Travel Agency

LOGO AND REAL COMPANY NAME NEEDS TO BE DONE BY STUDENTS

,.
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This is a business plan. It does not imply an offering of securities.

 Table of Contents

1. Executive Summary.....................................................................................................1
1.1. Objectives............................................................................................................4
1.2. Mission................................................................................................................4
1.3. Keys to Success...................................................................................................5
2. Company Summary.....................................................................................................5
2.1. Company Ownership...........................................................................................5
2.2. Start-up Summary................................................................................................5
3. Services........................................................................................................................7
4. Market Analysis Summary..........................................................................................7
4.1. Market Segmentation...........................................................................................7
4.2. Target Market Segment Strategy.........................................................................9
4.3. Service Business Analysis...................................................................................9
4.3.1. Competition and Buying Patterns................................................................9
5. Strategy and Implementation Summary....................................................................10
5.1. SWOT Analysis.................................................................................................10
5.1.1. Strengths....................................................................................................10
5.1.2. Weaknesses................................................................................................10
5.1.3. Opportunities.............................................................................................10
5.1.4. Threats.......................................................................................................10
5.2. Competitive Edge..............................................................................................11
5.3. Marketing Strategy............................................................................................11
5.4. Sales Strategy.....................................................................................................11
5.4.1. Sales Forecast............................................................................................12
5.5. Milestones..........................................................................................................14
6. Web Plan Summary...................................................................................................15
7. Management Summary..............................................................................................15
7.1. Personnel Plan...................................................................................................15
8. Financial Plan............................................................................................................15
8.1. Important Assumptions......................................................................................16
8.2. Break-even Analysis..........................................................................................16
8.3. Projected Profit and Loss...................................................................................17
8.4. Projected Cash Flow..........................................................................................18
8.5. Projected Balance Sheet....................................................................................20
8.6. Business Ratios..................................................................................................21
 Travel Agency

1. Executive Summary

– NEEDS TO BE DONE BY STUDENTS

What is the objective of the firm? Why does it make business sense? How
will you make money? Summarize your whole business plan into 1
paragraph.

Highlights

1.1. Mission – NEEDS TO BE DONE BY STUDENTS

What is your competitive advantage and how can you describe it to

investors and customers?

1.2. Keys to Success

 Effectively segment and target adventure travelers within the larger
travel market.

 Successfully position ourselves as adventure travel specialists.

 Travel Agency

 Communicate the differentiation and quality of our offering through

personal interaction and media.

 Develop a repeat-business base of loyal customers.

2. Company Summary

Travel Agency is a full service travel agency that specializes in adventure travel
and provides recreational and business travelers with professional service and
consultation. Travel Agency will position itself as a specialist in the field of
adventure travel and will generate the majority of its income from this segment.

2.1. Company Ownership

Travel Agency is a sole proprietorship owned and operated by Shea Delaney

in the town of Atkins Grove, California. Travel Agency's owner is researching
the possibility of establishing Travel Agency as a Limited Liability Company
(LLC) or Partnership (LLP). This may occur within eighteen months of
operation.

3. Products/Services – NEEDS TO BE DONE BY STUDENTS

What are the products or services? Include full product/service
descriptions
How will the products/services be priced? Which approach will be taken in
deciding on price?
What future products/services are going to be added on?

4. Market Analysis Summary – NEEDS TO BE DONE BY STUDENTS

What is the market for this business?
Do an industry analysis
What risks do you foresee? Market risks, competition risks, business
risks?

4.1. Market Segmentation

Segmentation – NEEDS TO BE DONE BY STUDENTS

Are there segments to the market that the company will be focusing on?
What are the market trends? Is this a seasonal marketplace? What is the
projected market growth?
 Travel Agency

Market Analysis (Pie)

Market Analysis
1999 2000 2001 2002 2003
Potential Gro CAG
Customers wth R
National 10% 9,000,0 9,900,0 10,890, 11,979, 13,176, 10.00
00 00 000 000 900 %
Woodville 15% 100,000 115,000 132,250 152,088 174,901 15.00
%
Internet 20% 3,000,0 3,600,0 4,320,0 5,184,0 6,220,8 20.00
00 00 00 00 00 %
Total 12.78 12,100, 13,615, 15,342, 17,315, 19,572, 12.78
% 000 000 250 088 601 %

4.2. Target Market Segment Strategy

What is the customer profile? Describe in detail who the customers are and
what will be the strategy for acquiring those customers. Will you try to go
after all the market segments at once or focus efforts on one or two and add
more later? Are some more profitable than others?

