1. business and industrial

The Ecotourism Planning Kit
A Business Planning Guide for Ecotourism
Operators
in the Pacific Islands
March 15, 1994
Written under a grant from the
Office of Territorial and International Affairs (OTIA)
OTIA Technical Assistance Grant GEN-61
by
Sherry M. Bushnell
prepared for
The Pacific Business Center Program
University of Hawaii
ABOUT THE AUTHOR
Sherry Bushnell was raised on the island of Kauai and her love of
the land grew as naturally there as the coconut palms. She is a graduate of
the University of Hawaii with an MBA in International Business and is the
Business Development Specialist for Pacific Business Center Program to
the State of Pohnpei in the Federated States of Micronesia, the Territory of
Guam, and the Commonwealth of the Northern Mariana Islands.
Sherry has a wide range of experience in the Pacific, including
eleven months in South Korea, Thailand, Taiwan, Hong Kong and
Singapore studying under a Thomas J. Watson Foundation Fellowship from
IBM. She speaks Japanese, Korean, and Thai.
Sherry is a savvy businesswoman who has a great respect for the
land and the cultures that make up the Pacific islands. She has written this
handbook to encourage others to develop ecotourism.
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TABLE OF CONTENTS
Page
Introduction
........................................................................ 1
Having A Dream..................................................................... 2
Overview
........................................................................ 3
Chapter One: Main Checklist ............................................................ 4
Step 1: Assess Your Project.................................................... 4
Step 2: Developing a Business Plan......................................... 6
Step 3: Preparing Financial Statements & Finding Backing.... 10
Step 4: Environmental Impact Assessment (EIA) .................. 15
Step 5: Receiving Official and Governmental Approval ......... 15
Step 6: Starting Up Operations ............................................. 16
Chapter Two: Project Assessment ................................................... 17
What are You Getting Yourself Into? ................................... 17
Roads, Cars, Water, and Things (Known as Infrastructure) ... 18
Is There Enough Energy in Your Area to Meet Your Needs? 22
How Do Surrounding Communities Feel About The Project?.24
Chapter Three: Creating a Business .................................................. 25
A. Executive Summary ......................................................... 25
B. Description of Company and Business.............................. 27
C. Product/Service................................................................ 29
D. The Market...................................................................... 30
E. Location of Business ........................................................ 38
F. The Competition............................................................... 39
G. Management Team........................................................... 41
H. Personnel ...................................................................... 43
I. Financial Analysis .............................................................. 44
J. Supporting Documents...................................................... 44
K. Conclusion ...................................................................... 45
Chapter Four: Financial Backing ...................................................... 46
A. Sources and Uses of Funding ........................................... 46
B. Capital Equipment List..................................................... 47
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C. Balance Sheet................................................................... 50
D. Projected Income Statement............................................. 55
E. Break-Even Analysis ........................................................ 65
F. Cash Flow Projection........................................................ 73
G. Historical Financial Reports ............................................. 81
Chapter Five: Environmental Impact Statement............................... 83
Chapter Six: Official and Governmental Approval.......................... 87
A. Determine Which Departments You Need To Contact ..... 87
B. Contact the Correct Person in the Department.................. 88
C. Check Back Periodically................................................... 89
D. Be Aware of Changes in Government Positions................ 89
E. Build a Positive Relationship with Government Officials... 90
F. Stress the Benefits of your Business Idea .......................... 90
Chapter Seven: Starting Operations.................................................. 91
Advice from Ecotourism Operators....................................... 91
Site Planning Issues .............................................................. 97
Building Design Issues.......................................................... 98
Energy Resource and Utility Infrastructure Issues ................. 99
Waste Management Issues .................................................. 100
Chapter Eight: List of Agencies and Organizations.......................... 101
Environmental Protection Resources................................... 101
University of Hawaii Resources .......................................... 105
U.S. Federal Government Programs.................................... 106
American Samoa................................................................. 108
Commonwealth of the Northern Mariana Islands................. 108
Federated States of Micronesia ........................................... 109
Guam
.................................................................... 110
Fiji
.................................................................... 110
Private Firms .................................................................... 111
Palau
.................................................................... 111
Republic of the Marshall Islands.......................................... 112
Banks and Development Banks........................................... 112
Societies and Information Organizations ............................. 114
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Magazines and Publications ................................................ 119
Travel and Tour Agencies................................................... 124
Chapter Nine: Case Studies of Successful Ecotourism-Style
Businesses ....................................................................
A. Pacific Island Architecture..............................................
B. Marketing Strategies for the Sufua Hotel........................
C. Business Plan for The Pathways Hotel, Yap ...................
Bibliography...................................................................................
Appendices:
Appendix A: Extensive EIA’s...........................................
Appendix B: Ecotourism Operators..................................
Appendix C: Practice Forms.............................................
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127
131
137
150
169
180
194
INTRODUCTION
This Ecotourism Planning Kit is designed for people who wish to
establish Ecotourism-based businesses. The idea for this book came from
comments and suggestions made by participants at the first conference on
"Ecological Tourism and Small Business in the Pacific" held in Palikir,
Pohnpei, September 17-20, 1991. The staff of the Pacific Business Center
strive to assist the people of the Pacific islands to work together to create
viable ecotourism-based businesses that will provide a means of livelihood
for Pacific island residents while safeguarding the environment for
generations to come.
As a prospective business owner, you can use this kit to learn the
steps needed to establish a successful business venture. Many of the steps
included in this handbook can be found in other "How-To-Set-Up A Small
Business" guides; however, this kit explains the unique obstacles that
ecotourism businesses face. We have included several case studies and
examples of ecotourism ventures in the Pacific to illustrate the process you
must undertake, and to show you that, with a lot of hard work, you can do
it. We hope that you will find it useful in making your ecotourism dreams
come true.
WHAT IS ECOTOURISM?
The definition of ecotourism varies among different groups of
people. Tour group operators, government officials, business owners, and
conservationists have spent a great deal of time trying to agree on a
common definition, but have failed to do so. Some people feel that nature
tourism, adventure tourism, cultural tourism, educational tourism, and
historical tourism are all parts of ecotourism; others believe that ecotourism
is a separate category. For our purposes, we will define ecotourism as "a
concept that describes a form of development that respects tradition and
culture, protects and preserves the environment, and educates and
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welcomes visitors." In addition, ecotourism should be economically
sustainable over the long-term.
HAVING A DREAM
One of the most important
keys to having a successful
ecotourism business is to have a
dream. It is essential that your
vision is clear, and that you are
interested in every aspect of it. For example, if you plan to open a dive
shop, you should enjoy diving and working with people. If you do not
enjoy being on boats and diving, it is probably not a good idea to establish
a dive tour operation. It is important to talk to people about your dream especially people who are already in the business. Find out what it is like
to run that kind of operation and determine whether or not you would
enjoy a similar experience. If the answer is no, then you should reexamine
your plans. Since establishing an ecotourism business will be very timeconsuming, it is essential that you love what you do.
Once you have decided what your dream is and are certain that you
will really enjoy the experience, you are already halfway to the finishing
point. As you begin setting up the business, always remember your
dream. This handbook will help you through the technical aspects of
establishing a business, and you can work with agencies who are willing to
assist ventures of this nature. But, no one can help you create your dream
- your dream belongs only to you.
Once you have a clear vision, this handbook will make the rest of
the process easier. Every business on each island is different, so this guide
will explain the general principles. Government agencies and existing
business owners may be in a much better position to assist you with
specific information. So, read on, learn from the information provided
here, hang onto your dream, and most of all, believe in yourself!
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OVERVIEW
This handbook is composed of nine chapters:
1)
Main Checklist: These are the steps an entrepreneur will
need to follow when establishing an ecotourism venture.
2)
Project Assessment: Here is a detailed discussion of how
to assess an ecotourism business idea.
3)
Creating a Business Plan: Take a step-by-step approach
to developing a business plan, with examples of financial spreadsheets and
marketing ideas is included.
4)
Financial Backing: You will find a
discussion of the documents necessary for securing
financial backing, including a list of organizations
that may be willing to provide loans or economic assistance for ecotourism
ventures.
5)
Environmental Impact Assessment (EIA): This is a brief guide
to developing an environmental impact assessment.
6)
Official and Governmental Approval: This gives a brief look at
the importance of receiving proper authorization and the types of
information that you may request.
7)
Starting Operations: Do a detailed examination of the factors to
consider before opening for business.
8)
Lists of Agencies and Organizations: Take a look at this list of
organizations and agencies that could assist you in establishing or
marketing an ecotourism venture, and provide technical assistance in
renewable energy and/or descriptions of existing ecotourism operations in
the Pacific.
9)
Case Studies of Successful Ecotourism-Style Businesses: These
are the business documents of two successful ecotourism-style businesses
in the Pacific islands and architectural examples of ecotourism resorts.
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CHAPTER ONE: MAIN CHECKLIST
This chapter will give you an outline of the steps you need to take
in order to establish an ecotourism business. Every island has its own
regulations and rules so all the steps may not apply to you. There may also
be steps that are particular to your island that are not mentioned in this
handbook. Your most important resource will be the people who have
already established businesses. Take the time to meet these people and
learn from them.
The checklist will give you a broad overview of what needs to be
done. Following chapters describe each step in the checklist in more detail.
You may already know a lot about setting up and running a business; this
book is set up so that you will be able to go to the sections that will be of
the most help to you. The order of the steps in the checklist may vary
depending on the type of operation, the business environment, and the
governmental regulations; many of these steps may also be done at the
same time.
CHECKLIST
•
STEP 1: ASSESS YOUR
PROJECT: The first thing you must do is
look at your project to decide whether or not it
is feasible, economically sustainable,
environmentally friendly, culturally sensitive,
and something you really want to do.
A.
Know All Your Options
Do you understand and know about all of the available options?
Would a less ambitious project be better?
Are you committed to this project?
Do you have a realistic idea of how much time and money it will
cost you?
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Are you able to meet the projected start-up costs?
B.
Consider Your Power Source
How will you provide power to your business?
From the grid?
From a diesel generator?
From renewable energy sources, such as solar panels, wind
generators, or hydropower?
From a combination of two or more of the above sources?
Do your energy needs put pressure on existing energy supplies?
Can you use renewable energy?
How expensive or feasible are different types of energy sources?
C.
Check the Infrastructure
Will the existing infrastructure (roads, airports, docks, water
supplies, waste removal, communication services) support
your venture?
Will your business be easy for visitors to find?
Are there transportation options (e.g., rental cars, bus service) for
visitors?
Are roads well-paved or are they full of potholes?
Do you have access to water supplies?
Do your water needs put a strain on the existing water supply?
What type of waste disposal system exists?
Do you have to remove your own waste, or will your government
provide the service?
Will your establishment have access to telephone services?
What will it cost to have a telephone line installed?
Will you need other forms of communication (e.g., mobile phones,
CB radios)?
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D.
Listen to Your Neighbors
How do your neighbors feel about your project?
Do the residents support your venture?
Will the residents be included in every (or the major) aspects of
project development?
Will there be jobs for local residents?
Will these jobs be temporary (e.g., construction of buildings or
clearing of land) or permanent (e.g., tour guides, waiters,
managers)?
Have issues relating to the use of alcohol by tourists been
discussed?
Has the project been clearly and honestly discussed with existing
residents?
Have all concerns of the residents been discussed and has a mutual
agreement for solving concerns been reached?
Has your project taken the residents' concerns into consideration?
The answers to the questions in this section are important in helping
you determine whether or not it is a good idea to set up a business. After
your business is operating, you should continue to ask these questions and
talk to your neighbors so that your business can adapt effectively to
changing conditions.
•
STEP 2: DEVELOPING A BUSINESS PLAN: Creating a
business plan may seem very frightening; however, you probably already
know a lot of the information - it may be just a matter of writing it down in
the correct format. The outline of a business plan is described below; a
more detailed explanation of every part of a business plan is given in
Chapters Three and Four.
A.
Executive Summary: This section clearly presents data and
information from the business plan in five pages or less. The executive
summary should touch on all the main points of the business plan and
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should end with a summary statement. The main opportunities and
advantages of opening a new business should be stated clearly in this
statement.
B.
Description of Company and Business: This section is especially
important if you will be asking for funding. However, even if all your
financing needs are already taken care of, it will be helpful for you to have
a written explanation of what your business is, how you are going to run it,
and why you think your business will succeed. This will allow you to
reevaluate the position of your business in the future and decide whether
you have achieved your goals.
C.
Product/Service: This section of a
business plan discusses your particular
product or service. Concentrate on the things
that make your product or service unique and
attractive to your clients. Make your product
or service seem special and different. There may be other operations that
provide the same basic products or services that you provide, so you need
to explain why your product is especially unique and why people should
want to purchase it.
D.
Marketing your Service/Product: There are a number of issues you
must consider when marketing your service or product. These issues will
be discussed in much greater detail in Chapter Three, but the major points
of interest are: (1) understanding your customer; (2) defining
service/product benefits; (3) establishing sales and distribution channels;
(4) understanding your competition; (5) generating promotion and
publicity; (6) pricing; (7) meeting your goals, but staying within your
budget; and, (8) choosing the best strategies.
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E.
Location of the Business: You probably already have an idea of
where you would like your business to be located. In the business plan,
you should describe the location
of your business in as much detail
as you can. It is also useful to
describe the special characteristics
of the location and explain why
you chose that particular spot or
building. Some lending
institutions require drawings,
photographs, or designs of the building or structure that you are going to
create. Chapter Nine contains some architectural drawings of building
created for ecotourism operations.
F.
Competition: You should know who your direct and indirect
competitors are. You must also find out if there are other people who are
planning to establish a business that will compete with your venture. Try
to find out as much information as you can about present and future
competition, so you can determine where your competitive advantage lies.
G.
Management: Information about your management team should be
included in this section. The personal history and relevant business
experience about the people who will manage the business should be
discussed. The duties and responsibilities of each person should be
described, as well as the salary each is to receive.
H.
Personnel: The personnel section of a business plan should include
a realistic assessment of what your employee needs are now and will be in
the future. Issues such as pay, fringe benefits, overtime options, and
training all need to be considered in this section.
I.
Financial Analysis: How much money will you need to make your
dream come true? How can you budget for it? How will you get the
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money? It is essential to know the answers to these questions if you are
trying to get financial help; but even if you are not seeking a loan,
preparing a financial analysis can help you define some guidelines about
what you can buy, as opposed to what you would like to buy. The
specifics of working with financial data will be discussed in Chapter Four
entitled, Preparing Financial Statements and Finding Financial Backing.
J.
Supporting Documents: Supporting documents are any type of
information that is relevant and lends support to your business plan. Some
examples of documents that may be included are:
° Personal resumes of you and your
management team
° Personal balance sheets
° Cost-of-living budget
° Credit reports
° Letters of reference
° Job descriptions
° Letters of intent from prospective customers
° Copies of leases (or buy/sell agreements)
° Contracts
° Legal documents
° Quotes/estimates
° Letters of support from people who know you
° Census/demographic data
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•
STEP 3: PREPARING FINANCIAL STATEMENTS AND
FINDING FINANCIAL BACKING: Knowing where to look and how
to receive financial backing may be vital to the success of your project.
There are five main sources of funds for ecotourism businesses: relatives,
personal savings, foreign investors, development banks, and commercial
banks. The information that you will need to provide to bankers or foreign
investors is the same type of information that should be included in the
financial analysis section of your business plan. Much of the information
included in the financial section needs to be presented in the correct format.
That format will be discussed in Chapter Four and examples will be
provided which will help you create the documents you need to get a loan.
A.
Sources and Applications of Funding: This section should explain
what types of funding you will be receiving and where you will get it. In
addition, you should be able to describe how you will use the funding. For
example, you might explain that a personal loan for $30,000 will be used
for a down-payment on the purchase of a piece of property.
B.
Capital Equipment List: This list should describe the equipment
that will be purchased in order for you to create your product or offer your
service. Capital equipment is equipment that is used and gets worn out or
depletes as you conduct business. Examples of items that should be
included in this list are: refrigerators, cash registers, furniture, computers,
boats, automobiles, knives, dive gear, and light fixtures. In addition to the
equipment, model numbers, styles, and the cost of the equipment should be
included in this list.
C.
Balance Sheet: A balance sheet is a financial statement that
summarizes the assets, liabilities, and net worth of a business at a given
date. There are a number of categories that belong in a balance sheet
including:
° Fixed assets
° Other assets
° Current liabilities
° Long-term liabilities
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° Net worth
° Current assets
° Footnotes
These categories will be explained in greater detail in Chapter Four.
D.
Break-Even Analysis: This section is designed to show you how
many customers you need to have or how much money you need to make
in a certain time-frame, in order to break-even financially. If you know
how many customers you need to have, then you can plan and market your
service or product accordingly.
E.
Projected Income Statement: While the balance sheet provides a
picture of the financial state of your business at a given time, the projected
income statement is designed to predict the financial position of your
company over a period of time, usually three years. For the first year, this
statement might provide monthly estimates of your projected sales and
expenses so that you can predict the success of your business as closely as
possible. This document is more detailed than the balance sheet, and will
involve more work. The format of a sample income statement is shown on
the next page.
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SAMPLE INCOME STATEMENT
CATEGORY
MONTH #1 MONTH #2
Net Sales:
less Cost of Goods Sold:
equals Gross Margin:
Operating Expenses:
Salaries and Wages
Payroll Taxes and Benefits
Rent
Utilities
Repairs and Maintenance
Office Supplies
Postage
Automobiles and Trucks
Insurance
Legal and Accounting
Advertising/Promotion
Consulting Services
Equipment Rental
Depreciation
Telephone charges
Travel Expenses
Others:
Other Expenses:
Interest
Total Expenses:
Profit (Loss) Pre-Tax:
Taxes:
Net Profit (Loss):
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F.
Cash Flow Projection: The cash flow projection is different from
the income statement because the cash flow projection concentrates on the
amount of hard cash you will have at any given moment, while the income
statement focuses on the value of the assets belonging to the business.
There are four main functions of the cash flow analysis:
(1)
To show you how much cash your business will need;
(2)
To tell you when the cash will be needed;
(3)
To help you decide whether you should look for equity (money
given by the owners of the business), debt (money received
from loans), operating profits (money from the business), or
sale of fixed assets (money received from selling something of
value); and
(4)
To help you determine where the cash will come from (Bangs,
Jr., p.82).
Like the projected income statement, it is best to view the cash flow
projections on a monthly basis for the first year, and then quarterly or
yearly for the next three to five years. Banks and lending
organizations are very interested in cash flow projections because it
shows them how you will pay back the money they lent you. The
format for a simple cash flow projection is shown on the next page.
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SAMPLE CASH FLOW PROJECTION
CATEGORY
MONTH #1
MONTH #2
Cash Receipts
Sales
Other Sources
Total Cash Receipts:
Cash Disbursements:
Cost of Goods
Variable Labor
Advertising
Insurance
Legal and Accounting
Delivery Expenses
*Fixed Cash Disbursements
Mortgage (rent)
Term Loan
Line of Credit
Others:
Total Cash Disbursements:
Net Cash Flow:
Cumulative Cash Flow:
*Fixed Cash Disbursement (FCD)
Utilities
Salaries
Payroll Taxes and Benefits
Office Supplies
Maintenance and Cleaning
Licenses
Telephone
Miscellaneous
Total: FCD/year
FCD/month
*Fixed Cash Disbursements and the format of the Cash Flow Projection will be
explained in greater detail in Chapter Four.
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G.
Historical Financial Reports: If you have already been in
business then you probably have some previous financial records.
In addition to balance sheets or income statements, you should
include previous tax documents in this section. If you are
establishing a new business, then income statements and cash flow
projections may have to be estimated. Personal tax forms might be
required if there are no previous business tax documents.
•
STEP 4: ENVIRONMENTAL IMPACT ASSESSMENT
(EIA): Not every new business idea will require an environmental impact
assessment; however, regardless of whether or not this assessment is a
requirement, it will be helpful to have a document that outlines the effects
that your business might have on the environment. Environmental impact
assessments are used to predict the future state of the environment as a
result of economic development activity. Not all aspects of environmental
impact can be exactly measured; but educated guesses are useful and
provide a framework for development that is environmentally sustainable.
•
STEP 5: RECEIVING OFFICIAL AND GOVERNMENTAL
APPROVAL: Each business on each island is going to have to fulfill
requirements specific to its government and its culture. It is imperative that
you contact the appropriate government officers and representatives, who
can provide you with the information you will need in order to get
approval. Each governmental system within the Pacific islands is run a
little bit differently; you may have to do some investigating to determine
which governmental department is the correct one (or ones) for you to
contact. The Department of Taxation, the Department of Economic
Development and Planning, and the Department of Resources and
Development are some examples of the government offices that it might be
necessary for you to contact. The last thing you want is for your business
to be unauthorized because you were not able to complete all the required
documents. Regulations often change when different people are elected; be
sure that the information you have is up-to-date and relevant.
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•
STEP 6: STARTING UP OPERATIONS: If you have a dream
and you have started preparing all the necessary documents, you should not
sit and wait for everything to be perfect. Go ahead and start making your
dream come true. Have a general work plan in mind (it does not have to
be very detailed) and be willing to experiment and build upon what you
learn. Things may not always happen the way you plan them, but think
creatively and do not give up. The first step is the hardest, and it takes the
most courage, so take a deep breath and start.
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CHAPTER TWO: PROJECT ASSESSMENT
Ecotourism projects are not limited
to lodging facilities. There are many types of
businesses that can be ecologically sound and
also attract visitors to your island. The
important thing to remember is that a
successful ecotourism venture is committed
to educating the visitor while preserving
and enhancing the environment and
culture in which it is operating. Outrigger
canoe tours through lush green mangrove
forests, bird-watching, scuba diving through
colorful coral reefs and grottos, mountain
treks into virgin rain forests, deep sea
fishing, and hikes to historic destinations can
all be considered ecotourism businesses if they are operated in the proper
fashion.
What Are You Getting Yourself Into?
Aspiring business owners everywhere are surprised at how much
time and effort it takes to set up their dream businesses. Don't get
discouraged!! If you really want to establish the business and believe in it,
then take one step at a time and everything will work out fine. Our
checklist presents a number of questions. It is important that you know the
answers to those questions before you invest a lot of money and time in
your project.
First of all, you should find out as much as you can about the
business that you would like to establish. If you want to set up a small
resort then you need to find out everything you can about operating a
hotel, or a small inn. Do not be shy - there are a number of organizations
that can help you. Talk to business assistance programs such as the
17
University of Hawaii’s Pacific Business Center Program (PBCP), the Small
Business Administration (SBA), and your local government Office of
Resources and Development (or its equivalent.) Talk to owners of existing
establishments if they feel comfortable talking to you; it will also be
important to talk to managers (if they are different from the owners),
employees, and consumers of these establishments. It may be difficult to
get people to talk to you, because you may eventually be their competitor,
but it is important to get as much first-hand information as possible. Find
out what the owners needed to do when they first established the
operation; determine what the managers and employees need to be
concerned about on a daily basis; ask the consumers what they like and
don't like about the existing establishment. Try to determine how much it
will cost you to start up the business. Can you afford it? Will you be able
to borrow as much money as you need?
Once you have talked to a number of people, take a look at the
information they gave to you. Does it sound like a business you would
enjoy establishing and operating for many years? If you have alternative
dreams, you need to find out as much as you can about every idea you have
and then make the best decision, based on the information you have. It
may be better for you to start off with a very small operation and expand as
you gain experience. Will the business be economically sustainable? Will
your business survive with the number of airline flights and visitors that
come to your island? Think through all these questions and look carefully
at the information given to you by the people to whom you talked.
"Roads, Cars, Water, and Things" (Known as Infrastructure)
Many developing economies
are constrained by the lack of base
infrastructure such as roads, water
lines, electricity, and sewage disposal
systems. In order for your business to be successful, you must have
visitors. These visitors need to be able to find your business, get there in a
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fairly convenient fashion, and be supported when they reach your
operation. It does not make sense for you to build an incredible cultural
center that people cannot find; it does not make sense for you to build 50
great huts for lodging when there are three other hotels on the island and
your island only receives 50 visitors a month; and it may not make sense
for you to develop a trail that is located at the end of a treacherous, dirt
road full of potholes. Think carefully about the following items:
° How many visitors can you reasonably expect to pay for or buy
your services?
° Can they find your operation easily and without too many
obstacles?
° (If not, can you provide transportation for the visitors?)
° Are necessary supplies, such as food, water, and diesel fuel
available?
° Are sewage services, power lines, and communication services
easily accessed?
You can contact your local tourist board to find statistics on visitors who
come to your island. It is important not only to find out how many visitors
come to your islands, but also to know visitor profiles. This means finding
out what the visitors to your island are like. For example:
° What is the average age of the visitors on your island?
° Why did these visitors come to your island?
° What kinds of activities did they chose to do?
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It might not be feasible to establish a dive shop if there
are only 50 visitors a month to your island and 95
percent of them are there on government business.
Once you are certain that there are enough
visitors to support your dream, it is time to look at the
infrastructure. Are there paved roads that lead to
your business? What is the condition of the roads?
Are visitors going to make the effort to find your business? Is it easy for
visitors to find your place in a rental car? Would it be wiser and easier to
shuttle them to your operation with your own vehicle? If your government
is working on infrastructural improvements in the area in which you plan to
establish your business, you should find out how long it will take to
complete the improvements. In other words, visitors must be able to
locate you easily. Be sure that infrastructure exists in order for that to
happen.
Are there sufficient water supplies for your new business? There
should be enough water so that your operation does not put a strain
existing supplies. If water is not piped into your area, will you be able to
get water in some other fashion? Rainwater can be collected for some
uses. Drinking water could be bought in villages and delivered to your
business. However, there are other ways to provide water for your
business.
True Story: Don Evans, one of the developers of the
Pathways Hotel in Yap, spent a great deal of time trying to
figure out how to provide ice and purified water for visitors.
There are a number of expensive, complicated catchment
systems that involve chemicals, pressure pumps, and other
various parts, but rather than try to implement a system of this
sort, Mr. Evans decided to use a simple gravity flow catchment
system that was described in a United Nations booklet. Water
is treated monthly in an elevated fiberglass tank with Clorox
20
(the chlorine is then filtered out). The system works
wonderfully, it is easy to care for (because there are no moving
parts), it is safe, and there is not much to maintain or repair.
So, do not give up if there are no easily identifiable sources of
water. There are creative ways to overcome many obstacles like obtaining
adequate water supplies. Improvisations like this "True Story" may even
become a great selling point for your operation. You must consider
whether or not the cost of these innovative schemes can be paid for by the
revenues of your business.
You will also need to concern yourself with waste disposal and site
drainage. Does the government provide for the disposal of solid waste?
Are there government workers who will pick up waste at your operation
site or do you have to take it someplace or bury it yourself? Do you need
to hire extra people to handle this work? In addition to solid waste
disposal, how will you dispose of sewage waste? There are generally three
types of sewage waste disposal systems if a sewer system is not available:
° Cesspool: a hole in the ground;
° Septic tank: similar to a cesspool, but a concrete or fiberglass
tank is used; and,
° Sewage pond system: consists of a series of ponds which
receive, filter and clarify waste water through natural biological
processes involving plants and sometimes fish (Terry, p. 9.)
