Latest / Travel Agency in a Year / DAY 292 | The E-Myth for Travel Advisors: Build the Business, Not Just the Job
Transcript
- Rachel: Welcome to the Travel Agency in A Year podcast. I'm your host, Rachel K, travel agency owner, helping you all build business that builds you up, and let's get you way past six figures. I want you all making multiple six, seven figures. I want to normalize in the travel industry a million dollars a year in commissions. That should be normal. And that should not be a team of like 50 to 100 travel agents. Okay. Anyway, if you want to know how I can help you other than this free podcast for your entertainment and education, head over to elevatewithrachelk.com. Today is day 292. Ooh, the emyth. Where I'm gonna go this whole next series. I wrote down my favorite books. And I'm gonna talk to you about these books in each episode. And it's gonna be from like how you can apply this to your travel agency. The EMyth, building the business, not just doing the work. This is gonna be these episodes might run a little bit longer. 'Cause this book this book is one of several in this upcoming little cluster of episodes that reshaped how I thought about business. Because I was struggling with this in my cleaning business. And I struggle I've struggled with this with any entrepreneurial endeavor until I got this book. So and I thought it was like a I thought it was I couldn't have more than a team of eleven. Period. End of story. And otherwise I just have to micromanage. I just have to control everything. And I wanted to know how past. So I said Maybe in the intro of this episode, because I'm batch recording, it may have been yesterday's episode. I want to normalize travel advisors getting to a million plus in commissions every year, not bookings. And here's my little rant on that for a second. A million a year in bookings, if you are hosted and you get 15%, is $150K gross. And if you factor in your taxes, unless you're like married with like five kids and you factor in all of your business expenses and you have no VA, I think if you do the math for like a single adult, maybe who doesn't own a home, your take home is like fifty-seven thousand a year. Which in today's society in the United States can't really get you on one bedroom apartment in most of the United States, especially if you work and travel and you need to be near an airport of any kind. Like you're and now if you have a VA, now you're like let's see, a cheap B to B VA, I think part time is like eighteen a year. So then subtract another eighteen thousand dollars. We'll make it fifteen because you might get a little tax benefit from it. but you're still down to like forty thousand dollars a year. Think about that. This is why I want to normalize building actual businesses in the travel agency. And I would like to say I don't know how put this. I don't know how to put this. So getting to $100,000 a year in commissions is great. Just like any other business. You're on the first path, like step. But you are not at a business level. And basic business math: the cost that you think you are deserving of being, whatever that number is, let's say you're like, I deserve a hundred thousand dollars a year salary minimum. In order for you to have this be a business and not just another excruciating job that you've created for yourself, you would have to bring in four hundred thousand dollars in commissions to comfortably pay your own salary. Because it's not really a business if you are in it in the day-to-day. Okay? It is not an asset that you can sell until you are in the day to day. And I've had to Anyway, And the same thing, if you want to hire a VA or an employee, if it's an employee on your team, whatever their salary is or their hourly wage, let's just keep it simple as a salary. Let's say you want to pay them $40,000 a year, in order for your business to sustain itself, you have to make $120,000 a year in commissions if you are not hosted. Well no, that's just if you're employed. If you're doing B2B, sorry, I've done this math before because I'm building a business. Duh. Like you have to know these numbers. That's if you want someone employed on your team, like US employee. So And that covers when you have like a downturn, which is gonna you're gonna have ups and downs in your business. It's gonna cover all of their benefits, all of the payroll costs, unemployment insurance, bada da da da. If you do a B to B service to hire a VA, you should consider having what is it if you're yeah two times their cost so if it's like it's only twelve hundred a month you have to be bringing in twenty four hundred dollars a month to cover the cost of that VA Otherwise, you do not have a really sustainable business. Now I'm not saying wait forever and deny yourself. If you are like looking at your books and you see that you've got an extra $50,000 in commissions next year, okay, it's time to consider hiring like a B2B VA. If you've got an extra $100,000 in commissions next year, okay, you can hire a full-time employee a low-salary full-time employee. right now and just hope that all those bookings travel, right? And I also so this is why I'm like not a fan of everyone that I see, and I could be wrong, everyone touting about a million in bookings. And $150,000 a year. The reality of the situation is if you and you might be listening to this and you have 100% full s financial support from your spouse, and you're like, no, that that money is life-changing for my family, that's great. But not everybody is in that situation where they have someone else that can pay all of their bills and provide everything. So if that person had two children and their spouse disappeared, left them, passed away, and for some reason, let's say you get a divorce, let's say you get into a situation where you don't feel safe with your spouse anymore, and you're gonna have to go and survive on your own for a few years before you can even touch any of their retirement. And you might not even get their retirement. You know what