4.3. Service Business Analysis

 Travel Agency

The U.S. travel and tourism industry is the nation's third largest retail
industry, and the U.S. Department of Commerce says that it will be number
one by the year 2000. Revenues from travel have increased approximately
100% in the last decade. U.S. travel agencies produce over $100 billion in
revenues each year. The market is separated into two main categories,
business and leisure travel. Each contributes about 45% to total revenues.
The remainders of revenues are generated from combined business/leisure
trips. The market is further separated into domestic and international travel.
Domestic travel accounts for approximately 70% of industry revenues.
Business travel can be divided into two categories, the medium to large
corporate account and the small independent businessman. Leisure travelers
are classified according to the types of trips they take, income, or age.

The four primary leisure travel groups are:

1. Adventure, Special-Interest, R&R, Honeymoons, and Sightseeing

Trips.

1. High-Income Travelers.

1. Budget-Conscious Travelers.

1. Families, Students and Seniors.

4.3.1. Competition and Buying Patterns

There are many activities and types of travel available to people

contemplating an adventure vacation. These substitute products and
services are one type of competition. Theme parks, motor home trips,
and cruises are just a few. Other substitutes include less expensive,
self-planned, or trips geared towards more traditional types of
vacations. In addition, potential customers do not have to vacation.
Instead, they may elect to spend elsewhere, or invest the money they
would have otherwise spent on a vacation. Direct competition can
come from virtually any agency, and there are several agencies that
specialize in adventure travel in the United States. Lifestyle, age, and
disposable income influence the decision to travel and in which type of
travel to participate. Adventure travelers make purchase decisions
based upon their desire to combine athletic interests with vacation
time. The average adventure traveler engages in one adventure travel
vacation every 12-18 months.

5. Strategy and Implementation Summary

NEEDS TO BE DONE BY STUDENTS

What will be your value? What will you offer that will make you valuable to the
customer and the marketplace?
 Travel Agency

5.1. SWOT Analysis – NEEDS TO BE DONE BY STUDENTS

Item body here

5.1.1. Strengths

Item body here

5.1.2. Weaknesses

Item body here

5.1.3. Opportunities

Item body here

5.1.4. Threats

Item body here

5.2. Competitive Edge

What will be your competitive edge? What is better about your business
vs. the competition?

5.3. Marketing Strategy

What Marketing plan do you foresee doing? What marketing strategy will
you use?
What will your community and public relations strategy be?

5.4. Sales Strategy

What sales promotions will you offer? What will be your pricing strategy?
Will you mark up your costs? Will you use market prices?

5.4.1. Sales Forecast

What is your sales forecast for the year and how did you decide on that
number?
Travel Agency

Sales Monthly
 Travel Agency

Sales Forecast
FY 2000 FY 2001 FY 2002
Unit Sales
Row 1 0 0 0
Row 2 0 0 0
Row 3 0 0 0
Other 0 0 0
Total Unit Sales 0 0 0

Unit Prices FY 2000 FY 2001 FY 2002

Row 1 $0.00 $0.00 $0.00
Row 2 $0.00 $0.00 $0.00
Row 3 $0.00 $0.00 $0.00
Other $0.00 $0.00 $0.00

Sales
Row 1 $0 $0 $0
Row 2 $0 $0 $0
Row 3 $0 $0 $0
Other $0 $0 $0
Total Sales $0 $0 $0

Direct Unit Costs FY 2000 FY 2001 FY 2002

Row 1 $0.00 $0.00 $0.00
Row 2 $0.00 $0.00 $0.00
Row 3 $0.00 $0.00 $0.00
Other $0.00 $0.00 $0.00

Direct Cost of Sales

Row 1 $0 $0 $0
Row 2 $0 $0 $0
Row 3 $0 $0 $0
Other $0 $0 $0
Subtotal Direct Cost of Sales $0 $0 $0
 Travel Agency

6. Web Plan Summary - NEEDS TO BE DONE BY STUDENTS

Create web pages in PowerPoint of what your website will look like. Will you
have an e-commerce or a static information site? What promotions will you
offer online? Create your domain name and make sure it is not used yet.

7. Management Summary

Shea Delaney will act as the General Manager. However, Travel Agency is a small
organization and its employees will share in management duties and decision
making. It will be important for each member of the team to be capable in all
aspects of the business. Prerequisites for all Travel Agency employees include at
least five years travel industry experience, knowledge and ability in the types of
activities Travel Agency will promote, and Certified Travel Counselor (CTC)
certification for applicable positions. The CTC designation can be obtained
through the Institute of Certified Travel Agents (ICTA).

