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Executive Summary执行摘要
Freestyle是一家位于中国辽宁省大连市的公司。这是一家高端的私人定制旅游公司，也就是说，公司的目标群体是那些愿意为旅游体验付出更高代价的高收入客户。除此之外，公司以家庭为导向，还擅长朋友、商务等精品旅游团的定制旅游体验。每个旅行者都有最好的私人定制服务。Freestyle是一家完全授权的公司，负责集团、休闲和公司旅行。客户满意是我们的首要任务。我们选择大连的原因是它是中国最好的旅游胜地之一。因此，我们对所提供的服务有很高的需求。该镇以其出色的时尚、对足球的热情和建筑的多样性而闻名。众所周知，这里有许多广场，使它看起来像巴黎。公司的理念是：专注于独特、深入、终极的个人定制旅游体验。我们拥有一支顶级的专业团队，确保您和您的家人在整个中国停留期间都能得到最好的服务。
FreeStyle is a company located in Dalian, Liaoning Province, China. It is a high-end private custom travel company.That means the target group of the company is focus on the high-income customers who are willing to pay the higher price on the travelling experience. Besides that, the company is family oriented and also good at friends, business and another boutique—style tour groups custom travel experience. Each traveler is given the best private customized services. FreeStyle is a fully licensed company that takes care of the group, leisure, and corporate travel. Clients satisfaction is our main priority. The reason why we chose Dalian is that it is one of the best tourist locations in China. Due to this, there is a high demand for the services that we offer. The town is famous for its excellent fashion, enthusiasm for football and the diversity in architecture. It is known to have many squares that make it resemble Paris. The company's philosophy is: focus on unique, in-depth, the ultimate personal custom travel experience. We have a top professional team that ensures that you and your family receive the best service throughout your entire stay in China.
我们选择了旅游业，因为它是一个平均每年增长2%的行业。此外，在这个行业中，冒险旅行也在增加。我们提供旅行指南，帮助您在度假期间计划活动。当您游览我们美丽的城市时，我们方便的导游将陪同您。提供的服务多种多样。有了这一点，我们的所有客户都将按照他们的规格来满足他们的要求。显赫的家庭不应该害怕寻求我们的服务，因为我们有豪华轿车和其他大型汽车为您提供。你在大连时不需要买新车。我们努力确保我们提供的车辆舒适安静。此外，我们还确保了车辆行驶良好，为人们和他们的行李提供了很大的空间（商业规划）。除了公路运输外，我们还提供水运。有摩托艇和游艇，你可以租用，以防你想下水。船上食物和饮料都很充足。你不必担心驾驶，因为游艇是和他们的司机一起来的。
We chose the tourism sector since it is a growing industry at an average of 2% per year. Also, in this industry adventure travel is on the rise. We provide a travel guide that will help you plan your activities while you are on your vacation. Our handy tour guides will accompany you as you tour around our beautiful city. The services provided are diverse. With this, all our customers will be catered for by their specifications. Prominent families should not fear to seek our services since we have limousines and other big cars to provide for you. There is no need to buy a new car while you are in Dalian. We have put much effort into ensuring that the vehicles we provide are comfortable and quiet. Also, we have ensured that the vehicles ride well and have much space for people and their luggage(Business Planning). Apart from road transport, we also offer water transport. There are motorboats and yachts which you can hire in case you want to go into the water. The boats are well stocked with both food and drinks. You do not have to worry about the driving since the yachts come with their drivers.
Freestyle为客户提供完整的旅行相关服务，包括活动管理服务。我们提供的服务水平将超过客户的期望，因为我们使每一个活动都非常精彩和难忘。我们的顶级专业团队经过培训，以确保他们了解客户的需求和需求，并与他们合作，为他们的假期制定最佳时间表。所有导游都很熟悉大连的旅游景点。除了提供交通，免费的风格，也为客户提供住宿。我们有一个在线网站，允许我们的客户提前预订我们的服务。他们甚至可以提前几个月预订。此外，该网站将使他们能够查询任何他们不清楚的事情。
。FreeStyle provides its clients with complete travel-related services including events management services. The level of services we provide will exceed our client's expectations as we make each event fantastic and memorable. Our top professional team is trained to ensure that they understand the client's wants and need and work with them to come up with the best schedule for their vacation. All the tour guides are well acquainted with the tourist attraction sites in Dalian. Apart from providing transportation, Free Style, also offers accommodation for its clients. We have an online site which allows our clients to book our services in advance. They can even book months before they visit. Also, the site will enable them to inquire about anything that is unclear to them.
Our target audience is both the international and local tourist. Before starting the company, we will consider both the external and internal factors that may affect it. The external factors entail the income levels of the residents in Dalian and how often they travel. The internal factors are mainly cost related. Here we focus on the site of the company, the cost of recruiting and training employees, the market dissemination and inspection of the re-route. Another critical part is the sources of funds. FreeStyle has only three significant shareholders. We also considered partner investment where people could buy shares from the company (Cady). The shareholders will make all the decisions. It will ensure that there is faster decision making and that the decisions made are in support of the company's primary goal.
Before allowing a new partner to invest, we ensured that we offered enough information about the prospects of future success. The philosophy of the company has to be well understood by anyone who desires to be a partner in our company. Also, to ensure we raise enough funds, we will persuade more people to invest. We will also build more capital from bank loans. Due to the credit rating and local policy benefit, the company would like to borrow the sufficient money with a lower interest rate, so that the company would like to gain the sufficient cash flow. Half of the funds for our capital will be from private investors while the rest will be from the business loans. The fact that our company will be a limited liability corporation means that all the shareholders will be shielded from personal liability.
We think that the company is going to succeed because Dalian provides a good market for the services. The tourists will visit throughout the year, and as a result, there is no time in the year when we will experience a shortage of customers. The fact that we are family oriented will attract more customers as many people prefer traveling with the people they love Family is as a group, the father would like to pay more money for their children and wife because they are willing to have a private and warm travelling.When they come in groups, it means they will pay more which in turn will increase our profits. After analyzing, the other travel companies in Dalian, we have come up with favorable prices that will cater to all clients. The costs will be on the low end of the market (Gevurtz and Gevurtz). It will, in turn, increase our clientele. By the end of the year, our profits will have increased substantially.
In the next few years, the owners plan to open up new branches in several parts of Dalian. They will develop approximately five more travel agencies under the Limited Liability Corporation. This business plan only outlines the first plans that will be used to come up with more concrete goals. Hopefully, our company will be built three months after financing it. We also hope that by this time we will be in business. We plan to take advantage of our experienced team, excellent location and effective management and marketing to ensure that we boost our sales.
Visions
FreeStyle will establish itself primarily as a travel agency in Dalian. We will adhere to our strong principles even as we anticipate growth in several other outlets. Here are some of the principles that will guide our decision making:
1. We will our employees with a favorable working environment and treat with dignity and respect.
2. As we carry out this business, we consider diversity as an essential part of it. We will accept clients from every part of the globe.
3. High standards of excellence will be implemented in our service production.
4. We will ensure that our clients enjoy working with us. We aim to build a lasting relationship with all of them.
5. We aim to influence the community of Dalian positively. It also applies to other cities.
6. #p#分页标题#e#In every decision we make, we have to ensure that it improves our profitability since it is vital to our future success.
7. The business will put much effort into ensuring that we balance relaxation and excitement to both families and couples. It will be done by offering optional activities that will suit both individuals and groups.
Objectives
FreeStyle Company will run its business with a travel agency in a certain location Within first two years, FreeStyle will follow the following goals:
1. Become the leading travel agency in Dalian.
2. Open the company for business three months after financing.
3. Increase the company's annual sales between 4 and 8%
4. Ensure that we set up a Limited Liability Corporation that will reduce investor and personal liability.
5. Attain a positive net profit within the first quarter.
6. Double the number of clients by the end of the first year.
7. From the total sales, 15% should be from the internet.
8. Create strategic alliances with other travel agencies in Dalian, the whole of China and around the world.
9. Market our services via personal interactions, regional marketing, and the media.
10. Reach a 60% retention rate of customers between the second and the third year.
11. Saving travel tips for customer's design time.
12. Achieve quality first, air tickets, hotels, scenic spots, food, and guide the choice to satisfy each customer. Most intimate itinerary to be customized for each customer.
