Starting any new business is an exciting, daunting, and sometimes all out terrifying prospect. Acquiring offices, developing a product, hiring employees, marketing the business—it can all get a little confusing to say the least.
If your new business is a travel agency, it can be even more convoluted. There isn’t a simple, tangible product to sell. You’re selling vacation packages, trips to exotic locales, you’re selling escape. With all the rigors that starting a new travel business entails, it’s easy for the minutiae of attending to the finances to fall by the wayside.
Proper accounting is essential to every business, and travel agencies are no exception. To ensure that your burgeoning travel business is on the right path, take these simple, proactive steps and consider investing in reliable, comprehensive, and affordable accounting software.
While this step seems like a no-brainer, it’s one that even the most practiced businessperson can neglect. According to financial experts writing for the Houston Chronicle, the most important aspects of accounting for your travel agency are your cash flow statement, general ledger, and income statement.
During the infancy of your travel agency, when you’re still establishing yourself, your cash flow statement will be your bible. It is a weekly or, more prudently, daily accounting of the cash you have on hand. With multiple transactions occurring daily, it’s easy to lose track of the monies you actually have available to you. So make sure to have it all written down—inputted—in your ledger or accounting software.
Similar in concept, but wholly different in practice, is the agency’s general ledger. This is a record of cash on hand, any transactions made, and the cost of running a business. The general ledger will give you some idea of your agency’s current financial position with regard to credits and debits.
You’ve done your due diligence, crossed every “T” and dotted every “I,” so how much money has your agency actually made? This information can be gleaned from your income statement, a thorough analysis of all incomes and expenses of your travel agency. In theory, once all the variables have been accounted for, you’re left with your profit.
Common Perils and Pitfalls
Navigating the world of small business is tricky, and even the most experienced and prudent of entrepreneurs can see their agency go up in smoke without the proper accounting practices in place. The trick to avoiding crashing and burning is to keep a weather eye on your financial horizon.
Stick to your budget! Your overhead and operations costs need to be kept current and up-to-date. If you know that it costs a certain amount each month to pay for your offices, pay your employees, advertise, etc. then you have a place to begin drawing up a budget. Each month the business should be bringing in enough money to pay its overhead costs and, ideally, enough to make a profit besides. Also make sure that your business is meeting its growth projections and expectations. If it isn’t, make a change.
Pay Uncle Sam! There’s no cheating the IRS out of their tax dollars. Make sure you file your taxes correctly and on time to avoid financial headaches. If you’ve recorded everything into your accounting software, this should be a breeze as all of your agency’s finances are up-to-date and in one easily accessible location.
All of these steps seem like common sense, and for the most part, they are. Just be sure to record everything as soon as you can, that way you can avoid the “I forgot” line that clients, creditors, and government agents hear so often. Also, if you haven’t done so already, consider investing in affordable accounting software. As good as you are at math, remember: computers are better.
This article was contributed on behalf of Blue Collar Software, your number one choice when looking for route scheduling software. Check out their website today and see how they can help you!