I mean? Like if you're going through that kind of situation. And I'm not saying you're gonna get divorced. I'm just saying if that were to happen, $150,000 a year, if you had your two children with you, once you pay all your expenses and if you have that VA service and you're like, I need this VA, you are like borderline Section 8 housing with your take-home pay. so it's not a glamorous number to be at. It's the very first step of like I can start considering quitting my job. So 150K a year would replace you if your if your take-home pay is in like the $40,000, $50,000 a year range, maybe, you could definitely leave and have $150K a year and now you've created another job for yourself. And you can't step out of the business because you've created the job and you are all the jobs, okay? This is gonna be a long episode, I'm sorry. Now, from there you can be on your own and also if you would like to scale, because I hear the big Dululu dreams and people always say, I wanna be part-time, I want to only work if I feel like it. You gotta go 10x that amount because then you have to find someone extremely valuable who can do what you've done or multiple. And again, whatever their salary is, a safe number, four times their salary should be your commission coming in, your revenues. And I'm not saying this to like hate on anybody, I'm not saying this to discourage you. I'm saying this to you so you understand the reality. And it is far easier than you have been led to believe to hit those numbers. So let's do it. We're gonna do it by talking about the emyth today and don't mind my race cake eating. So I recommend picking up the revisited version. Because the original version was written like in 1995. So the newer version revisited, I think is from 2008. So it'll be like Jeff Bezos is kind of doing a thing. You're like, what? This is one of the best books for small businesses. It's my one of my top like if you know back in the TA Toolbox days. I had a spreadsheet of like here's my top rec reading recs. And I really like to like start a book club. I think that would be fun. To read these books. And I'm thinking about that for the unfam. I fell in love with this lady who's got an author, like she's got an author. She's publishing a book right around the same time. Well about a year f next spring. And I was like, I'd love to have her come speak and then just buy copies of the book and then have like a little baby book signing or something just for everyone. But anyway, that's just a weird offshoot of what I'd like to do. But this has always been on my list for any travel advisor who actually wants to build something bigger than themselves, who wants to do more than create a second job for themselves. The author is Michael Gerber. Gerber liked the baby food. And his central idea is what he calls the fatal assumption. Don't worry, I got my notes here. It's the belief that if you understand the technical work of a business, you know, planning and booking and credible trips, you therefore understand that a business does that technical work. So he argues that these are two entirely different skill sets, and they absolutely are, because the number of agents I help is like, I thought this would just be planning and booking trips. Nope. Being excellent at the technical admin work gets most small businesses started. And we talked about this from the doing. What is it, the doing to leading mindset shift? And this book is very heavy on teaching you how to do this. So being able to do all the technical work, being able to plan and book trips is great and all. And you can start generating clients that way. But you can't really grow into something that's really scalable or sustainable because the second you get sick, the second you get burnout, business is done, baby. Or it takes a huge hit. So there are three distinct roles that exist. And he describes this in this book, the emyth get the revisited every business owner, and they're all within tension of each other. It's the technician who does the actual work. And in our case, it's the trip planning, the client calls, the itinerary building that a lot of you get stuck in. No shade to you, by the way. But I see a lot of travel advisors get stuck in that and like constantly thinking if I upgrade the technician and make the technician side better, then I'm going to get business. That is not the case. Anyway, then there's the manager who creates the order and the systems and the processes around that work. And most of what the industry is teaching you is how to continuously be the technician and be the manager. The third is the entrepreneur who holds the bigger vision, who sees the opportunity, that when everyone's going left, you go right, and drives your business forward strategically because there is that much, much bigger vision. And if you're in the success circle, we use the leadership lens for this, okay? His argument is that most small business owners are overwhelmingly technicians. In the case of TAs, it's the trip planning and making the itineraries pretty and make sure the website's pretty and make sure your workflow templates are in place. And you better make sure that your content grid has the same fonts. And now I've decided to change my fonts. And I better learn how to use Canva. And now I gotta post on social media. I better learn how to use this app and what hooks to I need and that that's all technic technical stuff. Okay? And I see so many of us stuck with this. And they have underdevelopment underdeveloped manager sides and like almost zero entrepreneurial sides. And this is why so many small businesses in general plateau at a ceiling of what one person doing the technical work themselves can physically produce. Because the manager side of you and and the entrepreneurial side of you is not developed. So there are other people in this space who teach you the manager side. My goal is to get you entrepreneur, baby. One of the most practical ideas that he does is the franchise prototype, which is building your business as though you were going to franchise it into 5,000. Identical locations tomorrow, even if you have zero actual intention of ever franchising. And this is also why a lot of the times when I'm teaching and talking in the podcast, I talk about McDonald's because they were franchising. Like you've gotta treat it like you're franchising. Because this forces a really specific type of thinking, which is documenting every system. Every role is precisely perfectly defined in your imaginary business. And then you build the processes so clear that someone other than you, preferably someone who is a teenager, like you gotta think about this: like, could a bored like 16, 17-year-old execute? certain processes to the same standard. When you are considering hiring, when you are considering even just contracting a VA, is this process so simple that a super bored 16-year-old, I can explain it to them and they can do it. This is like the entire podcast. This is the success circle. This is detailed teaching of ways you can do this as a travel advisor. And then you need to build out the manager. So the manager, so the technician should be the board teenager. The manager think board college graduate age with that level of education experience. And then they can help create and refine your processes. And you are the entrepreneur. Okay. This really got me because it forced me to confront what I'd been avoiding because I was doing all the technician stuff in my cleaning business and I was like doing manager stuff, but I had no bigger vision for the cleaning business. I had an idea, and this is a big struggle that many small business owners go through. So you get stuck kind of like in the manager position. And then in my experience you you have the technicians under you and now you're like I'm the I'm such an entrepreneur. No you're not. You're a freaking manager. If you can't step out of the business, you aren't an entrepreneur. Period. End of story. So I was trying to get to that entrepreneur step in the cleaning business, and I'll talk about the travel agency here in a second. And I was like, I'm gonna get manager underneath me, and I'm this big hot shot. But I was the only one who could like really, and it was my own mindset. Like I, because this was my baby, I had to have a certain sense of control over it. And I saw my technicians starting to like some of them maybe they weren't the best hires, right? And so they'd slack off. And then I would try to be a servant leader and be like, let me teach you how to do this. And this really grinds my gears when I get stuck with somebody like this, where I'm like, Let me teach you how to do this. And they're like, It's impossible, can't do it. And I'm like, Okay, you're fired. You're fired. But then if I had to let someone go, then I was short on staff. Because we were just like growing like crazy. So then I was like, okay, well now I had to come in and do the work with the people. So then I was like back in technician mode and I was like struggling to juggle the manager versus the technician. And I was never f really in the entrepreneur. And my company was doing about a million dollars a year in sales. And I will say like the small business, like the US government, small business association or whatever, once you hit a million in gross revenues, that's when they could Consider you small business, by the way. So I was just like I was just at that point. I wasn't even close to being an entrepreneur. I'm still not even close to being an entrepreneur because it is a beast of a path to go on. Come along this journey with me. And so then I convinced myself before I had this book, I was like, I just can't manage this many people. I'm just not good at it. And then I sold the company and then I started working in travel after I got the butler job and I was side hustling the travel and then in you know started the actual left one agency would join to host, started my LLC everything during COVID. And I was like, I'm gonna really build this into a business. And I even having my educational background, I was like, how do I do this? I have an idea, but how do I do this? And I wasn't even ready. I picked this book up before I was even close to ready to being able to hire. But I was just like struggling with like how do I divvy up this leadership and there's all these different roles and da-da-da-da-da. And this book changed my life. Because I was acting as a technician, doing the actual work of the business myself. I had no structure around what a future team would look like, let alone future leadership and what that would actually look like. And this book, he's got a an exercise in it that he prescribes. You have to create an entire organizational chart for your travel agency. This is what I did. And I still have it somewhere in like the legal pad. As though it was fully built out, you are not in the business. You do not work in this business at all. You are truly, fully entrepreneur. Okay. So this could be five, ten years down the road. It could be three years down the road. You don't know. With actual named positions for a future leadership team. And this is like when I say put on your CEO hat, take time for your CMO hat, take time for COO time and CFO time. This spans from this exercise because you have to play every single role until you can start filling in the roles. Okay. So you gotta go all the way down. So what I did is I had, you know, CEO, CFO, CMO, COO, and then I had the vice presidents, whatever assistants underneath them, then I had the managers underneath them, and then I had the reps underneath them. Okay. So I had for my marketing team, it went like sales and marketing for CMO. And sales would report to the sales manager, and marketing would report to the marketing manager, and they were split up from there. So there'd be like a social media manager, and then networking, like inbound versus outbound marketing management teams, and then reps for each one. And then on the sales side, there was group sales and there was wedding