I’m not going to scare you. You have certainly heard plenty of horror stories about the global economic situation. If you’re a small-business owner — whether you own a travel business or are self-employed as an independent contractor — the forecast can feel especially grim.
The good news, however, is that being in the travel industry, you have heard it all before. After all, if the talking heads were always right, you would have been out of business years ago just as they predicted back then. While a lot of other business owners are caught like deer in the headlights, battle-tested travel agents take a deep breath, roll up their sleeves and begin preparing for the long, hard fight, yet again.
So where do you go from here?
Regardless of how long this recession lasts, every owner needs to take immediate steps to safeguard his/her business. In this story, we’ve compiled 10 tips to help you craft a successful game plan for the months ahead.
Your Must-Do List
Remain Positive: Panic and hopelessness will probably cause more businesses to go under this year than anything that happens on Wall Street. A calm, optimistic approach will not only help business owners honestly assess their strengths and weaknesses, but develop a strategy for the future.
"First and foremost, owners need to have a positive attitude," said Filomena Andre, vice president of sales and marketing for Signature Travel Network. "A positive attitude is contagious and, if salespeople are upbeat, then they can translate that energy to their clients."
It’s important to note that just because you avoid being consumed with negative news doesn’t mean you are in denial. Take a realistic look at your business, which includes acknowledging your successes, and give due weight to the things your agency does well.
Be Flexible: It’s time to throw the playbook out the window. Forget how you have always done things in the past; these are exceptional times and they call for fresh thinking.
"In order to survive in today’s economy, independent travel agencies cannot rely on things they once did or things that worked five years ago to be effective today," said Jeffrey Anderson, vice president of marketing for America’s Vacation Center (AVC). "They must be flexible and open to change their business model if necessary. For example, they must be flexible with the hours that they are available to their clients — not working ‘full-time’ but working ‘right-time’ to meet client needs."
Focus on the Balance Sheet: This is no time for surprises. You need to go through your operating spreadsheet line by line, account by account, keeping an eye out for places where you can maximize revenue and cut costs.
In particular, pay special attention to accounts receivable and cash flow. Just as vendors are pressuring you to pay them on time, you need to make sure your clients are not overdue in their payments to you. Also, you want to take a good look at anyone that owes you a substantial amount of money. How sure are you that they are not in serious financial difficulty themselves?
As you look for places to cut spending, examine all discretionary spending, no matter how minor you think it might be.
"We’ve reduced local phone lines, moved records to a smaller storage unit, got a cheaper source for printer paper and renegotiated our rent and insurance rates," said Diana Saint James, owner of Dimensions in Travel in Novato, Calif., an Ensemble agency. "We found we had a maintenance agreement on a fax machine we no longer owned — embarrassing, but at least we caught it. We also discovered that we were being billed for picking up three trash cans and we only had two."
Think about ways you can use technology more efficiently to cut costs (and don’t be afraid to ask for expert help if necessary). Also, see if there’s a way to reduce your credit debt — the less you have to pay out regularly, the most flexible you’ll be. Finally, this could be a good time to renegotiate your lease or find someone to sublet office space from you.
Your Should-Do List
Rethink Your Marketing: A key to managing your business during the recession is to grow revenue, and an important step toward achieving that is marketing.
"Many companies cannot afford to stop marketing, regardless of economic condition," said Carl R. George of the American Institute of Certified Public Accountants in an article for Kiplinger Business Resource Center. "Determine what sets your business apart from the competition and market it like crazy. Attend networking functions, spruce up your Web site, send out post cards, put out a new sign in front of your office."
As important as marketing is, however, your emphasis these days should be on doing it as cost effectively as possible.
"Tracking showed that we got so little business from the Yellow Pages these days that we renegotiated our ad rates down by $450 per month. This frees up money for other, more effective advertising — niche newspapers, Web site development, direct mail and radio," said Saint James.
Reach Out to Customers: As an industry, travel agencies do a remarkably poor job of booking repeat business — some estimates put it at 25 percent. In this economy, that just won’t cut it. Business is based on relationships and the relationships you have with your past clients are key to maintaining and increasing revenue.
"The 21st-century business is much more about relationships than about business," said Jim Blasingame, host of the radio and Internet talk show, "The Small Business Advocate" in an article for U.S News and World Report. "There was a time when not everything you could buy was a commodity. Today, everything is a commodity. If I sell something that you can get in a thousand places, why would you buy from me? Because you like the way I treat you."
Andre, at Signature Travel Network, suggests agencies develop a plan for taking care of top clients.
"Have a clear strategy in place to manage your customer relations. Make sure you start by personally calling all your best clients first, then communicating with all clients in descending order of importance to your business," she said. "Institute processes and procedures for communicating with clients. This needs to be systematic and include such things as calling clients upon return from a trip, e-mailing them while on the trip, contact between the deposit and final payment, sending them new offers and more."
In addition to maximizing relationships with customers, agents should also be strengthening their ties to key suppliers. In particular, preferred-supplier relationships can be crucial in volatile times.
"Owners need to ensure that their staff is selling only preferred companies," said Andre. "Avoid doing business with unknown companies — there will be closures and financial defaults, and you don’t want to be caught by surprise."