All of these alternatives have costs and benefits; you will need to
investigate all of the options and determine which is the best for the
environment and for your operation. For example, cesspools are easy and
cheap, but they may not work very well in certain types of soil and they
may pollute ground water, reefs, or lagoons. Also, the government often
forbids cesspools in populated areas. Another system which reduces the
amount of sewage waste is a composting toilet. This toilet digests waste
products, which include human bathroom waste, kitchen food waste and
other organic materials such as lawn clippings, banana leaves, etc. There
21
have been a number of technological improvements in composting toilets
in the last few years. Greenpeace has tested a number of these biological,
composting toilets in the Micronesian islands (Yap and Kosrae) that do not
have any odor associated with them. As an ecotourism venture,
composting toilets might fit well into the design and purpose of your
operation.
What types of communication services are available at your place of
business? It is necessary to have a phone, facsimile machine, or some other
form of direct communication for potential customers to reach you? If
there is no telephone service in your business location, contact your local
telephone company and see if there is a way to receive their services. If
there is not, then you might have to investigate other means of
communication such as mobile phones or CB radios.
Is There Enough Energy In Your Area To Meet Your Needs?
In many places adequate energy supplies can be a
big problem, especially if your business is going to be
located in areas that are remote or far from the public
power plant. The first question you need to address is how
much energy your business will need. A lodging facility
will need more energy than a canoe tour operation. This
should be one of the questions that you ask the owners and
managers of existing establishments. Although they may be
able to give you some ideas, you will need to calculate your energy needs
based on your specific operation. This could mean that you need to hire an
electrician to calculate your estimated use of voltage/wattage. Once you
have figured out approximately how much energy your business will need,
it is a good idea to talk to the electric company to determine whether or
not the existing supply of energy will reliably cover your needs. If the
answer is "no," then you need to look at alternative energy sources.
There are a number of alternative energy sources which may be able
to fill some, if not all, of your energy needs. It may be more feasible to use
22
a combination of sources to meet your energy demand. These sources
include, but are not limited to:
° Photovoltaic systems: systems consisting of a series of solar
cell panels and a battery bank to store electricity
° Wind generators: consists of a large propeller mounted on a
tower and connected to a generator and storage batteries
° Gas services: certain functions can be performed with the
assistance of devices using gas as fuel, such as cooking, water
heating, and clothes drying
Some alternative energy systems may be very costly and
inappropriate for your needs. You should find out whether or not your
government is involved in any alternative energy programs; they may
welcome the idea of working together with you to develop alternative
energy sources. Some of the above energy sources have been adapted and
developed on a small scale for the Pacific islands. For example, Fiji gets
approximately 90 percent of its electricity from hydro resources. With the
help of the U.S. government and other donor nations, some Pacific island
governments are trying to develop mini- and micro-hydro projects that
serve isolated areas. Check with your government to see if any of these
alternate forms of energy are available to you.
23
How Do Surrounding Community Residents Feel About Your
Project?
Small businesses are much more likely to
succeed if they have the blessing of the community
residents and the traditional leaders of the area.
When you first start planning your business, make a
sincere effort to talk to as many people as possible.
One way to do this is to call a community meeting
which all the residents are invited to attend. An
alternative method is for you to talk to each person individually. Do not
forget to include this in your assessment work; the local people’s respect
and enthusiasm may be the most important factor behind your success.
Besides addressing the fears and concerns that the local residents
may have, include them in the planning process. Ask them for ideas and
ask for approval every time you make an important change in your plan.
Consider your ideas from their point of view. What is in it for them? Are
there jobs for youths so they can stay near their parents? Will it improve
the villagers' infrastructure? This may seem time-consuming and
burdensome, but in the long run you will be glad you took the time to talk
to the neighbors. Try to hire as many local residents as possible, both in
the construction process and during the operational phase. You will have
to train them, but it is an investment in your employees, your business, and
your community. Discuss these opportunities and the possible implications
of your business with the villagers.
True Story: In Tonga, a small ecotourism resort developer
wanted to build on an island close to Nuku Alofa. The
village had no power. When designing a renewable energy
system for the resort, the developers included the village.
For the first time, the 200 villagers had light in the evenings,
as well as jobs at the small resort.
24
CHAPTER THREE: DEVELOPING A BUSINESS PLAN
Creating a business plan may seem very difficult and complicated,
but it is not really all that hard. A business plan takes information that you
probably already know and puts it into a format that bankers, lenders, and
other business people understand. A business plan can be very simple or
very detailed, depending on your needs and wishes. This chapter will
describe the various parts of a business plan and explain what some of the
terms mean. The format of Chapters Three and Four is adapted from that
described by David H. Bangs, Jr. in Business Planning Guide.
A.
Executive Summary
The executive summary clearly presents all the data and information
from the business plan in five pages or less. An executive summary in a
simple business plan may be less than a page long; a more detailed business
plan may require a five-page executive summary. The main opportunities
and advantages of opening a new business establishment should be
discussed clearly, and the executive summary should end with a concluding
summary statement. An example of an Executive Summary is:
Auntie Moana's Handicrafts, Inc. (Moana's) would like to be
established as a manufacturer-retailer of a line of handicrafts from various
Pacific islands such as baskets, wood carvings, tapa cloth, fine mats, and
fans. Moana’s plans to sell its product line directly to tourists in outdoor
craft centers on islands throughout the Pacific, starting with American
Samoa. Moana's will be owned by Moana and Noelani Scanlan (a
mother/daughter team) of American Samoa and plans to begin operations
in January of 1995.
Moana's plans to contract with local artists to supply, and in some
cases, to actually produce the handicrafts for visitor viewing. The
handicrafts will be made using authentic designs and materials. In cases
where the authentic material is endangered or difficult to locate, a similar
type of material will be substituted. Handicrafts will not be cheapened in
25
order to satisfy tourists’ needs. Goods that are representative of the
culture are the only types that will be sold. Explanations of the product
and what its uses are will be given to the tourists through the use of small
pamphlets and by the workers themselves. There will be one local supplier
per island who will be responsible for identifying the artisans, ensuring that
a reliable and consistent supply of goods is available, and supervising the
local operations in Western Samoa, the Kingdom of Tonga, the State of
Pohnpei in the Federated States of Micronesia, the Republic of Palau, and
on Majuro in the Republic of the Marshall Islands. Moana's will operate
out of a small shop leased from the Pago Pago International Airport.
Moana's is seeking a loan to start the business. The funding will be used
for the following:
Establishment/Contacts
Handicraft Purchase
Transportation
Packaging and Handling
Lease Rent for the Shop
Clerk's Wages
Total
$200,000
100,000
10,000
12,000
78,000
20,000
$420,000
This business is expected to be very successful for two key reasons:
(1) Moana and Noelani are Pacific islanders who have long been active in
the community. Moana Scanlan worked for the American government and
has extensive government and business contacts throughout the Pacific
islands. Her adult daughter, Noelani, spent that time involved in
community organizations and has befriended a number of local residents;
(2) the governments of the Pacific islands are interested in promoting
ecotourism and any businesses that support ecotourism. Moana has
already discussed her idea with a number of government officials and has
found partners on all the islands on which they plan to establish craft
centers. Noelani has already lined up the people who are willing to supply
the handicrafts.
26
B.
Description of Company and Business
This description should be fairly brief, but a number of key
questions should be
answered. These questions are:
(1)
What business are you in?
What do you do (manufacturing, service)?
Who are your clients (tourists, adults, local residents)?
(2)
What is the status of your business?
Are you just starting a new business or are you buying an
existing company?
Are you expanding your current business or are you trying
to diversify into other areas?
(3)
What type of
business do you have
or will you have?
Is it going to be a sole
proprietorship (one
owner), a partnership
(two or more owners),
or a corporation?
(4)
Why is your business
going to be successful and profitable?
What is special about your business?
(5)
When did (will) your business open?
(6)
What time (hours and days of the week) will your
business be in operation?
(7)
Is your business seasonal?
Will your business have very busy periods and very slow
periods; or will your business have a constant stream
of customers?
(8)
What is your experience in this business or in any type
27
(9)
(10)
of business?
Have you researched companies that are in the same
type of business? What have you learned from them?
Have you spoken with prospective suppliers?
Are they willing to offer you managerial/technical help?
Are they interested in working with you?
The questions listed here are meant to be guidelines; do not feel
frustrated if you have not yet answered all of them. As you complete the
other sections of the business plan, you will have a better idea of how to
write this section. It may be wise to write this section after you have
completed the rest of the business plan. A sample Description of Business
is provided below:
Manny's Educational Mountain and Cave Tours is a tour company
that specializes in providing customers with a personalized tour of the
volcanic mountains and coastal caves that exist on Kauai. Although tour
fees are fairly low, there are few overhead costs, so the tours are very
profitable.
Manny's Educational Mountain and Cave Tours began business in
November 1993 as a sole proprietorship. Tours are given any day of the
week, between the hours of 6:00 a.m. and 5:00 p.m. Between the months
of October and April, the weather is stormy and rainy so demand for
mountain tours will not be very high during this period. Coastal caves have
always been a popular visitor destination and they are easily accessible
from the beaches. During the stormy months, inland cave tours are
expected to be in higher demand, thus offsetting the reduction in mountain
tours.
Manny and Marty, the owners, have lived on Kauai all of their lives.
They both have a deep understanding of the traditions and the culture of
the people who live on Kauai. Manny and Marty teach their clientele to be
respectful of the local people and their values. The customers also learn
about the legends that are associated with the mountains and the caves that
28
they visit. The tour guides ensure that their customers are educated ahead
of time so that they are environmentally sensitive, that no garbage is ever
left behind, and that clients participate in keeping the areas clean by picking
up any litter they encounter. The educational and environmental aspects of
the tours are very popular and are considered the company's strong points.
C.
Product/Service
The most important thing to remember is that you need to make
your product or service seem special or different from similar products or
services. If you establish an ecotourism venture, then you already have one
differentiating feature: the ecological focus of your business. Stress the
fact that you are building an ecotourism venture and describe why your
business fits into this special category. This section should respond to the
following questions:
(1)
What are you selling? As an ecotourism business, you are
not just providing a product or service. A hotel that is run for the
ecotourist not only provides lodging, but also provides education,
personal interaction with the culture, a lifestyle that preserves or
enhances the environment, a good feeling that you are helping local
people (since the lodgings are made from local materials and hire
local employees), and a unique experience.
(2)
What are the benefits of what you are selling? Why is
your product/service better than competitors'
products/services? The information located here is a summary of
the information found in the section entitled The Market, later in
this chapter.
(3)
Why is your product/service special? If your business is
the first of its kind on your island, then you may have to educate
people about what your business is all about. This may be difficult,
since it may be hard for others to understand what you are trying to
do.
29
True Story: An ecotourism hotel owner in Micronesia had a difficult time
convincing the local development bank that a thatched roof hotel was
something tourists would enjoy. It was not very "special" to them; it was
stupid. It would blow away during the first hurricane, or burn down and
the bugs would get in. When you are raised in a thatched roof home and
long for a western style home, thatch becomes undesirable. Local residents
could not envision his dream.
Today, the hotel is very successful; however, it took the owner five
years to convince lenders that his new idea was a good one; now, the local
residents are proud of the success of his business because it is a positive
and special reflection of their culture. The owner established a second
ecotourism business for which he received approval in weeks because the
bankers had acquired confidence in his business sense and the idea of
serving an ecotourism market is no longer new. It is much easier to
convince people of the benefits of your product/service if they already
understand what your product/service is.
D.
The Market
In the previous section, we discussed the importance of describing
your ecotourism product/service in the best possible way. Now that you
have identified the benefits that your product/service provides, you need to
describe your customers. This section is very important because you must
be able to convince a lender that there are enough customers for your
product or service to enable you to pay back the loan. These customers or
guests comprise a group known as your "market." The following items
should be understood and considered when presenting the description of
the market.
(1)
Understanding Your Customer: Every person that travels to
your island is not necessarily an ecotourist, and not every person is
interested in a product or service that is geared towards an ecotourist.
Generally, ecotourists are individuals who can appreciate the experiences,
30
respect the environment and culture, and are open to the adventures
offered by unfamiliar circumstances. You need to know what types of
people would like to purchase your product or service. Once you know
who your customer is, you need to make sure that they know about you.
You can determine who your customer is by observing your competitor's
customers, be a customer of your competitor (e.g., sign up for a dive tour,
stay at their hotel, eat at their restaurant), reading magazines and books,
and talking to people about your business. The types of things you might
want to know about your future customers are:
° Age
° Gender
° Place of residence
° Race and ethnic group
° Hobbies
° Lifestyle
° Income level
° Education level
° Social class
° Occupations
° Types of magazines they read
° Kinds of television programs they watch
For example, bird watching is a very popular activity in
countries throughout the world and interest in bird watching is
growing rapidly. If someone wanted to establish a bird watching
tour, they would find that the demographics on bird watchers are:
° 40% of all bird watchers are between 18 and 45 years of age;
the average age is 45.
° Average number of years birding is 17.
° 55% are female; 44% are male.
° Average household income is $40,000.
31
°
°
°
°
°
°
°
°
°
70% have household incomes
between $20,000-$50,000.
17% have incomes in excess of
$50,000.
68% own their homes.
81% attended college; 61% have a
college degree; 34% have advanced degrees.
In addition to bird watching, hobbies include: reading,
gardening, hiking, traveling, photography.
52% are planning or would like to go on a paid birding trip,
domestic or abroad.
46% are members of a bird club; 54% are affiliated with the
National Audobon Society.
Birders are drawn from a broad spectrum of business
occupations.
Birders spend more than 100 days a year in some leisure-time
activity.
Many magazines that focus on particular activities such as scuba
diving, bicycling, sailing, and hiking have a demographic profile of their
readers. If your business is geared towards a special group (divers, hikers,
bird watchers, tennis players), then contacting the editors of specific
magazines could provide you with the demographic information you need.
Chapter Eight contains the names and addresses of magazines and
organizations that may be able to provide you with demographic
information on certain activities. These organizations may also be an
effective marketing tool.
32
(2)
Product Benefits: This idea has already been briefly discussed on
page 31 of this chapter. You should focus on answering the questions:
° What are my customers going to be buying from me?
° Why would my customers want to buy from me and not my
competition?
Responses to these questions should focus on the benefits of your
product/service. This is different from the characteristics of your
product/service. For example, staying at an ecotourist hotel is good for the
environment, respects local customs and traditions, and provides the
ecotourist with new experiences. Other ecotourism operators may have
many of the same features, so your business has to offer something that
your competitors do not have. For example, if your operation is easier to
reach than your competitors' operations, then you have at least one
advantage over your competitors.
(3)
Sales and Distribution Channels: This section is concerned with
making the experience of buying your product/service easy and pleasurable
for your customers. Regardless of what your business is, anyone who has
contact with your customers should be polite, courteous, and informative.
Explain how you will make your product or service convenient for your
customer to purchase; and describe how your service/product will be sold
so that customers are encouraged to return. Handicraft makers or any
other product manufacturer should explain where their products will be
sold and how the products will get to the place where they are sold.
(4)
Competitive Analysis: Have a clear understanding of what you
learned when you were assessing your project. One of the steps in the
project assessment was to talk to other people who already owned and
operated businesses like yours. What did you learn? Summarize the
information that you received from your competitors and from your
competitors' customers. Speak with your competitors' suppliers; they may
have additional information; they may also be happy to talk to you if they
33
feel that you are a potential customer.
(5)
Positioning, Promotion and Publicity: When you position your
product or service, you should choose the market that you feel you can
serve best. In other words, now that you know what kinds of people will
be attracted to your product, the benefits of your product, and your
competition, it is time to decide which people you are going to choose as
your customers. For example, if your direct competitors try to attract
young, newly-married couples, you might want to attract single people or
groups of elderly people traveling together. Other information you need to
take into consideration is the growth of your market. If the number of
elderly people traveling together has decreased in the past three years, then
it may not be a good decision to focus on this group. It may also be
necessary to look at the growth of your competitors' markets. If their
market is growing, they may not be able to accommodate the increase in
visitors; your operation may be designed to serve the same type of
customers as your competitors. For example, if there is a 25% increase in
visiting married couples, you may wish to concentrate on serving the
increase in married visitors, but specialize in some segment of that market
that is underserved, such at the “budget” traveler or young married couples
with children.
Once you decide who you are going to attract, you need to figure
out how you are going to attract your customers. If you are targeting your
business towards older people who spend a lot of time reading, then you
need to consider advertising your business in magazines. There are many
ways to tell people about your product or service that do not require
spending a lot of money. If you are offering a unique or new service or
product, magazine journalists may want to write about it. You could send
out a press release (a piece of paper with all the information about your
product/service) to travel guides, travel magazines, tour guides, local
tourism offices, airlines, or car rental agencies.
34
Sample Press Release
LE SATAPUALA BEACH RESORT
Located in beautiful Western Samoa, Le Satapuala Beach Resort is
committed to offering visitors a first-hand experience of Samoans and their
culture. The resort is owned and managed by High Chief To’alepaialii
(Toe), his wife, and three daughters.
Satapuala village has a very small population of 1,200 people, who
are always happy to allow visitors to learn about the Samoan way of life.
In addition to making friends with the villagers, visitors will be able to
experience the natural beauty of Samoa’s beaches, scenery, and climate.
Le Satapuala Beach Resort has a relaxed and friendly atmosphere that
allows visitors to participate in the everyday life of Samoans.
The visitor has a choice of accommodations: beach fales provide a
traditional Samoan style of housing; Samoan fales allow the more
adventurous to experience an open Samoan hut with a sleeping mat; others
may prefer a tent on a camp site. In addition, arrangements can be made to
stay with a Samoan family.
There is live music every Friday and visitors are invited to
participate in a traditional Samoan feast every Sunday.
Le Satapuala Beach Resort offers reasonable rates and close
proximity to the International Airport and the ferry terminal to Savaii
Island. It is an ideal location for visitors in transit, a weekend getaway, or
a relaxing, culturally enriching vacation.
Give us a call and experience the richness and beauty of friendly
Western Samoa. To find out more, please contact:
Terry and High Chief To’alepaialii (Toe)
G.P.O. Box 1539
Apia, Western Samoa
Phone: 0685 42112
Fax: 0685 42386
35
Another common way for businesses to receive publicity is to
provide a complimentary or reduced-price trip to travel editors. Focus on
those magazines and publications that are concentrated on the Pacific
region or are very popular. Talk to some tourists on your island to find out
what publications they read when making travel plans. Once the travel
editors have experienced your operation, they should agree to write about
it in travel magazines or guides. If you can cooperate with local tourism
offices and other ecotourism businesses (e.g., hotel, dive shop, handicraft
center, mountain tour) to split the cost, it can be a very good way to
generate some publicity. A list of magazines and agencies can be found in
Chapter Eight.
Printing a simple brochure which states the unique benefits of your
product/service is not very difficult and is a very important marketing tool
to have. Additional information such as a map to your location, phone
numbers, and any specific details should also be included in the brochure.
The brochures should be placed at airports, hotels, restaurants, the local
tourism office, and other places where tourists might go.
Another way to advertise your product or service is to include your
business in tour packages. Although you may not make as much profit,
you may receive a more consistent stream of visitors. In addition, the tour
agent who created the package tours will be advertising all of the
companies included in the tour.
(6)
Pricing Your Product/Service: Knowing how much to charge for
your product or service can be very difficult. As an ecotourism operator,
you are offering a product or service that has been designed to be
environmentally sustainable, and culturally acceptable. The time, effort,
and expense of establishing your dream needs to be reflected in your price.
In the financial section (Chapter Four) of the business plan, we will discuss
how to price your product so that you make enough money to survive.
Your price will also depend on the quality of the product or service you are
offering, the uniqueness of it, your competition, and your costs. Be careful
36
not to undercharge since your business will fail if you cannot cover all of
your costs.
(7)
Meeting Your Goals Within a Budget: Most new small business
operators do not have a very large budget to spend on advertising.
However, it is very important to realize that promoting your business is an
investment in the future. People need to know that you are in business and
be aware of services or products you are going to provide. Decide how
much you will be able to spend on advertising based on your forecasted
sales. Find out the costs of advertising in all of the places you want to
advertise and then choose the places that you will be able to afford. You
may wish to spend a little more than usual on advertising in the beginning
so that people become aware of your business.
True Story: One ecotourism resort in Western
Samoa spends an average of 10-15% of sales on
advertising. When they are advertising for special
occasions, it may increase to 20-25% of sales.
(8)
Strategies: Implementing an effective marketing strategy means
keeping your customers happy, ensuring repeat business from customers,
and expanding your business to attract other types of customers. Explain
what types of things you will do satisfy your customers and expand your
market.
An example of a Market Description is provided below:
Lester's Lodge plans to provide accommodations for international
visitors and government travelers. Initially, we will concentrate on
providing a quality room with good service and no extra frills for a decent
price to government employees from off-island. We will focus on
establishing a good, strong relationship with these government workers and
their colleagues; then, we will expand to include international visitors as
our clientele. Within five years, we expect that international visitors will
37
make up 50 percent of our customers.
Our goal is to provide customers with an accommodation service
that incorporates the values and the attributes of the island's culture; we
also hope to educate the international visitor about the lifestyle of the local
people and the environment. The prices will be in the moderate range and
we expect to accommodate 15 percent of the island's international visitors
and 25 percent of the visitors who are here on government business.
Customers will be attracted by:
° Business amenities (telephone, fax machine, television, full-time
receptionist with good English);
° A moderate price;
° Environmental and cultural orientation;
° Attractive brochures distributed to the national tourism office, airports,
docks, car rental agencies, and at various tour shops;
° Promotional advertisements that will be placed in the next three
editions of the most popular travel magazine;
° Optional air conditioning;
° Water 100% of the time;
° Word-of-mouth advertising from co-workers, friends, relatives, and
customers; and,
° Our quiet, peaceful location which is just a five-minute drive from
town.
E.
Location of Business
In this section you need to describe the location of your business.
You should include your business address, a description of the physical
features of your building, an explanation of who owns the location, zoning
restrictions, an analysis of renovations, (if any), that will be needed and
their costs, a description of other businesses in the area, the rationale for
why you chose this place over other places, and a discussion about how
this location will affect your operating costs. If your operation does not
require a building, it is still necessary to describe the area in which your
business will be operating. A tour company, for example, should describe
38
the areas they are going to take customers, and explain why those areas
were chosen.
A sample description of the Location of Business is described
below:
Sea it All Adventures will operate out of a wooden, two-room, one
story, thatch roof building, canoe house (approximately 500 square feet)
situated near the boat landing on Sokehs Island, Pohnpei, FSM. The
building and the docking area belong to the owners of Sea it All
Adventures and the area has been zoned for commercial use. Sokehs boat
landing is located only one mile outside of the main town of Kolonia and is
accessible easily by foot, car, or bus. The largest room in the canoe house
contains one desk, one chair, and a number of benches where customers
can wait. The back room will be used as a working area and a place to file
business documents. There are two toilets so that men and women have
separate washrooms.
Customers will spend most of their time on the boat that offers
several tours to the various islands located around Pohnpei island. The
boat tours make stops on many of the islands, where interesting historical
sites can be toured with a guide provided by Sea it All Adventures. Local
tales, cultural themes, and historical events will be narrated for the
passengers. This particular area has 10 different sites that will be of
interest to visitors; including: a day tour to the world renown Nan Madol;
the atoll of Pakin some 17 miles away; the atoll of Ant; Joy Island; and
Black Pearl Island.
F.
The Competition
Take a look at the other businesses in your area and find out what
their product or service is like. Find out if their business is increasing,
decreasing, or steady, and find out why. Determine what the customers
like and do not like about your competitors. Find out how they advertise
and how customers heard about their business. By learning from other
people's mistakes, you can reduce your chances of failure. However, you
39
will probably not be able to be the best in everything. As an ecotourism
business, concentrate on those qualities that fit the definition of ecotourism.
Completing the following form will enable you to compare yourself against
your competitors; this form may need to be changed in order to reflect
your business. (There is a practice form in Appendix C.)
Customer Seeks:
Competition Offers:
Quality
Uniqueness
Lower Prices
Product Styles
Reliability
Delivery
Location
Information
Availability
Credit Card Option
Customer Advice
Accessories
(phone/fax, etc.)
Knowledge
Polite Help
Culture
Environmentally
Conscious
Adapted from Bangs, Jr., p. 36.
40
You Offer:
Here is a sample description of the Competition section:
"Just Jump" Dive Shop has two direct competitors:
(1)
Scuba Adventures--a small, two-man operation that takes tourists
out on half-day dives. Both owners have additional jobs, so the tours are
infrequent and scheduled to accommodate the owners’ needs rather than
the customers’ needs. The business side of the operation is run well, since
one of the owners has had extensive business and accounting experience.
Their equipment is new (less than two years old) and will last for a while.
(2)
The Deep Explorers--a very large business with a number of diving
instructors. They have been in business for about 12 years and have built
up loyal clientele among the Japanese. This company owns a number of
boats and has a huge inventory of equipment. A variety of services are
offered, including weekend packages, scuba certification courses, and day
trips. However, there have been numerous complaints against this
company. Concerns include anchor damage done to reefs, disposal of
waste into the ocean, and destruction to reefs from divers diving with too
much weight and breaking the coral. Sales have not risen in the past two
years because many tourists are now better educated and environmentally
conscious and do not want to be associated with this type of business.
Although, this company controls a huge percentage of the existing market,
it is not expected to be a main competitor, since we plan to target the
American and Australian market.
Indirect competition are dive shops on other Micronesian islands
that offer a variety of scuba diving packages.
G.
Management Team
If you plan to borrow money, it is critical that you, or someone in
your business, have management skills and experience; most small
businesses that fail do so because of managerial weaknesses. Lenders
know this and therefore pay special attention to the experience and success
record of your management team. There are five points that need to be
addressed in this section:
41
(1)
Describe the Personal History: This section should discuss your
experience, or the experience of the most credible manager on your team.
Focus on success. If your team is inexperienced, it would be a good idea
to recruit an advisor or board members on whom you can focus. In
addition, this section should include the age, education, interests, talents,
reasons for going into business, business background, management
experience, and financial status of each member of the managerial team.
This needs to be done for each of the principal owners or investors. Also
include information about the particular skills you have that you feel will be
influential in making your business successful.
(2)
List Related Work Experiences: This part is a more in-depth
description of any experiences you have had that relate to the business you
plan to operate.
(3)
Explain the Duties and Responsibilities: It is important write
down and explain the duties and responsibilities of each person. If the
duties and responsibilities are not defined, one person may end up doing
more work, or people may end up making decisions that they are
unqualified to make. It is also necessary to determine who makes the final
decisions. Job descriptions should be included as appendices to the
business plan, along with resumes of each member of the management
team, including their salary history if it is “impressive.”
