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... s & Sons. Ferguson and Bardell is the strongest competitor of Northwind Traders, due to its strong client base and experienced owner. However, its their press releases are of a very low quality, and its their location is undesirable, with difficult parking and limited customer service space. In addition, Ferguson and Bardell lacks the knowledge and expertise in the field of European adventure travel that is valued so highly by the clientele of Northwind Traders. Lakes & Sons will be a formidable competitor for Northwind Traders because of its their prime location, well-established business, and extensive training program.

Northwind Traders will occupy a specialized niche in the travel industry, with its focus on adventure vacations in Europe. Although they are is currently the only European adventure travel agency located in the Seattle Redmond area, there are competitors do exist in nearby areas (see above). In order to stay competitive, Northwind Traders will need to establish itself as the leader in adventure travel planning for Europe with its superior product knowledge and high-quality service. The lack of current adventure travel providers in the area represents a unique opportunity for Northwind Traders to expand in a rapidly growing market. BUSINESS STRATEGYMARKETING & SALES PLANNING With Northwind Traders expertise in European adventure travel, we can create customized travel itineraries for our clients and provide the most thorough, informative adventure travel service available. By offering superior customer service, Northwind Traders can distinguish itself from its competitors.

Our market research shows that publicity has the greatest impact on peoples choice of an adventure vacation travel agent, followed closely by having the right location, and having a recommendation from a friend, relative, or colleague. General press advertising seems to be fairly ineffective in this sector, and event specialist press advertising only brings in one out of seven clients. (See Appendix 1, Summary of Findings from Market Research. ) Our advertising and promotions will pivot around six key strategies: public relations, our shop front, an Internet Web site, customer relations, press advertising, and our association with the Northwind Traders clothing store. Public relations. We will put considerable effort into preparing and disseminating a regular flow of press releases.

These will be based on stories about our destinations, activities, corporate clients, and our staff. We will employee a freelance public relations adviser to help us write copy and locate publications editors. Shop front. We plan to have an exciting, informative, and actively managed display window.

There will be a video display showing adventure vacations in progress. Different destinations can be selected from outside the window via a control panel; , otherwise, the scenes will rotate on a random basis. Internet Web site. This is fast becoming a major promotional channel, and we believe it will increase in importance over time. Also, it is the most convenient way for us to have a global presence at the outset. (See Appendix 1, Internet Growth and the Sale of Travel Services. ) Customer relations. We will keep records of every sales contact.

Data such as source of inquiry, client needs, previous vacation, job, and income will be included. By having superior information on our clients and prospects, we intend to offer a truly personalized service. Our database will contain full details on all our clients, including the vacations they have taken and their post vacation appraisal data. We will use this data to encourage our satisfied customers to recommend our services to friends, relatives, colleagues, and employers. Press advertising. We will undertake a small amount of specialist press advertising in order to enhance our public relations activity.

There is considerable research to support the argument that the more often a potential client hears about you, the more likely they are to approach you when they have a need for your type of service. Northwind Traders association. We will write to all past shop clients announcing the establishment of the travel business and offer them a special introductory adventure vacation package. Excellent selling skills are vital in our type of business. Therefore, everyone will be fully trained in sales. Additionally, every month we will audit each other by observing half-a-days selling activity and giving feedback on strengths and weaknesses in skills.

We will also be using a contact management system that will allow us to monitor the effectiveness of different promotional strategies and of different marketing messages. The key to our strategic advantage lies in having superior data on prospects and clients. The normal commission paid to travel agents for this type of vacation is in the 10 percent to 15 percent range. While Margies Travel, the first agency we have been appointed to, pays us at the lower end of the scale, they are a prestigious firm to represent. Having them in our portfolio will enable us to negotiate much higher commissions from our new principals. Accordingly, we are planning on an average travel agency commission of 11 percent, rising to 13 percent by the end of Year Three.

Commission on insurance and other services will be 30 percent, throughout. Our clients will be protected financially against either our own or our tour operators failure, by virtue of the ARC bonding held by our principals. We will only use vacation providers who can provide 24 -hour emergency support services for clients while on vacation. It is vital that the travel business has both a storefront facing onto the main street and a visible separate entrance. The goal is for clothing shop clients to be able to move between the premises without going outside. We will be renting 2000 square meters of fully serviced space at a cost of $ 30, 060 per year fully serviced.

