns, as well as to increase awareness
about our business and services we intend to give out T-shirts and caps with our company
name. These campaigns will also assist in us being perceived and appreciated as a good
corporate citizen.
6.0 Management Summary
The human resources element shall be an essential component in the delivery of the total
service. By encouraging all employees to handle customers well, and by having enthusiastic,
capable and empowered people interacting with our customers, we intend to build the
competitive advantage of being able to comprehensively meet our customers' needs. There will
be need to evaluate jobs and remuneration packages against market benchmarks to employees
for their agreed and set out tasks so as to ensure they are competitive. These principles extend
to accident, medical, death and welfare benefits.
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6.1 Organizational Structure
Sephats Tours shall be managed primarily by working owners/partners. The company will engage
more of a functional organization structure whereby people shall be focusing on their prime area
of expertise. However in engaging this organization structure we intend to ensure that there is
open communication between all personnel at all levels. With such a group we believe it will be
simple to communicate with and support one another. Our organizational structure demonstrates
the importance we shall put on our customers, and ensuring their satisfaction in utilizing our
services.
As the company grows there will be more structure to the utilizing, with new employees being
assigned a supervisor or subordinate. When the company is at its full staff potential, it will
operate as any closely held utilizing, but maintain the personal interest in each employee's
personal and family welfare and their contributions to the business.
We acknowledge the fact that successful recruiting, motivation, and discipline procedures are
keys to the growth of the utilizing. Hence we intend to promote and maintain good labour
relations, strong morale and high quality work per employee through undertaking the following:
[discussion omitted].
6.2 Management Team
The founders of Sephats Tours are passionate about the activities it will promote and offer on
the market. Management style will reflect the participation of the directors/shareholders. The
company intends to respect its community and treat all employees well. We will develop and
nurture the company as community. However we realize that we are not fully conversant in
tourism and as such intend to engage experienced staff as well as undergo a training course
from a reputable institution.
The Managing Director's experience in public commercial transportation and government will
assist in the establishment of good networks. He also has attended a course in Auto Mechanics
at X Centre that will assist in servicing the vehicles. However acknowledging the importance of
continuous training and improvement the Managing Director intends to undergo a course in
Travel and Tourism so as to be fully conversant in the field, as well as obtain knowledge of the
latest developments in the industry.
6.3 Personnel Plan
The detailed monthly personnel plan for the first year is included in the appendix. The annual
personnel estimates are included here. We believe this plan is a good compromise between
fairness and expedience, and meets the commitments of our mission and business objectives.
We intend to compensate our personnel well, so as to retain their invaluable expertise and to
ensure job satisfaction and enrichment through delegation of authority. Our compensation will
include health care, generous profit sharing, plus a minimum of three weeks vacation. Sephats
Tours recognizes that our employees contribute fundamentally to the company's long-term
prosperity, acknowledging our obligation to remunerate them competitively. We intend to
enhance our capacity to attract and retain people of quality through competitive remuneration
packages.
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Table: Personnel
Personnel Plan
FY 2000 FY 2001 FY 2002
Directors $0 $48,000 $60,000
Accountant $30,000 $36,000 $36,000
Tour Guide $21,600 $48,000 $48,000
Sales & Marketing $19,200 $32,400 $43,200
Driver $14,400 $36,000 $36,000
Personal Assistant $13,200 $18,000 $18,000
Cleaner $7,200 $18,000 $18,000
Nightwatchman $7,200 $9,600 $9,600
Mechanic $0 $20,400 $20,400
Total People 11 14 16
Total Payroll $112,800 $266,400 $289,200
6.4 Training
In-house training shall be continuous so that we are continuously up-to-date in meeting
customer requirements. With time we also intend to undertake regular external training
particularly following any new developments in the market. This will ensure we are implementing
the latest techniques and aware of customers expectations. By setting our standards against
industry benchmarks we will be able to ensure a regular flow of customers as they are
continually referred to us.