Keys to Success
1. Encourage the visitors to try out the local culture and experience its uniqueness.
2. Make the prices open and transparent to give the customers a chance to pick the most favorable one for them.
3. Offer 24/7 customer service.
4. Ensure that the travels are as secure as possible.
5. Visit all the destinations to check if they are suitable for our target clientele.
6. Ensure that all the several suppliers have undergone strict screening.
Operations
FreeStyle will be located near the beach. We will have an array of occurs ranging from small cars to huge ones to cater for both individuals, small and large families. We will also a team of qualified professional to help in the running of our business. The experts who are seemed as trainer, will undergo training for approximately two months before they start working. In preparation, they will be taught how to interact with the customers. They will also be given a tour around the city to ensure that they are familiar with all the famous tourist sites. To ensure that agency-customer communication is fast and efficient we will use Computerized Reservations Systems. In addition, the opening hours are 9:00am to 8pm seven days. The location is in the central city of the Dalian. There are 6 employees in the company, 1 is the manager who is responsible for the decision making, the other 5 are staff,
Since we need an online platform, we will create a website, Instagram page and also a Facebook page. To ensure that the platforms are in check, we will employ web designers who will continuously update the content. We will be using our social media pages such as facebook and newspaper such as Dalian Evening to advertise our services and special deals that may come along. We will partner up with the best hotels in the city which will offer our clients accommodation throughout their vacation. We will also help our customers get accommodation at discounted prices in these hotels. For international visitors, we will ensure that we book their air tickets in time for when they need to travel back.
Marketing
FreeStyle will make use of several forms of communication for their marketing strategy. Their internet website will be given much attention. The internet will provide much information to offer Free Style's demographics. Even though our company already has a website, we are aware that the site requires resources to develop and maintain it. It also needs to be regularly improved. The testing of the website will continuously be done to ensure that it ranks at the top of search engine results. Communication can also be done through magazine advertisements (Grewal and Levy). The advertisement will only be done in those magazines that have the same demographics as the company. In this way, we will be able to increase the visibility of our company and rank it as the best service provider for travels.
The travel agency market has become quite competitive over the years. The technology especially the internet and Computerized Reservation Systems have improved the operation of travel agencies. With the internet, agencies and clients can conduct their research about travel. Some brokers are using the internet to offer clients tickets at discounted rates. As a result, the price competition has gone up. Agencies are carrying out their transactions with customers faster and more efficiently thanks to the Computerized Reservation Systems. Start-up costs for travel agencies have gone up since these systems are quite costly. Increased deregulation is one of the most common trends in the industry. With this, the need for differentiation has risen. Several publications rate the performance of different travel agencies. Customers often use this statistic to choose the agency they will use while they are on vacation.
In many occasions, the prices for travel related services have reduced. Other trends include a decrease in the profit margins and a rise in the people interested in adventure travels. The travel industry consists of consolidators on the internet, small home-based businesses, and large national chains. An estimation of the number of people who participate in this market can be gotten from an analysis of the total number of members in the travel-related association. FreeStyle has been analyzing the market to look for any opportunities that may potentially increase their future sales. To keep track of the quality of the services we are offering, we will use trade shows, travel industry publications and any other information concerning this industry. Our company will provide customized travel services which will include high-end personalized travel services. It will make efforts to get rid of adverse experiences of traditional tourism such as disrespectful tour guides, compulsory shopping and temporary cancellation of some of the itineraries.
Despite having several competitors, FreeStyle will offer a superb combination of price, scope and local focus. Our company will ensure that it maintains a competitive pricing policy. The pricing will be based on the current market conditions. However, we expect that by the time we are the leading travel agency in the area we will set premium prices. For this company to be well-known globally, we will conduct an aggressive marketing campaign. In our first year of operation, we will sponsor and organize several public events. For instance, we will hold several football matches for the youth and children of Dalian. We expect that this will improve our image and thus boost our sales. We have already had several negotiations with the local football clubs. So far they are willing to participate in our events. We will utilize the domestic radio situations to inform the residents of the city about our company and the events it is organizing for the people. FreeStyle is planning to put sales personnel in different locations in Dalian. The staff will be stationed in places like shopping malls, parks, and workplaces. They will also issue brochures to people along the roads and in buses while they are traveling. With this, our company aims at creating a personal familiarity with its community.
With time, we will be able to create a loyal customer base which will enable us to use email newsletters and direct emails to customers who are included in our mailing list. The newsletters will allow us to pass information to these selected groups about our exclusive deals and other trips. The main reason for this is to incentivize the previous customers to have another journey with us. We will be giving out special offers to our loyal customers. As our operation continues, we will measure our progress in comparison to that of our competitors and the market. Even though we have already defined our target market, we are still open for additional segments.