We will need to spend $ 25, 050 on internal refurbishing. We plan to do some of this work ourselves. An additional $ 4175 will be needed for desks, chairs, and other office furnishings. We intend to locate within the existing Northwind Traders shop, since this is close to the city center with a high density of both residential and business premises. The pavement is wide, so people can stand and look in the window without being in the way of other pedestrians. The telephone lines will be staffed 24 hours a day by live operators.

During the period from 9 am to 6 pm, this will be done mostly by our staff. However, overload calls during the day and after out-of-hours calls will go to our live telemarketing bureau. People consider vacation decisions at home in the evenings after discussion with friends and partners. We want to be available as their first point of contact with an informed, friendly service.

We believe that since our clients will mostly be busy professional people, off-peak- hours access to our services is also a key way in which we can differentiate ourselves from other travel agencies. We will be renting an integrated telephone / data -base system from the outset. This will allow up to ten sales staff to answer calls and have full on-screen data on clients and products. As service is one of our key components, it is essential that we have full access to all relevant data speedily and efficiently. From the outset all staff will have job descriptions, a career and training history file, and a record of employee reviews.

New staff will take the travel agency Psychometric Aptitude Test, and then spend time with each member of the Northwind Traders team. All staff will undergo full product training, and will spend at least four weeks a year on-site at key travel destinations. Our dress code will require us to look as though we are on our way to one of our adventure vacations. We plan to start with a staff of three full-time employees, including the founder, and one part-timer. We plan to be operating with a staff of thirteen during the fifth year of business. With this system we can review our sales and marketing activities on a regular basis.

Thus we will be able Quality Control We will be developing outline scripts to help the sales staff manage inquiries. This will ensure that all incoming phone calls are dealt with in the same way and meet a high standard. We will encourage people inquiring about vacations to give us feedback on: &# 61623; Our ability to handle their inquiry &# 61623; The amount of time from the clients first inquiry to the date of actual travel &# 61623; The clients reactions to the vacation in terms of whether it meets their expectations Heather Mitchell will be responsible for reviewing the range of tour operators that we seek to represent, and negotiating with prospective new principals. Our offices can accommodate five sales desks. Each sales desk has a capacity to handle four clients per hour, which means over the year we could handle up to 40, 000 inquiries. With our average sales rate of one in five, we could service 9600 clients from our present facilities.

This is well above the numbers we are anticipating in the business plan. Heather Mitchell, President and CEO. Before founding Northwind Traders, Ms. Mitchell owned and operated Northwind Traders, an outdoor clothing shop in the Redmond area. Prior to that, she managed the Olympia branch of one of the larger regional chains of general travel agencies operating throughout western Washington, where she was responsible for managing the office systems and a staff of four. She has a degree in travel and tourism from State University.

In addition to Ms. Mitchell, team members Jim Kim and Richard Bread will be moving into the new venture on a full-time basis, and Amy Egert has been recently recruited to cover Saturdays and vacations. Freelance business consultant Jae Pak will be advising during the businesss changeover from clothing shop to adventure travel agency. Jim Kim, Vice President Sales and Marketing. Prior to joining Northwind Traders, Mr. Kim worked for the marketing department of a major airline.

His current responsibilities include the companys direct marketing campaign and all sales related issues. Richard Bread, Office Manager. Twenty years as a travel agent has given Mr. Bread the ideal background for Northwind Traders. A knowledgeable salesperson, Mr. Bready's expertise in the area of European travel enables him to entice the adventure traveler.

Amy Egert, Sales Assistant. After completing her undergraduate degree at the Institute of Art, Ms. Egert spent a year traveling abroad and joined the staff at Northwind Traders recently as a sales assistant. Jae Pak, Business Consultant. With over twenty years of consulting experience in industries ranging from aerospace to technology to retail, Mr.

Paks knowledge and guidance will be instrumental to the success of Northwind Traders. (Heather Mitchells CV is in Appendix 3) The volunteer members of the Board of Directors provide guidance to the management and staff of Northwind Traders. The board meets twice yearly to discuss policy changes, review the mission statement, and update the business plan if needed. Northwind Traders plans to grow steadily over the next five years, becoming the premier provider of European adventure vacations in the greater Redmond area. Our financial objectives are to be operating at or close to break-even cash flow by the end of the first year. We aim to be profitable from Year One onward; our goal is to earn at least $ 300, 000 post tax profit in the Year Two, and nearly $ 500, 000 in Year Three.

