Travel Tour Agency Business Plan

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11.0 Executive Summary

2Chart: Highlights

21.1 Objectives

31.2 Mission

31.3 Keys to Success

42.0 Company Summary

42.1 Company Ownership

42.2 Start-up Summary

4Table: Start-up

5Table: Start-up Funding

6Chart: Start-up

62.3 Company Locations and Facilities

63.0 Services

63.1 Competitive Comparison

73.2 Service Description

93.3 Macroenvironment

93.4 Sales Literature

93.5 Fulfillment

93.6 Technology

103.7 Future Services

104.0 Market Analysis Summary

104.1 Market Segmentation

11Chart: Market Analysis (Pie)

11Table: Market Analysis

124.2 Target Market Segment Strategy

124.2.1 Market Needs

124.2.2 Market Trends

124.3 Service Business Analysis

124.3.1 Distributing a Service

134.3.2 Competition and Buying Patterns

134.3.3 Main Competitors

145.0 Strategy and Implementation Summary

155.1 SWOT Analysis

155.1.1 Strengths

155.1.2 Weaknesses

155.1.3 Opportunities

155.1.4 Threats

165.2 Marketing Strategy

165.2.1 Pricing Strategy

165.2.2 Promotion Strategy

185.2.3 Positioning Statement

185.3 Sales Strategy

185.3.1 Sales Forecast

18Chart: Sales Monthly

19Table: Sales Forecast

195.4 Strategic Alliances

195.5 Corporate Social Responsibility

206.0 Management Summary

206.1 Organizational Structure

206.2 Management Team

216.3 Personnel Plan

21Table: Personnel

216.4 Training

226.5 Feedback and Control

227.0 Financial Plan

227.1 Important Assumptions

23Table: General Assumptions

237.2 Key Financial Indicators

23Chart: Benchmarks

247.3 Projected Profit and Loss

24Chart: Gross Margin Monthly

25Chart: Gross Margin Yearly

25Chart: Profit Monthly

26Chart: Profit Yearly

26Table: Profit and Loss

277.4 Break-even Analysis


27Chart: Break-even Analysis

27Table: Break-even Analysis

287.5 Projected Cash Flow


29Chart: Cash

28Table: Cash Flow

307.6 Projected Balance Sheet


30Table: Balance Sheet

307.7 Business Ratios

307.7 Business Ratios

31Table: Ratios

328.0 Controls

1Table: Sales Forecast

2Table: Personnel

2Table: Personnel





5Table: Cash Flow

5Table: Cash Flow



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 tocontact 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.

Chart: Highlights

1.1 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.

1.2 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.

1.3 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.

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 through the foresight and vision of Mr. X and Mrs. Y. It is a 100% wholly owned Botswana firm.

2.2 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).Table: Start-upStart-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

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 Liabilities$0

Accounts Payable (Outstanding Bills)$0

Other Current Liabilities (interest-free)$0

Total Liabilities$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 Liabilities$197,000

Total Funding $202,000

Chart: Start-up

2.3 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.

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.

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 theMarket Analysissection of this plan.

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 ofseveral 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, 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.

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.

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.

Chart: Market Analysis (Pie)

Table: Market AnalysisMarket Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential CustomersGrowthCAGR

Tourists from Europe and Americas15% 124,000 142,600 163,990 188,589 216,877 15.00%

Tourists from South Africa25% 400,000 500,000 625,000 781,250 976,563 25.00%

Total22.85% 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' andpeoples' budgets, and that these people know that we exist, appreciate the value of our services, andhow 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.

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 sothat 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.

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.

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 stagesasareas 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 currentlyvigorously searching andrecruiting 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.

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.

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 basisso 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 ExpensesInitial 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 ofeight to tenpersons.

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.

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.

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.

5.3.1 Sales Forecast

The following chart and table show our planned Sales Forecast for the next three years.

Chart: Sales Monthly

Table: Sales ForecastSales Forecast

Year 1 Year 2 Year 3

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 Year 1 Year 2 Year 3

All tourist services$70,000 $111,300 $126,000

Other$0 $0 $0

Subtotal Direct Cost of Sales$70,000 $111,300 $126,000

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.

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. Ourorganizational structuredemonstrates 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 agood 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.

Table: PersonnelPersonnel Plan


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 People1114 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.