With time, FreeStyle will be able to decide whether or not there should be adjustments in positioning. Also, we will make sure that we can access all the information concerning our market and our competitors. However, we will end up incurring some additional expenses on this project. Another essential marketing strategy is to form long-term relationships with our clients with the membership relationship which is related to the addition service for the different level membership such as gold, silver and others . We will have a database that will contain all the essential demographic and psychographic information. As the business continues to grow, we will come up with new plans to expand. FreeStyle can accommodate any number of trips at the same time. The trips will take place in any part of Dalian City. Our goal is to establish Free Style as an international travel agency.#p#分页标题#e#
The most important marketing strategy is to create awareness of the services we provide. After that, we form a customer base and put some efforts in building customer loyalty and referrals. Rather than competing on the prices, our competition will be based on the services provided. We will ensure that our pricing is reasonably proportional to our services. We will do everything possible to ensure that the customer is happy even if it will be at the expense of short-term profits. In the long run, this type of investment will be fruitful as we will be having a vast number of loyal customers.
When developing our marketing plan, we held some focus groups to gather information on the customers' needs and desires. From this information, we were able to make useful decisions concerning our target consumers. We will be giving our clients a chance to praise or criticize our services. In this way, we will be able to know our weak points and improve on them. They can either do it by filling the forms that we give them at the end of their trip or by writing a review on our website. Finally, we will be keen to note any business model changes that our competitors will implement.
Customer and Competitor analysis and pricing
Customer Analysis
The psychographics and demographics of FreeStyle Travel Company cut' across people from all works of life. This includes; Families, business, friends, and other boutique-style tour groups. For those who naturally need the services of this company, there is no boundary or distinction to it. Unlike other traveling companies and agencies, which usually concentrate on high-earning clients and corporate clients, Free Style Traveling company serves any customer who can afford to travel from one country to another and within the boundaries of China. This company will mostly be focusing on those foreign tourists who are seeking excursions and leisure travels in China and more importantly the tourist attractions which are found in Dalian. The impression that Dalian gives first-time tourists the beautiful lawns, fountains, squares and gardens. A part of those attractions, the tourists, are also welcomed to see and appreciate the numerous attractions which are found in the country. Although Free Style Company realizes that the majority of its tourists come from South America, the company will target those tourists who are Africa and Europe. Often these tourists lack adequate and transport knowledge about China. The company shall hence target those tourists who want to see as many sites as possible and are not mobile. The company is a reliable source; it will escort tourists around the country and help them minimize wastage of money through vehicles to move them around by themselves (Tomczyk et al. 3652-3658).
Research which was carried out in China shows that traveling industry is growing at a rapid state. The main reason for this growth is because of the devaluation of other countries currency, a healthy domestic economy and improved infrastructure which is an excellent boost to the country. Statistics which was carried out in 2017 showed that leisure travel had increased by 3.2% and it is predicted to increase by 1.2% in the next year. The healthy economy in China has led to an increase in business which in return has helped cod the traveling business. Many customers who are from within and from abroad are usually unsure of the location of their destination, but our company has a vast knowledge of the various destinations within the country. Because many customers look for traveling companies which will maximize their satisfaction and ensure that the money is spent as required, Free Style Company is there to provide them with that satisfaction which they require. Tour and travel industries are a continuous state of growth. Because of that, ideas and business strategies are also evolving as days' pass. In the few traveling§ and touring agencies in China, it was found out that males are the ones who dominate in the touring services which were rendered. Statistic showed that 57% of the travelers were males while 43% were female. The difference in these percentages is because of the hard adventure which is offered by many traveling agencies. The other adventure which will also be offered by our company is the soft adventure which is much loved by the female. Thirty-six years is the average age of an adventure traveler in China. Comparing it to non-adventure travelers whose average years is forty-one years old, this shows that the number of travelers who are single is higher compared to those who are married. Most of the tourists and travelers are usually very educated, and it was estimated that their annual salary is $45,800 per annum. In the adventures list, most of the travelers like to travel to areas of natural beauty where they can relax and push their selves to the limits.