Our profit margin on sales by Year Three will be a respectable 7 percent. &# 61623; Extensive public relations campaign &# 61623; Recruit well-trained, enthusiastic staff &# 61623; Deliver superior product knowledge &# 61623; Provide high quality customer service &# 61623; Create library of tools / reference materials for clients &# 61623; Offer competitive pricing on vacation packages The first priority is to hire a competent public relations consultant. This individual will be the key to producing state-of-the art publicity materials and determining where these materials should be placed for optimum visibility. The second priority will be to increase the staff. The individuals recruited will go through an extensive training program to ensure that they will be able to provide superior product knowledge in the field of European adventure travel.

The present staff is passionate about adventure vacations, and we intend to maintain their enthusiasm through constant product development and skill training. We will only recruit those individuals who share our vision. We also want the business to have an enjoyable atmosphere. The third priority is to install a library of reference works in the shop. These materials will be available for clients to browse through while in the shop, or to check out and peruse at home. An agent will be on hand at all times to answer any questions.

While at present we are offering only other companys adventure vacations, we have protected our position in a number of ways. First, we have a two-year agency agreement with Margies Travel, which gives us access to all their existing vacation products as well as any new ones. This contract is dependent on Northwind Traders achieving sales of at least 250 vacation packages a year. We intend to negotiate similar agreements with future suppliers, although sales targets with them will be lower to reflect their relative market position. Second, we intend to maintain a high service element to our business, extending our range of value added services such as vacation insurance, individualized preparation booklets, post vacation follow-up, and continually updating our client database. In this way, we will seek to build up a high level of repeat business.

Customer loyalty is vital to our profitable growth. &# 61623; Loss of clientele to other providers &# 61623; Quality of services diminished The risks facing the expansion of Northwind Traders can be summed up in one word: competition. In order to sustain our position in the area as the premiere European adventure travel business, Northwind Traders needs to outshine our competition. By maintaining our focus on superior product knowledge and outstanding customer service, we will be able to uphold our position in the industry, thereby retaining current clients and attracting new clients. Our ratio of sales to inquiries of the adventure travel vacations sold to date, while operating within the outdoor clothing shop, has been one in three. For the purposes of our sales forecast, we are assuming that only one in five inquiries will actually result in an adventure vacation being booked.

This is a very conservative estimate. We expect there to be a steady buildup of clients coming from the clothing shop to talk to us about vacations (see Table 3 below). However, the number of new inquiries generated by our promotional activity will also build up during the year, gradually overtaking inquiries from the clothing shop. This is a trend we expect to continue. Based on the projection below, we are forecasting to sell 660 adventure travel vacations next year at an average price of $ 3549. Once insurance and other service sales are added in, we expect to generate a gross profile income of $ 268, 783 over the first 12 months.

Inquiries generated through promotion 200 425 425 750 1800 Total inquiries 500 725 875 1200 3300 Average vacations cost $ 3340 $ 3340 $ 3758 $ 3758 $ 3549 Commission received $ 33, 400 $ 48, 430 $ 72, 331 $ 98, 757 $ 252, 918 Commission on insurance & other services received $ 1670 $ 3340 $ 5010 $ 5845 $ 15, 865 Total commission & fees earned $ 35, 070 $ 51, 770 $ 77, 341 $ 104, 602 $ 268, 783 In Year Two we are forecasting a gross profit commissions of $ 624, 318, and in Year Three we plan to reach $ 986, 846. The Cash Flow projections for Year One (see Appendix 2) show that after the owner has put in $ 41, 750, the business will need additional short-term financing of about $ 83, 500. For the last two months of the year, we are forecasting a positive cumulative cash flow and a year-end cash surplus of $ 19, 935. In our Cash Flow projection, we have assumed the whole $ 83, 500 additional financing has come from a bank loan. We have allowed for interest on the full amount for the whole period. In practice we would hope to finance part of this at least by a line of credit equal to the money actually required.

In this way we believe we have made a prudent, conservative provision. We expect to make a small after- tax profit of $ 34, 901 in the first year of $ 34, 901 (see Appendix 2 and Table 4 below). This is before the owners drawings. Any owners drawings will be contingent on performance being better than that expected in the Plan. Table 4. Profits in Years One to Three will be Less cost of sales 2, 096, 056 4, 578, 327 6, 604, 286 Gross profit 268, 783 624, 318 986, 846 Less expenses 224, 740 243, 4043 345, 690 Net income before taxes 44, 043 380, 9145 641, 156 Provision for taxes 9142 76, 184 145, 751 Net income after taxes $ 34, 901 $ 304, 7301 $ 495, 405 The Balance Sheet at the end of Year One (see Appendix 2) shows a healthy surplus of current assets over current liabilities.