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 AssumptionsGeneral Assumptions


Plan Month123

Current Interest Rate10.00% 10.00% 10.00%

Long-term Interest Rate10.00% 10.00% 10.00%

Tax Rate18.08% 17.00% 18.08%

Other0 0 0

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.

Chart: Benchmarks

7.3 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.

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Chart: Profit Monthly

Chart: Profit Yearly

Table: Profit and LossPro Forma Profit and Loss


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/Sales24.03% 17.60% 19.23%


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.

Chart: Break-even Analysis

Table: Break-even Analysis

Break-even Analysis

Monthly Revenue Break-even$18,656

Assumptions:

Average Percent Variable Cost20%

Estimated Monthly Fixed Cost$14,925


The following chart and tablehighlights the projected Cash Flow statement for Sephats Tours.

Table: Cash FlowPro Forma Cash Flow


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 Liabilities (interest-free)$0 $0 $0

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$308,700 $532,133 $621,327

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending$112,800 $266,400 $289,200

Bill Payments$144,204 $200,926 $215,082

Subtotal Spent on Operations$257,004 $467,326 $504,282

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 Liabilities 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 $467,326 $504,282

Net Cash Flow$51,696 $64,807 $117,045

Cash Balance$81,696 $146,503 $263,548

Chart: Cash


The table below outlines the company's Balance Sheet.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current Assets

Cash$81,696 $146,503 $263,548

Accounts Receivable$41,300 $65,667 $74,340

Inventory$9,240 $16,222 $13,075

Other Current Assets$0 $0 $0

Total Current Assets$132,236 $228,392 $350,963

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 $395,392 $517,963

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable$18,134 $16,369 $17,795

Current Borrowing$0 $0 $0

Other Current Liabilities$0 $0 $0

Subtotal Current Liabilities$18,134 $16,369 $17,795

Long-term Liabilities$0 $0 $0

Total Liabilities$18,134 $16,369 $17,795

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 Liabilities and Capital$299,236 $395,392 $517,963

Net Worth$281,101 $379,022 $500,168

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.

Table: RatiosRatio Analysis

Year 1 Year 2 Year 3Industry Profile

Sales Growthn.a.59.00% 13.21% 4.00%

Percent of Total Assets

Accounts Receivable13.80% 16.61% 14.35% 22.30%

Inventory3.09% 4.10% 2.52% 0.70%

Other Current Assets0.00% 0.00% 0.00% 42.80%

Total Current Assets44.19% 57.76% 67.76% 65.80%

Long-term Assets55.81% 42.24% 32.24% 34.20%

Total Assets100.00% 100.00% 100.00% 100.00%

Current Liabilities6.06% 4.14% 3.44% 33.10%

Long-term Liabilities0.00% 0.00% 0.00% 16.40%

Total Liabilities6.06% 4.14% 3.44% 49.50%

Net Worth93.94% 95.86% 96.56% 50.50%

Percent of Sales

Sales100.00% 100.00% 100.00% 100.00%

Gross Margin80.00% 80.00% 80.00% 40.10%

Selling, General & Administrative Expenses56.07% 62.40% 60.52% 30.80%

Advertising Expenses4.71% 3.26% 3.17% 0.80%

Profit Before Interest and Taxes28.83% 21.20% 23.47% 1.20%

Main Ratios

Current7.29 13.95 19.72 1.66

Quick6.78 12.96 18.99 1.29

Total Debt to Total Assets6.06% 4.14% 3.44% 49.50%

Pre-tax Return on Net Worth35.89% 31.13% 29.57% 2.70%

Pre-tax Return on Assets33.72% 29.84% 28.55% 5.30%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin24.03% 17.60% 19.23% n.a

Return on Equity29.92% 25.84% 24.22% n.a

Activity Ratios

Accounts Receivable Turnover4.24 4.24 4.24 n.a

Collection Days56 70 81 n.a

Inventory Turnover10.91 8.74 8.60 n.a

Accounts Payable Turnover8.95 12.17 12.17 n.a

Payment Days27 32 29 n.a

Total Asset Turnover1.17 1.41 1.22 n.a

Debt Ratios

Debt to Net Worth0.06 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 Coverage0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales0.85 0.71 0.82 n.a

Current Debt/Total Assets6% 4% 3% n.a

Acid Test 4.51 8.95 14.81 n.a

Sales/Net Worth1.25 1.47 1.26 n.a

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.