Internal training will not only include service and technical aspects, but also expand to give
much greater knowledge of customers, market trends, services, new technology aids, time
management amongst other such variables. Marketing sessions in particular will be a regular
occurrence, as this will ensure that our personnel continuously portray a positive image of the
business, assisting in bringing in more business.
6.5 Feedback and Control
1. We intend to make sure that each employee understands the goals of the firm, is customer
focused, proud of their work and work as a team. This will encourage employees to become
entrepreneurial and customer responsible, in addition to unifying staff in customer focus and
values.
2. Important notices and developments will be continuously communicated to employees so as
to keep them abreast of developments and promoting a sense of belonging and oneness in
the organization.
3. We will encourage our employees to put forward any suggestions they might have regarding
the improvement of any of the company's functions - an open door philosophy. Such a
culture will enhance innovativeness and creativity in turn leading to job satisfaction and
enrichment.
4. We undertake to continuously formalize and measure cross-functional working
communication so as to ensure that the various departments work harmoniously towards
attainment of company objectives.
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7.0 Financial Plan
The financial plan shall be essential if we are to meet our objectives. The intention is to finance
growth through cash flow and equity.
One of the most important factors will be the payment terms as agreed between the client or
customer. We can't push our customers hard on collection days, because they are extremely
sensitive and will normally judge us on our terms. Therefore there is need to develop a
permanent system of receivables financing systems mutually agreed between both parties.
Hence in the financial plan we intend to have the following:
1. A fundamental respect for giving our customers value, and for maintaining a healthy and
congenial workplace.
2. Cash flow as first priority, growth second, profits third.
3. Respect for realistic forecasts, and conservative cash flow and financial management.
7.1 Important Assumptions
The financial plan depends on important assumptions. From the beginning, we recognize that
payment terms and hence collection days are critical, but not a factor we can influence easily.
At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and
personnel burden are based on conservative assumptions.
Some of the more important underlying assumptions are:
We assume a strong economy, without major recession.
We assume, of course, that there are no unforeseen changes in economic policy to make our
service immediately obsolete or unwanted.
We assume amongst other things a 60-day average collection period, sales entirely on invoice
basis except for individuals who come directly to us, expenses mainly on a net 30 day basis, 30
days on average for payment of invoices, and present-day interest rates.
Table: General Assumptions
General Assumptions
FY 2000 FY 2001 FY 2002
Plan Month 1 2 3
Current Interest Rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 18.08% 17.00% 18.08%
Other 0 0 0
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7.2 Key Financial Indicators
We foresee a slow initial growth in sales, as we strive to ensure we are known on the market,
though operating expenses will be relatively high, and a bump in our sales and revenue
generation as we spread our services during expansion.
Collection days are very important. We do not want to let our average collection days get above
the client's actual subscription period under any circumstances. This could cause a serious
problem with cash flow, because our working capital situation is chronically tight. However, we
recognize that we cannot control this factor easily, because of the relationship we wish to
create with our clients.
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7.3 Break-even Analysis
Our break-even analysis will be based on running costs, that is costs we shall incur in keeping
the business running, including salaries and wages, rent, vehicle and computer maintenance
costs, water and electricity, insurance amongst others. Hence many fixed costs shall be included
in these costs. We will thus ensure that our sales levels are running comfortably above break-
even.
Table: Break-even Analysis
Break-even Analysis
Monthly Revenue Break-even $18,656
Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $14,925
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7.4 Projected Profit and Loss
Our projected profit and loss is shown in the table below, with sales increasing from more than
P350,000 the first year to more than P556,500 the second, and P630,000 in the third year. Our
net profit margin is relatively good for a start-up organization in our line of business. Hence we
do expect to more than break-even in the first year of operation.
As with the break-even, we are projecting very conservatively regarding cost of sales and gross
margin. Our cost of sales may be much lower, and gross margin higher, than in this projection.
We prefer to project conservatively so that we make sure we have enough cash. The detailed
monthly projections are included in the appendix.
