Adjusting to economic conditions: budgeting for your business

When the economy is in a rough spot, it can be hard to figure out your financial budget. We chatted with travel advisors -- here's what they had to say.
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The world has been changing rapidly with the spread of COVID-19, and with those changes come economic challenges. With shelter in place orders across the world, the travel industry is slowing down, at least for the time being. As a small business the margins can be small, and it’s important to adjust your business budget where you can to weather this economic storm.

Keep perspective and consider what makes your business work. Take a step back to look at the whole picture before making decisions.

Just because the economic landscape is changing, doesn’t mean that you should immediately change everything about your business. It’s important to make it through this challenging time, but you also need to make sure that when things get back to normal, your business can too.

As you consider approaches to cutting costs, make sure to take the full picture into account. It may be tempting to slash your business budget quickly, but you could end up cutting costs in places that can help you come back. There may be difficult decisions ahead, but as  Entrepreneur recommends,

“[T]ake time to balance yourself and your mind before taking any drastic decisions. In what is a very dynamic and rapidly changing situation, sometimes taking a step back to reassess, asking for trusted opinions, and also keeping perspective will help.”

Keep in mind that your customers are also experiencing rapid changes, and there’s only so much you can control.

“I guess my tip would be take it one day and one booking at a time. Help the clients as much as we can, so we know we did everything we could. The rest we cannot control so there is no point in stressing over it. This too shall pass.”

- Marina Kaplan, I Travel Away

Focus on record-keeping.

With shelter in place orders and cancelled trips, it’s more important now than ever to keep good records. Clients may be in the midst of rescheduling or cancelling trips, and you’ll want to make sure refunds or credits are applied appropriately. When things get back to normal, you’ll also want to be able to follow up with clients to start rebooking.

Many companies have also begun to change policies related to refunds, cancellations and rebookings. Those new policies may be a temporary response to COVID-19, or they may become permanent adjustments. Either way, you want to make sure you know exactly what each policy is so you can effectively communicate that to your clients and follow up later.

“#1 tip is to keep very good records on what is canceling, status of refunds/credits on each piece of the trip and reminders now for the future to follow up with those clients so that they can rebook their trips. I think good recordkeeping now is essential.”

- Heather Parker, Bliss Travel Experiences

Now is also a good time to do that book-keeping you may not normally have time for. As Penny Gray of Gilchrist & Gray Tailored Travel recommends,

“[Take] the opportunity to look at all the stuff you normally don’t get time to do – costs, processes, training. Once cancelled/postponed bookings and clients stuck around the world sorted!”

Cut costs where you can.

Shelter in place orders have halted travel across the world, and with that have put a stop to commissions and revenue. Those commissions will come back, but costs may need to be cut to keep the business running in the meantime. With fewer clients traveling, you may also have a bit more time to put into other areas that can help you prepare for the future.

“What we have to do is cut our overhead first—do all we can to cut those expenses.

Then work on their busy work type things, administrative things we always push to the side. There tons of productive things we can do, like load all our old client files onto LA CRM! Develop ad campaigns or promotions, figure out new forms for internal use. Updating website. I know as a 1-person shop I have many things that get pushed aside that I have the time to do now.”

- Jan Stogner, Pacific Dive Vacations

Ask yourself which programs you really need, what costs you may be able to cut, and what the impact of those changes may be. It can be helpful to perform an audit of your costs to ensure you have the full picture of costs. Once you know where your money is going, consider categorizing costs based on immediate need, long term need, and look to where costs may be temporarily reduced.

“Most businesses have more subscriptions than they realize. Look at your accounting to see where your money goes when it comes to subscriptions and see if you can downgrade some of them.”

-  Entrepreneur's Handbook

Consider too, if you’re working with other small businesses, this is likely a difficult time for them and they may have a limited ability to negotiate costs. As  Entrepreneur's Handbook suggests,

“If you have a physical address where you pay rent, chances are it’s a considerable chunk of your budget. Figure out a win-win situation with your landlord. If you know your business will be back to normal in a few months, you could try asking for deferred payments with interest, for example. Whatever you choose to do, it doesn’t hurt to try and negotiate.”

Create opportunities for your clients to engage with a new product or service.

Clients aren’t traveling right now, but you may be able to offer other options to generate some short term income. Consider making special offers or creating insider deals for clients in the know. You can also team up with other small businesses to cross-market raffles filled with goodies. Partner with other travel agents to create a travel package raffle and help drum up excitement for future trips.

“If you’re strapped for cash and customers will need your help in the future, pre-sell your products and services. If they don’t buy because of the tough time, offer an irresistible offer (discount, added value, coaching, etc).”

-  Entrepreneur’s Handbook

There are also many programs being created to help small businesses stay afloat during this challenging time. These options can range from local startup communities with resources for free or low cost tools, to small business loans for payroll assistance. Make sure you’re familiar with the programs in your area, including both local and national government options.

“Governments around the world are already putting together initiatives to support small business owners, and this is something that is evolving on a daily basis. Be up to date with how your governments can help cut costs.”

-  Entrepreneur

Keep some marketing efforts in place to position yourself for recovery.

Clients may not be booking trips right now, but that doesn’t mean wanderlust is gone. It’s important to stay in touch with your clients now, so that when the time comes you’re the professional they come to for that first trip post-quarantine.

Caroline Joyner of Not Just Travel recommends a few low cost marketing tips:

“I would mainly be calling firstly all clients who have a holiday booked this year regularly, and then I would be finding a reason to call all other clients even if they don’t have something booked. I would tell them that if they are thinking about 2021 now is a great time to book as all the tour operators are offering amazing flexible terms.

Secondly I would be publishing lots of “escapism” blogs about destinations to inspire people and also daily inspirational Facebook posts to keep my audience hot.

Thirdly I would be doing facebook live Travel Clinics where people can ask questions about any holiday booked – not just through me.”

While it may be tempting to cut an expensive marketing budget, avoid slashing too much away. Marketing helps keep you visible, and you want to stay in front of your clients, even if they can’t travel right now. When things pick back up, that marketing will help you get more bookings more quickly!

For more specific tips on how to start planning for 2021 travel, read our blog post here.

Remember, though temporary budget adjustments may be necessary now, business will return to normal levels. This time can be challenging and stressful, but managing costs where you can will help keep things running. The travel industry has weathered many a storm in the past, and this too shall pass.

Are you a travel agent looking for an easy way to manage your clients and bookings? Less Annoying CRM is the simplest tool for travel advisors. See why we have hundreds of 5-star reviews here.

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