Table: Sales Forecast

Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales

All tourist services0%$14,000 $17,500 $17,500 $28,000 $28,000 $28,000 $28,000 $31,500 $35,000 $38,500 $42,000 $42,000

Other0%$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 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

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

Table: Personnel

Personnel Plan


Directors0%$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Accountant0%$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 Guide0%$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 & Marketing0%$1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600

Driver0%$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 Assistant0%$1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100

Cleaner0%$600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Nightwatchman0%$600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600 $600

Mechanic0%$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total People11 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

Table: General Assumptions

General Assumptions


Plan Month123456789101112

Current Interest Rate10.00% 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 Rate10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%

Tax Rate30.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00% 17.00%

Other0 0 0 0 0 0 0 0 0 0 0 0

Table: Profit and LossPro Forma Profit and Loss


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 Taxes0% $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%

Table: Cash FlowPro Forma Cash Flow


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 Received0.00% $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 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Expenditures from Operations

Cash Spending$9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400 $9,400

Bill Payments$320 $9,562 $8,865 $10,639 $13,799 $11,649 $13,973 $11,631 $13,634 $17,134 $15,903 $17,097

Subtotal Spent on Operations$9,720 $18,962 $18,265 $20,039 $23,199 $21,049 $23,373 $21,031 $23,034 $26,534 $25,303 $26,497

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Principal Repayment of Current Borrowing$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities Principal Repayment$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Long-term Liabilities Principal Repayment$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Other Current Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Dividends$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent$9,720 $18,962 $18,265 $20,039 $23,199 $21,049 $23,373 $21,031 $23,034 $26,534 $25,303 $26,497

Net Cash Flow($2,720)($9,978)($2,457)$2,711 ($274)$6,951 $4,627 $8,719 $8,524 $8,524 $13,255 $13,811

Cash Balance$27,280 $17,302 $14,845 $17,556 $17,282 $24,234 $28,861 $37,580 $46,105 $54,629 $67,884 $81,696

Table: Balance Sheet

Pro Forma Balance Sheet


AssetsStarting Balances

Current Assets

Cash$30,000 $27,280 $17,302 $14,845 $17,556 $17,282 $24,234 $28,861 $37,580 $46,105 $54,629 $67,884 $81,696

Accounts Receivable$0 $7,000 $15,517 $17,208 $22,458 $27,533 $27,533 $27,533 $29,283 $32,725 $36,167 $39,608 $41,300

Inventory$0 $3,080 $3,850 $3,850 $6,160 $6,160 $6,160 $6,160 $6,930 $7,700 $8,470 $9,240 $9,240

Other Current Assets$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Current Assets$30,000 $37,360 $36,669 $35,904 $46,174 $50,976 $57,927 $62,554 $73,794 $86,530 $99,266 $116,733 $132,236

Long-term Assets

Long-term Assets$167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000

Accumulated Depreciation$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-term Assets$167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000 $167,000

Total Assets$197,000 $204,360 $203,669 $202,904 $213,174 $217,976 $224,927 $229,554 $240,794 $253,530 $266,266 $283,733 $299,236

Liabilities and Capital Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Current Liabilities

Accounts Payable$0 $9,268 $8,514 $10,177 $13,413 $11,180 $13,587 $11,180 $13,061 $16,605 $15,335 $16,472 $18,134

Current Borrowing$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Current Liabilities$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities$0 $9,268 $8,514 $10,177 $13,413 $11,180 $13,587 $11,180 $13,061 $16,605 $15,335 $16,472 $18,134

Long-term Liabilities$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Liabilities$0 $9,268 $8,514 $10,177 $13,413 $11,180 $13,587 $11,180 $13,061 $16,605 $15,335 $16,472 $18,134

Paid-in Capital$202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000 $202,000

Retained Earnings($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)($5,000)

Earnings$0 ($1,908)($1,845)($4,273)$2,761 $9,796 $14,340 $21,374 $30,732 $39,925 $53,931 $70,261 $84,101

Total Capital$197,000 $195,093 $195,155 $192,727 $199,761 $206,796 $211,340 $218,374 $227,732 $236,925 $250,931 $267,261 $281,101

Total Liabilities and Capital$197,000 $204,360 $203,669 $202,904 $213,174 $217,976 $224,927 $229,554 $240,794 $253,530 $266,266 $283,733 $299,236

Net Worth$197,000 $195,093 $195,155 $192,727 $199,761 $206,796 $211,340 $218,374 $227,732 $236,925 $250,931 $267,261 $281,101

Documents

Travel Tour Agency Business Plan