Sometimes travel agency owners can be so busy managing their business day to day that they miss the opportunity to step back and look at the big picture.
But analyzing key business metrics and benchmarking those financials with a relevant peer group is the way to stay on top of this in this ever-changing industry. ASTA director of research Kevin Wang has been engaged in a multi-year benchmarking program to assist ASTA and NACTA members in running their businesses more strategically, and provided some insights at a session yesterday.
“As agents you are very busy servicing clients and hitting your sales goals. At the end of the day, it may be impossible for you to track critical information, look deeper into your financials, and see how healthy your business is,” Wang said. “We want to remind you how important it is to benchmark and show you how.”
For example, travel professionals may know what their sales and income is, but might not know how healthy their profit margin is, and more importantly, how much better their profits could be. “Even if you know your numbers right now, you don’t always have the time to analyze how they are trending over time and understand what that means,” he said.
Wang’s 90-minute workshop focused on helping attendees understand which financials are the most critical to view regularly, what to look for in the data, and how to compare yourself to peer groups. Agents registered for the session came with their agency’s data after filling out worksheets e-mailed to them prior to the conference.
Some of the key financials reviewed were sales, revenue and expenses. During the session, Wang walked attendees through profit calculations, and helped them visualize and understand trends, and benchmark as a group.
“It’s not sufficient just to compare yourselves to your peers, but also to understand what the top percentile looks like, so you can see a path to improvement if you aren’t in that group,” he said. Wang believes both independent contractors and agency owners should look at their financial and operational data every quarter.
“Most agents look at it twice a year at most, and often only once a year with their accountant when doing their taxes,” he said. If you missed out on the chance to participate in the session, Wang will host a similar workshop at NACTA’s annual conference in Alaska in September.