(4)
Salaries: This topic needs to be discussed among all the people
involved and agreement must be reached on what salaries will be given. Be
realistic about how much you should receive, but do not be greedy. Figure
out how much each person needs to live on, and make sure that your
financial projections support that amount. If you are borrowing money,
salaries in the early years should be minimal. Lenders don’t appreciate
their borrowers driving big cars and living an extravagant life style on
borrowed money.
42
(5)
Available Resources: Every small business should have access to
four specialists. These are:
° A banker
° An insurance agent or broker
° An accountant
° A lawyer
If any of the people on your management team can fulfill one of
these roles, then you will already have access to some of the professional
skills you need.
H.
Personnel
The first step is to determine what kinds of and how many
employees you will need. This will change over time so be sure to state
what your personnel needs are now, one year from now, and five years
from now. Once you know this information, you can decide whether you
are going to hire people as part-time or full-time employees, how you are
going to pay your employees (hourly or salary), what types of fringe
benefits, if any, you will provide, and whether or not you will have to train
people. For ecotourism projects, training may be very essential to the
success of your project, because you want your employees to answer the
environmental, cultural, and natural history questions that they may receive
from ecotourists.
An example of a personnel description for a small fishing expedition
company is shown below:
The Guarantee Catch company will begin operations with a total of
four employees, including the owner, one full-time assistant and two parttime employees. The one full-time person will be responsible for assisting
the owner in leading the fishing expeditions. He/she will be paid $8.00/hr.
and will be expected to work between eight and ten hours per day, Tuesday
through Sunday. He/she will receive health insurance, but no overtime pay
is expected. This employee will be a master fisherman and speak English,
but will probably need to receive training in knowing scientific names of
43
fish, regional fishing issues, and environmental protection issues as they
pertain to fishing.
The two other employees will be part-time. One will work around
10 hrs./wk., receive $15/hr., and be responsible for the accounting and
bookkeeping aspects of the business. This employee will receive no fringe
benefits and will receive no overtime pay. The other part-time employee
will be responsible for cleaning the boats, restocking supplies, and
maintaining the equipment. He/she will receive $4.00/hr. and is expected
to work approximately 24 hrs./wk. This person will also receive no
benefits or overtime. On-the-job training will be provided by the owner for
the part-time employee just discussed.
There are no anticipated changes for the first year, however, should
demand for our service produce enough revenues, the owners will hire
additional staff. The accountant may be asked to increase his/her hours to
20 hrs./wk. if necessary, and the maintenance person, may become a fulltime employee.
I.
Financial Analysis
Analyzing financial information and preparing the correct
documents is an important part of the business plan. The financial analysis
contains a lot of information and, rather than trying to go over it here, it
will be discussed in Chapter Four, Preparing Financial Statements and
Finding Financial Backing.
J.
Supporting Documents
As mentioned in the Main Checklist, supporting documents are any
type of information that is relevant and lends support to your business plan.
As you write your plan, be sure to keep track of where you got the
information, because you may need to refer back to the information at a
later time. If you are in doubt about whether or not to include a document
in your business plan, try to determine whether or not the document adds
credibility to your plan. If the answer is "no," then save the document, but
do not include it in the plan. The following items may be included in your
44
supporting document section:
° Personal resumes (of you and your management team)
° Personal balance sheets
° Cost-of-living budget
° Credit reports
° Letters of reference
° Job descriptions
° Letters of intent from prospective customers
° Copies of leases (or buy/sell agreements)
° Contracts
° Legal documents
° Quotes/estimates
° Letters of support from people who know you
° Census/demographic data
° Real estate appraisals
° Equipment appraisals and depreciation schedules
° Market analysis information
° Product literature (e.g., brochures, advertisements)
Since each business is different, it will be unlikely that you will need
all of these documents. Smaller businesses may have only three or four
supporting documents, while larger enterprises may need more.
K.
Conclusion
By now you have a good understanding of who your customers are,
what is involved in making your customers interested in the products or
services that you offer, and how to inform them of your product/service.
You should know your strengths and weaknesses. You will need to
emphasize your strengths and learn ways to correct or compensate for your
weaknesses. The next step is to determine whether or not your business is
financially feasible. It is important to you, and to your lenders, that your
business will make money. So, get your calculators ready, and move on to
Chapter Four.
45
CHAPTER FOUR: PREPARING FINANCIAL
STATEMENTS AND FINDING FINANCIAL
BACKING
Unless you finance your business through personal savings or
money from relatives, you will need to show your financial documents to
your prospective lenders, regardless of whether they are foreign investors
or bankers. Prepare the financial documents carefully because many
decisions may be made on the basis of the figures you use. Use realistic
numbers, and have some evidence that supports your numbers.
The financial documents used to request funding are the same
documents found in a business plan. Much of the financial information
found in a business plan is important to keep updated. Future decisions
and taxes will be based on real accounting and financial data. You may
want to set up a record keeping system as you prepare the business plan
that will make it easy for you to keep track of the real figures.
All of the financial statements in this chapter reflect a tax structure
that taxes income after all expenses have been deducted. A Gross
Revenue Tax is different, in that it takes a certain percentage of your
income based on revenue. In the case of the gross revenue tax, you should
determine your total revenue and then calculate the taxes from that
amount. If you need clarification on taxes, contact local business
organizations (Chapter Eight), your local tax office, or an accountant.
The documents that make up the financial section of the business
plan are discussed in this chapter:
A.
Sources and Uses of Funding
This is a brief statement that describes from where you will receive
funding, and how you will spend the money. An example of this statement
is shown below.
46
Danny's Dive Shop
Sources:
Mortgage Loan
Short-Term Loan
Danny's Personal Savings
Relatives' Personal Savings
Total
$50,000.00
20,000.00
10,000.00
15,000.00
$95,000.00
Uses:
Purchase Boat
Diving Equipment and air compressor
5-Year Lease on land
Inventory
T-shirts
Souvenirs
Working Capital*
Total
$15,000.00
15,000.00
50,000.00
1,000.00
14,000.00
$95,000.00
*Working Capital: the part of a company's capital which can easily become
cash for paying bills, wages, etc.
B.
Capital Equipment List
This list describes the equipment that will be purchased in order for
you to create your product or offer your service. You will not sell this
equipment as part of doing business; this equipment is necessary for you to
maintain your daily operation. Examples of items that should be included
in this list are refrigerators, cash registers, furniture, computers,
automobiles, boats, diving gear, and light fixtures.
47
Be careful not to get capital equipment confused with inventory
items. Equipment that qualifies as “capital equipment” does not need to be
replaced very often and has some value even after it has been used. For
example, for a resort business a refrigerator would be described as capital
equipment since it is going to be used by the resort owner. It will not be
sold to customers, it does not have to be replaced very often, and, even if it
were five years old, it could still be sold to someone who wants to buy a
used refrigerator. Items that are in inventory will need to be replaced fairly
often and will not have any resale value. An example of a capital
equipment list is shown on the next page:
48
Major Equipment:
Capital Equipment List
Castaways Bungalows
January 1994
Model:
Water Heater
375BQ
Beds for Visitor Rooms (10)
Handmade
Chairs for Visitor Rooms (20)
Handmade
Beneke Toilets for Visitor Rooms (10)
353
Chests of Drawers for Visitor Rooms (10)
Handmade
Writing Tables for Visitor Rooms (10)
Handmade
Lanai Furniture for Visitor Rooms (10 sets)
Handmade
GE standard refrigerator (1)
765-ABC-432
Chairs for Common Area (5)
Handmade
Sofas for Common Area (2)
Handmade
Front Desk (1)
Handmade
Panasonic Facsimile (FAX) Machine (1)
123-XYZ-987
Water Purifier (1)
Handmade
Westinghouse Stove (1)
7654
Solar Water Panels (10)
None
Dining Room Furniture
Handmade
Ceiling Fans for Visitor Rooms and
Custom Made
Common Area(11)
Steelmaster Filing Cabinets (2)
Century 62
Local Art for Common Area
Handmade
Display Cases for Common Area (2)
Handmade
Cash Register (1)
867 JKL
Safe (1)
1965 Diebold Master
Total:
Miscellaneous Minor Equipment:
Pots, pans, plates, silverware, glasses,
Handmade
table linens
Miscellaneous display trays, boxes
Handmade
Total:
Capital Equipment Total:
Cost or List Price
(whichever is
lower):
$1,000
1,100
900
1,500
700
300
2,000
450
500
635
985
345
1,340
850
3,450
5,600
1,500
465
650
250
500
250
$25,270
$750
245
$995
$26,265
If you are just starting up the business, you will only need to know
the model type and the cost (or list price). As you start operating, this is a
useful list to keep track of the depreciation that gathers on your capital
equipment. It would be wise to keep an "accumulated depreciation"
column next to the list of prices. It is very beneficial for you, or your
accountant, to keep track of the total amount of depreciation because it
49
will help you when you declare your taxes. We will describe depreciation
very briefly so you can understand how it works. For more detailed
information, you should talk to an accountant or a knowledgeable business
person.
When you first buy a piece of equipment, it is worth the amount
that you paid for it. As people use the equipment and it gets older, it is not
worth as much--but it is still worth something. It is useful for you to
record the decreasing value of the equipment because want to be able to
expense the value of the equipment over the life of the equipment. For
example, in year one, you buy a refrigerator for $700. Although you paid
$700 for the refrigerator, you may only “use up” $100 worth of value.
Therefore, in the second year, the refrigerator is not worth $700, it may
only be worth $600.
You may be wondering how you can determine what the value of a
piece of equipment is at the end of each year. It would not be very efficient
for you to find out the exact value of the equipment every year because you
would have to call a number of people for each piece of equipment.
Accountants have come up with a number of ways for people to depreciate
their equipment. The easiest way is to estimate how many years the
equipment will last and find the average value that the equipment will
decrease by each year. This technique is called "Straight-Line
Depreciation." In the example used above, the refrigerator was bought for
$700. After you spoke with the seller, you determined the refrigerator
would last for 10 years. Therefore, every year you would decrease the
value of the refrigerator by $70 ($700/10), and this $70 would be an
expense on your Income Statement. We have just described one way of
depreciating fixed assets; there are other methods that accountants use to
estimate the depreciated value of equipment. Talk to your accountant if
you would like to know more.
C.
Balance Sheet
A balance sheet is a financial statement that summarizes the assets,
liabilities, and net worth of a business at a given date. The format of a
50
balance sheet is very important and should not be changed. Bankers and
other business people are used to this format, and they can tell a lot about
your business by the figures in your balance sheet.
If you are just starting up a new business you may not need a
balance sheet. It is difficult to estimate these figures. Also, many of the
items listed in a balance sheet are irrelevant to new business people, such as
an accounts receivable category. People who are already in business and
would like to expand or diversify their business interests will find it
necessary to put together a balance sheet and update it on a regular basis.
This document can be very detailed or very simple, depending on
the size and nature of your business. Just remember to keep it in the
proper format. The order of the categories is important: they are arranged
in order of decreasing liquidity (for assets) and decreasing immediacy (for
liabilities). Liquidity refers to the ease at which something can become
cash. A checking account is very liquid; land is not very liquid. Immediacy
refers to the amount of time you have before something is due.
The format for a balance sheet is shown below:
Name of Business
Day (Month, Day, Year)
Balance Sheet
Assets
Current Assets
Fixed Assets
Less Accumulated Depreciation
Net Fixed Assets
Other Assets
Total Assets:
$________
$_________
$_________
$_________
$________
$________
Liabilities
Current Liabilities
Long-Term Liabilities
Total Liabilities:
Owner's Equity (total assets minus total liabilities)
Total Liabilities and Net Worth
Footnotes:
51
$________
$________
$________
$________
$________
It might be a good idea at this time to define each of these
categories.
Assets: Generally, assets are anything that has value. In accounting,
and on balance sheets, assets are the intangible and tangible
resources of a business or person, such as accounts and notes
receivable, cash, inventory, equipment, real estate, and goodwill.
Current Assets: This category consists of assets that are cash or can
be changed into cash within one year fairly easily. The assets that
are changed into cash need to take place through "normal" business
activity. For a hotel operator, a refrigerator is not considered a
current asset because it is not something you would normally sell.
In addition to cash, government securities, accounts receivable
(money that people owe you), inventories, and prepaid expenses
(such as insurance or advertising) are all considered current assets.
Fixed Assets: Fixed assets include all of the capital equipment that you
listed in Section B (Capital Equipment List), land, building, and any
improvements you have made to the building. These items are
expected to last for a long time and are used in the creation of your
product or service.
Accumulated Depreciation: In the previous section on page 53,
depreciation was defined and explained. Accumulated
Depreciation is the total amount of depreciation taken off of all
capital equipment and buildings. If you have been in business for
three years, then you would need to take the entire amount of
depreciation you applied to each piece of equipment for the past
three years and add it together. If we use the same refrigerator
example that we used in Section B, accumulated depreciation
would be $210 or ($70 x 3 years) for the refrigerator. On the
balance sheet you would need to add the $210 for the refrigerator
along with all the depreciation for the other equipment.
Net Fixed Assets: This is figured by taking your Fixed Assets and
subtracting your Accumulated Depreciation.
52
Other Assets: Other Assets is a category that is usually used for things
like patents, copyrights, and other intangible goods. You probably
will not have to worry about this category very much.
Total Assets: This is the sum of Current Assets, Net Fixed Assets, and
Other Assets.
Liabilities: Liabilities are the debts of a person or a business.
Current Liabilities: These are debts that you need to pay within one
year. Usually they include items such as wages, salaries, accounts
payable (individuals or businesses to whom you owe money
because of a service or a product they provided you), taxes, some
part of your long-term debt, and any other obligations that you
have to pay off within one year.
Long-Term Liabilities: These are debts that need to be paid over the
long-term, like mortgages, long-term bank loans (to be paid back
over a period of years), and equipment loans (if they are longer than
one year). Be sure that when you calculate long-term liabilities,
you subtract the amount that you are going to pay off in the current
year; this amount should be in the category named Current
Liabilities.
Total Liabilities: This is the sum of Current Liabilities and LongTerm Liabilities.
Owner's Equity: Sometimes this category is labeled Net Worth. It is
Total Assets minus Total Liabilities.
Total Liabilities and Owner's Equity: This is exactly what it sounds
like.Total Liabilities plus Owner's Equity.
Footnotes: Any information that clarifies what has been stated in the
above categories. This might contain descriptions of an item, the
names of people or businesses that you owe money to, the names of
people or businesses who owe money to you, or an explanation of
why you owe money.
An example of a Balance Sheet for a hula halau (dance studio) is provided
on the following page:
53
Kealani’s Hula Halau
February 1, 1994
Balance Sheet
CURRENT ASSETS:
Cash
Accounts Receivable (net)
Inventory (Souvenirs)
Pre-paid Expenses
Total Current Assets
FIXED ASSETS:
Building
Lighting Displays a
Stage Props and Costumes
Vans b
Total Fixed Assets
Less Accumulated Depreciation
Net Fixed Assets
$5,600
2,500
2,345
750
$11,195
$165,000
14,500
5,950
16,000
$201,450
(96,450)
$105,000
Total Assets
$116,195
Liabilities
CURRENT LIABILITIES
Accounts Payable c
Current Portion of Long-Term Debt
Total Current Liabilities
$3,492
1,700
$5,192
LONG-TERM LIABILITIES
Note Payable
Bank Loan Payable d
Total Long-Term Liabilities
$750
6,500
$7,250
Total Liabilities
$12,442
Owner's Equity
$103,753
Total Liabilities and Owner's
Equity
$116,195
54
Footnotes:
a
From John's Lighting Gallery.
b
Includes three used vans purchased in January.
c
Accounts Payable to:
Island Electric
$ 952
Martha's Light Shop
870
Betty's Stitchery
1,350
Water Supply
320
Total
$3,492
d
Commercial loan secured by Property A.
D.
Projected Income Statement
The balance sheet provides a picture of the financial state of your
business at a given time; the Projected Income Statement is designed to
forecast the financial position of your company over a period of time,
usually three years. The Projected Income Statement has a standard
format, just like the balance sheet, and should not be drastically changed.
You can make slight changes depending on the expenses that your business
has, but be careful not to change the order of the categories. You may
have to estimate many of the expenses until you are actually running the
operation, but by using the information you gathered when you were
assessing the feasibility of your project, you should be able to make some
educated estimates. Be as realistic as you can about your estimates. Try
not to be too conservative or overly optimistic; and ALWAYS document
your assumptions. If you estimate that your electricity bill is going to be
$20 a month, describe how you came up with that figure. In the first year,
you may be required to make a Projected Income Statement for every
month. Quarterly statements may be satisfactory for years two and three.
The main categories in the Projected Income Statement are:
55
1
2
3
4
Net Sales:
less Cost of Goods Sold:
equals Gross Margin:
Operating Expenses:
Salaries and Wages
Payroll Taxes and Benefits
Rent
Utilities
Repairs and Maintenance
Office Supplies
Postage
Automobiles and Trucks
Insurance
Legal and Accounting
Advertising/Promotion
Consulting Services
Depreciation
Equipment Rental
Telephone charges
Travel Expenses
Others (List them)
5
Other Expenses:
Interest
Total Expenses:
Profit (Loss) Pre-Tax:
Taxes:
Net Profit (Loss):
6
7
8
9
It is important to understand what all of the categories in a
Projected Income Statement mean:
(1)
Net Sales: This is your total sales minus any returns or discounts.
For example, if a customer on a tour to a waterfall broke his ankle, you, as
56
the tour operator, might want to give the customer his money back. You
would not count this customer's fee as part of your total sales. Only
include the actual amount of money you will be receiving. If you are a new
business, you will need to estimate this number based on the information
you have gathered.
(2)
Cost of Goods Sold: This is the amount you have to pay for
materials and labor directly associated with creating your goods or service.
This category also includes the amount of inventory you might have. For
example, if you have 100 handicraft products that have already been made,
but have not been sold, the cost of making them will be included in this
category.
(3)
Gross Margin: This is (1) Net Sales minus (2) Cost of Goods
Sold. This category is the total income on the sales of the product or
service without taking into account any of the indirect and fixed costs.
This is the figure that you can use to help determine your break-even
point which will be discussed in the next section (Section E).
(4)
Operating Expenses: These expenses are mainly the fixed costs
that we will discuss in the break-even analysis. These expenses must be
paid no matter what happens and regardless of the number of customers
you receive. Be sure to list all your expenses. If they seem insignificant,
put them in a miscellaneous category, but, do not forget or leave out any
expenses.
(5)
Other Expenses: Expenses in this category are similar to those in
the (4) Operating Expenses category because they need to be paid
regardless of the number of customers you have. However, expenses in
this category are non-operating. This means that the expenses are not
directly related in running the business. The most common item in this
category is interest and refers to the amount of interest you must pay on
any loans you have taken out. Others are gains or losses you might have
realized from selling old equipment or having something stolen.
(6)
Total Expenses: This is the sum of (4) Operating Expenses and
(5) Other Expenses.
57
(7)
Profit (Loss) Pre-Tax: This is (3) Gross Margin minus (6) Total
Expenses. Income taxes that you may have to pay will be based on this
figure. Gross revenue taxes are determined by the amount of your net
sales.
(8)
Taxes: Your taxes will depend on where you live and the tax laws
of your place of business. See the local business assistance organization,
your tax office, or an accountant for help in determining your taxes.
(9)
Net Profit (Loss): This is (7) Profit (Loss) Pre-Tax minus (8)
Taxes. This amount will reflect the success or failure of your business.
Predicting how many customers you will have and how much
money you will make is the foundation on which all of your financial
statements is based. As mentioned earlier, you will have to make an
educated guess based on all the information you have already gathered.
David Bangs, Jr. has a good method of determining a "realistic as possible"
sales forecast.
(1)
Determine what your main product lines or service lines are:
For example, an ecotourism lodge that only provides shelter for
ecotourists has only one line of business: accommodation. If this
same lodge also has a restaurant/bar at which people can drink and
eat at, then this lodge has two lines of business: accommodation
and restaurant services. If this same lodge offers boat tours to the
other side of the island, then this would be considered a third line of
business: recreation.
(2)
Estimate the level of sales you would receive for each
product or service line if everything went wrong (low)--even the
events you cannot control, such as weather or the state of the
economy.
(3)
Estimate the level of sales you would receive if everything
went perfectly (high); for example, your marketing strategies were
extremely popular and there was always high demand for your
products or services.
58
(4)
Estimate the level of sales you would receive that is the
most realistic (most likely). This figure would fall in between the
low and the high estimates that you just made and will be based on
the market research you have conducted.
You will need to do this for each period that you prepare a
Projected Income Statement. If you prepare an Income Statement that is
broken down by months, then you will need to calculate a sales forecast for
each month. The table presented below may help you in determining your
sales forecasts:
Sales Forecast: For (month, year) to (month, year)
Sales:
Low
Product/Service 1 __________
Most Likely
High
__________ _________
Product/Service 2 __________
__________
_________
Product/Service 3 __________
__________
_________
Product/Service 4 __________
__________
_________
Total Sales:
__________
_________
__________
Once you have these figures, you can start filling out the Projected
Income Statement forms. A sample Projected Income Statement is shown
on the following page:
59
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
Category
Experience Paradise’s Projected Income Statement
Year 1
Year 2
Year 3
Sales
Accommodations
Tour Trips
Restaurant/Bar
Total Sales
$35,000
22,000
31,000
$88,000
$50,000
26,000
40,000
$116,000
$75,000
30,000
75,000
$180,000
(v)Cost of Supplies
(v)Variable Labor
Cost of Goods Sold
24,800
7,600
$32,400
31,400
9,000
$40,400
60,000
11,000
$71,000
Gross Margin
$55,600
$75,600
$131,200
Operating Expenses
(f)Salaries and Wages
(v/f) Payroll Taxes and Benefits
(f)Rent
(f)Utilities
(f) Maintenance and Cleaning
(f)Office Supplies
(v/f)Automobiles and Trucks
(f)Insurance
(f)Legal and Accounting
(f)Advertising/Promotion
(f)Depreciation
(f)Telephone charges
(f)Miscellaneous
Total Operating Expenses
20,000
2,000
5,500
1,800
100
200
500
450
1,500
2,010
12,500
250
700
$47,510
20,000
2,000
0
1,920
100
100
500
875
400
5,000
12,500
300
700
$44,395
30,000
3,000
0
2,160
150
100
750
875
400
4,000
12,500
350
950
$55,235
Other Expenses
Interest (Mortgage)
Interest (Short-Term Loan)
Total Other Expenses
$1,140
2,192
$3,332
$3,170
2,192
$5,362
$3,170
2,192
$5,362
$50,842
$49,757
$60,597
Net Profit (Loss) Pre-Tax
$4,758
$25,843
$70,603
Taxes (estimated 20% of #39)
Net Profit (Loss)
$ 952
$3,806
$5,169
$20,674
$14,121
$56,482
Total Expenses
(v) = variable costs; (f) = fixed costs
60
William and his partner Jim, plan to start a small hotel named
Experience Paradise. A restaurant, bar, and tour business will also be
operated out of the hotel premises. Explanations and assumptions for the
numbers in Experience Paradise’s Projected Income Statement on the
previous page are described below by line number.
(4)
Sales: This section lists the revenues received from each of
three sources - accommodations, tours, and the restaurant and bar.
(5)
Accommodations: It is expected that revenue from
accommodation fees will increase from the first year to the second
year through word-of-mouth advertising. During this time, efforts
will be concentrated on getting the business going and operating
smoothly. In the second year, William plans to advertise extensively,
and therefore, hopes to have more clientele in the third year.
(6)
Tour Trips:. William and Jim have direct contact with the
guests and would like them to see and understand their home in a
respectful and environmentally friendly way, they have planned a
number of tours that guests are welcome to take. The tours will be
open to guests from all hotels and any interested local people.
William expects that revenues from tours will steadily increase as
guest count increases, but there will be little direct advertising off
island for the tours. Brochures will be distributed to all places that
tourists visit.
(7)
Restaurant/Bar: This is expected to be one of the largest
money makers because William plans to market the restaurant and bar
to both visitors and local people. In the second year, he will make a
strong effort to attract the local market to their establishment. A
large selection of food and drinks will be available; the atmosphere
will be conducive to sitting and talking; and the prices will be
reasonable. By the end of the third year, he expects the
restaurant/bar to be generating sales equal to that of the hotel.
(8)
Total Sales: This is reached by adding (5) plus (6) plus (7).
(10) Cost of Supplies: The cost of supplies averages about 40
percent of total sales and the supplies are used mainly in the
61
restaurant. This number was determined based on actual figures
obtained from similar businesses. The hotel and tour operations use
little inventory so these two businesses have low variable material
costs.
(11) Variable Labor: One full-time maid, one part-time cook,
one part-time waitress, and one part-time tour guide will be hired in
year one. In year two, an additional cook and waitress will be hired.
The owners will also work in the restaurant when needed. In year
three, another part-time maid will be hired along with another parttime tour guide. The rates will be $5.00/hour, except for the cook,
who will be paid $7.50/hour.
(12) Cost of Goods Sold: This is reached by adding (10) Cost of
Supplies plus (11) Variable Labor.
(14) Gross Margin: This amount is (8) Total Sales minus (12)
Cost of Goods Sold.
(16) Operating Expenses: Most of the expenses included in this
section are fixed costs. They do not vary with the amount of business
being conducted.
(17) Salaries and Wages:
Year One:
$10,000/year for each of the two owners
Year Two:
$10,000/year for each of the two owners
Year Three: Either $15,000/year for each of the two
owners
or
$10,000/year for each of the two owners and
$10,000/year for an additional manager
depending on conditions at that time.
(18) Payroll Taxes and Benefits: William and Jim determined
that this will be 10 percent of (17) Salaries and Wages. This will
include payroll taxes, health care, and annual bonuses. This
percentage was determined based on actual figures obtained from
similar businesses.
(19) Rent: Rent of $550/month will be paid for the first year. The
62
property will be bought in January of the second year and mortgage
payments will replace rent. The interest on the mortgage can be seen
in line (33) in the category Interest (Mortgage). Only the interest is
shown on the Income Statement; the principal and the interest
payments are shown in the Cash Flow Projection which is discussed
in Section F.
(20) Utilities: An agreement with the utility company specifies
that the standard rate will vary according to the number of guests that
stay at the hotel. Based on the utility company's rate schedule, the
utility bill will be approximately $150/month in the first year,
$160/month in the second year, and $180/month in the third year.
(21) Maintenance and Cleaning: This is money used for repairs
to room furniture and kitchen equipment. Since all of the furniture is
new, this amount is not expected to be very high in the initial years of
running the business.
(22) Office Supplies: Since year one will be the first year of
business, a number of office supplies, such as a stapler, pencils, pens,
paper, fax paper, accounting books, and other things will need to be
purchased. $200 will be allocated for office supplies in the first year.
For each year, thereafter, office supplies will be restricted to
$100/year.
