A passion for travel and for designing inspired itineraries is often what draws people to the field of travel advising, but the business side of the work requires time and attention, too — and if you only attend to the fun part, getting a handle on your finances is sure to become a daunting task.
Heather Christopher, owner of HC Travel Firm, has been selling travel for nearly two decades, and as her business has grown to include numerous independent contractors (ICs), keeping her finances buttoned up has become her No. 1 priority. And though the numbers — or the dollars — are what fuel the industry, Christopher thinks her peers don’t talk about them enough.
To help move the dial in the right direction, we spoke with numerous organizations and a finance pro about best practices in financial tracking. All agree that while crunching the numbers may not be the most thrilling part of their job, it’s crucial to their business success. In fact, in a pre-pandemic study, U.S. Bank found that 82% of small businesses (which are generally defined as companies with fewer than 100 employees) that failed did so because of cash-flow troubles. The below professionals believe that’s avoidable; here are their strategies to ensure success.
Tracking data helps advisors identify patterns in sales and make informed business moves.
Credit: 2024 Kaspars Grinvalds/stock.adobe.comDon’t Wait to Get Started
Even if your business is brand new, Kate Thomas of Travel Pro Theory says to start tracking your numbers (total sales, planning fees, commissions and more). There are good for-pay programs out there, from Quickbooks to Xero, but you can also design something that works for you on free programs such as Google Sheets (which is what Thomas uses to meticulously track her business data). Thomas even sells her sales tracker to fellow advisors looking for a tool to keep their finances clearly laid out.
Her next piece of advice? Don’t let the numbers intimidate you into doing nothing.
Some people are scared to look at the numbers, or are intimidated by the math of it, but once you get it set up, it’s easy.
“I love a spreadsheet, so I’m not put off by this, but I know some people are scared to look at the numbers, or are intimidated by the math of it,” Thomas said. “But once you get it set up, it’s easy, and you take that emotion out of it. You’re just entering data and gathering information, and now you can make better decisions.”
Byrd Bergeron, owner of The Travel Byrds, requires her full-time ICs to map out their finances and filter them through a monthly cash-flow statement. Looking at the numbers puts their work under a magnifying glass and helps them note patterns, including the times of the year that bring high sales and very low sales, for example, so they can plan accordingly.
“You are running your own business, but I don’t think people are running it like a business — and that’s half the battle,” Byrd said.
Try the “Profit-First” Method
Profit-first accounting, based on the book “Profit First” by Mike Michalowicz, is a practice Byrd recommends to fellow advisors as an alternative to cash-flow statements, which can be difficult to understand. The profit-first method involves having five different bank accounts that assist a business owner with organizing income and profit and saving for taxes, personal salary and rainy days. It’s a method that makes your budget very visible, like the envelope trick sometimes used for personal budgeting. (In this strategy, specific cash amounts are placed in physical, categorized envelopes — groceries, dining out, entertainment — so that the spender sees where the money goes, and when it’s gone.)
“This method also makes you put yourself first,” Bergeron said. “Maybe you start with 1% profit, but in six months you might be able to put away 2% profit. Then, you can slowly grow to a profitable model that’s doing things the right way.”
Make Tracking the Numbers Part of Your Workflow
With a tracking method selected and ready to go, advisors should make using it part of their daily workflow, such as by setting aside an hour at the end of every week to drop in incoming payments and outgoing sums. Thomas goes to her tracker any time money moves, whether she’s paying a vendor on the ground or collecting a fee from a new client who is just starting the planning process.
“I want to know what I’m making per trip, so I’ll have an estimated profit [in my tracker], and then when I plug things in, I get the actual profit,” Thomas said. “As soon as something is deposited, I go put it on the spreadsheet. That’s all part of the workflow.”
Most advisors agree that making data entry part of their workflow is vital.
Credit: 2024 kerkezz/stock.adobe.comWhy Tracking Data Is Important
The time it takes to track the numbers is well worth it, because it’s all data that helps an advisor make informed business decisions. The tracking sheet Thomas uses allows her to filter for all kinds of things — trip length, destination, travel type, whether the client is a new or repeat traveler, etc. — then she looks at her totals from all angles and makes business moves from there.
“I’ve made big decisions based on my data,” she said. “For example, I sell the United Kingdom and Ireland, and for a while, [when I was newer to the work,] I also sold Atlantic Canada. Canada was successful in terms of reaching new clientele and meeting suppliers. But it’s so inexpensive that profitability was low. So, I did it for a couple of years, reviewed the data and made the decision to cut it. If I sold 50 trips to Atlantic Canada vs. 50 trips to Ireland, the profit margin was too different. I wasn’t going to grow at that rate.”
Her filters highlight other things, too.
“I’m able to cite the average spend per person, and the average spend per trip,” Thomas said. “I base my minimum budget on that average spend, and that’s an easy way to vet people out as they come in and you’re growing your business. You can also see what’s most successful for you, and where to focus your marketing."
In-person courses and group financial workshops are ways to get business guidance.
Credit: 2024 master1305/stock.adobe.comWhen in Doubt, Ask For Help
No matter the field, reflecting and recognizing personal areas of need is just as important as recognizing areas of strength. So, if tracking expenditures and income or managing a budget feels overwhelming, Christopher of HC Travel Firm recommends looking for expert or peer support, or an educational course that aligns with your needs. The American Society of Travel Advisors (ASTA) has a three-module finances and accounting course ($190) to get participants started; it covers taxes, business structures and accounting basics. With an expanding business and a complex budget, Christopher sought the help of a fractional CFO, or a financial consultant for hire. She attends online group finance meetings led by Adam Knihtila of Adam Kae and Associates, and she brings her business questions with her. At $97 per month, Christopher says it’s been a smart investment.
"Working with a fractional CFO has vastly changed my knowledge of my financial health within the business,” she said. “Adam has helped me create multiple spreadsheets that help me determine, for example, the impact of changing my [host agency’s] IC split to 100% with a $500 monthly fee, or an 85/15 split with a $250 monthly fee. He’s also helped me clean up my entire QuickBooks, so I can easily pull a profit and loss statement and understand it.”
And why not hire a pro if you can? Knihtila notes that plenty of business owners love their work, but don’t necessarily love spending time keeping their books, or figuring out how to be more profitable — but that’s precisely what fractional CFOs went into business to do.
Even if I can help you make one better decision a month, or save one hour of your time per month, the results can have a return on investment for years to come.
"I interpret the books and give you the most important pieces of information, so that you can make proactive, informed decisions,” Knihtila said. “Even if I can help you make one better decision a month, or save one hour of your time per month, the results can have a return on investment for years to come.”
Bergeron of The Travel Byrds went the business coach route, paying about $2,000 per month for six months of coaching. She and her coach created highly detailed and personalized business tracking tools that remain fundamental to her clarity around her business and her financial success. She sees the coaching costs as a fantastic investment.
“You need refreshers, you need to continue to grow, and growing costs money,” Byrd said.
Additional Steps to Take to Better Ensure Success
Steven Gould, chief innovation officer of the Travel Advisor Resource Center (TARC) and owner of Gould’s Travel, also recommends that advisors educate themselves on their business organization options. Advisors can be a sole proprietor, operating under their own name, or they can create a DBA name, or a “doing business as” name, which Gould says can help build and legitimize a business. Advisors can also get an EIN number, or Employer Identification Number, so that they’re recognized as a business entity by the IRS (versus doing business via their own social security number). Gould also suggests setting up separate business bank accounts.
“We tell all of our advisors to have a commercial business account, to separate your personal and business finances due to the liability of getting audited,” Gould said. “This also allows you to more easily track your income and expenses.”
Other steps include developing an LLC, or limited liability company, “which essentially separates your business from your personal self,” Gould said. Advisors can also look into other tax codes — such as S Corp or C Corp designations — depending on how they want their business to be taxed. To help determine the best course of action, talking to a CPA might be a good play.
“You use a travel advisor to get professional advice on travel, so use the right resources for this, too,” Gould said. “Consider a CPA for the financial and tax side, an attorney for the legal side and for protection, and insurance agents for insurance. We have resources on the TARC page, including a list of travel industry attorneys and E&O insurance providers. Reach out to multiple carriers to see what they can offer you.”
Gould thinks of each of the above players as members of an advisor’s team.
“Having an expert in each arena just helps you navigate this work with more ease,” he said.
