What it means to be a Tourism Entrepreneur

This course will help you start your own business by introducing you the stories of three outstanding people who have started from scratch and became successful entrepreneurs. You will learn about their experiences, challenges and successes. 

Who is this course for? 

The course is intended for anyone thinking of starting their own business and anyone interested in the topic.

What will you learn? 

• You will learn how to evaluate the skills and traits to decide which business is suitable for you
• You will learn how to identify and implement key aspects for planning and running your business
• You will learn how to explain what administrative duties have to be fulfilled
• You will learn how to define funding options to get started with your tourism business

Keywords: Sustainability, tourism, management, entrepreneurship 

Planning Your Business as a Tourism Entrepreneur

In this session you will learn how to evaluate the skills and traits to decide which business is suitable for you as well as how to identify and implement key aspects for planning and running your business.

Lesson 1: What type of business is suitable for me?

Do you have all the right skills and abilities to start your business?

Can you get support from your families and friends?

Are you keen to develop an entrepreneurial mindset?

Great, these are perfect starting conditions.

Now, you need to think about which field of business you want to start your business in. You might ask yourself what are your work experiences, technical skills, knowledge of business practices, and also your personal preferences, hobbies, social ties and family background.

Tourism business types

It is not easy to find the right type of business or to generate a new business idea. There are so many fields to work in, so many businesses out there to choose from. There are three main types of tourism businesses:

Looking at your personality, preferences, skills, experience and social setting will help you to generate your idea. 

How to choose a type of business?

What are your interests?

What hobbies do you have? What do you do in your freetime? What are you passionate about?

What experiences do you have?

Where have you worked before? What were your previous jobs? Where did you get your training? What is your educational experience?  

What business network can you explore?

Who do you know? Who in your network could you ask? Friends? Relatives? Who could provide information, advice or assistance about the business?  

What is your preference?

• Do you prefer to work with others or alone?
• Do you prefer to be outdoors or indoors? 
• Do you prefer work that allows creative expressions?
• Do you prefer technical work or work that is related to people? 

Why is proper planning so important?

Planning well right from the start ensures that your business idea will be competitive on the tourism market in your region. And with the right product, you will meet the needs of your customers.  

It is important to consider certain issues when planning your business – don’t start out without doing proper research. Not having a well-thought-out business plan can lead to failure.

What is needed to ensure a successful business?

1. Size up the competition – Competitor Analysis

Thoroughly research the accommodation or restaurants in your area before you decide which type of business is right for you. You will want to choose a tourism sector that is not overly congested and one that you can contribute something unique to. Baba Mbengue

2. Identify key stakeholders – Stakeholder Analysis

A stakeholder is a person with an interest or concern in something, especially a business. Without the stakeholders, you won’t be able to guarantee a smooth delivery of your service or you might lack essential components of your product, such as food, transportation or guide services. 

Who are important stakeholders and their role?

They ensure the mobility of your customers from A to B.

Local suppliers for food, beverages

They ensure that you can provide meals and drinks for your guests, that you can cater well for them.

Local tourism suppliers

They provide essential equipment and ensure that activities can be realised.

Local authorities

They give you permission to run the business and set the legal framework.

Tour operators and travel agencies

They promote and sell your product, and might even coordinate your product if it is part of a package.

Employees

They will deliver the services to your guests. Without staff, you cannot run your business.

3. Understand your target group and target market

Research what your target market will be and think critically about why they would choose to use your service or product over another. What is appealing to one tourist may not attract another – be target-market orientated and authentic. Meet the customers’ expectations – customer expectation encompasses everything that a customer expects from your product or service you deliver. 

Keep in mind that you should consider not only your target market’s nationality but also their gender, age, social background, financial status, educational level and religion. Do they arrive in a group, as a family or by themselves? Abdou Ba

Targeting the local market

If you are targeting the local market, consider how you will offer something to a national client who doesn’t already have access to it.

Understanding international traveller’s expectations

Understand the international traveller’s expectations by researching. For example, look at travel blogs, travel agencies and rating platforms like TripAdvisor, websites of international tour operators or tourism market studies.

4. Engage with suppliers

Establish a good, reliable, long-lasting relationship with your suppliers. Fair, honest and reliable suppliers and service providers are valuable. 

Work closely with suppliers. Remember: it might happen that your suppliers could have difficulty maintaining the consistent availability of goods and services due to changing weather conditions or problems in delivery. Always have a plan B or even a plan C. Paloma Sané

5. Set up your business plan

You need a well-researched business plan to ensure that your aims are clear and that anybody interested in your business can quickly understand your vision. 

A business plan should formally cover the following areas that are important to the design of your business.