Competitor Analysis
Presently, in this line of business, few competitors are offering similar services like ours. Considering the current growth rate and the change of pace in the tourism industry, many companies are being lured into this sector. To avoid the company to be short-lived, the company will firmly be established on the market and strongly be differentiated from another genre of businesses. Most of the company’s competitors are hotels and travel agencies which offer traveling excursions to their customers. Most of the travel agencies and hotels help travelers book their hotel accommodations, rent or reserve a car or a taxi cab and also book a flight before the departure of his journey through the internet and just from the comfort of his or her own home. Being aware of the level of competition in the tours and traveling agency, we will ensure that we deliver timely and consistent quality service. Secondly, our customers will be able to experience remarkable improvement and difference in the way our services are being provided. We will ensure that the tourists, travelers, and our service providers expectations are met to the fullest. To minimize the competition between our competitors and us, in the form of a strategic alliance, we will create and establish a conducive and good working relationship between us. By this, our company will offer services to their clients, and this will enable them to effectively and conveniently undertake their main activities hence ensure that their customers are satisfied to their fullest. When this gap is bridged, due to the excellent working relationship which we created, the customers will be inclined towards our services. Lastly, under competitor analysis, the owners and management staffs of this company are referred to as gurus. These people are licensed, core professionals and very highly qualified tours and travel experts in China. This kind of people makes us count it as a competitive advantage to us (Sun, 125-141).
By the end of 2017, Dalian had 365 travel agencies in the whole city. In addition to relevant agencies and offices, the scale of the travel agency industry has been unprecedentedly developed. Of these, only 30 travel agencies are international travel agencies, and the remaining 80% are medium and small travel agencies. Their operation efficiency is relatively low, they have no brand awareness and are at a disadvantage in the competition. Such situation poses a severe test for the survival and development of medium and small travel agencies.
Pricing strategy
FreeStyle traveling Company will make its money through commission they get by offering services such as securing transit visas, booking flight tickets, booking for taxi cabs or shuttle buses, hotel bookings, car rentals and cruise line booking among many others. Apart from those sources of income, the company will generate incomes from selling of covers, related insurance policy, the sale of tour guide books and sale of foreign currencies. For our all of our clients, the fees will be below the average market rate. This will be enhanced through the collection of payment in advance and the overhead as low as possible. To nonprofit organizations, start-ups, small social enterprises, and cooperatives, a special discount will be offered to them. Clients who will need regular access to tours and travel consultancy, assistance and advisory services, they will be offered a flat rate service.
A markup pricing strategy will be used for the company to ensure profits are realized at the end of the sale of products and services. The costs that have been associated with setting up the business have been given an upper hand since the primary purpose of setting the business will be to make profits. Care will be taken to ensure that the pricing strategy is one that ensures the company is not loaded down with the administration and associated costs. An online booking system will, therefore, be implemented from the onset. At this technology paced age, there is an urgency which comes from following in the footsteps of the people who laid down the foundation for the business (Nagle et al.)
Since the business relies heavily on seasons, it is crucial that the different times and seasons be prioritized when setting up the pricing formula. Prices will be up depending on the times of the year and the demand that has been set by the market. Typically this will be experienced once every year. Last minute pricing will be used to some extent. The strategy will be used to fill the inventory gaps that may exist due to previous transactions. It will be applying discounts to daily prices depending on the prevailing rates in the market.
Level of Analysis
SWOT Analysis
In this rapidly growing economy, we are planning on entering a very lucrative market. We project our strengths by providing custom designed travel excursions to our customers and to respond to what the market dictates. The company's personnel will have a thorough and comprehensive knowledge of the areas we intend to take the tourists. Building a business which stands out at this age and time requires extensive planning and thoughtfulness which becomes vital as the business grows with time. It assists in many aspects of the business like establishing the goals and defining strategies which make the vision to appear brighter with each passing day. Business analyses help the business to stand out from those other businesses which have been in the industry for a while. This will enable us to penetrate the market and overcome the milestone. Below are the summaries of the strengths, weakness, opportunity, and threats (Boonyarat, Crowder, and Wills).#p#分页标题#e#
Strengths
Our main strength lays in power which our team has. The team are well equipped and trained so that they can pay attention to the details which they are given, and the team goes a long way in ensuring the customer feels satisfied and gets the value of their money. We will engage with the member of staffs to ensure that long-term plans and business strategies are jointly developed hence enable us to retain the company's objectives. Through our diversified client base, we will reduce our dependency on only one product. FreeStyle Company will undertake extensive marketing and advertising hence promoting its name as well as product and service awareness. Through focused and aggressive marketing campaign with clear strategies and goals, this is what will enable us to stay longer in the market.