sales and there was FIT sales, and they were all individual managers with reps underneath them because that's primarily. Primarily what I did with my business. And it was like that for every single department. It's this massive chart that I made. actual operations lead, the future marketing lead. These positions that at the time only were on paper because I was doing all these jobs myself, okay. And then I had to look, you gotta look up realistic salary ranges for these positions and write them down next to the position on the chart. Seeing the actual dollar amounts next to what a sales rep makes, which is probably, you know, 80 a year plus bonuses. And then going up there to like CEO, CMO, CFO, COO, and seeing what their salaries were. was amazing and so sobering. Because it made the abstract idea of growing this into a business into a concrete specific financial target. Because if I was like, okay, well, I'm gonna be these executive positions and I'm gonna have these manager teams down the road, the first step is I'm gonna have to hire like admin to help me. And general admin is about fifty thousand a year. So I have to make two hundred thousand a year in commissions to be able to afford a decent admin person full-time. And then I gotta pay myself too. And it also makes you write out the contracts for like your executive team. And you can write your employee handbook. But if you're like, I don't know if I want employees, but you can do all this stuff, but you write out the contracts. Keep it simple. Don't go crazy. of like what the CEO does, what what they're expected to do, what their salary is, what their o options for raises or whatever, all that, like an employment contract. And you sign that employment contract. I've talked about this in other episodes of the podcast, but it's like It's awesome because if you have that big Dululu goal of I'm only working part-time if I want to, this process will help you understand exactly what your financial targets need to be. And from there you can take a know your numbers guide, put in your average booking value, your commission, and this Dulu revenue goal, which should it's just it's a realistic future goal. And then you know how many trips you need to be booking based on your generalized commission booking value and niche each year. And from there you can take the plan and be like, okay, so this sounds like a lot for me. So now my goal next year, let's say you need $1.2 million in gross revenues to get started on this, right? To have like management, sales team, all that fun stuff. And they aren't like ICs. So let's say you're like, okay, I need 1.2, your average commission is like $400. That's a lot of bookings to get to $1.2 million. And that's gonna overwhelm you. And it it'll put it in the Know Your Numbers spreadsheet, like this is how many bookings you need for the year, and how many you need to average per month. That's too high of a number, okay? Let's make that your five-year know your numbers. So make a copy, make it 20, what is it? I don't know, 2035. Goal. And then you can knock it down by 10X. Be like, okay, now I know I want 120,000. And once you see that big number, it's a relief to be like, I only have to do this. This is easy peasy. Hopefully. Hopefully you're not booking commissions that are like four dollars a booking. Anyway. If you have time, I highly recommend getting this book or at least sketching out that organizational chart as though you were franchising this out and then you were creating the entire business model for someone else to buy into. So if you don't know what a franchise is, that's what a franchise is. You get they get your branding, they get your logo, and they get your exact business model. That's it. And if you're Ray Croc, they get you get the real estate. Hey. All right. Gerber is really clear. This shift does not happen overnight, like we said. It's gonna be really hard to move from technician to entrepreneur and you kind of go back and forth a little bit and you need to check yourself before you wreck yourself because if you do start hiring and you feel like you need to take control of things, you need to pause because you're not in manager mode. You're barely in manager mode, you're wanting to go back to technician mode because you aren't confident in your processes and you aren't confident that a bored teenager can do them. So then you shift back into technician mode, and then you're like, I just don't understand why I can't grow. Because you haven't made your processes easy enough. That's it. For someone else to execute. Anyway. I'm on this path with you right now as I rebuild. It takes a few years. It's not a weekend project. And you should revisit this organizational chart should you choose to accept that mission. Once a year and see if you like that flow. And this'll also help you get really clear in your SOPs, too, by the way. Man. Yep. Marketing is a completely different skill from booking and planning trips. Admin is kind of booking and planning trip stuff. Financial management is completely different skills. And obviously, if you were going to make this a multi-million dollar company, you would need the best of the best managing your money, managing your sales and marketing, managing your tech tools and systems. So on and so forth, managing your people. Right now that's gotta be you. And you're not gonna be perfect at all of them. And you'll quickly learn which positions to fill right away as you focus on these skills. Because you'll be like, well, I suck at money management. I need a CPA. But this is one of the most clarifying exercises inside this book that I've done when it's building any business. And it's something that you can do, like I said, like I've said it before. If you decide travel's not it for you on how you want to build a business, you can take that exact organizational chart in that book and apply it to any business. Okay. Alright, that was day two ninety-two, super long episode. I hope you have a wonderful day. I will see you tomorrow.