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Table: Profit and Loss
Pro Forma Profit and Loss
FY 2000 FY 2001 FY 2002
Sales $350,000 $556,500 $630,000
Direct Cost of Sales $70,000 $111,300 $126,000
Other $0 $0 $0
Total Cost of Sales $70,000 $111,300 $126,000
Gross Margin $280,000 $445,200 $504,000
Gross Margin % 80.00% 80.00% 80.00%
Expenses
Payroll $112,800 $266,400 $289,200
Sales and Marketing and Other Expenses $23,700 $27,163 $29,879
Depreciation $0 $0 $0
Miscellaneous $2,400 $2,640 $2,904
Leased Equipment $0 $0 $0
Rent $14,400 $15,840 $17,424
Travel $1,800 $1,980 $2,184
Insurance $12,000 $13,200 $14,520
Maintenance $12,000 $0 $0
Payroll Taxes $0 $0 $0
Other $0 $0 $0
Total Operating Expenses $179,100 $327,223 $356,111
Profit Before Interest and Taxes $100,900 $117,977 $147,889
EBITDA $100,900 $117,977 $147,889
Interest Expense $0 $0 $0
Taxes Incurred $16,799 $20,056 $26,743
Net Profit $84,101 $97,921 $121,146
Net Profit/Sales 24.03% 17.60% 19.23%
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7.5 Projected Cash Flow
The following chart and table highlights the projected Cash Flow statement for Sephats Tours.
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Table: Cash Flow
Pro Forma Cash Flow
FY 2000 FY 2001 FY 2002
Cash Received
Cash from Operations
Cash Sales $175,000 $278,250 $315,000
Cash from Receivables $133,700 $253,883 $306,327
Subtotal Cash from Operations $308,700 $532,133 $621,327
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabil ities (interest-free) $0 $0 $0
New Long-term Liabil ities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
Subtotal Cash Received $308,700 $532,133 $621,327
Expenditures FY 2000 FY 2001 FY 2002
Expenditures from Operations
Cash Spending $112,800 $266,400 $289,200
Bill Payments $144,204 $199,521 $219,625
Subtotal Spent on Operations $257,004 $465,921 $508,825
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabil ities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $257,004 $465,921 $508,825
Net Cash Flow $51,696 $66,212 $112,502
Cash Balance $81,696 $147,907 $260,409
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7.6 Projected Balance Sheet
The table below outlines the company's Balance Sheet.
Table: Balance Sheet
Pro Forma Balance Sheet
FY 2000 FY 2001 FY 2002
Assets
Current Assets
Cash $81,696 $147,907 $260,409
Accounts Receivable $41,300 $65,667 $74,340
Inventory $9,240 $14,692 $16,632
Other Current Assets $0 $0 $0
Total Current Assets $132,236 $228,266 $351,381
Long-term Assets
Long-term Assets $167,000 $167,000 $167,000
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $167,000 $167,000 $167,000
Total Assets $299,236 $395,266 $518,381
Liabilities and Capital FY 2000 FY 2001 FY 2002
Current Liabil ities
Accounts Payable $18,134 $16,244 $18,213
Current Borrowing $0 $0 $0
Other Current Liabil ities $0 $0 $0
Subtotal Current Liabil ities $18,134 $16,244 $18,213
Long-term Liabil ities $0 $0 $0
Total Liabil ities $18,134 $16,244 $18,213
Paid-in Capital $202,000 $202,000 $202,000
Retained Earnings ($5,000) $79,101 $177,022
Earnings $84,101 $97,921 $121,146
Total Capital $281,101 $379,022 $500,168
Total Liabil ities and Capital $299,236 $395,266 $518,381
Net Worth $281,101 $379,022 $500,168
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Sephats Tours
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7.7 Business Ratios
The following table shows some important ratios for the Tour Operators industry, as determined
by the Standard Industry Classification (SIC) Code, 4725.
