Five Key Areas To Reducing Travel Agency Overheads
As a travel agent accountant, we are often asked about how to reduce overheads. In today's competitive market place reducing travel agency overheads is more important. Increasing revenue at the same growth rate as prior years is not always possible, and in order to increase return on investment, taking a look at overheads can be beneficial for your travel agency.
It is important to take a measured approach to both revenue increases and cost decreases, as dramatic changes can often have unintentional consequences.
Identify your largest costs first. You can do this quite easily, although they are often also the most difficult to change. For example, staff costs are often the highest, but changing your full time staff to a 9 day fortnight to save 10% on labour is tricky business (and I wish you the best of luck if you do it). However, some hard decisions may need to be made.
In most travel agencies, it is the small things that really add up. To fix it overnight is not possible, and a 12 month period of review is usually required. Go through your bookkeeping software and review all of the transactions for the last 3 months. That will give you some clues as to where you should focus your attention. Your accountant can give you advice on how to do this if you are not sure.
Comparing your budget (which you should start if you don’t already) to actual figures at the end of each month or quarter in a spread sheet can help identify emerging new costs that you didn’t anticipate, and get the problem solved expediently. If you don’t have the time to do this, ask one of your staff in your travel agency, or your accountant, to help. Make sure it is a job that can be done consistently, and diarise it so it is not forgotten.
Although benchmarking with other travel agents has limited use, it can give you a picture of where most of your competitors are at.
Who writes your cheques? That is the person you need to get on board to identify all of the transactions they feel where an easy saving is to be had. As a travel agent, you often have to deal with different issues all of the time, and it is easy to lose your focus. Challenge your staff, who will remain focused on the task, to help you. Remember, you need to explain why you are doing what you are doing otherwise they may assume your business is in trouble.
Hillyer Riches can help you with reducing your travel agency’s overhead costs. We have the business advisors that will be able to help you focus on the issues you really need to resolve in your business and work with you to provide the solutions. Contact us today to see how our accounting firm can help you.