(23) Automobiles and Trucks: Gas expenses, oil changes, and
general upkeep for the autos/trucks of the company belong in this
category. The tour section of William's business needs vehicles to
transport their clientele to and from the starting points of the tours.
(24) Insurance: This section includes liability and vehicle
insurance. Years two and three reflect the property insurance that
needs to be paid on the purchase of the property.
(25) Legal and Accounting: The first year has high legal and
accounting expenses; a lawyer will be used to help negotiate the
purchase of the property for commercial use and an accountant will
be hired to set up a bookkeeping system for the three sections of the
business. These services are needed initially, but they will not be
63
needed on a daily basis once the business has been established. It is
expected that the accountant's services might be needed at selected
times during years two and three, so smaller amounts are budgeted.
(26) Advertising/Promotion: In years one and three, it is
expected that two percent of total sales will be spent on advertising
and promotion. This will be done through brochures sent to travel
agents and local tourism offices. In addition, the restaurant and bar
will be advertised on the local radio and in the local newspapers. At
the end of year two, there will be a large advertising push for
international tourists. Posters and articles will be sent to international
tour agencies, travel magazines, and travel guides. In year two, four
percent of total sales will be spent on advertising and promotion.
(27) Depreciation: Ten-year Straight-Line depreciation on
equipment (beginning January, year one) worth $125,000. Although
William and Jim will not actually pay this money, it is a reminder that
the equipment they have will be declining in value as they operate
their business. They are going to try and set aside about the same
amount of money, so that when the equipment needs to be replaced,
they will already have the money to do so.
(28) Telephone Charges: This amount is based on an estimated
number of phone calls and faxes that will need to be made in order to
generate business. The amount is expected to increase as the number
of guests increase.
(29) Miscellaneous: These are all of their expenses that are too
small to be itemized.
(30) Total Operating Expenses: This is the sum of lines (17)
through (29).
(32) Other Expenses: These are expenses that may be fairly
significant, but are not operating expenses.
(33) Interest (Mortgage): This is the interest on a $55,000
mortgage for 15 years at 9.5%.
(34) Interest (Short-Term Loan): This is the interest on a
$35,000 loan for six years at 11.5%.
64
(35) Total Other Expenses: This is the sum of the interest
expense on lines (33) and (34).
(37) Total Expenses: This is reached by adding line (30) Total
Operating Expenses plus line (35) Total Other Expenses.
(39) Net Profit (Loss) Pre-Tax: This is computed by taking the
(14) Gross Margin minus (37) Total Expenses.
(41) Taxes: William and Jim estimate that their taxes will be
around 20 percent of their profits. This number will depend on the
tax structure of your own area.
(42) Net Profit (Loss): By subtracting (41) Taxes from (39) Net
Profit (Loss) Pre-Tax, you will arrive at your overall Net Profit (or
Loss) for the year. William and Jim are not planning to make a lot of
money in the first couple of years, but that is a normal situation for
small businesses.
Remember to use figures that are as accurate and realistic as
possible. When you are creating your own Projected Income Statement, it
is not necessary to explain every category, like we did in this example.
You should explain categories that will clarify your assumptions to your
lender or business partner, such as your sales categories, interest
categories, and some of the expenses that are especially important to your
business. It is also important to remember that you will need a set of
Projected Income Statements. During the first year, you will need to figure
out your costs on a monthly basis; for the next two years, you may need to
break them down by quarters.
E.
Break-Even Analysis
The Break-Even analysis section is designed to show you how
many customers you need to have, or how much money you need to make,
in a certain time frame, in order to break-even financially. If you "breakeven" it means that you neither earn nor lose any money. As you get
involved in your business it may be easy to forget about the money you
65
have already invested in your business; however, the amount of money you
make should cover all of the original expenses, your current expenses, and
your salary. A break-even analysis is one way of ensuring that you do not
forget all the costs of being in business.
Even more so, it gives you an idea - on a daily, weekly, or monthly
basis - of how much you need to sell in order to pay your bills. In other
words, when you close the register at the end of the day and add up the
receipts, you can compare your sales to the break-even point and know if
you had a good or bad day.
Also, when you are making plans, knowing the break-even point
will help you figure out if your business has a good chance of surviving. If
you plan a six-unit hotel and your break-even point shows that you need an
average of seven units rented to break even, then you need to re-evaluate
how you plan to run the hotel. Maybe you need to increase your rates, or
you need to cut back some costs, or perhaps you should start with more or
less units.
Before explaining how to calculate your break-even point, you need
to understand the difference between fixed and variable costs.
Fixed Costs: These are costs that stay the same, no matter how many
units you sell or how many customers you have. These costs will remain
the same regardless of whether or not you conduct any business. Fixed
costs include items such as: rent, salaries, administrative costs, and "hidden
costs" such as interest and depreciation. One example might be the basic
telephone bill. You might be charged $20.00/month just for having the
phone hooked up to the system. Even if you never use the phone, you will
still be responsible for paying the $20.00 fee.
Variable Costs: These are costs that change depending on the number of
customers you have. As your level of sales increases, so do your costs.
For example, suppose a customer at your ecotourism lodge eats dinner
prepared by the lodge's restaurant. The customer pays $10.00 for his meal.
Your profit is not $10.00, because you must pay for the food that was
prepared, the wage of the person who cooked the food, the electricity that
it cost to prepare the food, the janitor who cleaned up, and the cost of
66
removing the garbage. If all of the costs add up to $7.00, then you actually
made a profit of only $3.00. However, the $3.00 profit shown in this
example will not be constant for every $10.00 meal because there are many
other variables to consider. If 100 people decide to eat at your restaurant,
you need to purchase a lot more food. This may be better for you, because
you will get a better per unit price on something if you buy a lot of it. On
the other hand, if you want to buy some crab and there is a short supply of
it, you may have to spend a lot more. All of these costs need to be
considered when you determine your break-even analysis. Variable costs
may decrease or increase as your level of sales, or the amount of
customers you have, increases or decreases.
The formula for determining your break-even sales point is:
S = FC + VC
where:
S = Break-even level of sales (in dollars)
FC = Fixed costs (in dollars)
VC = Variable costs (in dollars)
You may be wondering how it is possible to determine your
variable costs when it depends on the number of customers you have, and
you do not know how many customers will be purchasing your product or
service. The best way to determine your projected break-even sales
amount is to use a different formula, as shown below.
67
This formula is:
S = FC ÷ GM
where,
S = Break-even level of sales (in dollars)
FC = Fixed costs (in dollars)
GM = Gross Margin expressed as a percentage of sales
Gross Margin: Gross margin refers to the amount of money you will
make after you pay out your variable costs. The gross margin (in dollars)
can be found in your Projected Income Statements which is located in the
previous section (Section D) in this chapter. The following steps will
explain how to find your projected break-even point.
Step 1: Find the Gross Margin ( in dollars) from your Projected Income
Statement. The Gross Margin (in dollars) will be Total Sales minus
the Cost of Goods Sold.
Step 2: Find the Total Sales figure from the Projected Income Statement.
Step 3: Divide the Gross Margin by Total Sales (GM ÷ Total Sales).
Step 4: Determine your Fixed Costs.
Step 5: Divide the Fixed Costs by your result in Step 3.
This should give you the amount of money you will need to make in order
to break-even. If you would like to determine how many customers you will
need to make that amount of money, divide the results by the amount you will
charge one customer. For example, say you determined that you will need to
make $20,000/year to break-even. If each customer pays an average of $100,
then you will need 200 ($20,000 ÷$100) customers. A sample break-even
analysis for an ecotourism hotel is on the next page:
68
Jungle Paradise Hotel
Break-Even Analysis
Fixed Costs: FC = $24,500/year
Gross Margin GM = (21,400 ÷ 95,000) = .23 = 23%
Therefore, break-even sales = S = FC ÷ GM
= ($24,500 ÷ .23)
= $106,522/year
On a monthly basis:
S = $8,877/month ($106,522÷12)
FC = $24,500 ÷ 12 = $2042/month
Break-Even Analysis for Year 1993, by Month
12000
10000
S
a
l
e
s
D
o
l
l
a
r
i
s
n
Break-even = $8,877/month
8000
6000
4000
Fixed Costs = $2,042/month
2000
0
Jan
Feb
Mar
Apr
Jun
Jul
Aug
Monthly Sales
69
Sep
Oct
Nov
Dec
This graph illustrates when Jungle Paradise will reach its break-even
point. In this case, it is estimated that in September of 1993, Jungle
Paradise will be making over $8,877. Notice that in each month, Jungle
Paradise makes more than the fixed costs. This is important to note
because most businesses are not able to meet their break-even level of sales
for the first few months of operation. This is acceptable; however, you
should always be able to pay for all of your fixed costs. If you are unable
to cover your fixed costs, you will need to make some major changes in
your business. If you are finding that your break-even point is unrealistic,
you may have to cut back on some of your costs, or reevaluate the prices
that you are planning to charge. Keeping your costs down is just as
important as generating sales.
Another item you must consider is that fixed costs do not
necessarily remain the same forever. If your business is very profitable and
you need to rent another building, your fixed costs are going to rise; if your
tours are sold-out every day, you may have to hire another full-time person
who will receive a salary; if your dive adventures are popular, you may
need to buy another boat. Any of these situations would cause your fixed
costs to rise; they need to be taken into account when updating your breakeven analysis.
Break-even analysis can also be useful if you would like to calculate
your break-even point in order to achieve a certain level of profit. In the
above example, let's imagine that the owners of Jungle Paradise wished for
$8,000 profit in the first year. What would their break-even point have be
to achieve this profit level?
70
FC
VC
Total Sales (projected)
GM
= $24,500
= $21,400
= $95,000
= 23% = .23
S = (FC + Profit Goal) ÷ GM
where Profit Goal = $8,000
S = ($24,500 + $8,000) ÷ .23
S = ($32,500) ÷ .23
S = $141, 304/year
or
S = $11,775/month
Notice the difference between the first example where the owners
just wanted to know the break-even point--they only had to make $8,877
per month. They would make $0 profit if they made $8,877/month. In the
second case, they would have to make $11,775/month in order to make an
annual profit of $8,000.
Ex.
(a)
Goal
Break-even Sales
(annually)
Break-even Sales
(monthly)
Break-even Sales
(weekly)
Formula
S=FC ÷GM
Result
$24,500÷.23=$106,522/yr
Result in (a)÷12
106,522÷12= 8,877/mo
Result in (a)÷52
106,522÷52= 2,049/wk
(d)
Break-even Sales (daily)
Result in (a)÷365
106,522÷365=292/day
(e)
Break-even Sales
(annually+certain Profit
[P] )
S=(FC+P)÷GM
(e.g. P=8,000)
(24,500+8,000)÷.23=141,304/yr
(b)
(c)
71
Using the same example, there are some other ways to understand
Break-Even Analysis. You must keep in mind that all of the figures are
averages and should not be used as your only indicator of business success.
If you want to know your break-even sales with a profit, then use
example (e) and divide by 12, 52, or 365 to find the monthly, weekly, or
daily break-even points respectively.
Another way of using break-even analysis is to see whether you are
generating enough customers. These results are also averages, but can give
you an idea of how many clients you need. Let’s assume that each client
spends $100 per day.
Ex
.
Goal
Formula
Result
(f)
# of customers
needed annually to
break-even
Result in (a)÷100
$106,522÷100=
1065 customers/yr
(g)
# of customers
needed monthly to
break-even
Result in (b)÷100
$8877÷100=
89 customers/mo
(h)
# of customers
needed
weekly to break-even
Result in (c)÷100
$2,049÷100=
21 customers/wk
(i)
# of customers
needed
daily to break-even
Result in (d)÷100
$292÷100=
3 customers/day
(j)
# of customers
needed annually to
break-even with profit
of $8,000
Results in (e)÷100
$141,304÷100=
1413 customers/yr
You need to include your salary in the fixed costs. Although the
salary should not be too high in the beginning, you need to be paid, too!
72
If you have trouble with this section or with preparing any other
financial statements, please feel free to contact us at the Pacific Business
Center Program or at a local business organization. For a list of places that
can help small businesses like yours, please turn to Chapter Eight.
F.
Cash Flow Projection
The Cash Flow Projection is extremely important; it is probably
the most important financial document you will need to have when you are
starting out. It is necessary to have an organized and realistic Cash Flow
Projection statement, especially if you are applying for a loan. This
document can make the difference between success and failure. As
mentioned earlier, the Cash Flow Projection shows you how much cash
your business will need, when it will be needed, how you will get it, and
where it will come from. It also shows the lender how you will repay the
loan, which is their number one concern.
You need to have access to cash so you can pay your expenses in a
timely way. A Cash Flow Projection lets you budget the cash needs of
your business. It also shows how cash will flow in and out of the business
over a certain period of time. You will receive cash from sales of your
product or service, or in specialized instances, such as receiving a loan.
You will pay cash for expenses that you incur as a cost of doing business,
such as fixed costs, variable costs, and interest payments. Depreciation
was discussed previously when we discussed the Balance Sheet in Section
C on page 53, however, depreciation is not included in the Cash Flow
Projection because it is not an expense that the business actually has to pay.
73
Like the Projected Income Statement, Cash Flow Projections are
given monthly for the first year, quarterly for the next two years, and a
summary report for the first three years.
In the example on the
following pages, a monthly breakdown of the first year's cash flow for
Experience Paradise is shown:
74
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Category
Experience Paradise’s Cash Flow Projections, Year 1
March
April
May
June
July
August
Cash Receipts
Rooms
Tour Trips
Restaurant/Bar
Other Sources
Total Cash Receipts
$2,000
1,300
1,500
35,400
$40,200
$2,200
1,350
1,950
350
$5,850
$2,400
1,400
2,100
250
$6,150
$2,600
2,000
2,000
350
$6,950
$4,500
3,000
4,000
400
$11,900
$4,000
2,600
3,500
420
$10,520
1,520
1,550
1,610
1,890
3,390
3,150
600
800
200
1,000
2,129
600
250
700
600
600
600
700
125
2,129
2,129
2,129
125
2,129
2,129
550
669
550
669
550
669
550
669
10,000
550
669
550
669
Total Cash
Disbursements
$7,468
$5,873
$5,658
$16,438
$7,463
$7,198
Net Cash Flow
$32,732
(- 23)
492
(-9,488)
4,437
3,322
Cumulative Cash
Flow
$32,732
$32,709
$33,201
$23,713
$28,150
$31,472
Cash Disbursements
Cost of Goods
(Supplies)
Variable Labor
Advertising
Insurance
Legal and Accounting
*Fixed Cash
Disbursements
Mortgage (rent)
Term Loan
Others(see notes)
*Fixed Cash Disbursement (FCD)
Utilities
$1,800
Salaries
20,000
Payroll Taxes and
2,000
Benefits
Automobiles and
500
Trucks
Office Supplies
200
Maintenance and
100
Cleaning
Telephone
250
Miscellaneous
700
Total: FCD\year
$25,550
FCD/month
$2,129
75
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Category
Cash Receipts
Rooms
Tour Trips
Restaurant/Bar
Other Sources
Total Cash
Receipts
Cash Disbursements
Cost of Goods
(Supplies)
Variable Labor
Advertising
Insurance
Legal and
Accounting
*Fixed Cash
Disbursements
Mortgage (rent)
Term Loan
Others(see notes)
Experience Paradise’s Cash Flow Projections, Year 1 (cont.)
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Total
$1,800
1,500
1,600
210
$5,110
$1,900
1,500
1,550
260
$5,210
$2,000
1,400
1,850
210
$5,460
$3,750
1,550
3,450
450
$9,200
$4,250
2,400
4,000
460
$11,110
$3,600
2,000
3,500
430
$9,530
$35,000
$22,000
$31,000
$39,190
$127,190
1,410
1,480
1,600
2,250
2,710
2,240
$24,800
600
600
700
360
600
600
700
$7,600
$2,010
$ 450
$1,500
250
125
125
2,129
2,129
2,129
2,129
2,129
2,129
$25,548
550
669
550
669
550
669
550
669
570
669
35,000
570
669
$6,640
$8,028
$45,000
Total Cash
Disbursements
$5,358
$5,553
$6,008
$6,198
$42,053
$6,308
$121,576
Net Cash Flow
(- 248)
(- 343)
(- 548)
3,002
(-30,943)
3,222
$ 5,614
$31,224
$30,881
$30,333
$33,335
$2,392
$5,614
Cumulative Cash
Flow
26
27
28
29
30
31
32
33
34
35
36
37
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(3-6) Cash Receipts: Since all business is conducted on a
cash/check/credit card basis, Experience Paradise will receive
immediate payment for its products and services. Business is
expected to be slower than usual from September to November,
because it is off-season for tourists. Notice that the total cash
receipts received from each part of the business (accommodations,
tour trips, and restaurant/bar) is the same as the amount found in the
sales category of the Projected Income Statement (Section D).
(7)
Other Sources: In March of the first year, this business
received a $35,000 short-term loan. It is also expected that donations
and sales of trinkets made of natural materials will raise an additional
$200-$500/month.
(8)
Total Cash Receipts: This is the sum of all revenues
received from each division of the business on lines (4) through (7).
(10) Cash Disbursements: This is the amount of money required
to cover your expenses. It may be spent every month (for example,
electricity bill), or only once a year (insurance), or even once every
three months. It is important to know when the money needs to be
paid. If all of the major expenses are due in January, it will be very
difficult to pay them and still run a profitable business. You should
try to spread out your expenses so that your business is stable.
(11) Cost of Goods (Supplies): These figures are the same as on
your Projected Income Statement (line 10). Notice that the year one
total on the Projected Income Statement is the same as the total on
the year one Cash Flow Projection.
(12) Variable Labor: These figures are the same as on your
Projected Income Statement (line 11).
(13) Advertising: $800 will be spent on the grand opening and on
advertising and promotion during the first month of business in an
effort to build awareness of the hotel, bar and restaurant. $250 will
be spent in April. An additional $600 in brochures and radio
advertising will be spent in June, since it is the start of the peak
tourist season. In November, $360 will be spent on a promotion for
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the restaurant part of the business. Notice that the year one total on
the Projected Income Statement is the same as the total on the year
one Cash Flow Projection.
(14) Insurance: Insurance costs in the first calendar year were
$20/month, payable as one payment at the beginning of the year.
Experience Paradise opened in March, so in the first year, they only
had to pay for 10 months. As you can see from line (14) in the Cash
Flow Projections, William paid $200 in March. In January,
Experience Paradise paid the insurance for the upcoming year; a
total of $250. Although the insurance company determines its fee on
the number of months, it is a cash expense to the business only once a
year.
(15) Legal and Accounting: During the first month, William and
Jim needed a number of professional services in this area which cost
$1,000. In addition to this initial start-up expense, the hotel expects
to use $500 more in legal and accounting fees. These fees are
charged on a quarterly basis. Legal and accounting fees of $125 are
paid every three months (April, July, October, and January).
(16) and (27-37) Fixed Cash Disbursements (FCD): These are
payments that are relatively independent of sales and fairly constant
from month to month. These expenses are added together and then
evenly distributed throughout the year. All of the expenses that are
part of fixed cash disbursements are shown in lines (28) through (35).
Notice that all of the figures are the same as the yearly totals in the
income projection statement. The fixed cash disbursement total is
shown on line (36). This is found by adding the numbers in lines (28)
through (35). Notice that it says FCD/year. All of the numbers listed
in the fixed cash disbursement are yearly expenses, so the total figure
is also a yearly number. In order to determine the monthly payment,
divide line (36) by 12. In other words, line (37) = line (36)÷12. If
you look at line (37), the total FCD/month is determined to be
$2,129. On line (16), $2,129 is the cash disbursement in every
month.
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(17) Mortgage (rent): In this section you should list your
payments for rent or your mortgage payments. In the example, rent
is $550/month until January. It was stated in the Projected Income
Statement that the building was going to be purchased in January. At
that time, Experience Paradise will have to cover the mortgage
payments. A mortgage of $55,000 for 15 years at 9.5% interest
requires a monthly payments of $570. These numbers will differ from
the numbers on the Projected Income Statement. This is because
$570 includes the principal of the loan and the interest. This is the
amount of cash you will have to pay each month. The Projected
Income Statement is only concerned with the total amount of interest
to be paid over the life of the loan.
(18) Term Loan: This is the amount needed to pay (principal and
interest) each month to pay back the money borrowed on the term
loan. In this case, it is $669/month for six years.
(19) Others: If there are any additional large or special payments
that will occur, you will list the figures in this category. You should
explain each of the payments. In the example:
June:
Payment for kitchen equipment purchase due in full.
January:
Purchase of building.
(21) Total Cash Disbursements: This is the sum of lines (11)
through (19).
(23) Net Cash Flow: This tells you how much cash is coming
into, or going out of, your business. If the number is in parentheses (
), then you lost money in that month. For example, in April,
Experience Paradise lost $23. They paid $23 more than they
received in sales. If you take the amount of line (8) Total Cash
Receipts and subtract the amount on line (21) Total Cash
Disbursements in the example, you will get the Net Cash Flow for
that month.
(25) Cumulative Cash Flow: Line (25) shows how much money
is really left at the end of a month. Even if you lose money in
February, you may still have a positive balance because you might
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have made a lot of money in January. You find these numbers by
adding the amount of (23) Net Cash Flow to the previous month's
(25) Cumulative Cash Flow. In the example, March had a cumulative
cash flow of $32,732 which is the same as its (23) Net Cash Flow.
This is because it is the first month of business, and there is no profit
or loss from the previous month. In April, the cumulative cash flow
is $32,709. This number is found by taking $32,732 (the Cumulative
Cash Flow in March) plus (-$23) (the Net Cash Flow in April).
(27) Fixed Cash Disbursements: Lines (27) through (37) itemize
the Fixed Cash Disbursements which are part of (16) Cash
Disbursements. Please note that the categories and figures are
exactly the same as those on the Income Statement. They are added
together and then arranged out over the year on a monthly basis in
line (16).
The Cash Flow Projection Statement is a tool for you to make
important decisions. If you determine sales and expenses on an
annual basis, you will know if your are going to make a profit and
you can monitor your progress. If all of your expenses need to be
paid in one month, however, you may not be able pay all your bills on
time. If this situation occurs you may get a bad reputation among
suppliers and they may not wish to do business with you in the future.
If you prepare a Cash Flow Projection Statement and notice that this
type of problem might occur, you may be able to negotiate with your
suppliers to spread out your payments. A Cash Flow Projection
Statement is also useful for detecting expenses that might be too high.
You may realize that your advertising budget is too large. Once you
make the realization, you can do something to correct the situation.
Congratulations!!!! You Made It Through This Section!!!!!
Well, almost. There is one more thing you will need to do in order to
complete your financial analysis, but you do not have to look at another
worksheet or calculate any more numbers. The financial analysis section is
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probably the most difficult for entrepreneurs to complete because it is so
detailed. Just remember, taking the time and the effort to find this
information and making these documents can provide you with useful tools
to make good decisions.
G.
Historical Financial Reports
If you have already been in any type of business, then you probably
have some previous financial documentation. In addition to balance sheets
or Income Statements, you should include previous tax documents in this
section. This information is important because it shows lenders or buyers
that you can operate a successful business. Lenders can determine many
things from your previous records: how you have managed your business,
what you have done with profits, how you have minimized losses, what
investments you have made, and other important information. If you are
just starting out in business, remember to keep track of all of your financial
information. If you ever plan to expand your business in the future and will
be looking for financial backing, you will need to support your ideas with
financial documents.
Commercial banks are generally willing to finance loans for existing
businesses. If you can prove to the bank that you have the ability to run a
business and pay back your loans, then commercial banks will be interested
in you. Financial documents, such as balance sheets, Income Statement
projections, break-even analysis, and Cash Flow Projections are very
helpful in getting a loan. Another important thing to have is a good credit
rating (this means that you have paid back your previous loans on time).
Banks are able to investigate your credit rating, so make sure you pay
back money that you borrow.
If you are establishing a new business, then Income Statements and
Cash Flow Projections may have to be realistically estimated. Personal tax
statements may be requested, and your credit rating will be extremely
important. It is much harder to obtain a loan from a commercial bank if
you are trying to set up a new business. Banks need evidence to prove that
you are a good business person. The development banks may be more
helpful if your business is the type they have decided they want to support.
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Generally, development banks support tourism-based businesses, especially
those that will create jobs for local people. For them to be able to lend you
money, you must furnish them with realistic information.
One manager from the Bank of Hawaii on Guam said that there are
two things that are very important when he is considering loaning money to
someone. First of all, this person must have an excellent credit rating.
Secondly, there must be a very strong desire to establish and make the
business successful. You, as an entrepreneur, must be willing to work long
hours and sacrifice your personal savings to make your dream come true.
You must also understand that even if your business fails, you are still
responsible for paying back all of the money that you borrowed.
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CHAPTER FIVE: PREPARING AN ENVIRONMENTAL
IMPACT ASSESSMENT
An Environmental Impact Assessment may not be required by your
government. However, if you are establishing an ecotourism venture, you
should make know how your business activity will affect the environment,
the natural surroundings, and your neighbors. Preparing an Environmental
Impact Assessment will also show people such as government officials,
bankers, and potential visitors that you are sincere about establishing an
ecotourism business. Your Environmental Impact Assessment (EIA)
consists of a written report that predicts how your business activities will
affect the surroundings in the near future and in the long-term.
Showing potential visitors that you are serious about preserving the
environment, culture, and natural surroundings also adds value to your
service. If the environment or surroundings are polluted, it will reduce the
quality of a visitor's experience, and gradually force them to travel
elsewhere. Do not take the environment and your natural surroundings for
granted - appreciate them, protect them, learn about them, and pass on
your knowledge to others.
Environmental Impact Assessments
There are various ways of preparing
Environmental Impact Assessments that
differ in the level of detail, as well as in
their content. Ecotourism businesses are
usually small and will not require in-depth
or complicated analysis; therefore, we will
not discuss Environmental Impact
Assessments that discuss extended benefitcost analysis techniques or risk assessment. If you would like to conduct a
very thorough EIA, it would be best to get some professional help.
Agencies and institutions that can help you prepare these assessments are
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listed in Chapter Eight of this handbook. Much of the information in this
section comes from a training manual entitled, How to Assess
Environmental Impacts on Tropical Islands and Coastal Areas, by Richard
A. Carpenter and James E. Maragos. This manual was paid for by the
Asian Development Bank and prepared by the Environment and Policy
Institute at the East-West Center.
Preliminary Environmental Assessment or Initial Environmental
Examination:
This is the simplest type of Environmental Impact Assessment.
You, as an entrepreneur of an ecotourism business, will probably only need
to prepare this type of statement. Since an ecotourism business is
supposed to promote and preserve the environment and natural
surroundings, there should be a low level of impact on the surrounding
areas. The following items should be included in the preliminary EIA:
(1)
Description of the site
° How large is the area?
° What kinds of plants are growing in the location?
° What kinds of animals live in the location?
° Is the land full of rocks? sand? swampland?
° Is it near the ocean? near a city? on a mountain?
° Are there rivers? forests?
How many people live in the area?