Get Everyone Involved: Don’t keep your staff in the dark; share with them, as honestly as you feel is appropriate, the current state of your business and how you plan to survive this recession. Reasonable employees are going to want to pitch in to help your business make it through the tough times, if only to save their jobs.
Also, it’s important that everyone in your organization understands that business as usual won’t cut it. Everyone will need to lend a hand if the business is to survive, even if that means taking on additional tasks. This will also be a good way to gauge which employees you will be able to count on, and which might be the first to let go.
Finally, an atmosphere of camaraderie among your staff is the best way to foster good ideas, and good ideas may be the difference between closing your doors and staying in business.
Diversify and Launch: When times are tough, it’s natural to want to play it safe, but it’s important to look at new niche markets, new products and new partnership opportunities in order to increase revenue.
"Consider one new segment of the travel business that might make sense for your company," said Andre. "If you are a cruise-only agency, you could start selling land packages, FIT trips, hotels and resorts. If you are a full-service company offering a wide range of services, perhaps you can consider going after a segment of the market — families, gay travel, an ethnic group, an area of the world or adventure travel."
It’s also important to keep in mind that when an industry is in flux, it could be a great opportunity for developing a plan for the future of your business. So be sure to look ahead and think about where you want your business to be two years or five years from now.
"Consider prospects for the future and plan a future business strategy for your company. Consider all options that are possible, including merging with another company, buying another agency and selling your company," said Andre.
"Economic downturns have a benefit for business," said George. "A recession gives you the opportunity to step back, rethink and review all sectors of your operation. Consider launching a new product or service not currently offered in your market. Use the time to diversify your products, services or industries so you don’t have too many eggs in one basket."
Your Please-Do List
Agent Training and Education: As day-to-day business slows, it can be a good time to have agents focus on training and education. Without a doubt, business owners would rather see their employees using whatever down time they have to increase their skill set rather than sitting around waiting for the phone to ring.
"By taking all the training opportunities that come their way — reading the travel publications and staying in tune to what is happening in the industry — they can know when to act and what to act on," said Anderson.
Webinars, trade shows and supplier seminars are just some of the training options owners should research for their staff. It can also be a good time to look into having agents experience new products and destinations on fam trips.
Clean Up Mailing Lists: Another good project when business is slow is to clean up customer mailing lists and databases. Along with other benefits, this will give your agents an opportunity to check in with past customers to see how they are doing.
"Get in touch and stay in touch with your active customers … Revisit dormant customers and see what you can do to bring them back into the fold," said George. "Sometimes it takes as little as just asking to restart a relationship. Other times it can take some imagination and insight, but resurrecting a past customer can still be easier and less expensive than finding and breaking in a new one."
Rely on Experts: If you’ve made it this far in the travel industry, then you’ve proven you know how to run a business through good times and bad. Nobody knows everything, however. These are extraordinary times and there are experts in a wide range of fields that may be able to help you in specific areas.
"We hired a travel industry consultant to come in and work with our staff and ICs for a day," said Saint James. "It felt risky to spend the money, but it was worth it. He worked with them on qualifying clients better, selling in this economy and closing techniques .… We all feel ramped up several notches as a result."
If your agency belongs to a host agency, now is the time to leverage that relationship and ask for advice and assistance. In addition, industry organizations such as the American Society of Travel Agents (ASTA) and the Cruise Lines International Association (CLIA) have informational programs for agents.
In the end, despite the bleak economic outlook, it’s important to remember that, even in the worst of times, there are opportunities. As George said, "Somebody’s always making money, even in a recession, so if you can find out where those pockets are and if you have services you can provide to them, maybe you want to expand those services."
Business as usual surely won’t cut it any longer, but by developing a fundamentally sound game plan, your business can, and will, weather the storm.
For More Help
Now is not the time to go it alone. Fortunately, agency owners who want financial help from experts have more
options than ever.
To begin with, the American Society of Travel Agents (ASTA) recently created tools for agents on its Web site.
"ASTA has been — and continues to be — hard at work to provide you with the necessary tools and programs to help you weather the current fiscal crisis," said Chris Russo, president of ASTA, in an open letter to members. "Tools that will not only help keep you afloat in today’s stormy waters but that will put you ahead of the competition when the sun shines again."
Some of the tools available include tips for guiding your business through an economic downturn; financial benchmarking tools that will help you evaluate your business relative to similar businesses; information on work-share programs; tips for developing a business plan; and virtual seminars on a range of topics.
ASTA is not the only trade organization looking to help agents in these tough times. Agents attending the Cruise Line International Association’s (CLIA) upcoming Cruise3Sixty conference in Ft. Lauderdale, Fla., from April 2-6, will be able to take seminars designed to help them deal with the economic crisis. Agents will also be able to hear from a range of speakers who are experts on the economy.
"It’s important to remember that economic downturns, however severe, do recover; it is not a matter of if, but of when," said Terry Dale, CLIA’s president and CEO. "The challenge for cruise lines and travel agents is to do everything possible to make the ‘when’ sooner rather than later."
ASTA
www.asta.org
CLIA
www.cruising.org
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