Is Tourism for you?

If you believe that tourism is the right industry for you, then you need to decide what type of business you would like to operate. Will you offer a product or service that people want and will pay for? Here are a few questions that you should think carefully about before getting involved in a tourism operation:

  • Why do you want to start a tourism business?
  • Do your personal objectives fit with the lifestyle of a tourism business operator?
  • Is this the kind of lifestyle you will enjoy?
  • Do you have an adequate working knowledge of the industry?
  • Have you looked at a recent industry profile?
  • Are you aware of the types of skills necessary to be a tourism operator?
  • Do you have these skills?
  • Have you thought about the possibility of financial loss?
  • Are you sure you can generate both the short and long term financial gains you expect from this operation? How will this be accomplished?

Many characteristics of successful tourism operators are shared with successful small business owners. In general, you:

  • Enjoy being around other people
  • Enjoy talking to strangers
  • Are always ready to smile
  • Have a tolerance for all age groups
  • Can control your temper
  • Are accepting of criticism
  • Anticipate the needs of your clients
  • Have an emergency plan in place
  • Consider yourself a self-starter
  • Set goals and deadlines
  • Always try to meet those goals
  • Maintain high standards
  • Have a drive to achieve
  • Have people management and hosting skills
  • Are able to make sound judgements
  • Have the ability to raise and handle credit

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Moving forward to develop your tourism business

Should you wish to move forward at this point and begin to develop a business, you will require a business plan. There are a number of agencies that will provide you with information on how to develop a business plan, as well as a variety of business plan templates that exist. Resources for Alberta business include:

Alberta Women Entrepreneurs:

The Business Link:

The following is a checklist, adapted from Alberta Women Entrepreneurs [AWE], that business owners should go through to ensure each item has been covered in their business plan.

  • Insure your business against the risks it faces.
  • Develop a workable system of records management for sales, management, inventory, and purchases.
  • Discuss your preliminary financial needs with your banker.
  • Comply with the legal requirements affecting your type of business.
  • Research zoning requirements, bylaws and licensing.
  • Know and understand: environmental, fire and health regulations, labor legislation and transportation guidelines.
  • Set objectives for various parts of your business, i.e. sales, employee performance, occupancy rate, etc.
  • Develop a way to repair and replace your fixed assets.
  • Determine the employees you will need to hire to start the business.
  • List and define the types of positions required.
  • Identify the level of training, education, and experience required.

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The Challenges Ahead

Should you wish to pursue a tourism operation, there are a number of issues that must be addressed before you can begin operating a tourism business in Alberta. For an indication of the types of challenges that may exist, please refer to the following points:

Financial Considerations

Many small businesses misjudge their capitalization costs, especially in the start-up phase. Remember, in addition to your projected costs, you also must be prepared for unexpected expenses. Be prepared to run your business with capital reserves large enough to absorb both general economic and specific tourism industry downturns.

A financial analysis is absolutely necessary!

The financial analysis gives the entrepreneur a detailed picture of the costs involved in starting up the enterprise, annual operating costs, projected income and the means of financing the operation. Ensure that your financial plan contains the necessary financial statements required by a banker or investor.

Can you afford to operate a Tourism business?

Prior to any investment or construction, a feasibility study should be completed to help determine the viability of your project. This study will help determine if the business has a chance to be successful or not. Following are examples of questions that these studies endeavor to answer:

  • Do a sufficient number of people demand your product?
  • What competing facilities are in the area?
  • What complementary facilities are in your proposed area?
  • Could you partner with these businesses?
  • Have they been successful?
  • What is the nature of the tourist traffic in the area?
  • Who are your visitors? How many?
  • What services do they require?
  • What are the recent trends in the industry?
  • What are the growth forecasts?

Some steps that are necessary to complete your financial analysis include:

  • Determining the capital costs associated with your business
  • Determing cashflow and working capital requirements
  • Completing the proforma financial statements [income statement, cashflow forecast & balance sheet]
  • Figuring out how you will finance the venture
  • Evaluating the rate of return on your investment and deciding how you wish to proceed

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Do you need to borrow money for your business?

To assist in evaluating the financial viability of your proposal, you can utilize information developed by Alberta Tourism, Parks, Recreation & Culture.

Other Financial Planning Tools

The Tourism Development Branch has a list of potential funding sources related to tourism based operations. For a copy of this list, call:

  • Toll free in Alberta: 310-0000, then dial: 780.427-6544

or complete our online request form:

Seasonality

Most tourism operations must take into account changing seasons and the effect this has on the number of visitors to their business. Careful monitoring of cash flow statements can be used to determine costs and revenues during specific times of the year.

If the costs of doing business far outweigh the benefits during a specific period of the year, then you may want to investigate what effect hiring seasonal workers or even closing the business for a period of time would have.

Human Resources

Do you need additional staff to handle different aspects of the operation? Can you afford to hire additional people? If not, can family members provide sufficient "manpower", and are they willing to forego salaries until such time that the tourism operation is generating a profit? To be professional, you must:

  • formalize roles & responsibilities in written job descriptions
  • establish compensation levels for staff
  • determine staff training requirements
  • Identify costs associated with training

Information and technology

Electronic technology and the Internet are changing the way the industry and its customers do business. There is an increasing demand for timely, accurate and relevant information directed to the business owner and consumer.

Inevitably, more issues will pop up over the course of developing and running a tourism business. So, how do you become successful? Although there really are no formulas for success in the tourism business, proper attention to some key business elements will dramatically increase your chance of success.

Do You Build or Buy?

A potential tourism operator must decide if they should buy an existing business, or build a new one from scratch. Although your decision may be influenced by your financial ability, there are some other considerations to consider as well.

Buying an existing facility may have advantages:

  • Less development than building brand new facilities.
  • Already established as a good location for tourists.
  • Current client lists could be available.
  • May receive some limited management/operational training from previous owners.
  • Reduces the overall risk because good ties may have already been made with clients, banks, and suppliers.

The key to successfully purchasing a business is to fully investigate before you commit yourself. To identify facilities that are for sale, you may wish to contact a local commercial realtor. If you are considering the purchase of an existing business, visit:

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The Business Link

Building a new site also offers advantages:

  • Freedom to design your operation "from the ground up". This improves your ability to market to a specific target market. If you purchase an existing business, you have to work with the facilities already in place.
  • New facilities and equipment are guaranteed [which may interest more of your potential clients].
  • You get to choose the location.
  • Leasing, franchising, and operating a current operation under contract are other options available to those interested in tourism operations.

Regulatory Controls

You may be required to consult the following departments concerning the development process:

Further considerations

  • Does your proposal fit within the current bylaws for the area? If not, what will you do to change your project?
  • Can you obtain the land necessary for a tourism property?
  • Is your location accessible? Is it possible for roads to be built if necessary?
  • Are any similar developments planned in the area for the near future? If so, how will this affect your business?
  • Have you received all licenses and permits you will need?
  • Do you have the required insurance?
  • Has the local municipality approved your plan?

As all tourism businesses are unique, some departments may be more involved with your development than others. Remember to check with your lawyer, accountant, and municipal officials during the planning stage of your business.

For information on requirements for tourism development proposals on lands owned and managed by the Province of Alberta, contact: