Managing your Travel Business
by John Hawks

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If you'd like to grow that part-time income into serious profits, however -- to the point that you could turn your home-based agency into a full-time labor of love -- the first step is planning your profits. With pen and paper (or computer) in hand, let's figure out the sales level you must attain to reach your profit goals!

Step # 1: Calculate your expenses.

We'll start with fixed expenses -- those costs that you'll have in your home-based agency, no matter how many trips and cruises you sell. These expenses include the rent and utilities (e.g., the percentage that's attributable to your home office), your professional liability/errors and omissions insurance, OSSN dues, TRUE renewal fees, Web site hosting fees, Internet access charges, basic phone line charges, and anything else that you can predict based on the history of your travel business.

Then, we'll add the variable expenses -- those costs that increase as you sell more travel. These expenses include office supplies, phone and fax charges (beyond the base monthly rates), and postage.

Add these figures to find your "nut" -- the bottom-line figure you'll need to generate each month or each year to keep your doors open as a travel retailer.

Step # 2: Add in your profit goals.

Only you can determine the money that you'll need to clear from your business in order to meet your own needs. Start with the minimum dollars you want to take home each month or year in order to make your travel business worthwhile; then, ramp up from there to the amount you will need to buy those extras for your family or to make a full-time living. (Don't forget these dollars are "gross," so you'll have to add your payroll or income taxes into the mix.) Always use dollars in these calculations, not percentages.

Step # 3: Build your sales goals from these figures.

Now that you know your bottom-line financials for the month or year -- your fixed and variable expenses, along with your desired amount of take-home profit -- you can translate those figures into monthly or annual sales goals. In other words, you can figure out how much travel you must sell (based on your commission levels) to earn that money.

For example, if your fixed and variable expenses total $500 a month, and you need to earn an additional $2,000 gross in order to take home $1,500 a month in net pay, then your monthly "nut" is $2,500. If your average commission rate is 10 percent, then you must sell at least $25,000 each month (assuming that you collect 100 percent of the commissions you are due!) to achieve those goals.

Elementary, you say? Yes. I'm willing to bet you a soda pop at the upcoming Home-Based Agents Show in Baltimore that 95 percent of your fellow OSSN agents (and 95 percent of all home-based and storefront agents) have never taken the time to plan their profits in this manner.

When it comes to making money in the travel business, the old saying is true: If you always do what you've always done, you'll keep getting what you've always gotten. Be smart -- sit down this month, and plan your profits for the rest of 2005. You'll be amazed how this exercise will focus your thinking!