Weaknesses
Being new to this industry, this makes us lack a reputation in comparison to our competitor. The personnel and staff members are all new and not familiar with each other because they have not worked anywhere previously together. To the organization, this is an enormous challenge, but I know with time we will overcome it. Additionally, the business may lack a better branding and better reputation like the rest of the businesses. This weakness, in turn, leads to many cases of low customer turn out because the business has not established its operations in the specific region or locality. The customers may prefer the already established brands in the market thus limit the expansion process of the new business. It may take time for the business to establish itself in the industry fully and reach the par set up by the counterparts in the industry. Other companies with a better reputation may, therefore, have a considerable market share which in turn determines the total income for the business.
Opportunities
Considering the number of families, individuals and corporate individuals who travel on a daily basis within China and the other parts of the world, this shows that the opportunities in the tours and travel are very many and massive. Secondly, there is a drive by the government which encourages young entrepreneurs to venture into the tourism industry. To us, this is an opportunity which we will fully utilize. Currently, there is an increase in growth rate in tourism this is through the current marketing campaign which is done by the regional tourism body and the government. Lastly, in this present times, there isn’t any reliable public transportation company which can take travelers to their area of interest and the international tourism indicates that this generation, travelers usually want an enriching experience which provides all things under one roof.
Additionally, the misfortune that may befall the competitors who fail to perform well in the industry provides the company with an opportunity to better its service delivery in the business while keeping an eye on the future without in any way hampering the quality of services provided by the business. At this age and time, there may be technological developments.
Threats
Due to the growth of the tourism sector, this has led to an increase in the number of companies which have entered the market. Because of this factors, competition has increased through a variety of sources which include; The hotels, travel agencies and lodges may establish vertically integrated transport systems and development of new lines so that they can provide additional services to its customers, some companies will establish new tactics and new marketing structures and which will provide traveling excursions which is similar to our and lastly, the existing competition.
The originality of idea and feasibility of the proposal
FreeStyle is a high-end private custom travel company which is in Dalian, Liaoning Province, China. In these present times, many families, company employees, and corporate owners have the desire to conquer and explore new places. For many reasons, many people are on the move from one place to another. Due to those reasons, the idea of FreeStyle traveling company was formed. The desire is to enable tourists and travelers to move and conquer new continents and to retain the thirst for the unknown. The company wants its customers to enjoy new places, to travel and broaden the view of the world, enjoy new places and experience the new cultures of the residents of China. Because of this passion for tourism, travel and expose, we decided to bestow that responsibility to ourselves.
As we earlier said, Free Style Company will provide travelers and individuals to corporate client, families, friends and leisure group travelers. The services and products which will be provided for by FreeStyle travel company will include tours, travel consultations, pre-arranged tours, reservation for lodging, custom packages, cargo passage and rental cars. The company wants to differentiate itself as the premier and adventure travel Company in the whole of China.
FreeStyle is a full-time service provider which also sells travel company services and goods. These services include Travel packages and airfare. The value added to FreeStyle Travel Company is that it will offer expertise and knowledge, specialty focus, competitive rates on adventure travels. This will in return ensure that customers experience maximum customer satisfaction. The companies travel adventure divided into two; those adventures are soft adventures and hard adventures. Both these adventures involve athletic and active activities. Like the name suggests, hard adventures are those activities which involve risks while soft adventures are those activities which are less demanding but only require competence. Economic research shows that traveling companies require these adventures so that they can remain viable in these hard economic times. In the tourism market industry, Free Style Company will be a niche higher in providing high-quality adventure travel market and be a full-service provider. The company will deal with top-notch professionals who are who have an accomplished background to enable us to realize our goals.
We have made brochures for rental car companies, travel locations, and entertainment. The brochures can be found in supermarkets, and the service provides which we directly interact with. The brochures for the FreeStyle company are made by Dalian Local Graphics which is found in Dalian town. When they are ready, upon request, they will be delivered to potential customers. In those brochures, one will find additional literature such as print ads, direct mail, and sales promotion materials that will be utilized as much as possible. Through the internet, we have a created a database which will maintain all the customer's contact and information such as phone numbers, email addresses, and postal addresses. The management soft would also contain the database to maintain the information of the clients.