7.1. Personnel Plan - NEEDS TO BE DONE BY STUDENTS

Who will make up the management team and what makes them qualified?
(Include Resumes) Figure out your salary grid.

What other staff will be required?

Personnel Plan
FY 2000 FY 2001 FY 2002
Manager/President
Accountant
Travel Agent
Marketing & Advertising Dir.
Other
Total People

Total Payroll

8. Financial Plan

Travel Agency's financial plan is detailed in following sections. Preliminary

estimates suggest that Travel Agency will experience slow growth in the first two
quarters of operation. This is partly due to Travel Agency's status as a start-up
company and seasonal factors. Income estimates are based, in part, on
anticipated revenues from accounts that were secured by Travel Agency
employees prior to their departure from former employers. Travel Agency has
 Travel Agency

sufficient cash to endure the negative cash flow situation that it may encounter
initially. Travel Agency also anticipates an increase in gross margin and sales
volume. Thus, the overall financial plan presents a conservative but realistic
depiction of Travel Agency's financial position.

8.1. Important Assumptions

Travel Agency assumes the following:

 Market growth projections for the travel industry and for adventure
travel are accurate.
 National economic conditions, which are favorable to the travel
industry, will not experience significant decline in the next five years.

 International conditions will remain favorable for service providers

and Travel Agency will be able to maintain those relationships.

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 7.25% 7.25% 7.25%
Tax Rate 24.50% 24.00% 24.50%
Other 0 0 0

8.2. Break-even Analysis

The following table details Travel Agency's break-even analysis, including

monthly sales break-even points.

Break-even calculations assume a 20% gross margin. This is a conservative

estimate, and it will be improved as strategic relationships develop and the
benefits of Travel Agency's offerings are realized by customers.
 Travel Agency

Break-even Analysis

Break-even Analysis

Monthly Units Break-even 0

Monthly Revenue Break-even $0

Assumptions:
Average Per-Unit Revenue $0.00
Average Per-Unit Variable Cost $0.00
Estimated Monthly Fixed Cost $7,938

8.3. Projected Profit and Loss

Travel Agency's profit picture improves as operations progress into the third
quarter of the first year of operation. Travel Agency anticipates improving its
gross margin from 20% in year one to 22% in year two. Annual estimates of
profit and loss are detailed in the following table.
 Travel Agency

Pro Forma Profit and Loss

FY 2000 FY 2001 FY 2002
Sales $0 $0 $0
Direct Cost of Sales $0 $0 $0
Other $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $0 $0 $0

Gross Margin $0 $0 $0
Gross Margin % 0.00% 0.00% 0.00%

Expenses
Payroll $45,000 $46,248 $47,546
Sales and Marketing and Other $26,100 $26,280 $26,280
Expenses
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $4,500 $4,500 $4,500
Insurance $2,400 $2,400 $2,400
Rent $10,500 $10,500 $10,500
Payroll Taxes $6,750 $6,937 $7,132
Other $0 $0 $0
------------ ------------ ------------
Total Operating Expenses $95,250 $96,865 $98,358

Profit Before Interest and Taxes ($95,250) ($96,865) ($98,358)

EBITDA ($95,250) ($96,865) ($98,358)
Interest Expense $5,856 $5,597 $5,597
Taxes Incurred $0 $0 $0

Net Profit ($101,106) ($102,462) ($103,955)

Net Profit/Sales 0.00% 0.00% 0.00%

8.4. Projected Cash Flow

Monthly cash flow is shown in the following illustration. Annual cash flow
figures are estimated based on collection days, included in Table 7.5. Annual
cash flow for the first year of operation becomes positive in the second
quarter of operation.
Travel Agency

Cash
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Pro Forma Cash Flow

FY 2000 FY 2001 FY 2002
Cash Received

Cash from Operations

Cash Sales $0 $0 $0
Cash from Receivables $0 $0 $0
Subtotal Cash from Operations $0 $0 $0

Additional Cash Received

Sales Tax, VAT, HST/GST $0 $0 $0
Received
New Current Borrowing $0 $0 $0
New Other Liabilities (interest- $0 $0 $0
free)
New Long-term Liabilities $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 $0 $0 $0

Expenditures FY 2000 FY 2001 FY 2002

Expenditures from Operations

Cash Spending $45,000 $46,248 $47,546
Bill Payments $51,607 $56,093 $56,393
Subtotal Spent on Operations $96,607 $102,341 $103,939

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid $0 $0 $0
Out
Principal Repayment of $0 $0 $0
Current Borrowing
Other Liabilities Principal $7,800 $0 $0
Repayment
Long-term Liabilities Principal $7,800 $0 $0
Repayment
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $112,207 $102,341 $103,939

Net Cash Flow ($112,207) ($102,341) ($103,939)

Cash Balance ($77,207) ($179,548) ($283,487)
 Travel Agency

8.5. Projected Balance Sheet

The pro forma balance sheet indicates sustained and planned growth. Net
worth improves considerably in year two and will provide Travel Agency with
a strong financial position. Monthly estimates are included in the appendix.