Target Market

• What do tourists need? 
• What makes an experience really special for a tourist?
• Who is my target market? Are they local, domestic or international tourists?
• Have I tested the idea on my target market?

Unique Selling Point

• Why is my business idea different? What will be my Unique Selling Point (USP)?
• What is being done already? What is working? Why is it working?
• What isn’t working? Why isn’t it working?
• What does my business have that other businesses don’t have?

Investment

• How can I ensure I am on the right path before I invest everything?
• How much money will I need? How long does it take before I earn enough money to pay for expenses, without making any profit (break-even) and turn a profit?
• How can I start small and then grow when business improves?

Lesson 3: How to ensure business success?

Once your business is up and running, planning and managing are not finished. There are constant changes to which you have to adapt. And you need to ensure your business quality and customer service at all times. This makes constant planning and managing essential. Continuous work is the key to ensure that your business is running smoothly. Paloma Sané

Good business practice

Add value to your product

Ensure your products are unique, up-to-date and good-quality. If your product is a handicraft or similar, wrap it nicely and inform your customers about their uses and origins. You can then charge more without adding more to the cost of the product.

Make quality a top priority

Apply quality control at all stages in your business. Ensure that all your products and services are consistently high quality.

Focus on good customer service

Be reliable and consistent, and communicate effectively. This ensures that your customers will come back.

Focus on efficient production and service delivery

Plan your production or service delivery precisely and keep track of progress, number of customers or number of excursions to be run.

Plan ahead

Be aware of the changing needs of customers, observe their requests constantly and make a plan to satisfy their needs. And think carefully about cost-intensive purchases and whether you have enough cash to make these purchases. Otherwise, you might lack money to buy essential raw materials or basic equipment to ensure your production or service delivery.  

Put systems in place

To complete a specific task or an activity or solve a problem. Keep them clear and easy to follow. Make them visible and easy to track via a check-list.

Plan for action and make improvements

Do not plan too many things at once but make improvements constantly. Provide or take part in training for yourself and for your staff.

Know the difference between pricing and costing

How much does it cost for you to make the product or to deliver the service? And how much would you sell it for? Don’t charge too much – it is very important to have happy customers and good quality, but of course you need to make a profit.

Remember to add value to your product and constantly make improvements. Stagnation is a step backwards.

Administrative and Financial Issues as a Tourism Entrepreneur

Lesson 1: What administrative duties have to be fulfilled?

When I founded my agency in 2001, it was my absolute dream to be my own boss. But that also brought with it a lot of responsibility. That includes applying for the correct administrative and legal documents. Otherwise, it can quickly lead to the closure of the company. Abdou Ba

As a hospitality and tourism manager, you are required not only to understand the day to day operation of your business, but also the administrative and legal aspects of tourism management. Bear in mind that you must comply with certain administrative duties when starting or running a tourist business. 

The nature of the business venture will often determine if a license is necessary to get it up and running. For example, a seller’s permit is often required if a company intends to sell products or services to the public, like travel agencies. Restaurants and cafés require special licensing to sell food products.

It is vital that you do specific research about the administrative requirements in your region.

Essential administrative steps

This paperwork may be tedious but it is essential that you have the following items in order. 

1. Obtain business registration

Once you have thoroughly planned your business concept and carried out market research and a competitor analysis (along with the other steps), the first stage in your administrative process is to register your new business.

2. Open a bank account

Select a bank of your choice. Compare their terms and conditions thoughtfully. Be aware that tourists often pay by visa or online. The selected bank should offer these features. 

3. Obtain tourism registration and relevant licenses

Once you have completed the business registration, you need to apply for your tourism license as well as the relevant licenses to ensure you’re fulfilling all administrative requirements. The registration requires several documents that have to be compiled in advance.

4. Take out relevant insurance

It is recommended to take out insurance – the type of insurance very much depends upon the business you run and the clients you have.

5. Consider taxes and Levies; Each country has a very specific tax system in place. Inform yourself in detail about the different types of taxes. Consult a professional accountant about tax, since methods of paying depend on the type of business.

6. Regulatory Permits; Think about the regulatory permits you need for an office, restaurant, event space or accommodation. For example, you may need a fire safety check, business premises licence or similar.

Lesson 2: Why is it crucial to get professional advice for administrative processes?

One of the most important choices you make when starting your business is the type of business structure you select for your company. 

The choice of business structure can have long-lasting effects on the way the business is run and operated, so think about it carefully and seek expert advice from business professionals when considering the pros and cons of various business entities. Baba Mbengue

How to get professional help

• Contact the business centers in your region
• Consult the regional Chamber of Commerce
• Work in other tourism businesses to gain experiences
• Speak to entrepreneurs in your community

Tips and tricks

Talk to other business owners

Ask them about administrative errors and how you can avoid them. For example, do they respect the privacy policy of their clients?