° Is there any electricity? water supply? sewage system?
° Is the site isolated?
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(2)
Identification of possible impacts to the site from previous
experiences
For example:
° There used to be many trees, but many of them have been cut
down for fire wood for cooking;
° The reduction of trees has caused a number of birds to
disappear;
° The introduction of electricity has drastically changed the
traditions of the villagers;
° Litter has made the sight very unattractive;
° Sewage problems from the village has contaminated the water
supply.
(3)
Explanation of your plan to monitor your surroundings and, if
necessary, plans to correct any existing problems based on
what you know and what you have learned from looking at the
site
For example, in your plan you could say that you will:
° Check the plant life around your business every month to see if
there are any drastic changes; if there are negative changes,
investigate why the changes have occurred and correct the
problem;
° Check the sewage system every week to ensure that there are
no leaks into the water supply;
° Talk to the village headman at least once a week to ensure that
the villagers are happy, and that your visitors are not a negative
influence on the lifestyles of the local people;
° Make a plan to educate your visitors to be sensitive to the
environment by not breaking off pieces of coral, walking off of
clearly-marked paths, and destroying plant and animal life.
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A second type of EIA is called a Quantitative and Explanatory
Impact Assessment. It involves a lot more time and effort. It is probably
not worth it to have such a detailed plan, unless it is required by your
government. If it is, see Appendix A for more information.
Take a look at the three steps discussed in the Preliminary EIA
statement and do a thorough job of describing your business site. It may be
helpful to do this together with a number of your friends or business
associates. There are a number of items that can be included in the
Environmental Impact Assessment and it may be hard for just one person
to see everything. The EIA will be one reflection of your sincerity in
developing a responsible, successful business, so preparing a complete EIA
will benefit you.
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CHAPTER SIX: RECEIVING OFFICIAL AND
GOVERNMENTAL APPROVAL
No one can guarantee governmental
approval for your business idea, but there are a
number of things you can do which may help you
receive the proper authorization. Every business on
every island is going to have to fulfill requirements
specific to its government and culture. It is
imperative that you contact the appropriate
government workers who can provide you with the information you will
need in order to get the necessary approvals. Each Pacific island has
different government regulations; you may have to do some investigating
to determine which governmental office is the appropriate one to help you.
Most of the information in this section comes from current
ecotourism operators in the Pacific who have already gone through the
process of applying for and receiving governmental approval. The
operators that we spoke with all had similar advice for the entrepreneur
interested in opening an ecotourism business. Listed below are the steps
that you should follow:
(A)
Determine Which Departments You Need to Contact
This may not be as easy as it sounds. Many government officials
may want to be informed about your business and may request submission
of various documents. As an ecotourism business you may have to work
with departments that are concerned with business licenses, the
environment, and tourism. If you are planning to bring in foreign labor,
you may have to receive permission from the Department of Immigration.
If you are going to conduct activities that may be dangerous, you may have
to work with the Department of Health. Certain infrastructure needs will
be required for your business; so you may have to work with whichever
office is responsible for planning, as well as several others.
You will also need to know which level of government has the
authority to make the approvals you need. You may need to go to both
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state and national governments. If you do not know where to start, contact
the Department of Taxation, the Department of Commerce, the
Department of Planning, and/or the Department of Resources and
Development (or their equivalent). These departments will be able to point
you in the right direction. Be prepared to meet with a lot of different
government officials. One ecotourism operator reported having to meet
with all of the following:
° Accident Compensation Board
° Business Development Center
° Department of Finance
° Department of Local and Natural Resources
° Development Planning Office
° Immigration Department
° Inland Revenue Department
° Labor Department
° Medical Services Office
° Public Safety Office
° Tourism Office
° Visitor's Bureau
(B)
Contact the Correct Person in the Department
Once you know which departments you have to work with, you
must determine who can be of assistance and who has the authority to
make decisions. You can waste time, and even weaken your case, if you
meet with the wrong person. It never hurts to start at the top. Ask the
department head or chairperson who they want you to work with. The
person you work with should be able to understand your idea and know
what information you will need to submit in order to receive approval. If
the person you are talking to is unclear of what you need to do, contact
his/her supervisor. If you do not completely understand what information
the government department needs, ask the official to explain it again. Even
though this may seem embarrassing, it is better to ask than to spend a lot of
time collecting the wrong information. If you talk to different people all
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the time you may get conflicting information, so when you have found the
right person, try to work with them every time. And be nice; ideally, this
person will become a personal advocate or supporter of your plan.
(C)
Check Back Periodically
As you go through the process of gathering the information that is
required by government departments, check back periodically with your
contact person. This is helpful for a number of reasons. First of all,
regulations sometimes change, and you may not have been informed of the
change. It is better for you to make the effort and ensure that you have the
most recent, up-to-date information than to prepare the wrong documents.
Another good reason to check back with your contact person on a
consistent basis is to reassure the government official that you are still
interested and enthusiastic about your business plans. A third reason is to
confirm that you are preparing the documents in a way that is acceptable to
the government office. For example, if you are supposed to supply the
department with information about how to finance your project, you may
have to present it in a way that is consistent with the government's
requirements. Fourthly, if you have to make any changes in your business
idea, it is a good idea to consult with the government contact person.
(D)
Be Aware of Changes in Government Positions
Another good reason to keep in touch with your contact person is
because the person you are dealing with may be promoted or moved to
another position. If a new person takes over the duties of your original
contact person, it will be best for you to introduce yourself and your
business idea to him/her as soon as possible. It will also be beneficial for
you to explain to the new person what documents you are working on in
order to receive approval. This action may mitigate any possible
misunderstandings in the future.
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(E)
Build a Positive Relationship with Government Officials
As is true in most business situations, it will be to your benefit to
have a positive relationship with government
officials. In general, government officials are
usually willing to support you, if you are
willing to support them. Being aware of
changes in government offices is a good
business practice. You should know about
the philosophies that current office-holders
have and know how that will affect your
business. If you are thinking of expanding your business, it may be better
for you to try and work with government officials that agree with your
principals and are sympathetic to your needs. It will be difficult to run a
business smoothly if you have made enemies within the government. Know
what changes are taking place, know how the changes will affect you, and
work with your knowledge to create the results that are the most beneficial
to you.
(F)
Stress the Benefits of your Business Idea
Many people have the idea that mass tourism is good for the
economy, while ecotourism businesses offer very little. This is a myth.
Ecotourism businesses do not have to be small; they can be medium-sized
or even be run as a large-scale operation. What is important is that
ecotourism operations are defined by their commitment to the environment,
culture, nature, and education. Since ecotourism businesses use a large
proportion of local labor and materials, more money stays on the island and
in the hands of the local people. Mass tourism resorts and affiliate
businesses often involve large inflows of foreign investment and large
outflows of earnings from tourism-related activities. On the other hand,
ecotourism businesses bring money directly into the island's economy, train
local workers, work with local people to settle land claim differences, and
provide a chance for local people to participate in owning and running their
own business. Be sure to document, and show the government officials
how your island and the local people will benefit from your business.
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CHAPTER SEVEN: STARTING UP YOUR OPERATION
After all the planning is done, you must
get started. In this section, current ecotourism
operators have provided some advice for new
entrepreneurs. Sixty-five ecotourism operators
in the Pacific islands were surveyed in October
1993. Twenty-five responses were received and
the advice given in this section is derived from
their responses. Read the advice carefullly because their experiences and
insights can help protect you from potential problems and frustration.
The information contained in this chapter does not have to be done
in any particular order. Some of it may not even be relevant to your
business. As you go through the list, it might be helpful to mark all the
suggestions that are applicable to your business idea. There may also be
many ideas that you have which are not included in this section. It would
be impossible for the following list to describe everything that one needs to
be concerned about when starting up operations, but the list may help you
determine what types of things you must do to get established.
The most important thing to remember is that you are running a
business; if you cannot succeed in managing the operations, there is no
way that you can be a successful ecotourism operator. Although the
ecotourism factors are crucial to your business, they can only be
implemented if you are profitable. Other things that might need to be
considered are listed below:
Hire professionals. If possible, hire a local contractor, or one that has
experience and interest in developing ecotourism facilities. A number
of architects that have worked in the Pacific islands and have
experience in creating ecotourism designs are listed in Chapter Nine at
the end of the book. Some of their plans for ecotourism architecture
are shown at the end of the book.
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Construct the buildings with local labor
and materials. Ecotourists like to stay in
places they feel are a part of the local culture.
Talk to the local residents every step of the
way. Encourage them to give you ideas and
participate in decision-making. Find ways for the residents to
participate that are financially and emotionally rewarding.
Buy only the equipment and supplies that are absolutely essential
to your operations in the beginning. You can always buy additional
items as you need them, but it would be a waste of money to buy things
that are not necessary and do not get used very often. Vasili Moelagi
Jackson, a very successful ecotourism operator in Western Samoa,
recommends that every new ecotourism business buy a facsimile (fax)
machine if they are connected to a phone line. The fax machine has
allowed her to confirm direct bookings with clients, and enabled her to
market her services better.
Keep good records of what you have spent your money on. This is
important for a number of reasons. First of all, establishing a business
can get expensive very fast, if you are not careful. You do not want to
run out of money when you are only halfway through it. Secondly, if
you borrowed money, lenders (banks or investors) might want to know
how you have spent the money they lent you. Thirdly, if you plan to
borrow more money in the future for expansion or improvements, it
will be helpful to show lending institutions some of the costs you
incurred as you were establishing your business. Lastly, it is just good
business sense to keep track of your expenses.
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Keep complete lists of the equipments that you get. If you have
kept good records of how you spent your money, then you should
already have a fairly detailed list of the
equipment you have. Also, if you prepared a
Capital Equipment List, which is described in
Chapter Four, then you will already have
followed this piece of advice. It is necessary
that you update the list on a fairly consistent
basis. Items will need to be deleted and added to the list as you get rid
of something or purchase a new piece of equipment.
Keep track of things that have worked and things that have failed.
You may want to keep some of this information confidential by keeping
a diary. When you are busy working, you may not be able to remember
everything you hear. It is important to write it down so you can find it
easily when you need it. Some things you might want to include are
the answers to questions like these:
° What building design was the easiest to build?
° What marketing techniques are working best?
° What marketing methods are working the least?
° Which people were easiest to work with?
° Who supported your efforts the most?
° Who was the least helpful?
If you know the answer, you might also document why something was
successful or why it failed. This will help you in the future if you ever
make changes to your existing business, or expand your business.
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Keep track of the differences between the projected figures on
your financial statements and the real figures.
It is easier to do this on a monthly basis than try
to remember everything at the end of the year.
This will enable you to see how close your
projected estimates were to the real figures. This
will enable you to plan and make better decisions,
and to set priorities about purchases and hiring.
If you have overspent in the Salaries and Wages
category, they you may not be able to afford a
van or some other needed equipment. This will also help you make
better estimates for the following years. Why is this important to you?
You can get a clearer idea of how much you are really making (or
losing) on your ecotourism business venture. Accurate financial
statements will also be helpful if you wish to seek lending in the future.
Determine how many workers you will need when you first open
the doors of your ecotourism venture. Hire only as many employees
as are necessary. You can always hire more workers in the future as
you need them. If you hire too many workers and have to lay off (fire)
some of them because you do not have enough business, it will not help
your reputation in the local community.
Decide how you are going to locate your employees. Are you going
to advertise in the newspaper or are you going to hire people you
already know? Are there any laws that govern your hiring practices?
What kinds of skills do you expect from your employees? Will you
have to provide training to the employees you hire? What kind of
training will you be able to provide? You will need to decide how to
deal with these issues. Once you have answered these questions, you
will need to recruit your employees, provide any necessary training, and
help them feel comfortable in their new positions.
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Make copies of all the important documents you have that pertain
to your business. This will include loan agreements, contracts, lease
agreements, financial documents, receipts for any major purchases,
warranties, government certificates, letters of support/approval from
government officials or guests, tax records, and any other information
that seems important to you. If you have
put together a business plan, this might be
included in the list of important documents.
You might want to purchase a fireproof
safe to keep these documents and other
valuables. In addition, it is a good ideas to make copies of these
documents and keep them in a relative's house or in a safe deposit box
at a bank.
It is important to be flexible in your ideas, but do not compromise
your dream. This may seem contradictory and very difficult to
accomplish; however, it is possible. Your dream contains some
important values and ideals that you believe in, and there may be many
ways to achieve your dream. You may have to alter things along the
way, but just keep looking toward your dream at the end. Different
people have different ideas - be open to new ways of doing things and
other people’s needs, without comprimising your values.
Maintain a good sense of humor. This piece of advice was given
quite often, and it has a lot of merit. Opening a business anywhere is
difficult. Some things may be more difficult in the Pacific islands due
to lack of infrastructure, the size of the economies, or land ownership
problems. The best therapy for a bad day is to laugh at it and try to
learn from it.
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Stock up on items you will need to run your business. As you start
setting up operations, keep a list of all the things you will need, big and
small. As the opportunity arises, stock up on the
items you have listed. For example, if you are
setting up an ecotourism resort, you will need to
have furniture for the rooms and the common
area. Even if all of the buildings are not yet
completed, you can still hire someone to make the
chairs. You can stock up on paper, cleaning supplies, and office
equipment, when you have the chance. If you do it a little at a time, it
might not be so overwhelming. Just remember that you should keep
track of your expenses and buy only what you will need and use.
Keep in mind that you are trying to minimize negative impacts on
the environment, nature, and culture. Whenever you make a
decision that might impact one of these systems, do what you can to
prevent negative effects. Talk to people about your ideas and try to
understand what may happen. Listen to advice from others and make
the decision that you feel is the best.
Once you are receiving visitors, treat them as
friends. Ecotourism businesses are seen as special
because of their exclusivity and their commitment
to protecting the environment and sharing the
culture of the host destination. Share your
customs, your food, and your knowledge with your
guests. When the visitors leave, they will
remember you as a friend, not as a business person. Not only does this
fulfill the objectives of ecotourism, but it encourages people to come
back, which is great for business.
96
If you plan to market your business as an ecotourism venture, then
you need to be sure that your building structures and your services
meet the standards of ecotourists. The following checklist,
developed by Andersen (1993), provides a guide for you to follow as
you develop your business:
Site Planning Issues
°
Construct buildings and structures in
certain places so you do not have to cut
down a lot of trees or disturb other
natural areas. For example, some of the
sleeping houses at The Village Hotel on
Pohnpei have strange shapes. This is
because the structures were built around the trees and the
vegetation that already existed.
°
Use naturally-felled trees or thatch whenever possible (such as trees
which have fallen down from wind or other natural causes).
°
Construct paths or walkways that do not interfere with habitats or
lifestyles of local residents or wildlife.
°
When you construct buildings, roads, or paths, make sure your
construction will not cause erosion.
°
Divert water off paths and roads before the flow becomes so strong
that it creates significant erosion problems.
°
Do not clear a lot of plants or vegetation from the shoreline and
beachfront areas.
97
°
Construct buildings around natural vegetation.
°
Strictly limit the use of automobiles and other vehicles.
°
Provide signs along paths that educate visitors, enhance
appreciation of natural environment, and clearly establish rules of
conduct. Provide additional rules in guest units.
°
Discreetly label plant/tree types around the immediate lodging
facilities to acquaint visitors with species they may encounter in the
surrounding preserved/protected areas.
°
Use low impact techniques, such as boardwalks, instead of paved or
unpaved trails wherever possible.
°
Review and minimize any potential sources of sound or smell
associated with the development that may be disruptive to the
environment or offensive to the visitor.
Building Design Issues
°
Assure that the designs reflect seasonal
variations such as rainy seasons and solar
angles (e.g., The Village Hotel uses natural
wind currents, and each sleeping house has a
view of the sunrise or the sunset).
°
Design buildings that utilize local construction
techniques, materials, and cultural images
wherever that approach is environmentally
sound.
98
°
Provide building forms and images in harmony with the natural
environment. Design building on long-term environmental
standards and not necessarily on short-term material standards.
°
Provide ecotourists with reference materials (if available) for them
to learn more about the environment and your culture.
°
Take advantage of local materials, local craftspeople and artists
wherever possible.
°
Avoid using energy intensive products (such as refrigerators and air
conditioners in each room) or hazardous materials (such as candles
that can be knocked over easily).
°
Give special design consideration to insect, reptile, and rodent
control. The sensitive approach to design should minimize
opportunities for intrusion rather than the killing of pests.
°
Plan for growth of the facility to minimize future demolition and
waste
Energy Resource and Utility Infrastructure Issues
°
Consider use of passive or active solar or wind energy sources
wherever practical.
°
Locate water lines to minimize disruption of earth, adjacent to
paths wherever possible.
°
Design facilities to enhance natural ventilation and avoid
unnecessary consumption of energy.
99
Waste Management Issues
°
Utilize appropriate technologies for the treatment of organic wastes
such as composting, septic tanks, or biogas tanks.
°
Look at methods to recycle wastewater for nonpotable
uses and to treat tainted waters before their return to the
natural environment.
°
Provide for environmentally sound methods of trash
removal.
°
Provide trash storage secure from animals and insects.
°
Provide facilities for recycling.
Stick with it!! Don't give up!! If establishing an ecotourism
business is truly your dream do not give up! This advice was given by
almost every ecotourism operator who returned our questionnaire. In
addition, almost every respondent said that in spite of all the problems and
hardship, they would all do it again. It will take a lot of work and patience,
but it is worth it - and you will have made your dream come true.
100
CHAPTER EIGHT: AGENCIES AND ORGANIZATIONS
INVOLVED IN ECOTOURISM
ENVIRONMENTAL PROTECTION RESOURCES
Aquaculture Development Program
State of Hawaii
Department of Land & Natural Resources
335 Merchants Street, Room 359
Honolulu, HI 96813
Attn: John Corbin, Manager
Tel: (808) 587-0030
Fax: (808) 587-0033
Bureau of Reclamation
Contracts and Repayment Division
Department of the Interior
Washington, DC 20240
Tel: (202) 208-3014
Fax: (202) 208-3484
(Small Reclamation Project Loans - provides loans for water resource
development projects for fish and wildlife enhancement and recreation)
Committee on Renewable Energy Commerce and Trade (CORET)
U.S. Department of Energy
1000 Independence Ave., SW
Washington, DC 20585
Attn: Mr. Tom Hall, Program Specialist
Tel: (202) 586-8302
(Information on federal programs providing foreign buyer assistance)
101
Conservation and Environmental Protection Division
Agricultural Stabilization and Conservation Service
U.S. Department of Agriculture
P.O. Box 2415
Washington, DC 20013
Tel: (202) 720-9073
(Water Bank Program - To conserve surface waters, preserve and improve
migratory waterfowl habitat and wildlife resources and secure other
environmental benefits and agricultural production limitations)
Conservation International
1015 18th Street NW, #1000
Washington, DC 20036
Attn: Jill McLaughlin
Tel: (202) 429-5660
Fax: (202) 887-5188
(Non-profit organization dedicated to saving threatened ecosystems;
publications available)
Environmental Center
University of Hawaii
2550 Campus Road
Honolulu, HI 96822
Attn: Mr. John Harrison, Coordinator
Tel: (808) 956-7361
Fax: (808) 956-3980
(Will do environment impact studies)
102
Export Council for Renewable Energy
777 North Capitol Street, NE
Suite 805
Washington, DC 20002-4226
Attn: Ms. Judy Seigel, Executive Director
Tel: (202) 408-0660
Fax: (202) 408-8536
(Has a number of publications that could be useful to potential ecotourism
operators about solar energy and financing for renewable energy systems)
International Fund for Renewable Energy and Energy Efficiency
777 North Capitol Street, N.E.
Suite 805
Washington, DC 20002
Attn: Ms. Barbara Lashinger, Director of Operations
Tel: (202) 408-7916
Fax: (202) 371-5115
(Helps environmentally sound energy projects in the countries of the
developing world; may also help small businesses)
Office of Energy and Infrastructure Research and Development
U.S. Agency for International Development
Room 508, SA-18
Washington, DC 20523-1810
Attn: Mr. Ross Pumfrey, Renewable Energy Director
Tel: (703) 875-4694
Fax: (703) 875-4053
(Information on experience with renewable energy in developing country
applications, and availability of U.S. foreign assistance programs and
services in renewable energy)
103
Resources Institute (Energy & Minerals)
East-West Center
1777 East-West Road
Honolulu, HI 96848
Attn: Dr. Fereidun Fesharapi, Director
Tel: (808) 944-7560
Soil Conservation Service
U.S. Department of Agriculture
P.O. Box 2890
Washington, DC 20013
Attn: Deputy Chief for Programs
Tel: (202) 205-0027
(Watershed Protection and Flood Prevention Technical Assistance assistance in planning, designing and installing watershed works of
improvement; in sharing costs of flood prevention, irrigation, drainage,
sedimentation, control, and public water-based fish, wildlife and
recreation; in extending long term credit to help local interests with their
share of the costs)
Office of Water Regulations and Standards
Analysis and Evaluation Division Office of Water
Environmental Protection Agency
Washington, DC 20460
(Water Pollution Control - provides grants to help agencies, institutions
and individuals in the control of water pollution)
104
RESOURCES FOR SMALL BUSINESS DEVELOPMENT
University of Hawaii Sources
Pacific Business Center Program
College of Business Administration, A-413
University of Hawaii at Manoa
2404 Maile Way
Honolulu, Hawaii 96822
Attn: Ms. Angela L. Williams, Director
Tel: (808) 956-6286
Fax: (808) 956-6278
(The Pacific Business Center offers a variety of informational,
technical, and business-related services to small businesses and
governments in the Pacific)
Pacific Islands Development Program
East-West Center
1777 East-West Road
Honolulu, HI 96848
Attn: Dr. Sitivini Halapua, Director
Tel: 944-7745
Sea Grant
MSB 230
University of Hawaii
Honolulu, HI 96822
Attn: Dr. Raymond Tabata, Coastal Research Agent
Tel: (808) 956-2866
Fax: (808) 956-2858
105
U.S. Federal Government Programs
EDA/ U.S. Department of Commerce
4106 Federal Building
Box 50264
300 Ala Moana Blvd.
Honolulu, HI 96850
Attn: Mr. Frank McChesney, Economic Development Representative
Tel: (808) 541-3391
Fax: (808) 541-3138
Farmers Home Administration
Prince Kuhio Federal Building, Room 7123
Honolulu, HI 96813
Attn: Thao Khamoui, District Director
Tel: (808) 541-2556
Fax: (808) 541-3162
(Resource Conservation and Development Loans - to provide loan
assistance for 1) rural and community public outdoor-oriented, waterbased recreation facilities; 2) soil and water development, conservation,
control, and use facilities; 3) shift in land use facilities; 4) water storage
facilities; and 5) special purpose equipment to carry out the above
purposes),
also,
(Rural Businesses and Industrial Loans - guaranteed/insured loans to
cooperatives, corporations, partnerships, trusts, tribes, municipalities,
counties or individuals for the purpose of improving, developing or
financing business, or developing a healthy economic climate in rural
communities)
106
SCORE/ACE
Small Business Administration
Prince Kuhio Federal Building, Room 2314
Honolulu, HI 96850
Attn: Sally Dugger, Chapter Coordinator
Tel: (808) 541-2977
Fax: (808) 541-2976
(Service corps of retired executives who provide management counseling
to small business by utilizing the talents of successful retired and active
business executives)
U.S. Small Business Administration
238 Archbishop Flores Street, Room 508
Agana, GU 96910
Attn: Mr. Jose M.L. Lujan, Director
Tel: (671) 472-7308
Fax: (671) 472-7365
(Management Assistance to Small Businesses - advisory services and
counseling, training, dissemination of technical information to help
prospective as well as present small business persons to improve skills to
manage and operate a business)
and,
(Loans for Small Businesses - direct loans, guaranteed/insured loans,
advisory services and counseling to assist in establishing, preserving and
strengthening small businesses owned by low income persons, or located
in areas of high unemployment, direct loans to independently owned and
operated small businesses to construct, expand or convert facilities; to
purchase building equipment or materials; for working capital)
107
American Samoa
Amerian Samoa Government
Ecomonic Development Planning Office
Commerce and Industry Division
Pago Pago, AS 96799
Attn: Mr. Alex Zodiacal, Business Development Specialist
Tel: (684) 633-5155
Fax: (684) 633-4195
Commonwealth of the Northern Mariana Islands
Business Incubator
Northern Marianas College
P.O. Box 1250
Saipan, MP 96950
Attn: Mr. Eric Plinske, Assistant Manager
Tel: (670) 235-1551
Fax: (670) 235-5383
Commonwealth Development Authority
Watkin’s Building, Gualo Rai
P.O. Box 2149
Saipan, MP 96950
Attn: Mr. James H. Ripple, Executive Director
Tel: (670) 234-7145
Fax: (670) 234-7144
108
Visitor Industry Program
Northern Marianas College
P.O. Box 1250
Saipan, MP 96950
Attn: Mr. Antonio V. DeLeon Guerrero, Tourism Instructor and
Coordinator
Tel: (670) 234-5498
Fax: (670) 234-0759
Federated States of Micronesia
Chuuk Visitors Bureau
P. O. Box FQ
Moan, Chuuk State, FM 96942
Attn: Mr. Simiram Sipenuk, Executive Director
Tel: (691) 330-4133
Fax: (691) 330-4194
Pohnpei State Government
Department of Commerce and Industry
Kolonia, Pohnpei, FM 96941
Attn: Mr. William Iriarte, Director
Tel: (691) 320-2735
Fax: (691) 320-5997
Yap Commerce and Industries Division
Department of Resources and Development
P.O. Box 36
Colonia, Yap, FM 96943
Attn: Mr. Tom Bennett, Business Advisor
Tel: (691) 350-2184
Tel: (691) 350-4113
109
Guam
Department of Commerce
Government of Guam
590 South Marine Drive, Suite 601
Tamuning, GU 96911
Attn: Mr. Peter Barcinas, Director
Tel: (671) 646-5841
Fax: (671) 646-7242
Guam Economic Development Authority
ITC Building, Suite 911
590 South Marine Drive
Tamuning, GU 96911
Attn: Mr. Kimberly Lujan, Chief Economic Planner
Tel: (671) 649-4141
Fax: (671) 649-4146
Fiji
Tourism Council of the South Pacific
G.P.O. Box 13119
Suva, Fiji
Tel: (679) 304-177
Fax: (679) 301-995
Attn: Mr. Levani Tuinabua, Director
(Regional intergovernmental organization whose main objective is to
foster regional cooperation in the development and promotion of tourism
in the island nations of the South Pacific)
110
Private Firms
Pacific Island Investments
P.O. Box 383970
Waikoloa, HI 96738
Attn: Ms. Karen Jeffrey, President
Tel: (808) 883-8000
Fax: (808) 883-8838
(Offers sales, management, and consulting on business site development;
specializes in selling islands and small resort hotel sites)
Palau
Palau - Small Business Resource Center
Palau Community College
P.O. Box 9
Koror, Palau 96940
Attn: Mr. Reginald Bennet
Tel: (680) 488-2650
(Help with advertising, marketing, management, computers, bookkeeping,
basic business skills, obtaining a loan, employee training, and others)
Palau Visitors Authority
P.O. Box 256
Koror, Palau 96940
Tel: (680) 488-2793
Fax: (680) 488-1453
111
Republic of the Marshall Islands
Kwajalein Atoll Development Authority (KADA)
P.O. Box 5159
Ebeye, MH 96970
Tel: (692) 329-3100
Fax: (692) 329-3297
Marshall Islands Development Authority (MIDA)
P.O. Box 1185
Majuro, MH 96960
Tel: (692) 625-3417
Fax: (692) 625-3158
Banks and Development Banks
American Samoa Development Bank
P.O. Box 9
Pago Pago, AS 96799
Contact: Mr. Nuese Punimata, President
Tel: (684) 633-4031
Fax: (691) 320-2842
Bank of Guam
P.O. Box BW
Agana, Guam 96910
Tel: (670) 472-8865-7
112
FSM Development Bank
Headquarters
P.O. Box M
Kolonia, Pohnpei 96941
Contact: Mr. Norman Clow, Senior Loan Officer
Tel: (691) 320-2840
Fax: (691) 320-2842
Branch Offices
P.O. Box 648
Kolonia, Pohnpei 96941
Tel: (691) 320-2624
Chuuk
P.O. Box 786
Weno, Chuuk 96942
Tel: (691) 330-2760
Fax: (691) 330-4149
Yap
P.O. Box 81
Colonia, Yap 96943
Tel: (691) 350-2165
Fax: (691) 350-2249
Kosrae
P.O. Box 104
Lelu, Kosrae 96944
Tel: (691) 370-3070
Fax: (691) 370-2170
113
Marshall Islands Development Bank
P.O. Box 1048
Majuro, MH 96960
Tel: (692) 625-3230
Fax: (692) 625-3309
Pacific Islands Development Bank
Suite 600 J, GCIC Building
414 West Soledad Avenue
Agana, GU 96910
Contact: Mr. Will Cooper, Director
Tel: (671) 477-0047
Fax: (671) 477-0067
ORGANIZATIONS THAT MIGHT BE HELPFUL IF CONTACTED
Societies and Information Organizations
The Adventure Travel Society
6551 S. Revere Parkway, #160
Englewood, CO 80111
Attn: Ms. Renee Karlin
Tel: (303) 649-9016
Fax: (303) 649-9017
(A trade organization that promotes the integration of enviromentally
responsible natural resource management, economic viability, and
protection of social values through tourism; publishes books, provides
referrals, offers seminars, and offers consulting services)
114
American Hotel and Motel Association
1201 New York Avenue, NW, Suite 600
Washington, DC 20005-3931
Attn: Mr. Thierry Roch, Director of Member Relations
Tel: (202) 289-3152
Fax: (202) 289-3158
(Promotes hotel/motel business through publicity and promotion
programs. Also serves as educational institute)
Tourism Associates
3640 SW Dosch Road
Portland, OR 97201
Attn: Sharr Prohaska, President
Tel: (503) 227-3307
Fax: (503) 274-9858
(Ecotourism planning and development, works with indigenous groups,
interested in rural tourism development)
The Ecotourism Society
P.O. Box 755
North Bennington, VT 05257
Attn: Ms. Laurae Lyster, Membership Director
Tel: (802) 447-2121
Fax: (802) 447-2122
(Operates as a membership resource center, provides referrals, publishes
a quarterly newsletter and books, and offers entry in rosters that are given
to the media, conference organizers, governments, and other institutions)
115
Greenpeace International
Ecotourism Project
139 Townsend Street
San Francisco, CA 94107
Attn: Mr. David Rappaport [(503) 687-1043]
Tel: (415) 512-9025
Fax: (415) 512-8699
(Works with Pacific Island Ecotourism projects)
Travel Industry Management School
University of Hawaii
2560 Campus Road, George Hall
Honolulu, HI 96822
Attn: Joseph Patoski, Assistant Researcher
Tel: (808) 956-8946
Fax: (808) 956-5378
(Provides ecotourism policies and environmental planning)
Inter-American Travel Congresses
c/o Organization of American States
International Trade and Tourism Division
1889 F Street, N.W., 4th Floor
Washington, DC 20006
Tel: (202) 458-3582
Fax: (202) 458-6163
(Develops inter-American cooperation concerning travel. Deals with
technical matters of tourism. Works with both government and private
enterprise)
116
The International Ecotourism Education Foundation
P.O. Box 676
Falls Church, VA 22040
Attn: Ms. Yvonne Rodgers, Executive Director
Tel: (703) 534-5430
Fax: (703) 534-5109
(Alliance of tourism and environmental educators, tourism industry
members, and travelers committed to promoting environmentally sound
tourism principles through education; publishes newsletter)
International Institute for Tourism Studies
George Washington University
Travel & Tourism Program, H.K.L.S., Bldg. K
817 23rd Street, N.W.