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Sephats Tours
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Table: Ratios
Ratio Analysis
FY 2000 FY 2001 FY 2002 Industry Profile
Sales Growth 0.00% 59.00% 13.21% 4.00%
Percent of Total Assets
Accounts Receivable 13.80% 16.61% 14.34% 22.30%
Inventory 3.09% 3.72% 3.21% 0.70%
Other Current Assets 0.00% 0.00% 0.00% 42.80%
Total Current Assets 44.19% 57.75% 67.78% 65.80%
Long-term Assets 55.81% 42.25% 32.22% 34.20%
Total Assets 100.00% 100.00% 100.00% 100.00%
Current Liabil ities 6.06% 4.11% 3.51% 33.10%
Long-term Liabil ities 0.00% 0.00% 0.00% 16.40%
Total Liabilities 6.06% 4.11% 3.51% 49.50%
Net Worth 93.94% 95.89% 96.49% 50.50%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 80.00% 80.00% 80.00% 40.10%
Selling, General & Administrative Expenses 56.07% 62.40% 60.52% 30.80%
Advertising Expenses 4.71% 3.26% 3.17% 0.80%
Profit Before Interest and Taxes 28.83% 21.20% 23.47% 1.20%
Main Ratios
Current 7.29 14.05 19.29 1.66
Quick 6.78 13.15 18.38 1.29
Total Debt to Total Assets 6.06% 4.11% 3.51% 49.50%
Pre-tax Return on Net Worth 35.89% 31.13% 29.57% 2.70%
Pre-tax Return on Assets 33.72% 29.85% 28.53% 5.30%
Additional Ratios FY 2000 FY 2001 FY 2002
Net Profit Margin 24.03% 17.60% 19.23% n.a
Return on Equity 29.92% 25.84% 24.22% n.a
Activity Ratios
Accounts Receivable Turnover 4.24 4.24 4.24 n.a
Collection Days 56 70 81 n.a
Inventory Turnover 10.91 9.30 8.05 n.a
Accounts Payable Turnover 8.95 12.17 12.17 n.a
Payment Days 27 32 28 n.a
Total Asset Turnover 1.17 1.41 1.22 n.a
Debt Ratios
Debt to Net Worth 0.06 0.04 0.04 n.a
Current Liab. to Liab. 1.00 1.00 1.00 n.a
Liquidity Ratios
Net Working Capital $114,101 $212,022 $333,168 n.a
Interest Coverage 0.00 0.00 0.00 n.a
Additional Ratios
Assets to Sales 0.85 0.71 0.82 n.a
Current Debt/Total Assets 6% 4% 4% n.a
Acid Test 4.51 9.11 14.30 n.a
Sales/Net Worth 1.25 1.47 1.26 n.a
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Sephats Tours
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Dividend Payout 0.00 0.00 0.00 n.a
8.0 Controls
The local tourism industry has been growing rapidly over the last decade due to increases in the
number of people seeking holidays in the country. With this in mind we intend our marketing
programmes to expand accordingly. The introduction of good brochures and other sales literature
will enable Sephats Tours to market to potential customers. We project sales to increase
accordingly, though slightly slower as we establish a reputation for ourselves. With time, we
intend to be at the forefront of customers' minds with regards to travel excursions.
Throughout the year we intend to undertake regular evaluations of our marketing programmes so
as to ensure that we are in line with our intended objectives. In summary we intend to
undertake the following:
1. Tracking and follow-up: We intend to have the discipline, as an organization, to track
results of the business plan and make sure that we implement it.
2. Market segment focus: We intend to have the discipline to maintain the market segment
focus.
3. Customer Follow-up: We intend to have the discipline as an organization to constantly
follow-up on customers so as to ensure that we are meeting their expectations at all times.
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Appendix
Page 1
Table: Sales Forecast
Sales Forecast
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales
All tourist services 0% $14,000 $17,500 $17,500 $28,000 $28,000 $28,000 $28,000 $31,500 $35,000 $38,500 $42,000 $42,000
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $14,000 $17,500 $17,500 $28,000 $28,000 $28,000 $28,000 $31,500 $35,000 $38,500 $42,000 $42,000
Direct Cost of Sales Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
All tourist services $2,800 $3,500 $3,500 $5,600 $5,600 $5,600 $5,600 $6,300 $7,000 $7,700 $8,400 $8,400
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $2,800 $3,500 $3,500 $5,600 $5,600 $5,600 $5,600 $6,300 $7,000 $7,700 $8,400 $8,400
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Appendix
Page 2
Table: Personnel
Personnel Plan
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Directors 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Accountant 0% $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Tour Guide 0% $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Sales & Marketing 0% $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Driver 0% $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Personal Assistant 0% $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100
Cleaner 0% $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Nightwatchman 0% $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600
Mechanic 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 11 11 11 11 11 11 11 11 11 11 11 11
Total Payroll $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400
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Appendix
Page 3
Table: General Assumptions
General Assumptions
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
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Appendix
Page 4
Table: Profit and Loss
Pro Forma Profit and Loss
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales $14,000 $17,500 $17,500 $28,000 $28,000 $28,000 $28,000 $31,500 $35,000 $38,500 $42,000 $42,000
Direct Cost of Sales $2,800 $3,500 $3,500 $5,600 $5,600 $5,600 $5,600 $6,300 $7,000 $7,700 $8,400 $8,400
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $2,800 $3,500 $3,500 $5,600 $5,600 $5,600 $5,600 $6,300 $7,000 $7,700 $8,400 $8,400
Gross Margin $11,200 $14,000 $14,000 $22,400 $22,400 $22,400 $22,400 $25,200 $28,000 $30,800 $33,600 $33,600
Gross Margin % 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00% 80.00%
Expenses
Payroll $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400
Sales and Marketing and Other
Expenses
$1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975 $1,975
Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Miscellaneous $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Leased Equipment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Rent $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
Travel $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150
Insurance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Maintenance $0 $0 $3,000 $0 $0 $3,000 $0 $0 $3,000 $0 $0 $3,000
Payroll Taxes 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Operating Expenses $13,925 $13,925 $16,925 $13,925 $13,925 $16,925 $13,925 $13,925 $16,925 $13,925 $13,925 $16,925
Profit Before Interest and Taxes ($2,725) $75 ($2,925) $8,475 $8,475 $5,475 $8,475 $11,275 $11,075 $16,875 $19,675 $16,675
EBITDA ($2,725) $75 ($2,925) $8,475 $8,475 $5,475 $8,475 $11,275 $11,075 $16,875 $19,675 $16,675
Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Taxes Incurred ($818) $13 ($497) $1,441 $1,441 $931 $1,441 $1,917 $1,883 $2,869 $3,345 $2,835
Net Profit ($1,908) $62 ($2,428) $7,034 $7,034 $4,544 $7,034 $9,358 $9,192 $14,006 $16,330 $13,840
Net Profit/Sales -13.63% 0.36% -13.87% 25.12% 25.12% 16.23% 25.12% 29.71% 26.26% 36.38% 38.88% 32.95%
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Appendix
Page 5
Table: Cash Flow
Pro Forma Cash Flow
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Cash Received
Cash from Operations
Cash Sales $7,000 $8,750 $8,750 $14,000 $14,000 $14,000 $14,000 $15,750 $17,500 $19,250 $21,000 $21,000
Cash from Receivables $0 $233 $7,058 $8,750 $8,925 $14,000 $14,000 $14,000 $14,058 $15,808 $17,558 $19,308
Subtotal Cash from Operations $7,000 $8,983 $15,808 $22,750 $22,925 $28,000 $28,000 $29,750 $31,558 $35,058 $38,558 $40,308
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $7,000 $8,983 $15,808 $22,750 $22,925 $28,000 $28,000 $29,750 $31,558 $35,058 $38,558 $40,308
Expenditures Oct Nov Dec Jan