Get help from the regional Chamber of commerce or business center

Review what policies you need to have in place for your small business. What else is required in your region?

Research on the internet

See what other entrepreneurs have experienced. Maybe you can join a digital network or forum to exchange info on administrative issues to be considered.

Liability management

Make sure that you have good liability management in place that reduces the chances of accidents occurring and legal action being taken against you and your business. Be familiar with liability issues, for example, liability for health and safety, customer liability and premises liability. 

Brief and train your staff

Brief and train your staff on what their administrative obligations are in terms of health and safety, serving alcohol and other duties. Remember that your employees’ mistakes may create more administrative difficulties.

You will be surprised at how much the correct administration can help your business to be a success.

 

Lesson 3: Sources of funding

What are funds?

In business, the term funds generally refers to the pool of financial resources available for near-term use. Funds has roughly the same meaning as available cash.

When starting your business, obviously you need financial resources. You are short of money, but you still have an excellent business idea?  Don’t hesitate, there are diverse funding options out there. Paloma Sané

Personal investment

Your first investor should be yourself – either with your own cash or with collateral on your assets.

This proves to investors and bankers that you have a long-term commitment to your project and that you are ready to take risks.

Loans

Loans can come from families and friends. Repayments can be made when the company’s profit increases. Loans can also be given by private entities (usually banks). The conditions are often very different. Bank loans are the most commonly used source of funding for small and medium-sized businesses.

Love Money:

Love money is money loaned by a spouse, parents, family or friends of yours.

Investors and bankers consider this as patient capital, which is money that will be repaid later as your business profits increase.

When borrowing love money, you should be aware that:

• Family and friends rarely have much capital.
• They may want to have equity in your business.
• A business relationship with family or friends should never be taken lightly.

Bank Loans: Consider the fact that all banks offer different advantages, whether it’s personalised service or customised repayment. It’s a good idea to shop around and find the bank that meets your specific needs.

Bear in mind that you should have a sound financial track record and excellent credit. A good idea is not enough – it has to be backed up with a solid business plan. Start-up loans will also typically require a personal guarantee from you.

Be very wary of jumping into a loan agreement – be sure you are not getting yourself into more difficulty in the long term. As in many countries inflation is unpredictable and loans come with high interest rates, so you could very quickly find yourself in financial difficulty if you are not careful – a targeted approach to funding is crucial. Baba Mbengue

Government grants, Crowdfunding and Business incubators

Government grants and subsidies

Government agencies provide financing, such as grants and subsidies that are aimed to promote business in a specific field.

Keep an eye on relevant funding lists for grants and subsidies online. This could be on websites of business networks, governmental sites or economic development institutions that provide comprehensive listings of various government programs at federal and provincial levels. 

Getting grants can be tough. There may be strong competition and the criteria for awards are often stringent. Generally, most grants require you to match the funds you are being given and this amount can vary greatly.

Crowdfunding

Crowdfunding uses small amounts of capital from a large number of individuals to finance your business venture.

It can be a fun and effective way to raise money for a relatively low-cost, creative project. Use the easy accessibility of vast networks of people through social media and crowdfunding websites. Check out crowdfunding platforms online.

Business incubators

An incubator is an organisation designed to help start-up businesses grow and succeed by providing free or low-cost workspace, mentorship, expertise, access to investors, and in some cases, working capital in the form of a loan.

You’ll work around other entrepreneurial businesses, often with a focus similar to yours.

Do some research on tourism incubators in your region and find appropriate incubators.

You must have a proven idea and concept before looking for external funding. Finding funding without proving how and why your idea will work is extremely difficult. 

Lesson 4: How can you get funding to start your business?

For some funding options, the application processes are very long and complex, you need to fulfill certain requirements and your business idea needs to be extraordinary so that other people invest in you. 

So start out with the most achievable funding options that are also the most popular ones.

Depending on your business type, you do not  necessarily need a huge amount of capital to succeed. Being rich does not ensure business success. Work within your means. Abdou Ba

Your attitude, business plan and strategy are more important than money.

Funding process

After finding the most common funding options, you will need to go through a formal process to secure funds. The following steps will help you.

1. Set up a proper business following local laws.

2. Describe your business idea in a very detailed way: What services or products do you want to offer or deliver.

3. Define the market you want to target and serve.

4. Present ideas on how to promote your business and how to market your products or services.

5. Outline how much money you need to get started. What are your expected start-up costs?

6. Identify the business model: How do you plan to earn money in the long run? How do you generate income?

Summarise your well-thought business idea and formulate it in a well-written document. This Business Plan document can be presented to any person or institution that you ask for funding.  

Now that you have studied and passed this module you are well-prepared to start your business.