We have shown a conservative funding position, which does not include any of the additional capital that we hope to secure. We plan to move our gross profit up from 11 percent in Year One, to 13 percent in Year Three. These figures look quite low, but it should be remembered that our gross profit income is really the sales commission we earn, not the full price of an adventure vacation. Our net income before taxes is a more accurate measure of performance.

This we expect to move from 2 percent at the outset, up to 8 percent by Year Three. Commission generated and profit per employee will be among the highest in the industry. Table 5. Commission Generated and Profit per Employee Commission generated per employee $ 76, 795 $ 138, 737 $ 164, 473 Profit per employee $ 12, 584 $ 69, 257 $ 106, 858 To break even we will need to sell between 2 and 3 vacations per day. This compares with our present sales of 1. 3 vacations per day, based on our part-time effort out of the clothing shop. We feel confident that the break-even point can be attained within a reasonable period of time.

We plan to make two major investments: one in Web site and database development and one in shop premises development. Web site and data base development - this will cost $ 41, 325750. The data base system is one of our key differentiators. It will allow us to offer superior service and ensure a high level of repeat business and referrals. The Web site is vital if we are to reach this wide and disparate global market. The group of potential clients we have chosen as our target market, affluent, professional 25 - to 35 - year olds, are prime users of the Internet.

Even those people in our locality will expect to be able to research our offers on the Internet before coming to the shop. (See Appendix 1, Internet Growth and the Sale of Travel Services) Shop premises development - this will cost us $ 29, 225. We have to look professional and to have an efficient work environment. If our staff do not have the right tools, we can hardly expect them to deliver superior performance. If clients see amateur premises, they will not be inspired to spend thousands of dollars and entrust their adventure vacation plans to us.

Both these investments need to be made at the outset to ensure that the business creates the right impression from the start. We get only one chance to make a first impression. We have decided to lease our telephone and computer systems, since this is a rapidly changing area and we need to have access to the very latest technology. Financing packages from equipment suppliers are currently very attractive. The owner plans to invest $ 41, 750 of her own money (the proceeds of the sale of her share of the clothing shop business). The cash flow projections show that the business will require $ 83, 500 of working capital during the early months of the first years operations.

We think we should provide an additional $ 10, 020 for unforeseen eventualities. We are considering In the event that additional funds prove necessary, we have identified two options for raising further funds this $ 93, 520: Option 1: The sale of equity, perhaps to the original shop partners, could raise between $ 41, 750 and $ 167, 000. This would provide some capital to allow for growth. Any shortfall could be funded either by a line of credit or a bank loan. Option 2: Approach our bank with a view to raising a medium- term loan of $ 41, 750 and a line of credit of $ 58, 450. Heather Mitchell could, with family help, provide any lender with security for part, if not all, of this facility.

We will be using a computer-based financial management system. This will allow us to analyze the profitability of sales of different vacations through each tour operator. In this way we can review our sales and marketing activities on a regular basis. It will also allow us to reward staff on the basis of profit achieved rather than just on sales. We will be using a computer-based financial management system. With this system we can review our sales and marketing activities on a regular basis.

This will allow us to analyze the profitability of sales of different vacations through each tour operator. Thus we will be able to reward staff on the basis of profit achieved rather than just on sales. We will be developing outline scripts to help the sales staff manage inquiries. This will ensure that all incoming phone calls are dealt with in the same way and meet a high standard. We will encourage people inquiring about vacations to give us feedback on our service: Our ability to handle their inquiry The amount of time from the clients first inquiry to the date of actual travel The clients reactions to the vacation in terms of whether it meets their expectations Heather Mitchell will be responsible for reviewing the range of tour operators that we seek to represent and negotiating with prospective new principals.

Our offices can accommodate five sales desks. Each sales desk has a capacity to handle four clients per hour, which means over the course of a year, we could handle up to 40, 000 inquiries. With our average sales rate of one in five, we could service 9600 clients from our present facilities. This is well above the numbers we are anticipating in the business plan. Northwind Traders plans to grow steadily over the next five years, becoming the premier provider of European adventure vacations in the Greater Seattle area. Our The financial objectives of Northwind Traders are to be operating at or close to break-even cash flow by the end of the first year, with steady growth over the next five years.