Washington, DC 20052
Attn: Dr. Donald Hawkins
Tel: (202) 994-0458
(Conducts management workshops on Ecotourism & Heritage Tourism)
National Audubon Society
700 Broadway
New York, NY 10022
Attn: Margaret Carnright, Travel Manager
Tel: (212) 979-3000
Fax: (212) 353-0190
(Connected to the Audobon Magazine, which has a very large potential
ecotourism readership)
117
Travel Collaborative
14 Arrow Street
Cambridge, MA 02138
Attn: M.J. Kietzke
Tel: (617) 497-8151
Fax: (617) 492-3720
(Organization that works to connect various consumers with
environmentally responsible businesses; official travel agents for Co-op
America)
Society of American Travel Writers
1155 Connecticut Avenue, NW
Suite 500
Washington, DC 20036
Tel: (202) 785-5567
(Assists travelers by providing accurate destination, facility and service
reports. Protects person’s freedom of travel. Strives for preserving
historic sites and nature conservation)
World Wildlife Fund
Membership Travel Program
1250 24th Street, NW
Washington, DC 20037
Attn: Ms. Elizabeth Boo, Ecotourism Specialist
Tel: (202) 293-4800
(Non-Profit Organization focused on preserving wildlife and the
environment; promotes ecotourism projects in the Pacific)
118
Magazines and Publications
The Buzzworm Magazine Guide to Ecotravel or
Buzzworm: The Environmental Journal
2305 Canyon Blvd., #206
Boulder, CO 80302
Tel: (303) 442-1969
Fax: (303) 442-4875
(Contact Lisa Jones for information about Travel; contact Fran Meneley
about advertising)
Conde'Nast Traveler
360 Madison Avenue
New York, NY 10017
1-800-777-0700
(Coverage of ecotourism destinations)
E Magazine
The Earth Action Network, Inc.
P.O. Box 5098
Westport, CT 06881
Tel: (203) 854-5559
(Popular magazine for environmentalists)
Earthtrips: A Conservation International Book
Living Planet Press
558 Rose Avenue
Venice, CA 90291
Tel: (213) 396-0188
(Consumer guide to ecotourism ventures)
119
EcoTraveler
7730 SW Mohawk
Tualatin, OR 97062
(A new magazine that promotes social responsibility and environmental
sensitivity along with descriptions of ecotourism operations)
Eco-Vacations: Enjoy Yourself and Save the Earth
Blue Penguin Publications
BBP Sales
147 Sylvan Avenue
Leonia, NJ 07605
(Guide to ecotourism ventures)
Hotel/Travel Index
Ziff-Davis Publishing Company
One Park Avenue
New York, NY 10016
In Business: A Magazine for Eco-Entrepreneurs
419 State Avenue
Emmaus, PA 18049
Tel: (215) 967-4135
(Business advice and strategies for small businesses concerned with the
environment; some ecotourism is included)
Insight Guides
APA Productions
Prentice Hall Press
One Gulf & Western Plaza
New York, NY 10023
(Guidebooks for different places; writes short articles on places to stay
and activities)
120
Islands International Magazine
Islands Publishing Company
3886 State Street
Santa Barbara, CA 93105
Tel: (805) 682-7177
Fax: (805) 569-0349
(Magazine which covers stories relating to islands and their environments.
It presents awards to places that are sensitive to environments)
Journal of Sustainable Tourism
Channel View Publications
Frankfurt Lodge
Clevedon Hall, Victoria Road
Clevedon, Avon,
England BS21 7SJ
(Looks for ecotourism businesses as case studies)
Just Go! An Ecotravel Magazine
544 Second Street
San Francisco, CA 94107
Tel: (415) 546-7128
(Magazine that supports local cultures and responsible tourism)
Mr. Terry Lawhead
4246 E. Cheery Lynn Road
Phoenix, AZ 85018
Tel/Fax: (602) 468-1926
(Writer/editor on economic development; specialist in Pacific region
travel)
121
Mr. Jim Molnar (Travel Column) Seattle Times Travel Section
P.O. Box 70
Seattle, WA 98111
Tel: (206) 464-2245
(Editorial column on travel)
National Geographic Traveler Magazine
17th & M Sts., N.W.
Washington, DC 20036
Tel: (202) 775-6700
(Magazine for travelers)
New World of Travel: A Guide to Alternative
Vacations in America and Throughout the World
Prentice Hall Press
Travel Division
15 Columbus Circle
New York, NY 10023
(Travel guide which outlines the full diversity of new travel trends)
Outside Magazine
1165 North Clark Street
Chicago, IL 60610
Tel: (312) 951-0990
(Normally covers adventures and wilderness experiences; it has a travel
advertising section)
Smithsonian Magazine
P.O. Box 55593
Boulder, CO 55522
Tel: (202) 357-4700
(Magazine for members of the Smithsonian Natural History
Museums/Smithsonian Institution)
122
Specialty Travel Index: Directory of Special Interest Travel
305 San Anselmo Avenue
San Anselmo, CA 94960
Tel: (415) 459-4900
Fax: (415) 459-4975
(The primary trade index of small/alternative tours for agents, tour
operators, and consumers)
Tour & Travel News
Miller Freeman Publishing Company
600 Harrison Street
San Francisco, CA 94107
Attn: Diane Merlino
Tel: (415) 905-4923
Fax: (415) 905-2232
(A global magazine which is distributed directly to travel agents. She
would appreciate information for a regular publication supplement called
"Island Destinations." She is interested in materials about hotels, naturebased attractions, and special events such as island festivals)
Travel Industry Association of America
International Travel News Directory
Communications Dept.
2 Lafayette Centre
1133 21st Street N.W.
Washington, DC 20036
Tel: (202) 293-1433
(Directory with names of travel press contacts around the world.
Increases public awareness on the importance of travel to the economy.
Promotes domestic and international travel through campaigns, education
and improvement of services)
123
Travellife Magazine
505 Market Street
Whittle Communications
Knoxville, TN 37902
Tel: (615) 595-5774
(May promote your business if you send press release)
Unique and Exotic Travel Reporter
6716 Eastside Drive NE, #12
Tacoma, WA 98422
Attn: Pat Chesebro, Editor
Tel: (206) 927-1688
Fax: (206) 927-1688
(Written for people who do not want to do the "usual" things)
Travel and Tour Agencies
Four Seasons Travel Services
P.O. Box 759
Pinehurst, NC 28374
Attn: Mr. Voit Gilmore
Tel: (910) 295-3131
Fax: (910) 295-4287
(Travel agency which concentrates on leisure travel and eco-travel)
Islands in the Sun/Ted Cook Tours
2381 Rosecrans Avenue, Suite 325
El Segundo, CA 90245
Tel: (310) 536-0051
Fax: (310) 536-6266
(Specializes in tours to the Pacific)
124
Journeys International
4011 Jackson Road
Ann Arbor, MI 48103
Tel: 1-800-255-8735
Fax: (313) 655-2945
(International tour organization focused on ecotourism)
Preferred Adventures, Ltd.
1 West Water Street, Suite 300
St. Paul, MN 55107
Attn: Karen L. Johnson
Tel: (612) 222-8131
Fax: (612) 222-4221
(Tour agency that specializes in Adventure Travel)
Smithsonian Odyssey Tours
Saga International Holidays
120 Boylston Street
Boston, MA 02116
(Specializes in cultural and historical tours)
Trans Niugini Tours
P.O. Box 371
Mount Hagen, Papua New Guinea
Tel: (675) 52-1438
Fax: (675) 52-2470
(One of the most respected tour operators in the Pacific Rim)
125
Tread Lightly, Ltd.
1 Titus Road
Washington Depot, CT 06794
Attn: Audrey Patterson
Tel: (203) 868-1714
Fax: (203) 868-1718
(Tour agency that promotes ecotourism)
Trip-n-Tours Micronesia
846 Williamston St., Suite 202
Vista, CA 92084
Attn: Michael Musto, President
Tel: (619) 724-0788 / (619) 724-7089
Fax: (619) 724-9897
USA 1-800-348-0842
Victor Emanuel Nature Tours
P.O. Box 33008
Austin, TX 78764
(Group that provides ecotours)
Williamette International Travel
118 SW 1st Avenue
Portland, OR 97204-3501
Attn: Ms. Lynn Nicholson or Ms. Pam Davis
Tel: (503) 224-0180
Fax: (503) 242-3867
(Travel agency that spends much of its time focusing on ecotourism tours)
126
CHAPTER NINE: CASE STUDIES
In this chapter, you will find three sections that may be helpful in
starting an ecotourism business. The first section is a listing of four
architectural firms who have experience in Pacific island-style designs,
along with some examples of their work. The second section is a
compilation of marketing strategies used by the owner of the Sufua Hotel
in Western Samoa. The third section is a business plan for The Pathways
Hotel in Yap.
A.
Pacific Island Architecture
The following drawings are by professionals who are experts in
Island-style architecture. If you need any assistance in future design,
construction or consultation, feel free to contact the following people:
Carey Smoot
Sourcetropical Inc.
44-229 Kaneohe Bay Dr.
Kaneohe, HI 96744
Tel: (808) 254-4002
Fax: (808) 254-6472
SOURCETROPICAL, INC. Carey Smoot's work is characterized by
the use of tropical materials which are creatively designed to respond to
each unique client and site. Carey's philosophy of enriching the beauty of a
location and preserving the natural resources is evident in the statement,
"Architecture should have a magic and beauty to awaken the senses and
emotions of those who will use it." Carey has been in business for over 20
years; he founded SOURCETROPICAL, INC. over 7 years ago in
response to the demand for unique and "hard to find" materials such as
ironwood shingles, coconut timber, structural bamboo, and all types of
thatched roofing. SOURCETROPICAL, INC. specializes in custom
designing tropical style homes, offices and buildings for the resort
environment. Carey is a consultant in environmentally-safe energy sources
as well as planning, design and construction.
127
Cliff Terry
TRB/Architects, Ltd.
Pauaha Tower, Suite 1110
1001 Bishop Street
Honolulu, HI 96813
Tel: (808) 528-2020
Fax: (808) 523-1264
TRB/ARCHITECTS, LTD. provides architectural, energy planning and
environmental design services to clients in the Pacific basin.
TRB/ARCHITECTS, LTD. engages in commercial, residential, industrial
and governmental projects. They offer over 20 years of experience in
appropriate, energy efficient island architecture, including four years of
residential and architectural work in Micronesia. The principal architect is
licensed to practice architecture in Hawaii, Guam and the Commonwealth
of the Northern Mariana Islands, and the firm is licensed to do business in
those areas as well. They have recently completed projects in various
countries from Saipan to the Cook Islands. They welcome inquiries from
interested people at all times. TRB/ARCHITECTS, LTD has made
available a guide to Development of Building Projects on Pacific Island
Sites which can be purchased for $25.00.
128
Mel Fielding
P.O. Box 534
Honolulu, HI 96809
Tel: (808) 537-4478
MEL FIELDING. Mel has over 30 years of commercial and residential
architectural experience in the Pacific Rim. He has become well known in
the Pacific region for the famed Village Hotel in Pohnpei. This 23-room
hotel, restaurant, and bar with thatched roofing, reed walls and wood floors
has become a showcase of island architecture. With his flexible approach
and versatility, Mel tailors designs and buildings to the needs of his clients.
MEL FIELDING also offers energy planning and interior design services.
129
David L. Andersen, AIA
Tourism Design Consultant
The Andersen Group Architects, Ltd.
Suite 211, 7601 Wayzata Boulevard
Minneapolis, MN 55426
Tel: (612) 593-0950
Fax: (612) 593-0033
THE ANDERSEN GROUP ARCHITECTS, LTD. David is
internationally known for his research and design work on ecotourism
facilities. He believes that ecotourism facilities represent a window to the
natural world. Beyond their hospitality role, they provide tourists with an
appreciation of biological and cultural diversity on this planet. The
Andersen Group Architects, Ltd. is available as a design consultant for
private development, government studies and non-profit groups who
envision tourism as part of a conservation program. (No sketches
available.)
130
B.
Marketing Strategies for the Sufua Hotel
When businesses first open their doors, it is difficult for them to
know how to best market products and services. Ecotourism businesses
are no different. The following account describes one ecotourism
operator’s experiences in learning about her customers and the best ways
to reach them. The categories listed in this example are those found in the
marketing section of the business plan. The information contained here is
useful for new ecotourism operators because it is a good example of being
flexible. If you learn something new, try to adapt it to your business and
continue to strive toward making your business better and more attractive.
When you write your marketing plan, discuss the things that you
plan to do or are already doing. If you find our later that your ideas about
marketing were not that successful, you can always try other strategies.
In 1985, the owner of the Sufua Hotel began her business with a
vision that foreigners would truly enjoy Samoan Hospitality. This vision
and the desire to be environmentally friendly provided an opportunity for
visitors to enjoy Samoa and all the rich beauty of its culture and
environment. The Sufua Hotel has had a positive impact on the local
economy; bringing about a revival of traditional Samoan dances,
handicrafts, and pride, while allowing guests to learn the Samoan culture
and way of life. The vision and determination of one individual has made
the Sufua Hotel the pride of this Samoan community.
The following is an account of how the owner of the Sufua Hotel in
Savaii, Western Samoa marketed her ecotourism hotel when she first
opened, and explains some of the things she learned along the way.
UNDERSTANDING YOUR CUSTOMER
In 1985, I began to build the Sufua Hotel because I knew people
would enjoy the opportunity to learn about the real Samoa. At first, I was
so busy that I did not take the time to think about who my future
customers would be or where they would come from. However, as the
time for the opening grew closer, I realized that I had not thought about
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how I would market the hotel. As luck would have it, the word got out to
a few people that we were building a hotel in Savaii, Western Samoa, and
they came to stay with us. It was with these initial contacts that we began
our first steps in marketing the hotel. The two main things I did with these
and later guests became the foundation for our marketing efforts.
First, I spent quality time with these guests. I began to see patterns
in the types of things they liked to do. I learned about their interests,
occupations, the kind of reading materials they enjoyed, and other
miscellaneous information from these discussions. I discovered the type of
person that was attracted to my hotel.
I learned that most of the visitors read travel guides. They liked to
experience things that were off the beaten path, and were curious about
cultures different from their own. These guests wanted a vacation that was
both educational and relaxing. With this knowledge, I had some idea about
what type of market I needed to target. To this day, I continue to spend
time with my guests, and I keep records of their interests to assist me in
future marketing efforts.
The second thing I did was pass out cards with information about
the hotel. I asked guests to give cards to their friends and travel agents.
Visitors who really enjoyed their stay were happy to spread the word about
my business. They turned out to be an extremely effective marketing tool.
I discovered that it was a more sophisticated form of word-of-mouth
advertising. Although word-of-mouth advertising is very effective, people
may misplace or forget names, phone numbers, and other essential
information. By giving them the cards to pass out, it became easier for
potential guests to contact us.
PRODUCT BENEFITS
The Sufua Hotel offers visitors the opportunity to experience
Western Samoa in its traditional and natural state. We offer our guests a
rich cultural experience through the traditional architecture of the hotel,
genuine Western Samoan food, educational tours, and the opportunity to
meet and share stories with Samoans. It is my hope that our guests leave
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their vacation from Savaii with a new appreciation and understanding of
the Western Samoan way of life.
Operation of the Sufua Hotel does not harm the environment and
we use local products as much as possible. Visitors know that they will be
able to experience what the real Samoa is all about and not a watereddown tourist version. Not only are people able to relax and unwind when
they come to our hotel, but they are also able to leave with an
understanding and an appreciation of the Samoan people.
SALES AND DISTRIBUTION CHANNELS
I feel it is very important for people who are interested in starting
an ecotourism business to understand that you need to make your product
or service known to those who would like to enjoy it. I use a variety of
sales and distribution channels to reach our potential customers.
I knew that many tourists were already going to Apia, the capital of
Western Samoa, so I made some arrangements with Apia agents to send
guests to our hotel or to purchase optional day tours that we had at the
time. I also sent my sister to Apia to encourage visitors to come to the
hotel. I called her every day to find out how many guests had made
reservations at Savaii for the following day.
During the early months of business I did not have a phone or fax
machine. I had to walk one mile every day to the nearest phone to see if
any reservations had been made through my sister or the agents in Apia.
Needless to say, the most important recommendation I have is to purchase
a phone and a facsimile (fax) machine. I still travel to Apia one or two
times a week to promote the hotel and ensure that our contracted agents
are properly marketing of the hotel.
In order for me to market our product overseas, I aggressively
contacted overseas tour operators and let them know about our unique
hotel. I found out about these operators through travel guides, travel
magazines, directories, and by asking guests which travel agents they had
used. I sent travel guide writers and these agents brochures and invited
them to stay at the hotel free of charge. Whenever I travel, I stop at travel
133
agencies to give them information about our hotel and to thank those who
have sent guests. I always present gifts to key people in the hope that they
will remember me and my hotel. I think that the best gift is something that
stays on their desk so they will remember me.
I personally contacted approximately 40% of the tour operators
that book with the hotel today. The other 60% of our tour operators read
about the hotel in travel guides, newspapers, books, and travel magazines
before contacting us for more information.
Approximately 85% of our guests researched the destination before
they came. With this in mind, I make sure our hotel is well represented in
the media. I contact well known travel writers and invite them to our
facility. Some of the more effective travel guides for our hotel have been
Lonely Planet, Frommers, Fodders, South Pacific Handbook and the
Sierra Club.
I always survey our customers to find out how they heard about the
hotel; this is one of the best ways to determine which forms of advertising
are the most effective. In addition to surveying customers, I stay in close
contact with the Western Samoa and Tonga Visitors Bureaus, as well as
wholesalers, and retailers. I ask them how inquiring customers learned
about the hotel. I have concentrated my advertising efforts in the areas
which I have deemed to be the most effective.
COMPETITIVE ISSUES
When I started my business, I looked at my competition and
thought about how I could be successful. I had to develop a product that
was different to the customer. When I started the Sufua Hotel, it was the
only hotel on the island. While this may have been an advantage in some
respects, in reality it meant that the island had no sales connections or prior
exposure to potential customers. Competition in Apia was already
established. In addition to Apia, the Sufua Hotel was competing with other
Pacific islands that offered similar accommodations.
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POSITIONING, PUBLICITY, AND PROMOTION
I was able to differentiate the hotel from our competition in Apia
and other Pacific Islands because it was an ecotourism hotel which
provided insights into Samoan culture . In addition, I was able to attract a
wide range of customers because the accommodations were moderately
priced.
Brochures were, and still are, a great promotional tool for us. We
distribute them worldwide through travel agents, friends, previous
customers, rental car agencies, and anywhere else possible.
Articles from travel writers, airline magazines, and travel guides
promoting the Sufua Hotel are other excellent sources for promotion. I
invite travel guide writers and authors to stay at my hotel free of charge.
In exchange, they write about the Sufua Hotel in their publications.
Clearly the best promotion is from satisfied customers who go
home and tell their friends. Word of mouth advertising is free and the most
effective way of promoting a product. I also promote the optional tours by
making presentations. I have made over 120 presentations to schools,
villages, and organizations about the environment, our culture and the
importance of keeping our heritage. Not only is this an excellent learning
experience, but it also exposes our tours to many people. In the future, I
plan on making presentations to non-governmental organizations worldwide.
In my experience, the most important thing to consider is the
involvement, support and cooperation of local community members.
Therefore, local publicity is necessary to build trust. I use local radio
advertising and signs to publicize activities and special events. I employ
many local people to dance and make handicrafts for the guests on tour.
PRICING YOUR PRODUCT/SERVICE
In order to determine the price of our accommodations, I had to
consider both the competitions’ prices and the expenses at the hotel. I
spend many hours updating myself on local, regional, and global travel
trends and spending behavior. I read the Pacific Travel News, Pacific Asia
Travel Association studies, and information from local and regional
135
Visitors Bureaus to understand how international events might affect the
Sufua Hotel. I adjusted the rates so that they are competitive and enable
me to make a profit.
MEETING YOUR GOALS WITHIN A BUDGET
My advertising budget is currently between 10-15 percent of our
total sales. This figure varies depending on new travel developments and
new advertising opportunities. My advertising budget includes marketing
trips, the cost of printing brochures, entertaining travel agents and travel
writers, the cost of printing cards that guests give to friends, and paid
advertising in airline magazines.
STRATEGIES:
I have expanded the tour options available to visitors so that they
are more appealing to customers. I now offer mangrove swamp, hiking,
cultural, and educational tours as well as demonstrations of tapestry
making and weaving. The diversification of activities ensures that our
guests are happy and I can include more members of the community in the
promotion and spirit of traditional Samoan hospitality.
136
C.
BUSINESS PLAN: THE PATHWAYS HOTEL, YAP
EXECUTIVE SUMMARY
Yap is known for its spectacular scuba diving, traditional way of
life, and tropical climate. As more people look for remote destinations to
relax and enjoy nature, Yap will become increasingly attractive to tourists.
The Pathways Hotel will provide accommodations in an atmosphere that
upholds Yapese customs, promotes and strengthens traditions, and
educates visitors about the Yapese lifestyle. The Pathways is owned and
operated by people who are committed to being environmentally friendly
and culturally sensitive. The eight local-style cottages, restaurant, and bar
will not only provide tourists with a relaxing place to stay, but will fulfill
the visitors’ fantasies of staying somewhere exotic. In additions to
supporting Yap’s diving industry, The Pathways Hotel will diversify the
tourist industry by attracting a different market of visitors.
The Pathways Hotel is approaching the Federated States of
Micronesia Development Bank for a start up loan of $300,000 at 10%
interest over 20 years for the building of the hotel. This money will be
used to construct the buildings, furnish the rooms, provide initial operating
supplies and give access to working capital.
DESCRIPTION OF COMPANY AND BUSINESS
The Pathways Hotel is in the service business and will provide
accommodations to visitors, and food and beverages to both local residents
and visitors . One mission of the Pathways Hotel is to enhance and
reinforce the traditional values of the Yapese people. By hiring local
workers, using local-style architecture, and being environmentally friendly,
the Pathways Hotel will be able to fulfill its objective, provide visitors with
a culturally enriching experience, and become economically sustainable.
The company will be run as a partnership. It will be owned and
operated by an American doctor, Don Evans, and his Yapese partners, Stan
and Flora Fillmed. The Pathways will employ 14 full and part-time staff to
handle operations of the hotel, restaurant, and bar.
137
The rooms will be available year-round with rates of $85 per night
for rooms without air-conditioning and $95 for rooms with airconditioning. The restaurant will serve breakfast from 6:30am to 9:30am
each morning. Meal prices will range between $5 and $10. The bar will be
open between the hours of 4:30pm and 9:00pm each evening.
The Pathways Hotel will be the first hotel on Yap. With the
planned eight room hotel, restaurant, and bar, the Pathways should be able
to make an operating profit after the first six months of business (see
income statement projections on pages 156-159.). The peak seasons for
the hotel are projected to be the summer months of July, August and
September, as well as the Christmas holidays. The consistent climate in
Yap will offer visitors the opportunity to visit throughout the year. The
increase in tourism throughout Micronesia is an encouraging sign for Yap’s
visitor industry.
PRODUCT/ SERVICE
An American construction company with experience in the design
and building of energy-efficient, traditional style buildings will be employed
to build the initial phase of the hotel. Local workers will be employed
during the second and final phase. The cottages for the Pathways will be
made from thatched roofing, coconut rope lashings, log supports, and
intricate woven reeds, bamboo, and nipa leaves. The interiors will be
modern and comfortably furnished with amenities such as air-conditioning,
ceiling fans, refrigerators, and a private balcony. The rooms will be
cleaned on a daily basis. Guests will have a choice between air-conditioned
and non-air-conditioned rooms. Free transportation to and from the airport
and hotel will be provided.
The Pathways Hotel will benefit the local people of Yap, tourists
and the government. Local Yapese will benefit in a number of ways. First,
there will be new jobs available which will also provide the opportunity to
learn new skills. Secondly, other businesses will prosper as tourists and
employees spend their money within the local community. Possibilities for
optional tours and other new service related work will develop. The
people of Yap will further benefit through the revival and practice of
138
Yapese traditional dances and cultural shows. It is our hope that the hotel
will be a platform for reviving culture due to the interaction with visitors.
The government will benefit from increased excise taxes and room
taxes collected from the Pathways Hotel. Visitors to Yap will bring foreign
currency which will be spent on taxis, restaurants, arts and crafts, scuba
diving, fishing and other tourist-related activities.
Yap is an interesting place for visitors because of the traditional
stone money "currency", stone village paths, colorful traditional dances,
island legends and scuba diving with manta rays. Due to Yap’s isolation
and its lack of visitors in the past, visitors perceive Yap as a pristine,
exotic, culturally rich, and romantic place to visit. The Pathways Hotel on
Yap provides a service that fits visitors’ perceptions.
THE MARKET
In the past, tourism has not been pursued on the island of Yap.
While other Micronesian islands have successfully engaged in a profitable
tourist industry, Yap has not been able to attract tourists because of its
distant location and lack of accommodations. The tourist industry in Guam
has increased its room occupancy rate over the past few years. Saipan is
building an additional 1200 hotel rooms and has maintained high
occupancy rates. The Palauan tourist industry is growing and is expected
to continue growing in the future. The future expansion of tourism in Yap
looks promising because of Yap’s location between Guam and Palau.
These are strong indicators that a hotel business in Yap will be profitable.
Continental Airlines has three flights a week to Yap which is on the
popular route between Guam and Palau. Primary customers will comprise
Japanese, Guamanian, American, and Australian citizens. Visitors from
these areas comprise the traditional market that vacations in Micronesia.
The Pathways will advertise in diving magazines and travel guides.
The owners will work with travel agents and tour wholesalers that have
sales offices in places which serve the target markets in order to promote
the hotel. Tourism offices, restaurants, and dive shops will be given
brochures to hand out to customers.
139
MANAGEMENT
The Pathways will be run as a partnership. Lifetime residents of
Yap, Stan and Flora Fillmed, have worked a combined 25 years in Yap.
Don Evans originally came to Yap as an educator and is responsible for
establishing a primary health care clinic for the outer islands of Yap. The
partners will hire a General Manager to take care of the daily operations of
the hotel, restaurant and bar. The partners are deeply committed to the
Pathways Hotel for several key reasons:
(1)
The partners have a strong desire for visitors to have the
opportunity to experience and learn about the real Yapese lifestyle.
(2)
The Pathways has the potential to be a financially profitable
business for the owners,
(3)
The Pathways will provide jobs which may improve the quality of
life for its employees.
PERSONNEL
The Pathways will employ eight full-time employees and six parttime workers. Local staff will be trained in a variety of hotel and restaurant
procedures. Two full-time and three part-time staff will handle front desk
responsibilities. They will process guest check-in and check-out. They will
have reservations responsibilities as well. One full-time cook and one parttime cook will serve the daily breakfast. Two full-time bartenders will be
trained for the beverage operation. The Pathways will need three part-time
housekeepers. Administrative responsibilities and the management of daily
operations will be handled by the General Manager. Full-time employees
will receive medical insurance. Part-time employees can have partial
coverage based on the plan they choose.
FINANCING
Mr. Evans and Mr. and Mrs. Fillmed are requesting financing of
$300,000 in order to build The Pathways Hotel. One of the partners owns
the land on which the hotel will be built and is willing to offer it as
collateral. The financial analysis section on pages 152-159 clearly displays
the potential profitability of The Pathways Hotel. The Pathways Projected
140
Income Statements and Cash Flow Projections for the first three years of
operation are shown.
The Projected Income Statements reflect The Pathways Hotel’s
ability to repay the loan. Revenue figures were obtained by multiplying the
average room rate to the number of rooms reserved per night and
projecting future occupancy percentages over the three-year period.
Expenses were determined by price quotes from suppliers and service
providers. By forecasting the revenue and expenses, the Pathways is able
to project an operating profit in the sixth month of business ( see Projected
Income Statement on pages 156-159).
The Projected Cash Flow Statement for the first year of operation
clearly shows that the Pathways Hotel will have enough cash available to
repay the loan and pay for operating expenses. The figures were based on
an average occupancy of 62% over the first year of operations. Based on
the above financial projections, The Pathways Hotel will clearly be able to
meet all of its financial responsibilities.
Further supporting documentation available upon request.
CONCLUSION
The owners of The Pathways Hotel are committed to sharing all of
Yap’s assets. By building The Pathways Hotel, tourists who come to Yap
will not only have a place to stay, but they will be provided with the
opportunity to experience Yapese culture and tradition in ways that are not
available to them now. With the increase in tourism throughout the Pacific
islands, and the natural beauty of Yap and its people, The Pathways will
truly contain the necessary ingredients for a successful and profitable
business. The Pathways Hotel will be able to pay its debtors, provide jobs
for the local people, enhance the local traditions, increase the government’s
revenues, give tourists a pleasurable “Yapese” vacation experience and
provide the owners with a chance to make their dreams come true.
.
141
Cash Flow Projections
CATEGORY
Jan.
Cash Receipts
Room Sales
6,680
Food & Beverage Sales
1,304
Other Sources [a]
10,000
Total Cash Receipts
17,984
Cash Disbursements
Cost of Goods
522
Variable Expense (rooms)
267
Advertising
400
Insurance
550
Legal and Accounting
120
Delivery Expenses
350
Wholesaler Commission
668
Fixed Cash Disbursements 7,626
Term Loan
2,895
Feb.
Mar.
Apr.
May
June
7,640
1,592
0
9,232
8,600
1,880
0
10,480
9,560
2,168
0
11,728
10,520
2,456
0
12,976
11,480
2,744
0
14,224
637
306
0
550
0
350
764
7,626
2,895
752
344
0
550
0
350
860
7,626
2,895
867
382
400
550
120
350
956
7,626
2,895
982
421
0
550
0
350
1,052
7,626
2,895
1,098
459
0
550
0
350
1,148
7,626
2,895
Total Cash Disbursements 13,398
13,127
13,377
14,147
13,876
14,126
Net Cash Flow
4,586
(3,895)
(2,897)
(2,419)
(900)
98
Cumulative Cash Flow
4,586
691
(2,206)
(4,625)
(5,525)
(5,427)
Fixed Cash Disbursements (FCD)
Utilities
5,400
Salaries & Wages
76,800
Payroll Taxes & Benefits
3,072
Office Supplies
1,200
Maintenance
1,200
Licenses
840
Telephone/Fax
1,800
Miscellaneous
1,200
Total FCD/year
Total FCD/month
91,512
7,626
a: Working Capital from the loan
142
Cash Flow Projections (cont.)
CATEGORY
July
Cash Receipts
Room Sales
12,440
Food & Beverage Sales
3,032
Other Sources [a]
0
Total Cash Receipts
15,472
Cash Disbursements
Cost of Goods
1,213
Variable Expense (rooms)
498
Advertising
400
Insurance
550
Legal and Accounting
120
Delivery Expenses
350
Wholesaler Commission
1,244
Fixed Cash Disbursements 7,626
Term Loan
2,895
Total Cash Disbursements 14,895
Net Cash Flow
Cumulative Cash Flow
577
(4,850)
Aug.
Sep.
Oct.
Nov.
Dec.
Total
14,744
3,723
0
18,467
12,245
2,985
0
15,230
11,864
2,859
0
14,723
13,784
3,435
0
17,219
13,400
3,320
0
16,720
132,957
31,498
10,000
174,455
1,489
590
0
550
0
350
1,474
7,626
2,895
1,194
490
0
550
0
350
1,225
7,626
2,895
1,144
475
400
550
120
350
1,186
7,626
2,895
1,374
551
0
550
0
350
1,378
7,626
2,895
1,328
536
0
550
0
350
1,340
7,626
2,895
12,599
5,318
1,600
6,600
480
4,200
13,296
91,512
34,740
14,974
14,329
14,746
14,725
14,625
170,345
3,493
901
(23)
2,494
2,095
4,110
(457) (479)
2,015
4,110
(1,358)
143
Cash Flow Projections, Year Two
CATEGORY
Cash Receipts
Room Sales
Food & Beverage Sales
Other Sources
Total Cash Receipts
Cash Disbursements
Cost of Goods
Variable Expense (rooms)
Advertising
Insurance
Legal and Accounting
Delivery Expenses
Wholesaler Commission
Fixed Cash Disbursements
Term Loan
Total Cash Disbursements
Net Cash Flow
Cumulative Cash Flow
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Total
43,769
5,682
0
49,451
39,654
4,959
0
44,613
48,621
6,179
0
54,800
46,562
5,899
0
52,461
178,606
22,719
0
201,325
2,273
1,751
400
1650
120
1,250
4,377
22,953
8,685
1,984
1,586
400
1650
120
1,250
3,965
22,953
8,685
2,472
1,945
400
1650
120
1,250
4,862
22,953
8,685
2,360
1,862
400
1650
120
1,250
4,656
22,953
8,685
9,088
7,144
1,600
6,600
480
5,000
17,861
91,812
34,740
43,458
42,593
44,337
43,936
174,324
5,993
2,020
10,463
8,525
27,001
10,102
12,122
22,586
31,110
Fixed Cash Disbursements (FCD)
Utilities
5,700
Salaries & Wages
76,800
Payroll Taxes & Benefits
3,072
Office Supplies
1,200
Maintenance
1,200
Licenses
840
Telephone/Fax
1,800
Miscellaneous
1,200
Total FCD/year
Total FCD/qtr
91,812
22,953
144
Cash Flow Projections - Year Three
CATEGORY
Cash Receipts
Room Sales
Food & Beverage Sales
Other sources
Total Cash Receipts
Cash Disbursements
Cost of Goods
Variable Expense (rooms)
Advertising
Insurance
Legal and Accounting
Delivery Expenses
Wholesaler Commission
Fixed Cash Disbursements
Term Loan
Total Cash Disbursements
Net Cash Flow
Cumulative Cash Flow
Fixed Cash Disbursements (FCD)
Utilities
Salaries & Wages
Payroll Taxes & Benefits
Office Supplies
Maintenance
Licenses
Telephone/Fax
Miscellaneous
Total FCD/year
Total FCD/qtr.
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Total
44,659
5,996
0
50,655
40,921
5,667
0
46,588
50,742
7,092
0
57,834
47,779
6,435
0
54,214
184,101
25,190
0
209,291
2,398
1,786
450
1650
135
1,350
4,466
23,615
8,685
2,267
1,637
450
1650
135
1,350
4,092
23,615
8,685
2,837
2,030
450
1650
135
1,350
5,074
23,615
8,685
2,574
1,911
450
1650
135
1,350
4,778
23,615
8,685
10,076
7,364
1,800
6,600
540
5,400
18,410
94,458
34,740
44,535
43,880
45,825
45,148
179,388
6,120
2,708
12,009
9,066
29,903
37,230
39,938
51,947
61,013
5,850
79,200
3,168
1,200
1,200
840
1,800
1,200
94,458
23,615
145
Income Statement Projections, Year One
CATEGORY
Sales
Room Sales
Food & Beverage Sales
Total Sales
Jan.
Feb.
Mar.
Apr.
May
June
6,680
1,304
7,984
7,640
1,592
9,232
8,600
1,880
10,480
9,560
2,168
11,728
10,520
2,456
12,976
11,480
2,744
14,224
Cost of Goods (Food)[A]
522
Variable Expense (rooms)[B] 267
Cost of Goods Sold
789
637
306
942
752
344
1,096
867
382
1,250
982
421
1,403
1,098
459
1,557
7,195
8,290
9,384
10,478
11,573
12,667
Operating Expenses
Utilities
330
Salaries & Wages
6,400
Payroll Taxes & Benefits[C] 256
Advertising
134
Office Supplies
100
Insurance
550
Maintenance
100
Legal and Accounting
20
Delivery Expenses
350
Licenses
70
Telephone/Fax
115
Wholesaler Commission[D] 668
Depreciation[E]
955
Miscellaneous
100
Total Operating Expenses 10,148
350
6,400
256
133
100
550
100
20
350
70
120
764
955
100
10,268
365
6,400
256
133
100
550
100
20
350
70
125
860
955
100
10,384
390
6,400
256
134
100
550
100
260
350
70
130
956
955
100
10,751
440
6,400
256
133
100
550
100
20
350
70
145
1,052
955
100
10,671
480
6,400
256
133
100
550
100
20
350
70
150
1,148
955
100
10,812
1,687
1,687
1,657
1,657
1,626
1,626
1,594
1,594
1,562
1,562
1,528
1,528
Total Expenses
11,835
11,925
12,010
12,345
12,233
12,340
Net Profit (Loss) Pre-Tax
(4,640)
(3,635)
(2,626)
(1,867)
(660)
327
Gross Margin
Other Expenses
Interest (Term Loan)
Total Other Expenses
A: Cost of Goods = 40% of Total Food and Beverage Sales
B:Variable Expenses (Rooms) is for things like soap, shampoo =4% of Total Rooms
Sales
C: Payroll Taxes and Benefits = 4% of Salaries & Wages Amount
D: Wholesaler Commission = 10% of Room Sales
E: Depreciation: 10 year straight line depreciation on most equipment beginning January
(Year one) and 20 year straight line on buildings
146
Income Statement Projections, Year One (cont.)
CATEGORY
Sales
Room Sales
Food & Beverage Sales
Total Sales
Cost of Goods (Food)[A]
Variable Expense (rooms)[B]
Cost of Goods Sold
Gross Margin
Operating Expenses
Utilities
Salaries & Wages
Payroll Taxes & Benefits[C]
Advertising
Office Supplies
Insurance
Maintenance
Legal and Accounting
Delivery Expenses
Licenses
Telephone/Fax
Wholesaler Commission[D]
Depreciation[E]
Miscellaneous
Total Operating Expenses
Other Expenses
Interest (Term Loan)
Total Other Expenses
Total Expenses
Net Profit (Loss) Pre-Tax
July
Aug.
12,440 14,744
3,032 3,723
15,472 18,467
1,213
498
1,710
1,489
590
2,079
Sep.
Oct.
Nov.
Dec.
Total
12,245 11,864 13,784 13,400 132,957
2,985 2,859 3,435 3,320 31,498
15,230 14,723 17,219 16,720 164,455
1,194
490
1,684
1,144
475
1,618
1,374
551
1,925
1,328 12,599
536 5,318
1,864 17,917
13,762 16,388
13,546 13,105 15,294 14,856 146,538
485
540
6,400 6,400
256
256
134
133
100
100
550
550
100
100
20
20
350
350
70
70
170
170
1,244 1,474
955
955
100
100
10,934 11,218
495
475
530
520
6,400 6,400 6,400 6,400
256
256
256
256
133
134
133
133
100
100
100
100
550
550
550
550
100
100
100
100
20
20
20
20
350
350
350
350
70
70
70
70
175
170
165
165
1,225 1,186 1,378 1,340
955
955
955
955
100
100
100
100
10,929 10,866 11,107 11,059
1,494
1,494
1,459
1,459
12,428 12,677
1,334
3,711
1,423
1,423
1,387
1,387
1,349
1,349
5,400
76,800
3,072
1,600
1,200
6,600
1,200
480
4,200
840
1,800
13,296
11,460
1,200
129,148
1,310 18,076
1,310 18,076
12,352 12,253 12,456 12,369 147,224
1,195
851
2,837
2,487
A: Cost of Goods = 40% of Total Food and Beverage Sales
B:Variable Expenses (Rooms) is for things like soap, shampoo =4% of Total Rooms
Sales
C: Payroll Taxes and Benefits = 4% of Salaries & Wages Amount
D: Wholesaler Commission = 10% of Room Sales
E: Depreciation: 10 year straight line depreciation on most equipment beginning January
(Year one) and 20 year straight line on buildings
147
(686)
Income Statement Projections, Year Two
CATEGORY
Sales
Room Sales
Food & Beverage Sales
Total Sales
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Total
43,769
5,682
49,451
39,654
4,959
44,613
48,621
6,179
54,800
46,562
5,899
52,461
178,606
22,719
201,325
2,273
1,751
4,024
1,984
1,586
3,570
2,472
1,945
4,416
2,360
1,862
4,222
9,088
7,144
16,232
Gross Margin
45,427
41,043
50,384
48,239
185,093
Operating Expenses
Utilities
Salaries & Wages
Payroll Taxes & Benefits
Advertising
Office Supplies
Insurance
Maintenance
Legal and Accounting
Delivery Expenses
Licenses
Telephone/Fax
Wholesaler Commission
Depreciation
Miscellaneous
Total Operating Expenses
1,435
19,200
768
400
300
1650
300
60
1,250
210
425
4,377
2,865
300
33,540
1,305
19,200
768
400
300
1650
300
300
1,250
210
450
3,965
2,865
300
33,263
1,495
19,200
768
400
300
1650
300
60
1,250
210
470
4,862
2,865
300
34,130
1,465
19,200
768
400
300
1650
300
60
1,250
210
455
4,656
2,865
300
33,879
5,700
76,800
3,072
1,600
1,200
6,600
1,200
480
5,000
840
1,800
17,861
11,460
1,200
134,813
3,750
3,750
3,480
3,480
3,222
3,222
2,970
2,970
13,422
13,422
37,290
36,743
37,352
36,849
148,235
8,138
4,300
13,031
11,390
36,859
Cost of Goods (Food)
Variable Expense (rooms)
Cost of Goods Sold
Other Expenses
Interest (Term Loan)
Total Other Expenses
Total Expenses
Net Profit (Loss) Pre-Tax
148
Income Statement Projections, Year Three
CATEGORY
Sales
Room Sales
Food & Beverage Sales
Total Sales
1st Qtr.
2nd Qtr.
3rd Qtr.
4th Qtr.
Total
44,659
5,996
50,655
40,921
5,667
46,588
50,742
7,092
57,834
47,779
6,435
54,214
184,101
25,190
209,291
2,398
1,786
4,185
2,267
1,637
3,904
2,837
2,030
4,866
2,574
1,911
4,485
10,076
7,364
17,440
Gross Margin
46,470
42,684
52,968
49,729
191,851
Operating Expenses
Utilities
Salaries & Wages
Payroll Taxes & Benefits
Advertising
Office Supplies
Insurance
Maintenance
Legal and Accounting
Delivery Expenses
Licenses
Telephone/Fax
Wholesaler Commission
Depreciation
Miscellaneous
Total Operating Expenses
1,435
19,800
792
450
300
1650
300
70
1,350
210
455
4,466
2,865
300
34,443
1,410
19,800
792
450
300
1650
300
330
1,350
210
420
4,092
2,865
300
34,269
1,540
19,800
792
450
300
1650
300
70
1,350
210
450
5,074
2,865
300
35,151
1,465
19,800
792
450
300
1650
300
70
1,350
210
475
4,778
2,865
300
34,805
5,850
79,200
3,168
1,800
1,200
6,600
1,200
540
5,400
840
1,800
18,410
11,460
1,200
138,668
2,736
2,736
2,523
2,523
2,328
2,328
2,151
2,151
9,738
9,738
37,179
9,291
36,792
5,892
37,479
15,488
36,956
12,773
148,406
43,445
Cost of Goods (Food)
Variable Expense (rooms)
Cost of Goods Sold
Other Expenses
Interest (Term Loan)
Total Other Expenses
Total Expenses
Net Profit (Loss) Pre-Tax
149
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168
APPENDIX A
A.
Quantitative and Explanatory Environmental Impact
Assessment:
This EIA statement looks at the information explained in the first
EIAon page 59 in even more detail. Unless you have been educated in
environmental studies, or have a lot of knowledge in the area, you will
probably need to hire a professional to help you put together this
statement. The steps included in this statement are as follows:
(1)
Items at the site are noticed, counted, examined, and
analyzed
In the first EIA statement, you
are supposed to identify
obvious characteristics of the
site. In this EIA statement,
you need to gather a lot more
information. For example,
imagine that you noticed
hibiscus shrubs growing on the
site. In the first EIA statement, you might state, "There are a
number of hibiscus shrubs growing on the site; there are various
colors such as red, white, pink, and yellow." In the quantitative and
explanatory EIA, you will need to count or estimate the
approximate number of hibiscus shrubs, describe in detail the
colors, age, and condition of the flowers. You will need to examine
the condition of the shrubs and explain if they are healthy or
diseased. Based on this information, you will need to discuss the
trends of the hibiscus shrub. For example, if all of the hibiscus
shrubs are young, you will be able to predict that in five years, the
shrubs will be 30 percent larger than they are now and might be a
problem because it will block the view to the ocean.
169
(2)
Describe major natural systems: You will need to describe,
and maybe map, natural systems such as rivers, mangrove
forests, and coastal waters.
For example:
° How wide is the river at all points on the site?
° How dense is the mangrove forest?
° Which way does the river run?
° How many miles away is the coast from your site?
° How many small streams come from the river on your
site?
° How deep is the river; is it the same depth at all points?
° Does the river consist of fresh water or brackish water?
(3)
Material and energy flows through systems are quantified
For example:
° How many fish are in the river?
° How many local people are dependent on the fish in the
river?
° How many boats land at the coastal site?
° How many people get their water from the water pipes?
° How many people fetch water from natural underground
sources?
(4)
Cause and effect relationships are established
For example:
° The increase in visitors has caused damage to the reefs
because they walk on the reef which kills many forms of
life. In addition, visitors break off pieces of coral to
take home as souvenirs;
° Increased sewage disposal in underground cesspools
will make the water unhealthy to drink.
170
(5)
Models are constructed to explain consequences of
development activities and to make predictions
Based on the information collected above, mathematical
models are designed to analyze the results of your
observations.
(6)
Create strategies based on the results of the model that will
minimize or reduce negative environmental impact
The results of the model show how various decisions will
affect the environment. If you have this knowledge, you
will be able to make educated business decisions that will
not adversely affect the environment.
B.
Environmental Consequences of Tourism
There are a number of short-term and long-term consequences of
tourism. The environmental consequences affect both humans and
ecosystems. The table on the following page describes how various
tourism activities can affect the environment. As you establish your
business, it might be helpful to look at this table. For example, if you plan
to employ local residents to help you run your business, this table will show
you some of the results that might occur. Definitions for difficult words
and phrases in the tables can be found on pages 187-189.
171
Environmental Consequences of Tourism
Activity
Consequences to
Environment
Solid Waste Disposal
Sewage Disposal
-Waste from human activities
pollutes water and soil
-Drainage from landfills or dumps
-Smoke and fumes from burning
-Suspended solids
-Fish & plants need oxygen
-Bacteria & germs
-Chlorine
-Freshwater demand
-Toxic industrial waste
Ecosystem Impact
-Water and air quality reduced
- species/habitat poisoned
-Fish caught in trash
-Clean-up costs
-Water quality goes down
-Oxygen in water decreases
-environment poisoned
-Groundwater contamination
-Drainage from landfills or dumps
-Smoke and fumes from burning
Human Impact
-Public health risk
-Economic loss (tourism)
-Aesthetics
-Public health risk
1. Bacteria & germ exposure
2. Toxins build up in food
-Welfare loss
1. Subsistence
2. Recreation
3. Economic (fisheries, tourism)
-Aesthetics
-Increased local infrastructure costs
Mitigation
-Lots of trash cans
-Routine clean-up
-Adequate treatment and
disposal technology
-Waste management
-User/impact fees
172
Environmental Consequences of Tourism (cont.)
Activity
Land-Use Changes
Tourist Activities
(sightseeing, reef walking,
souvenir collecting)
Consequences to
Environment
-Secondary development
-Enhanced access/high density
-More people in area
-Increased contact with different
cultures and lifestyles
Ecosystem
Impact
-Urbanization
-Overfishing/resources depletion
-Change in ecosystem structure
-Resource depletion
-Change in ecosystem structure
-Degradation of important cultural/
historic or recreational areas
Human Impact
-Public health risk
1. Air pollution
2. Water pollution
-Welfare losses
1. Quality of life
2. Loss of agricultural land
3. Overburdening of infrastructure
-Aesthetics
-Welfare losses
1. Commercialization of
culture/ religious practices
2. Quality of life
3. Subsistence
4. Economic (fisheries)
Mitigation
-Land-use planning
-Resource management
1. Catch limits
2. Education
-Appropriate site selection
avoiding sensitive areas
-Education /information
-Ensure compatibility with
community through
-Compensation in money
or land
173
Environmental Consequences of Tourism (cont.)
Activity
Employment of Local Residents
Employment of Immigrant
Labor
Consequences to
Environment
-Shift of labor resources from
government service to private
-Round-the-clock work shifts
Ecosystem
Impact
-Loss of productive capacity in
other work
-Change in lifestyle
-Dependence on imported goods
Human Impact
-Disruption of family values
-Cultural conflicts
-Social differentiation
-Reliance on cash income
-New mobility
-Housing shortages
-Overburdening of infrastructure
-Social gaps (outsiders fill
high-level jobs)
Mitigation
-Employee training
-Housing impact fees
-Employee training
174
-Increased population
Environmental Consequences of Tourism (cont.)
Activity
Consequences to
Environment
-Fertilizer/pesticides
Landscaping (long-term)
-Barren landscape
-Altered soil profile
-Altered topography
-Altered drainage characteristics
Ecosystem
Impact
-Land poisoned
-Oxygen in land/water
decreases
-Soil erosion
-Water quality degradation
-Instream and coastal habitats/
species loss
-Increased risk of land slippage
-Degraded coastal surface
-Increased runoff
Human Impact
-Public health risk
-Welfare losses
1. Subsistence
2. Recreation
3. Economic (fisheries)
-Destruction of cultural resources
& archaeological sites
-Welfare losses
1. Subsistence
2. Recreation
3. Economic (fisheries)
-Loss of potentially productive land
-Cultural displacement
-Aesthetics
-Catastrophic risk
1. flood
2. loss of landform stability
Mitigation
-Chemical management
-Intercept treat runoff water
-Avoid sensitive
areas
-Archaeological survey
-Grading controls
1. Drainage berms
2. Settling basins
-Relocation of displaced
population
-Avoid filling in land in
low areas
-Revegetation
175
Site Clearance/Grading
Environmental Consequences of Tourism (cont.)
Activity
Consequences to
Environment
Construction Activities
Construction/Labor Importation
-Noise
-Fugitive dust
-Machinery emissions
-Congestion/traffic
-Structural addition to coast and
landscape
-Immigrant worker population
-Sewage
-Temporary housing
Ecosystem
Impact
-Disturbance of animals
-Poison environment
-Water quality degradation
-lower oxygen in land/water
-Water quality degradation
Human Impact
-Worker safety
-Public health risk
-Respiratory irritation
-Welfare losses
1. Quality of life
2. Subsistence
-Aesthetics
-Public health risk
1. Disease introduction
2. Sanitation problems
-Overburdening of infrastructure
-Overburdening of public facilities
-Cultural conflicts
-Loss of labor from productive sectors
Mitigation
-Noise and emission control
ordinances
-Toxic substance controls
-Timing to avoid
migratory or spawning
-Improve over original
176
-Minimize contact of
temporary workers and
local people
-Construction of housing
adequate for
post-construction period
-Infrastructure enhancement
integrated with project design
Environmental Consequences of Tourism (cont.)
Activity
Consequences to
Environment
Construction/Landscaping
-Introduction of exotic species
-Fertilizer/pesticides
-Toxicity: species/habitat loss
-Downstream eutrophication
Ecosystem
Impact
-Displacement of indigenous, rare
species
Human Impact
-Natural/cultural resource loss
-Welfare losses
1. Subsistence
2. Recreation
Mitigation
-Use of native plants
-Management of chemical
products
Since many of the words in the table are not very common, some
definitions are provided below:
Aesthetics: Sensitivity to art and beauty; showing good taste.
Archaeological Sites: Places that have the remains or ruins of ancient
people, cities, and things.
Biological Oxygen Demand: The amount of oxygen needed to
decompose the organic matter in waste water.
Compensatory Enhancement: To make something more beautiful, or of
better quality, in exchange for the original.
Cultural Displacement: Cultures can no longer exist the same way as
they did in the past. Traditional culture is replaced or transformed.
Degradation: Decrease in quality, character, etc.
Denuded: To make bare or naked; to destroy all plant and animal life in
an area.
Drainage Berm: A ledge or shoulder, along the side of the road to
facilitate water drainage.
177
Endemic: Indigenous; Native; Native to a particular country, nation, or
region: said of plants, animals, and sometimes, customs, etc.
Eutrophication: A decrease of oxygen in a body of water, so that plant
life survives, but animal life does not.
Excavation: A hole made by digging, often to find something old.
Food Web Toxic Accumulation: Poisons that build up in certain food
chains.(ex. fish swim in polluted water and then are eaten by
people, who get the poison along with the fish.)
Fugitive Dust: Dust that flies around.
Grading: To level or reduce (a road, ground, etc.) to a desirable slope.
Indigenous: Native; existing, growing, or produced naturally in a region
or country.
Land Slippage: Landslide; the sliding of a mass of loosened rocks or
earth down a hillside or slope
Landform Stability: The stability of any land feature on the earth's
surface, such as a plain, valley, or hill.
Landscaping: To improve or change the features of appearance of a
piece of property.
Leaching: To remove or dissolve by filtering.
Migratory: Moving from one place to another with the change in seasons,
especially birds and fish.
Mitigation: Ways to reduce or make the consequences less severe.
Ordinances: Laws.
Pathogenic Organisms: Bacteria (germs) that produce diseases.
Receptacles: Trash cans.
Respiratory Irritation: Something that causes you to have trouble
breathing.
Revegetation: The act or process of growing plants again.
Runoff: Something that runs off, like rainwater that cannot be absorbed
into the ground.
Settling Basin: A large, wide hole in the ground that allows solid matter
to settle to the bottom while the liquid stays on the top.
Spawning: To produce (eggs, sperm or young).
Suspended Solids: Solid waste that does not get decomposed quickly.
Swales: Low areas of land, often wet and marshy.
178
Topography: The surface features of a region including rivers, lakes,
mountains, etc.
Toxicity: The amount of poison in something; a condition caused by
poison.
User/Impact Fees: A payment made by the person who uses something or
affects it in some way.
179
APPENDIX B
DESCRIPTIONS OF EXISTING ECOTOURISM OPERATORS
The businesses described in this appendix responded to our
questionnaire of ecotourism operators. If you did not receive a
questionnaire and would have liked to respond to it; please let us at the
Pacific Business Center know about your business, so that in the future, we
can contact you if we are involved with any similar projects.
Adventure Cruising Company, Ltd.: This company offers a variety of
cruises aboard a wooden ship names "Te Aroha." With accommodations
for 22 passengers, the Te Aroha is navigated by Mike and Dee Pigneguy
around the Hauraki Gulf. Visitors can take day trips or spend up to 5 days
exploring the islands of Great Barrier, Kawau, Little Barrier, Tiritiri
Matangi and visiting the islands that dot the Coromandel Coast. Special
features include a botanical cruise, a history and conservation cruise,
natural history expeditions, bird observation cruises, and rare and
endangered species cruises. For more information, please call:
Ms. Dee Pigneguy
Adventure Cruising Co., Ltd.
P.O. Box 338
Auckland, New Zealand
Tel: (64) 9-444-9342
Fax: (64) 9-444-9342
180
EcoTours of Hawai'i: This company allows visitors to experience the
splendor of Hawai'i by hiking, biking, kayaking, or any combination of the
three activities. The tours can take place on one island or they can be
designed so that travel to two or more islands is possible. In addition to
adventure and historical interpretation, EcoTours of Hawai'i can create
special packages that include eclipses, whale watching, astronomical events
or historic themes. For more information, please contact:
Hugh R. Montgomery
Proprietor
Hawaiian Walkways
P.O. Box 2193
Kamuela, HI 96743
Tel: (808) 885-7759
Fax: (808) 885-6957
Fafa Island Resort: Located in the Kingdom of Tonga, the Fafa Island
Resort consists of a number of fales (bungalows) that are built using local
materials such as coconut timber and thatching. Food is made from local
fruits and vegetables. The motto of this traditional place is "Come as a
guest, leave as a friend." To find out more about becoming a friend,
contact:
Ms. Angelika Frank
Assistant Manager
Fafa Island Resort
P.O. Box 1444
Nuku'alofa, Kingdom of Tonga
Tel: (676) 22800
Fax: (676) 23592
181
Hawaiian Walkways: Hawaiian Walkways, located on the island of
Hawai’i, offers custom hiking tours taking in the natural beauty of Mauna
Kea and Mauna Loa volcanoes, rain forest streams and waterfalls,
sweeping upland meadows and ancient Hawaiian trails along the coast with
hidden pools and fishponds. They inform their visitors and interpret the
natural and historical experiences in ways that allow everyone to enjoy and
appreciate the beauty and significance of sites without adverse impact.
Please contact:
Hugh R. Montgomery
Proprietor
Hawaiian Walkways
P.O. Box 2193
Kamuela, HI 96743
Tel: (808) 885-7759
Fax: (808) 885-6957
Kapiti Tours, Ltd.: John W. Barrett operates this nature and cultural
heritage tour operation in New Zealand. By working closely with the
Maori Tribe, Mr. Barrett is able to provide his visitors with an education
and a deep understanding of the Maori people. For more information,
please call:
Mr. John W. Barrett
Managing Director
Kapiti Tours, Ltd.
P.O. Box 113
Paraparaumu, New Zealand
Tel: (64) 04-298-6044
Fax: (64) 04-297-2474
182
Lake Moeraki Wilderness Lodge: Lake Moeraki is considered New
Zealand's foremost nature lodge. You can do your own thing - fish for
brown trout, canoe the gentle lake waters or walk through rain forest and
coastal tracks. The lodge and the activities offered by the owners are
environmentally friendly and culturally sustaining. They use renewable
energy and work with Environmental and Conservation organizations to
save the animals and plants that exist there. One can go on penguin and
seal tours, or even participate in rain forest study trips. For more
information, please contact:
Gerry McSweeney and Anne Saunders
Directors/Owners
Wilderness Lodge Lake Moeraki
Private Bag 772
Hokitika, New Zealand
Tel: (0064) 3-7500-881
Fax: (0064) 3-7500-882
Le Satapuala Beach Resort: This resort is a family-owned and managed
resort, run by high chief To'alepaialii (Toe), his wife Terry, and their three
children. With a choice of accommodation ranging from an entire beach
fale, a sleeping mat in a Samoan fale, a campsite, or actual homestay, Le
Satapuala allows its visitors to experience as much of the Samoan culture
as they would like. In addition to accommodation, the resort offers its
guests the chance to experience a traditional Samoan feast, live music, land
tours, ocean tours, diving expeditions, cultural experiences, handicrafts,
and fishing tours. For more information, please contact your hosts:
Terry and High Chief To'alepaialii (Toe)
G.P.O. Box 1539
Apia, Western Samoa
Tel: (0685) 42212
Fax: (0685) 42386
183
Manono Village Tours: This company offers a number of different tours
to meet the needs of their visitors. Day tours, weekend tours with
overnight stays in a Samoan family's house, and work study programs are
all offered. They can accommodate 10-20 people who are interested in
living with an ordinary Samoan family and want to experience the
hospitality that Samoan groups traditionally extend to each other as they
travel. For more information on this interactive program, please contact:
Ms. Fay Ala'Ilima
Manono Village Tours
P.O. Box 4228
Apia, Western Samoa
Fax: (685) 26905
Micro Tours: A young and enthusiastic man runs this business in
Pohnpei. He will custom tailor any type of tour to fit your preferences. He
arranges tours for sightseeing, picnicking, snorkeling, fishing, boat riding,
and land-touring. This business is family-run and the guides are friendly,
responsible, and dependable. They will explain local culture, legends, and
the story of Pohnpei to visitors. Please contact:
William Kostka
Manager
Micro Tours
P.O. Box 275
Pohnpei, FM 96941
Tel: (691) 320-2888, 320-5409, 320-3683
Fax: (691) 320-5528
184
Nan Madol Foundation: This Foundation is a non-profit organization
that was created to fund cultural, historical, protective, educational, and
research activities related to the archaeological site of Nan Madol located
in Pohnpei State, Federated States of Micronesia. It is the explicit purpose
of the Nan Madol Foundation to support projects desired by the citizens of
Pohnpei to benefit their understanding of their past. All activities of the
Foundation will be approved by state and local governments and traditional
leaders. For more information on the Foundation and its objectives, please
contact:
Carole Nervig
Executive Director
Nan Madol Foundation
HCR 2-13043
Keaau, HI 96749
Tel: (808) 966-8827
Fax: (808) 966-8827
Natural History Tours of New Zealand: At the time of their response,
this company had not actually conducted its first tour. They have received
funding from a government agency and are about to embark on this new
venture. This company will focus on giving visitors a cultural and
historical interpretations of sites that are visited. Please contact:
Mark Mitchell
Director
Natural History Tours of New Zealand
P.O. Box 9123
Hamilton, New Zealand
Tel: (0064) 7-838-3119
Fax: (0064) 7-839-3125
185
Neco Marine: If you are interested in diving in Palau, Neco Marine is the
place to go. Neco Marine offers diving, snorkeling, and fishing trips.
There is also a PADI training facility so you can learn to scuba dive while
you are there. While diving with Neco Marine, you will be able to see
spectacular marine life such as schooling sharks, barracudas, manta rays,
giant clams, soft corals, and lion fish. In addition, the hundreds of W.W.II
wrecks make diving an exciting adventure in Palau. Neco Marine can also
fulfill visitors' urges to go on mangrove swamp or hiking tours. Please
contact:
Mandy T. Etpison
Reservations/Purchasing Manager
Neco Marine Corp.
P.O. Box 129
Koror, Palau PW 96940
Tel: (680) 488-2206 or 488-2009
Fax: (680) 488-3014
Nett Cultural Center: Located in Pohnpei, the Nett Cultural Center
offers visitors an opportunity to experience life on this Micronesian island.
The cultural center also provides traditional music and dance experiences.
For more information, please contact:
Nett Cultural Center
P.O. Box 305
Kolonia, Pohnpei, FM 96941
Tel: (691) 320-3622
186
The Pathways Hotel: The Pathways Hotel is owned and operated by
Yapese who are trying to be environmentally sensible, and culturally
sensitive to the goal that their island values must be preserved. The
Pathways Hotel offers a carefully built local-style cottage in which guests
can leisurely examine the thatching, the coconut rope lashing, the log
supports and intricate patterns of reeds, bamboo and nipa leaves. There is
also a beautiful view as it is located on a hillside overlooking Chamorro
Bay. For more information, please contact:
Don Evans
Pathways Hotel
P.O. Box 718
Colonia, Yap, FM 96943
Tel: (691) 350-3310
Fax: (691) 350-2066
Pwudoi Sanctuary: Located a few miles past the FSM capital of Palikir,
visitors to Pohnpei have the chance to experience the beauty of mangrove
swamps. There is a raised walkway built entirely of mangrove wood which
winds through mangrove thickets teeming with a variety of plant and
animal life. Visitors will also see hollow trees which house colonies of
sheath-tailed bats, stone ruins similar to those at Nan Madol, and children
playing with freshwater eels. The boardwalk concept was chosen to
minimize disturbance of this fragile and pristine area which the Sanctuary
hopes to preserve in an ecologically sound manner. Please call:
Mr. Francisco Ionas
Box 774
Pohnpei, FM 96941
Tel: (691) 320-2211 or 320-5278
187
Royal Sunset Island Resort: Located on Atata island in the Kingdom of
Tonga, the Royal Sunset Island Resort offers accommodation in individual
fales (bungalows) on the beach. While interacting with Tongans from
Atata Island, visitors have a variety of activities to choose from including
scuba diving, sailing, sport fishing, diving, and shopping for handicrafts.
To relax at this isolated paradise, contact:
David and Terry Hunt
Pacific Islands Resort Ltd./Royal Sunset Island Resort
P.O. Box 960
Nuku'alofa, Kingdom of Tonga
Tel: (676) 21254
Fax: (676) 21254
Sufua Hotel Tourist Travel: This business provides visitors with the
chance to see and experience the Samoan way of life. Visitors will be able
to meet Samoans in their own surroundings and will be welcome to join the
family or village in their festivities. Special excursions are available in
which visitors can help save some villages from over-using the land in
agriculture or logging. A number of tours are also available that take
visitors to see fruit bats, beaches, cliffs, rain forests, fresh-water springs,
lava fields, and cave pools. Please contact:
Mrs. Moelagi Jackson
Proprietress
Sufua Hotel
Private Bag
Saleologa
Savaii, Western Samoa
Tel: (685) 51271
Fax: (685) 51272
188
Samoa Express, Limited: This company is in the process of establishing
an ecotourism hotel and handicraft center in Western Samoa. While they
were not operating at the time this questionnaire was sent out, they do plan
to open soon. The hotel plans to hire only local employees and is
determined to represent the Samoan culture in an appropriate way. For
more information, please contact:
George Hadley
Governing Director
Samoa Express, Limited
P.O. Box 9590
Apia, Western Samoa
Tel: (685) 24842
Fax: (685) 24842
The Savaiian Hotel: Roger and Ama Gidlow operate this hotel which has
six rooms and is located amongst culture and tradition on the unspoiled
island of Savaii, in the village of Lalomalava. In addition to the rooms,
Roger and Ama offer tours to historical sites on the island and can arrange
traditional music/dance experiences. Please contact:
Roger and Ama Gidlow
The Savaiian Hotel
Lalomalava, Faasaleleaga
Savaii, Western Samoa
Tel: (685) 51206 or 51296
Fax: (685) 51291
189
Sea Canoe Thailand Co., Ltd.: This company, located in Thailand, offers
a number of tours that allow the visitor to learn about the beauty of
Southern Thailand's coastal areas by paddling in a "sea canoe." Guides are
environment-conscious and knowledgeable about the areas to which they
take visitors. The founder of the company, Mr. John Gray, has participated
in a number of ecotourism workshops and conferences and has consistently
encouraged environmental development. To find out more, contact:
Mr. John Gray
Sea Canoe Thailand Co., Ltd.
367/3 Yaowaras Road
Phuket 83000
Thailand
Tel: (66) 76-213055
Fax: (66) 76-121172
South Seas Curios: A handicraft retailer in American Samoa has been
running South Seas Curios for a number of years. The operation sells
mainly baskets and wood carvings but has other handicrafts for sale as well.
For more information, please contact:
Lee Ruark, Manager
South Sea Curios
P.O. Box 3927
Pago Pago, AS 96799
Tel: (684) 633-1850
190
Southern Heritage Expeditions: This tour company is located in New
Zealand and is managed by Mr. Rodney Russ. Mr. Russ and his employees
provide visitors with natural history expeditions and cruises. Southern
Heritage Expeditions specializes in tours that educate the visitor about the
natural surroundings and the history of the places that are visited. Please
contact:
Mr. Rodney Russ
Southern Heritage Expeditions
P.O. Box 22,
Waitori, N. Canterbury, New Zealand
Tel: (0064) 3-314-4393
Fax: (0064) 3-314-4137
Tanna Beach Resort: The visitor to Vanuatu will be able to participate in
a number of activities through the Tanna Beach Resort. Hiking tours,
volcano tours, ocean tours, diving, cultural education, and exposure to
traditional music and dance are all options when you stay at this resort.
The huts are made out of local products, so that visitors are able to
experience the richness of the culture in Vanuatu. For more information,
please contact:
Mr. Jim McGeough
Managing Director
Tanna Beach Resort
P.O. Box 27
Tanna Island, Vanuatu
Tel: (678) 68610 or 25770
Fax: (678) 25792
191
Tiri Tours: Operating out of New Zealand, Frank Deacon takes visitors
on guided interpretation tours on both the land and the sea. Flora and
fauna are explained and discussed in the context of the sites. Mr. Deacon
and his employees are enthusiastic about their tours and work well together
with the local people. Please contact:
Frank Deacon
Director
Tiri Tours
P.O. Box 1265
Auckland, New Zealand
Tel: (64) 9-366-4049
Fax: (64) 9-846-5900
The Village: The Village is a world-renowned hotel about five miles
outside of Kolonia, Pohnpei. In 1991, Bob and Patti Arthur won the
prestigious Ecotourism Award presented by the Overseas Private
Investment Corporation. The Village consists of individual cottages made
out of local materials and constructed using timeless Pohnpeian carpentry
techniques. While the exterior looks like an island chief's house, the
interiors have elegant bathrooms, oversized beds, white-wicker furniture,
whirling wooden fans and attractive island-print fabrics. In addition to the
hotel, The Village has a superb restaurant, a bar, and offers hiking, diving,
ocean and fishing tours. Please contact:
Bob or Patti Arthur
Managers
The Village
Box 339
Pohnpei, FM 96941
Tel: (691) 320-2797
Fax: (691) 320-3797
192
Willis' Bed and Breakfast: In addition to affordable, relaxing
accommodations, Willis' Bed and Breakfast introduces guests to
traditional-style "umu" cooking. Guests are able to stay in comfortable
lodging and participate in fishing expeditions. For more information about
staying in this "down-to-earth" place, please contact:
Barry Willis
Willis' Bed and Breakfast
P.O. Box 5572
Pago Pago, AS 96799
Tel: (684) 633-4499
193
APPENDIX C
In the following pages you will find a number of business plan
forms to use for practice.
194
Customer Seeks:
Quality
Uniqueness
Lower Prices
Product Styles
Reliability
Delivery
Location
Information
Availability
Credit Card Option
Customer Advice
Accessories (phone/fax, etc.)
Knowledge
Polite Help
Culture
Environmentally Conscious
Others:
Competition Offers:
195
You Offer:
Capital Equipment List
Major Equipment:
Model:
Miscellaneous Minor Equipment:
Total:
Capital Equipment Total:
196
Cost or List Price
(whichever is
lower)
Sales Forecast: For (month, year) to (month, year)
Sales:
Low
Product/Service 1 __________
Most Likely
High
__________ _________
Product/Service 2 __________
__________
_________
Product/Service 3 __________
__________
_________
Product/Service 4 __________
__________
_________
Total Sales:
__________
_________
__________
197
Balance Sheet
CURRENT ASSETS:
Cash
Accounts Receivable (net)
Inventory
Pre-paid Expenses
Total Current Assets
FIXED ASSETS:
Building
Lighting Displays a
Stage Props and Costumes
Vans b
Total Fixed Assets
Less Accumulated Depreciation
Net Fixed Assets
Total Assets
Liabilities
CURRENT LIABILITIES
Accounts Payable c
Current Portion of Long-Term Debt
Total Current Liabilities
LONG-TERM LIABILITIES
Note Payable
Bank Loan Payable d
Total Long-Term Liabilities
Total Liabilities
Owner's Equity
Total Liabilities and Owner's
Equity
198
1
2
3
4
5
6
7
8
9
10
11
Monthly Projected Income Statement
Month 1
Month 2
Month 3
CATEGORY
Sales (List Categories)
Total Sales
(v)Cost of Supplies
(v)Variable Labor
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Cost of Goods Sold
29
30
31
32
33
34
(f)Miscellaneous
Total Operating Expenses
35
36
37
38
39
40
41
42
Total Other Expenses
Gross Margin
Operating Expenses
(f)Salaries and Wages
(v/f) Payroll Taxes and Benefits
(f)Rent
(f)Utilities
(f) Maintenance and Cleaning
(f)Office Supplies
(v/f)Automobiles and Trucks
(f)Insurance
(f)Legal and Accounting
(f)Advertising/Promotion
(f)Depreciation
(f)Telephone charges
Other Expenses
Interest (Mortgage)
Interest (Short-Term Loan)
Total Expenses
Net Profit (Loss) Pre-Tax
Taxes
Net Profit (Loss)
(v) = variable costs; (f) = fixed costs
199
Month 4
1
2
3
4
5
6
7
8
9
10
11
Quarterly Projected Income Statement
1st Qtr.
2nd Qtr.
3rd Qtr.
Category
Sales (List Categories)
Total Sales
(v)Cost of Supplies
(v)Variable Labor
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Cost of Goods Sold
29
30
31
32
33
34
(f)Miscellaneous
Total Operating Expenses
35
36
37
38
39
40
41
42
Total Other Expenses
Gross Margin
Operating Expenses
(f)Salaries and Wages
(v/f) Payroll Taxes and Benefits
(f)Rent
(f)Utilities
(f) Maintenance and Cleaning
(f)Office Supplies
(v/f)Automobiles and Trucks
(f)Insurance
(f)Legal and Accounting
(f)Advertising/Promotion
(f)Depreciation
(f)Telephone charges
Other Expenses
Interest (Mortgage)
Interest (Short-Term Loan)
Total Expenses
Net Profit (Loss) Pre-Tax
Taxes
Net Profit (Loss)
(v) = variable costs; (f) = fixed costs
200
4th Qtr
1
2
3
4
5
6
7
8
9
10
11
Yearly Projected Income Statement
Year 1
Year 2
Category
Sales (List Categories)
Total Sales
(v)Cost of Supplies
(v)Variable Labor
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Cost of Goods Sold
29
30
31
32
33
34
(f)Miscellaneous
Total Operating Expenses
35
36
37
38
39
40
41
42
Total Other Expenses
Gross Margin
Operating Expenses
(f)Salaries and Wages
(v/f) Payroll Taxes and Benefits
(f)Rent
(f)Utilities
(f) Maintenance and Cleaning
(f)Office Supplies
(v/f)Automobiles and Trucks
(f)Insurance
(f)Legal and Accounting
(f)Advertising/Promotion
(f)Depreciation
(f)Telephone charges
Other Expenses
Interest (Mortgage)
Interest (Short-Term Loan)
Total Expenses
Net Profit (Loss) Pre-Tax
Taxes
Net Profit (Loss)
(v) = variable costs; (f) = fixed costs
201
Year 3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Category
Monthly Cash Flow Projections
Month 1
Month 2
Month 3
Cash Receipts (List
Categories)
Total Cash Receipts
Cash Disbursements
Cost of Goods
(Supplies)
Variable Labor
Advertising
Insurance
Legal and Accounting
*Fixed Cash
Disbursements
Mortgage (rent)
Term Loan
Others(see notes)
Total Cash
Disbursements
Net Cash Flow
Cumulative Cash Flow
34
*Fixed Cash Disbursement (FCD)
Utilities
Salaries
Payroll Taxes and
Benefits
Automobiles and
Trucks
Office Supplies
Maintenance and
Cleaning
Telephone
35
36
37
Miscellaneous
Total: FCD/year
FCD/month
31
32
33
202
Month 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Category
Quarterly Cash Flow Projections
1st Qtr.
2nd Qtr.
Cash Receipts (List
Categories)
Total Cash Receipts
Cash Disbursements
Cost of Goods
(Supplies)
Variable Labor
Advertising
Insurance
Legal and Accounting
*Fixed Cash
Disbursements
Mortgage (rent)
Term Loan
Others(see notes)
Total Cash
Disbursements
Net Cash Flow
Cumulative Cash Flow
34
*Fixed Cash
Disbursement (FCD)
Utilities
Salaries
Payroll Taxes and
Benefits
Automobiles and Trucks
Office Supplies
Maintenance and
Cleaning
Telephone
35
36
37
Miscellaneous
Total: FCD/year
FCD/month
28
29
30
31
32
33
203
3rd Qtr.
4th Qtr.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Category
Yearly Cash Flow Projections
Year 1
Year 2
Cash Receipts (List
Categories)
Total Cash Receipts
Cash Disbursements
Cost of Goods
(Supplies)
Variable Labor
Advertising
Insurance
Legal and Accounting
*Fixed Cash
Disbursements
Mortgage (rent)
Term Loan
Others(see notes)
Total Cash
Disbursements
Net Cash Flow
Cumulative Cash Flow
34
*Fixed Cash
Disbursement (FCD)
Utilities
Salaries
Payroll Taxes and
Benefits
Automobiles and Trucks
Office Supplies
Maintenance and
Cleaning
Telephone
35
36
37
Miscellaneous
Total: FCD/year
FCD/month
28
29
30
31
32
33
204
Year 3