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Tourism
business
planning
online course in responsible
tourism development
session #05
Gerardine Parisi
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Agenda
1. From business idea to business plan
2. What is a business plan
3. How to write a business plan
4. Create your own business plan
5. A practical example
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From business idea to business plan
How to start up your own business
Create a successful business is a very difficult task.
You have to be strong motivated and very oriented to planning
and scheduling.
Principal steps of an aware process:
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From business idea to business plan
The business idea
Your business idea can be based on a dream or an aspiration but
you have to translate it in something of concrete
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From business idea to business plan
The importance of planning
Planning and scheduling are key successful factors
Most common reasons of failure:
Lack or inadequacy of planning
Lack of market research
Overestimation of demand
LACK OR
Poor quality in the management of the business
POORNESS
Error in determining the selling price
OF
Little attention to costs and expenses
BUSINESS
Poor financial management PLAN
Insufficient sales
Startup capital deficient
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What is a business plan?
Business plan
Business plan allows to verify:
Market feasibility TO SELL
Organizational and technical feasibility TO MANAGE
Financial and economic feasibility TO EARN
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What is a business plan?
Aim of business plan
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Create your own business plan
1. Market feasibility
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Create your own business plan
2. Marketing mix
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Create your own business plan
3. Organizational and technical feasibility
Most important point to evaluate:
Special permissions to start up
Investment necessary to start the business
Most appropriate legal form to manage the business
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Create your own business plan
4. Financial and economic feasibility
Year 1 Year 2 Year 3 Year ……
Investment
cost
Operating Operating Operating Operating
cost cost cost cost
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Create your own business plan
4.1 Initial investment cost
Initial investment cost are all the expenses you will need
to start up your business such as:
Immaterial expenses to start up the business, such as
permission;
Material needs:
• location or office;
• special machine;
• basic equipment.
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Create your own business plan
4.1 Initial investment cost
How can I get the money I need to start up my
own business?
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Create your own business plan
4.2 Break even point
BREAK EVEN POINT
NO PROFITS
NO LOSES
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Create your own business plan
4.3 Operating cost
To calculate the break even point it is necessary to know
which kind of costs are related to your business.
Costs can be divided into four main categories:
Fixed cost
Variable cost
Financial cost
Taxes
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Create your own business plan
4.3.1 Fixed cost
Fixed costs are business expenses that are not
dependent on the level of goods or services
produced by the business.
$
FIXED COST
UNIT OF
PRODUCTION
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Create your own business plan
4.3.2 Variable cost
Variable costs, instead, are volume-related.
The sum of fixed cost and variable cost represent the total
cost that is the total economic cost of production.
$
TOTAL COST
VARIABLE COST
FIXED COST
UNIT OF
PRODUCTIO
N
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Create your own business plan
4.3.3 Financial cost and taxes
Financial cost consists in interests which the
entrepreneur have to pay to banks for loans
Taxes are calculated on the taxable income
and differ from country to country
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Create your own business plan
4.4 Pricing strategy
The other main point to calculate the break even is to define the price of
product or service.
Price is influenced by internal and external factors
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Create your own business plan
4.4 Pricing strategy
There are some criteria used to define the price. The principal are:
Cost plus pricing: the price is fixed calculating the cost of production
and adding to it a percentage
Competition-based pricing: the price is decided taking into account
the price adopted by competitors
Objective profit pricing: the price is set at a level that allows to gain a
certain level of expected profit.
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Create your own business plan
4.4 Pricing strategy: 9 laws of price sensitivity &
consumer psychology
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Create your own business plan
4.5 Turnover and net profit
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A practical
example
Gerardine bed and breakfast
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Gerardine bed and breakfast
Business idea
WHAT: Boutique, charming, eco bed and breakfast,
5 rooms, high level of standard.
Special offer for people interested in
enogastronomy, tradition and mountain.
WHERE: Abandoned house of my grandmother in a
rural area of Trentino, tourism not well
developed
WHO: I will be the enterpreneur, this will be a
second work
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Gerardine bed and breakfast
Market feasibility
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Gerardine bed and breakfast
INITIAL INVESTMENT COSTS
MATERIAL EXPENSES
Refurbishment of the house 100.000€
Purchasing furniture 50.000€
IMMATERIAL EXPENSES
Permission and certification 3.000€
Marketing and communication (website, brochure…) 7.000€
TOTALE 160.000€
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Gerardine bed and breakfast
How can I get the money I need to start up my
own business?
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Gerardine bed and breakfast
Every year I have to sustain this cost:
Fixed cost: 5.000€
Variable cost: 30.000 (40€ for every host 750 arrivals for
year)
Financial cost: 5.000€
Taxes: 6.000 (10% of 60.000€ that is the foreseen turnover)
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Gerardine bed and breakfast
Break even point:
Cost/price = number of host 26.000€ / 80€ = 325 arrivals
Provisional net profit:
Turnover-costs = net profit 60.000€ - 46.000€ = 14.000€
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Thank you very much!
Gerardine Parisi
mail: gerardine.parisi@gmail.com
skype:
