Advisors Can Plan to Succeed by Succeeding at Planning

Business plan.

For most small businesses, those are two frightening words. Entrepreneurs typically only create one when they are seeking financing. But business plans can be a great focusing tool, organizing a business owner’s daily activities around their core objectives; identifying the ideal clients they want to attract; and keeping agents on track towards their sales and profit goals.

Business plans also can help an advisor inform and adjust their selling, marketing and servicing strategies based on actual business performance.

“Not only should every business have a business plan, and some kind of monthly cash flow statement, but they should be checking it every month,” said Dan Chappelle, owner of The Wealthy Travel Agent, Inc., a Seattle-area travel agency consulting and coaching business.

“Cash flow is the lifeblood of any business, so knowing monthly income and expenses is critically important. Any entrepreneur, including travel agents, can benefit from having a set of simple documents.”

This is exactly why Don Capparella, MBA, PHR, CTA, CTC, spent more than 25 hours in November and December of last year, updating his business plan for Quality Travel Solutions, a Travel Planners International (TPI) affiliated agency.

“I love numbers. I analyze average commissions by type of travel, destination, trip duration, etc. I also look at how much commission is earned based on the estimated number of hours it takes to book/manage the sale,” said Capparella, Quality Travel CEO & founder.

A professional educator with The Travel Institute, Capparella is a refugee from decades of work in Corporate America, where he was indoctrinated with the concepts of business planning. As a result, he has created a business plan for each of the 11 years he has owned his agency.

But planning is also a part of Capparella’s personality. “I am someone who wants to know what to expect out of the business. I don't want to go into something blind without goals and expectations.”

As a result, Capparella is projecting growth of 45% in 2020, including increasing his team size from 16 to more than 20 independent contractors (ICs); shifting his sales mix to more international and less domestic travel; utilizing more of the agency’s preferred suppliers (paying higher commission rates); cultivating new preferred supplier relationships, and converting more of Quality Travel’s ocean cruise clients to river cruises.

Jenn Lee, TPI’s vice president sales and marketing, believes Capparella’s business planning skills are a big part of why he doubled his revenues last year, and is now a “TPI Agent on the Rise.”

“Many times, people say they are going to do something and don’t. Or they start in one direction, and do too many pivots,” Lee said. “Don has remained focused because he dedicates so much time to planning.”

Lee would like to see more agents replicate Capparella’s planning regimen. “Agents have the desire to plan appropriately, but that usually means just meeting sales goals,” Lee said.

Chappelle agrees. “Those who are successful plan for it, and really know their key financials. Those owners who aren’t successful, tend to look at their data rarely,” he said. “Most agents don’t have a firm grasp of their financials, so they struggle.”

The process
Capparella started writing his 2020 plan around Thanksgiving of last year. “December is my slowest month in terms of new bookings, which gives me time to think, reflect and plan for the upcoming year,” he said. He looks at everything from his target markets (including client demographics), an analysis of the previous past year's business, and what he wants next year to look like.

He analyzes his agency’s strengths, weaknesses, opportunities and threats (also known as a SWOT analysis), and breaks down goals for each quarter and the full 12 months. The plan includes a wide variety of expenses as well, including marketing (e.g. trade shows) and education investments.

In his planning, Capparella also includes his partner Dan, as well as his top performers. “I want to know what is working well for them, what their goals are, and how they plan to achieve them.”

Capparella keeps his business plan in a Microsoft Word document, accompanied by calculations recorded in Microsoft Excel. “I maintain ongoing spreadsheets of our financials. I have a page for each of my ICs which roll up into an agency page,” he said.

Not everyone needs to be as thorough as Capparella, Chappelle said. “A business plan doesn’t have to be a book. A good one could be just a couple of pages. It should be short enough that you’re inclined to refer to it on a regular basis.”

He added that if a travel advisor understands at least three key numbers – how many leads entered their sales funnel, how many quotes were offered, and how many sales were closed – they have the basic facts to reverse engineer a plan that can have a positive impact.

For example, Chappelle said, “If you know 100 sales brought you $500,000 in business, but you offered 400 quotes last year, from 1,000 sales leads, it’s basic math. If nothing changes in your business next year, to hit $600,000, you’ll need to close 20 more sales, which means 500 quotes, which means you need to produce 1,200 sales leads.

“Or, you could see what is impacting your close rate, or your sales leads, and maybe if you improve one of those steps in the sales process, you can close more business, higher paying commissions, at the same ratios of quotes and closed sales. But you won’t have a clue about any of this, if you aren’t tracking your financials and have some kind of business plan.”

The decision to reduce Quality Travel’s domestic trip focus was based on reviewing his average commissions by destinations, and realizing how much lower the agency’s average commission was, Capparella said. “We’ll still do some domestic, but not as much.”

The benefits expand
An agent’s business plan and cash flow statements should also reflect how they pay themselves. TPI’s Lee estimates fewer than 20% of agents she has encountered make a plan to pay themselves regularly.

“They pay their bills from their business account, but only a small percent are in the habit of writing themselves a check every week, or month, or whatever,” she said. “When you have a business plan, and cash flow statements, and you are documenting all of this, your paycheck is a fixed part of how money comes in and goes out of your agency.”

“For most agents, cash flow can be seasonal, based on when your clients are traveling,” Chappelle said. “So, do you know what you can do from a tactical standpoint to deal with something like no money coming in for two months?

“Your business plan should also include the activities that will empower an owner to reach those goals. Do you need to build your knowledge base in a new category? Are there suppliers you need to add to your portfolio? If the answer is yes, what are you doing to check off those items? That can be part of your business plan.”

For example, Capparella’s 2020 plan includes a new IC onboarding process. If he executes correctly, those new ICs will contribute to his forecasted revenue growth – and profits.

More advisors are getting better at planning
TPI’s Lee believes the industry – including companies like her own – is ramping up their reinforcement of the need for greater planning rigor, so more agents will get better at it. “We used to use language like ‘you sell travel.’ Over the last couple of years, I hear more of us saying ‘This is a business that sells travel,’” she said.

To keep up the momentum, Lee would like to see more agents participate in business groups that are not specific to travel. “That will help you get out of the ‘selling travel’ mindset, and put you in the entrepreneur mindset that helps you run your agency like a business,” she said.

Capparella advises others agents to “start slow. It doesn't have to be perfect. When I started my agency, there were only three of us. I had a plan, but it was simpler than what it is now. When the team grew to about 10 agents (about seven years ago), I realized the need to expand the plan to be more detailed.

“Something as simple as, 'This month I want to sell three cruises, two FITs, and one all-inclusive resort' – and then the following month, and etc., etc. Just get started.”