Pro Forma Balance Sheet

FY 2000 FY 2001 FY 2002
Assets

Current Assets
Cash ($77,207) ($179,548) ($283,487)
Accounts Receivable $0 $0 $0
Other Current Assets $17,500 $17,500 $17,500
Total Current Assets ($59,707) ($162,048) ($265,987)

Long-term Assets
Long-term Assets $26,925 $26,925 $26,925
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $26,925 $26,925 $26,925
Total Assets ($32,782) ($135,123) ($239,062)

Liabilities and Capital FY 2000 FY 2001 FY 2002

Current Liabilities
Accounts Payable $4,499 $4,620 $4,636
Current Borrowing $0 $0 $0
Other Current Liabilities ($7,800) ($7,800) ($7,800)
Subtotal Current Liabilities ($3,301) ($3,180) ($3,164)

Long-term Liabilities $77,200 $77,200 $77,200

Total Liabilities $73,899 $74,020 $74,036

Paid-in Capital $18,000 $18,000 $18,000

Retained Earnings ($23,575) ($124,681) ($227,143)
Earnings ($101,106) ($102,462) ($103,955)
Total Capital ($106,681) ($209,143) ($313,098)
Total Liabilities and Capital ($32,782) ($135,123) ($239,062)

Net Worth ($106,681) ($209,143) ($313,098)

 Travel Agency

8.6. Business Ratios

The following table details our primary business ratios. Initial analysis
indicates that Travel Agency's ratios for profitability, risk, and return are
financially favorable and will improve greatly in year two of operation.
Industry Profile ratios are based on Standard Industry Classification (SIC)
Index code 4724.
 Travel Agency

Ratio Analysis
FY 2000 FY 2001 FY 2002 Industry
Profile
Sales Growth 0.00% 0.00% 0.00% 4.00%

Percent of Total Assets

Accounts Receivable 0.00% 0.00% 0.00% 25.20%
Other Current Assets -53.38% -12.95% -7.32% 38.10%
Total Current Assets 182.13% 119.93% 111.26% 64.00%
Long-term Assets -82.13% -19.93% -11.26% 36.00%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 10.07% 2.35% 1.32% 39.60%

Long-term Liabilities -235.49% -57.13% -32.29% 16.30%
Total Liabilities -225.42% -54.78% -30.97% 55.90%
Net Worth 325.42% 154.78% 130.97% 44.10%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 0.00% 0.00% 0.00% 38.30%
Selling, General & 19.65% 18.76% 17.97% 27.50%
Administrative Expenses
Advertising Expenses 0.34% 0.00% 3.76% 0.40%
Profit Before Interest and 0.00% 0.00% 0.00% 1.30%
Taxes

Main Ratios
Current 18.09 50.96 84.08 1.44
Quick 18.09 50.96 84.08 1.13
Total Debt to Total Assets -225.42% -54.78% -30.97% 55.90%
Pre-tax Return on Net Worth 94.77% 48.99% 33.20% 3.20%
Pre-tax Return on Assets 308.42% 75.83% 43.48% 7.20%

Additional Ratios FY 2000 FY 2001 FY 2002

Net Profit Margin 0.00% 0.00% 0.00% n.a
Return on Equity 0.00% 0.00% 0.00% n.a

Activity Ratios
Accounts Receivable 0.00 0.00 0.00 n.a
Turnover
Collection Days 0 0 0 n.a
Accounts Payable Turnover 12.47 12.17 12.17 n.a
Payment Days 27 30 30 n.a
Total Asset Turnover 0.00 0.00 0.00 n.a

Debt Ratios
 Travel Agency

Debt to Net Worth 0.00 0.00 0.00 n.a

Current Liab. to Liab. -0.04 -0.04 -0.04 n.a

Liquidity Ratios
Net Working Capital ($56,406) ($158,868) ($262,823) n.a
Interest Coverage -16.26 -17.31 -17.57 n.a

Additional Ratios
Assets to Sales n.a. n.a. n.a. n.a
Current Debt/Total Assets 0% 0% 0% n.a
Acid Test 0.00 0.00 0.00 n.a
Sales/Net Worth 0.00 0.00 0.00 n.a
Dividend Payout 0.00 0.00 0.00 n.a