Latest / Travel Agency in a Year / Day 217: Which business model works for your travel agency?
Transcript
- Rachel: Welcome to the Travel Agency New Year Podcast. I'm your host, Rachel Kay. I'm a travel agency owner helping travel advisors step into their CEO mindset. Like, let's really build something. And today's episode is all up all about that. We are on day 217. What kind of business do you actually want? Also, my chair squeaks a little bit. Enjoy. I am too lazy to get the WD 40 out. Here's a question worth sitting with honestly, maybe for the first time since you started this whole travel career. What kind of business do you actually want to build? Not what you think you're supposed to want, but what you actually want. Because there are plenty of, there's several different models that you can implement in your travel business. And that's what we're going to talk about today. A lot of advisors never consciously answer that question. They just keep adding clients or adding services or adding complexity without ever deciding whether they're building towards something they genuinely enjoy running two, five, ten years from now? They don't know. They're just doing they're just doing what they think they should be doing. So let's take a look at three rough categories for business models. For your travel agency, so you can locate where you want to land in this industry. Because there's plenty of room for all of us. All right, the first model, and the model most travel advisors stay in, is the boutique agency. The boutique agency is typically just you, maybe some light support like a VA or two, maybe one or two other agents, serving a smaller number of clients very, very deeply. The appeal here is control and personal connection. You know every single client, every trip has your direct hands on it, and your reputation is built on developing those super close relationships. The trade-off There is a ceiling. Your revenue is largely capped by your own hours and capacity, and growth beyond a certain point usually means either raising fees, implementing fees, changing niches significantly, or accepting that you can only serve so many people well. So this type of agency, I'd say you can comfortably make maybe close to $300,000 a year, just really depending on your niche, your fees, and your workflows, automations you have set up, and your capacity. Okay. You could probably make more in like safari travel or like higher ticket travel, but in general, I'd say the cap is like 300. All right, the next. And three hundred in commissions, not bookings, by the way. The next model is the mid-size, the mid-size model. So a mid-size agency usually involves bringing on other advisors or significant support staff or a little bit of both, serving considerably more clients, with your role shifting at least partly from doing to overseeing. The appeal is there's real growth beyond your own personal hours and often more stability since. Since the business isn't entirely dependent on you being available all day, every day. Okay. The trade-off is complexity. You will have to understand and assess if you have the ability to properly manage people, the standards, and the systems, not just trips. And that requires a different skill set than the one that got you started. So you can't, unless you have that skill set already developed, you can't really go from like, I'm just a single Travel agent to mid-size in like six months. Like you would have to have significant skills developed in terms of management, business operations. And it's a when you're starting from scratch, that takes some time to develop as well. Mid-size agencies can be like I don't know. I would say over three for me, for me personally, I have to have significant staff once I hit like three three fifty a year. So I would say three fifty up to maybe one or two million in revenue easily. It just really depends, again, on your niche. But usually in that time, like that's where you're gonna get like the quote unquote big players in the industry. they usually have a lot of employees or a lot of agents on their team. it could be maybe upwards of five million. It really just depends in terms of commissions earned, not your individual earnings, because you would have to pay a lot of support staff. This scaled agency looks more like this is the top one. This looks like a company with multiple advisors, completely and clearly defined departments, and a business that could theoretically run and be sold without your daily presence at all. And that is if you are like, I'm an entrepreneur, that is the true definition of an entrepreneur. If you have to work daily in your business to keep the business going, even if it's just simple marketing and lead generation. you're not really running in the business. I mean you could be the face of the brand as well, but you don't really have something to sell. Okay? And we're gonna talk about that in other episodes. This is the model built with an eventual sale or significant passive income in mind. The appeal is the biggest potential upside and the most freedom from day-to-day involvement eventually. It's not it's not overnight. Like you'd have to be like already Elon Musk and be like, I'm gonna start a travel agency. The trade off Is the most upfront complexity, the most systems and delegation. You have to have the ability to delegate. You cannot be micromanagey control freak. And as we're gonna talk in the next episode, a business in this category is one of the very few agency like travel agency setups that's genuinely realistically sellable. We need to talk about that because I've heard of so I've got I've heard so many stories. stories of travel agencies trying or travel agents trying to sell their business and they're like it's worth a million dollars and it's like no it's not. So we're gonna have a whole episode on that. In case you ever run into that, you can make an informed and educated decision. Alright, so none of these three models is objectively better than the other. We're all different people. I know an advisor I've mentored for a while was really, really going for the big-scaled model, and then they learned what the owner of that agency does, and they were like, no, that is not what I want, and they want to stay boutique. another agent That I've mentored is like, you know, I can make close to six figures, just me, and I'm not working crazy hours, so I'm gonna stick with this. You know, it really just depends on what you've got going on in your life. And some people really love the boutique agency because they love to be hands-on with every client and really, really enjoy building those relationships. They don't want to manage a team. And that is a successful sustainable business. Full stop. A scaled agency built by someone who wants to eventually exit or step back is also a successful business built with a different goal in mind. The mistake isn't picking any of these three, the mistake is drifting between them by accident and adding complexity you didn't actually want or you don't have the skills for yet, or staying small when you actually crave big growth simply because. Yep. Sit with that for a second. Yep. So you really need to be strategic. You can go, you can be like, I want the skilled model, but understand you need to go from boutique to mid-size to scaled. And you need to understand that you have the skills pretty well developed to get to that next level. It's just like a video game. Like Super Mario. If you need the fireball and you can't find where the little flower power guy block is. And you need that fireball to get through the level, you're not gonna get to the next level until you learn where the fireball is. And so or the flower power is. I don't know why it's called flower power in my brain. So it's like that. Like you're just gonna do the same thing over and over again and hit a wall until you learn, okay, this is exactly what I need to do in terms of my skills development. Okay. Alright, tomorrow we get into something that every advisor should understand, regardless of what model you're building towards. Why travel agencies are notoriously hard to sell and how to think about the real value. If anyone ever offers you their book of business, I've sold businesses myself, so and they were service-based. So we're gonna talk about why you probably can't sell your travel agency, and why most people trying to sell their travel agency are asking for way too much money. This is travel agency in a year day 217. Have a wonderful day. I will see you tomorrow.