We aim to be profitable from Year One onward; our goal is to earn at least $ 304, 000 postal profit in Year Two and nearly $ 496, 000 in Year Three. Our profit margin on sales by Year Three will be a respectable 7 percent. Northwind Traders strategy for achieving our goals consists of six major points: Establish an extensive public relations campaign Recruit well-trained, enthusiastic staff Provide high-quality customer service Create a library of tools / reference materials for clients Offer competitive pricing on vacation packages The first step to achieving our goals is to hire a competent public relations agency. This will be the key to producing state-of-the art publicity materials and determining where these materials should be placed for optimum visibility. The second step will be to increase the staff. The individuals recruited will go through an extensive training program to ensure that they will be able to provide superior product knowledge in the field of European adventure travel.

The present staff is passionate about adventure vacations, and we intend to maintain their enthusiasm through constant product development and skill training. We will only recruit those individuals who share our vision. We also want the business to have an enjoyable atmosphere. The third step is to install a library of reference works in the shop. These materials will be available for clients to browse through while in the shop or to check out and peruse at home. An agent will be on hand at all times to answer any questions.

While at present we are offering only other companys adventure vacations, we have protected our position in a number of ways. First, we have a two-year agency agreement with Margies Travel, which gives us access to all their existing vacation products as well as any new ones. This contract is dependent on Northwind Traders achieving sales of at least 250 vacation packages a year. We intend to negotiate similar agreements with future suppliers, although sales targets with them will be lower to reflect their relative market position.

Second, we intend to maintain a high service element to our business, extending our range of value-added services such as vacation insurance, individualized preparation booklets, post vacation follow-up, and continually updating our client database. In this way, we will seek to build up a high level of repeat business. Customer loyalty is vital to our profitable growth. We see some risks associated with our expected growth: Loss of clientele to other providers The risks facing the expansion of Northwind Traders can be summed up in one word: competition. In order to sustain our position in the area as the premier agency for European adventure travel, Northwind Traders needs to outshine its competition. By maintaining our focus on superior product knowledge and outstanding customer service, we will be able to uphold our position in the industry, thereby retaining current clients and attracting new clients.

International Arrivals by World Region Updated forecast for the years 2000 and 2010 (millions) 1975 1995 1996 2000 2010 Average annual growth rate (%) 1990 - 2010 Europe 153. 8 338. 2 347. 4 397 525 3. 1 East Asia/Pacific 8. 7 84. 5 90. 1 122 229 7. 6 Americas 50. 0 110. 1 115. 5 138 195 3. 7 World total 222. 3 567. 4 592. 1 702 1, 018 4. 1 Indications of Tourism Demand in 1997 International tourist arrivals (x 1, 000) Nights spent by foreign tourists (Mill) International tourism receipts (Mill. ECU) Summary of Findings from Market Research Survey Three hundred clients of Northwind Traders who had made purchases in excess of $ 350 in the past six months were surveyed. Percentage of Sample Customers Taking and Not Taking Adventure Vacations According to our research, only 20 percent of our sample customers had never taken or considered taking an adventure vacation. Thirty percent, while they had not yet taken such a vacation, had at least actively considered doing so.

Fifty percent of our sample are regular adventure travelers users, taking at least one adventure vacation each year. Information About 150 Respondents Who Took At Least One travel Vacation Per Year Adventure Vacation Travelers, by Age and Percent According to our study, the percentages of adventure vacation travelers in fall into various age groups as follows: 25 % are between the ages of 16 than 24 40 % are between the ages of 25 than 35 20 % are between the ages of 36 than 45 Percentage of Adventure Vacation Travelers by Income Group According to our research, the percentages of adventure vacation travelers in various income brackets are as follows: 6 % earn less than $ 16, 700 or less annually 22 % earn between $ 16, 701 and $ 25, 050 annually 28 % earn between $ 25, 051 and $ 33, 400 annually 25 % earn between $ 33, 401 and $ 41, 750 annually 19 % earn more than $ 41, 750 annually Forty-five percent of respondents taking adventure vacations spend in excess of $ 3340 per person per vacation. Twenty percent of the respondents, who tend to be professionals in the 25 - to 35 -year age range, typically spend over $ 5010 per person. Those respondents spending under $ 3340 are both in the lower income and lower age groups and represent 10 percent of the respondents. Percentage by Destination of 5000 Major Adventure Tours Available on the Market A study by destination of approximately 5000 major adventure tours on the market reveals the following: 1200 of the 5000 offered are for destinations in Europe 1000 of the 5000 offered are for destinations in North America 600 of the 5000 offered are for destinations in India 810 of the 5000 offered are for destinations in Africa 675 of the 5000 offered are for destinations in the Far East 675 of the 5000 offered are for other destinations By contrast, the percentages of the market adventure travelers devote Bibliography:


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