Australia!

The Land of Backyard Tourism!

It's just not Cricket!

By Tim Sillcock

If you follow your Accreditation guidelines fastidiously, you will notice that you must have a Business / Marketing Plan and that it requires a Situational Analysis. In other words, "Where are you now?"

Well, let's have a look at where we all are!

You will have received your renewal notice for your Public Liability Insurance recently. You are probably shocked at the rise in premiums, ranging from some 300% to 1000% over the past few years.

We would like to blame events and tragedies in the greater business environment! However, we are told that the increase has little to do with the past HIH collapse, Ansett demise, September 11 attack, or SARS outbreak, but is a result of an un-natural levelling of premiums over the past few years. This essentially means that the rates should have been increasing over the past decade instead of being stagnant. It was further compounded by a lack of competition in the current insurance marketplace and the effects of claims by some operators.

Therefore, we must pay the PLI premium bill or cease to operate. Most operators have checked their figures carefully and wondered if it is worthwhile dabbling in Tourism.

So, what is the Analysis of the Situation? Where do you really stand ...?

Are All Your Costs Really Necessary?

Most likely you have found that your gross profit from the first 100 or so customers this year will be passed directly onto the Public Liability Insurance company. It doesn't help that you read in the papers that the executives in many of these insurance companies are possibly on ridiculously high salaries, or that your premiums are possibly being "gambled" on the Overseas Money Markets or Share Markets! (What will stop your insurance company ending up like HIH?)

However, the real injury to your ego is that much of your premium is funding the claims of your opposition or fellow operators; probably the ones who have been undercutting your prices or who have been criticizing your style or methods or personality or whatever!

Amongst the pile of accounts on your desk is the bill for your Accreditation. Again, you must wear this cost because "every one else has it" - you have been told by all Industry Bodies that it is necessary. As you write out the cheque you realise that these funds could have bought you a fax-out promotion reaching some 1600 potential customers or endless email promotions to current customers. Scanning through the documents again, you sarcastically re-assure yourself that it is more important to prove you are a "high quality operator", than to be a "successful" operator with actual customers!

Did you really understand everything listed in the Accreditation documents, or did you simply tick every section hoping that your office files, full of half finished strategies and plans, will suffice. Don't feel embarrassed! The best Business and Marketing plans for small business are short, fluid (they may change from day to day) and simple. Why would you write a Whistle Blowers Policy, a  Human Resource Strategy or an Office Procedure Manual for you and your off-sider. Your time is better spent seeking more customers so that you can pay for your accreditation!

What's next in your pile of bills? Oh, yes! The Public Land Usage Permits. You don't mind paying this bill because Parks Victoria is a great resource when you need information and will help you when you need it. Besides, the up-front fee is minimal and the ongoing "visitor fees" are based on your turnover - the big companies pay more than you, but they can afford it! However, you question why your customers can take any number of uncontrolled risks on public land if they visit by themselves, but you have to pay to provide them with a safe experience. Furthermore, why should a school use public land free of charge, but have to pay for it when they contract you to provide a safer experience.

Perhaps you should follow a number of other operators who close up shop, hire their equipment to schools, provide their own services on the school's payroll, don't pay any insurance premiums, land-use fees, accreditation fees, GST and so forth, but still make the same profit margin! Simple!

Back to your desk ...

Clipped together are a number of accounts for Membership fees. At the top of the pile is your "peak body" membership. It probably administered the accreditation programme in the past (for a much lower fee) and provided other useful services. How many customers and how much income can you attribute to this membership? Do these memberships save you money by performing roles or duties on your behalf? If they do, then send a cheque. If not, drop them or pressure them to do something for you!

If you own a bus, you will have a bill for an insurance premium, and probably the membership fees of an organization through which you have sought your discounted rate.

Add to this cost is the Bus Operators Accreditation fees and the cost of undertaking the first module of the University Course to learn to administer the Bus Operators Accreditation. If you think you might make a little extra money by chartering your bus to customers, then weigh it against the cost of completing the rest of the modules in the Bus Operators Accreditation Course (hundreds of dollars!). Your first few charters will keep the University teachers in work!

Have you completed a food handling course yet? Is your First Aid Certificate current? What about your annual update of CPR? Do you need rescue courses, skill updates, communication courses and all the seminars on marketing, international tourism, Tourism Victoria Strategies, and of course, the seminars on completing the forms for Accreditation! There's another 100 or so customers who you must turn-over before you begin to make any money for yourself! Add in the cost of your time to undertake the course and seminars, plus the "opportunity" cost of your time (what you could have achieved if you did not attend the courses and seminars).

You don't want to think about the regular overheads that all businesses face. Your accountant has probably instructed you to send a couple of hundred dollars to the Australian Securities & Investments Commission for their annual fees (and, of course, charged you for the instruction). Was that payment an investment? Did it increase your personal income or wealth?

You understand that the GST, Group Tax, Company Tax, FID and GTD are all funds that don't belong to you. So, why does it feel so bad when you write the cheques to pay them.

Bank fees, Merchant Fees, Rates, Rent, Hire Purchase and Leases you see as "dead money". Whilst you resent paying them, have you calculated the number of customers who must pass through your doors to break even on these costs?

Are you ready to throw in the towel? Do you regret price matching with the "backyarder" down the road who thought he was clever by picking up market share by under-cutting your prices?

If you kept your prices at a reasonably high level, you will have sufficient cash in the bank to pay all of your bills and you will sleep well tonight. If not, you had better review your Situation Analysis.

It is very obvious that operating a small tourism business in this decade is difficult! The hours are long and the financial returns are poor. The costs are high and everyone seems to make money from your business, except you. And you are right!

Your options are obvious. Either you must wind-up the business or reduce your costs!

Your ego dictates that you must not let go of years of hard work, building a business that "has potential".

You can dispense with the office and storage buildings. This will pay for the Public Liability Insurance and you can work from home. Cutting back on your advertising (like Yellow Pages ads and all those directories!) will save heaps. It's hard to drop the Industry Memberships because they are the lifeblood of your ego; it is where you go to wear your "success" facade amongst those who you openly call your colleagues and friends but secretly despise.

You have a momentary lapse of rationality and realise that you would be better off mingling with potential customers rather than Industry Colleagues, so you resign from the unnecessary Industry organizations.

As for the Accreditation, will you go "cold turkey" and brave a break away from the system? Are you a hero or just plain stupid to dump the Accreditation? Probably stupid, so you write out the cheque.

You are going to sleep better tonight.

... However, how is your Situation now?

A cold fear engulfs you as you experience a transcendental self refection. You are now a "back-yard" tourism operator. You can only afford to market to very few customers so your turnover will be low. You have everything in place to operate a dynamic and top quality organization. You even have Accreditation to prove it! But, you do not have many customers.

You are no better than the backyard organizations who use to undercut your prices! All talk and little action!

It's time for a change!

Commandments To Aid Survival

What does the Industry need?

The reality is ... only larger companies, with several entrepreneurs working together, will survive the current Australian business environment.

Here are a few Commandments to aid survival:

1. There is only One God. So get over your Ego and stop trying to be King of the Castle. Learn to share your toys and power! You don't have to own your company and be the sole person in control to make a good living from it. If you get over the control freak thing, you will enjoy working with carefully chosen partners.
   
   
2. Love thy neighbour. Find peace and harmony with other Tourism Operators. It is not a competition in which you, and every other company, should be lurking in the shadows wanting to draw customers from each other. Some companies have already joined forces to either market more effectively or to offer a wider variety of experiences to their joint customer base.
   
   
3. Thou shall not steal. The clever operators do not need to steal customers from other companies. Instead, they take the trouble to identify their real competition. In most cases, the real competition is other forms of entertainment competing with their tourism product (for example, football, Grand Prix, weddings, hot beach days, Moomba, Olympics!) These companies will find their own comfortable niche in the market place and work at owning that niche.
   
   
4. Thou shall not bear false witness against thy neighbour. In desperation to gain greater market share, many operators are over critical of their opposition. Admittedly, the bad example is everywhere; from the top politicians to the local petrol stations. They are all bagging one another! Unfortunately, in a small industry, such as ours, where staff will often work for several companies in one season, and customers may have close contact with several companies, we all suffer from any "mud-slinging" and "name-calling" in the Industry.
   
   
5. Honour thy father and thy mother: that thy days may be long upon the land which is given thee. Your most precious asset in your business is your Parks Victoria Permit to operate on Public Land. It is amazing how many operators do not know, or have never approached, the local Parks personnel in the areas in which they operate. They are a great resource for your business and can aid you in many ways. Furthermore, they are well trained in both land management and customer service. You will generally find Parks Victoria personnel exceptionally helpful to you!
   
   
6. Thou shall not kill. Modern day Marketing recognises the benefits of return customers. Therefore, it is a good idea to bring your customers home alive and un-injured! Sounds silly, however, there are many Adventure Instructors (and some operators) who pay more attention to satisfying their own need for pleasure than the need to satisfy their customer's enjoyment and safety. Let's face it, if there were fewer accidents in our Industry, then our Insurance Premiums would not be so high!
   
   
7. Thou shall not covet anything that is thy neighbour's. Whilst we may not be considering coveting other operators' wives, servants or oxen, it is a common habit of operators to move in on others' ideas and packages. It seems that the moment someone develops a new package, other operators, worried that they are missing out on something, quickly develop a copy-cat package. This unnecessary competition, generally, inhibits the viability of the new package, often causing it to fail. If the originator is given a fair chance to develop the package, then the concept will often grow sufficiently to support more than one operator.
   
   

To suggest that we should not work on the Sabbath, commit adultery, or use the Lord's name in vain would miss-direct the point of this discussion.

However, there are a couple of issues that need to be addressed if this Industry is to grow and prosper.

Learn Business Skills

Business acumen is the most obvious skill that is lacking in this Industry. Most operators have grown from a love or talent in some area of Outdoor Adventure. Few businesses are created by people with business backgrounds who want to start a Tourism operation.

Imagine a novice racing car driver entering a Grand Prix without any previous skill in track driving. How long would it take for the novice to make a serious mistake and cause a disastrous outcome to the race and everyone in it?

Our Industry is suffering a similar fate. Every time an operator "price cuts" a competitor or neglects to calculate their pricing to include the proper values of equipment and overheads, they damage the Industry, and of course, their own companies. They soon find that they can't replace equipment or employ additional staff behind the scenes as the company grows, so they find they have to take short cuts on safety, staffing or some other component. Whether or not the company survives long term (they usually don't) the Industry becomes under-valued. Customers gain an un-realistically low perception of the value of Tourism packages. Companies who operate in the School Markets are well aware of this phenomenon. School teachers milk it to the maximum, often playing-off companies against each other.

Operators who understand a little about Marketing will see that they can't be everything to everyone, so they find niche markets that they can service well. They will develop a Marketing Mix that will consider their Product offering, the appropriate Price level that will ensure both customer bookings and the sustainability of the company, the Distribution, the Promotional channels and the Positioning of their company.

These are not hard concepts to learn. There is a variety of courses, seminars and resource materials available about these, and other, basic marketing topics.

When Industry thinking is aligned, the whole Industry (and those in it) will prosper.

We may even grow out of our Back Yards and become Professional!

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