Due to the competitive market, technology and more importantly the internet and the computerized reservation systems have in a significant way changed the way travel agencies are operating. The internet services enable customers to know more about an individual product and also enable them to buy the services and products via it. Some brokers are logged on the internet who call themselves discount air-fare brokers. They take advantage of the internet and offer tickets to customers at a lower price. Because of this factor, there has been an increase in price competition. Formation and implementation of Computerized Reservation Systems which we will adopt so that we can remain at par with the prevailing market trends will be used extensively. This will enable us to increase efficiency and speed of the company and customer transaction.
After successful years of business operations, Free Style Traveling Company will open other travel companies and agencies at different locations within China and beyond borders to open market for many more tourists, customers, and travelers. Through customer's satisfaction and research which we will conduct after that, we will identify potential opportunities so that we can increase our future sales. Our principal and the long-term goal is to identify ourselves as an internationally recognized traveling company world over.
Note 1: The sales figure for year 1 is$260,000 as stated in the financial feasibility part 1 for Free Style. In year two the sales increased by $40,000. In year three the sales increased by $80,700 because of the increased customer's loyalty and returned customers.
Note 2: the Opening stock is $12, 000 and this is the holding policy which FreeStyle Company wishes to maintain in the three years.
Note 3: The Purchases of $90,000has been worked out taking 34.6% of the yearly sales figure of $260,000. In the year 2, purchases of $94,000 have been worked out by taking 31.3% of the yearly sales figure of $300,000. In the year 3, purchases of $96,000 have been worked out by taking 24.8% of the yearly sales figure of $96,000. There is a decrease of 10% ( 34.6% down to 24.8%) due to slightly increase in purchases and a significant increase in sales in these three years.
Note 4: Like the first stock, the Closing stock was maintained at $12,000 in the three years.
Note 5: The cost of goods sold has been worked out by adding the opening stock, purchases and deducting closing stock.
Note 6: The Gross profit for year one has worked out at $170,000 by taking the total cost of goods sold from the sales figure. In the year two it works out at $206,000 and year three it is $284,000.
Note 7: As outlined in the expenses, Wages and salary in year 1 were $90,000 and in year 2 and 3 is increased by $3,000 and $4,000 respectively. Utility expenses increased by $500 over the three years. The Rent has increased from $12,000 to $14,000 from year 1 to year 3. Maintenance & Repair has a steady increase from year 1 $3,000 to year 3 $3,200. Legal costs have cleared as there will no need for legal administration in Year 2. The Advertising costs from year 1 $4,000 to year 3 $3,000.#p#分页标题#e#
Note 8: Depreciation for Motor vehicle & equipment is at 10% on reducing the balance. The Motor Vehicles and Equipment and Furniture & Fixtures will all be depreciated. The total fixed assets figure of $306,000, so the depreciation for year 1 is $30,600, the total fixed assets figure of $275,400, the depreciation for year 2 is $27,540. The figure of $247,860, the depreciation for year 3 is $24,786.
Note 9: The total overheads are the sum of all expenses(Note 7) plus depreciation of non-current assets is $155,900 in year 1. In the year 2, the total overheads are made up all expenses (Note 7), and depreciation is $156,240. The year 3 of the total overheads are made up all expenses (Note 7) plus depreciation is $158,486.
Note 10: The net profit for year one has been worked out by taking the total overheads figure of $155,900 from gross profit of $170,000 to get $14,100. The net profit for year two has been worked out by taking the total overheads figure of $156,240 from gross profit of $206,000 to get $49,760. The net profit for year three has been worked out by taking the total overheads figure of $158,486 from gross profit of $284,000 to get $125,514.
A seen in the profit and loss account, the first year of operation has unusually high operating costs as compared to the other years. Generally, a new system costs a lot of money and investment. Quality of the whole process begins with the way the whole company was designed. FreeStyle Company invested heavily in quality in the first year. Since it was a new company, it invested in the advertisement to be relevant in the industry which was previously unexplored in the way Free Style was exploring. As seen in the account above, the loan interest, legal and advertising costs were relatively high. The estimated cost of the supplies was very high in the first year due to a high number of resources that are miscellaneous and monetized costs. The installation costs were very high during the first year considering that issues emerged that required specific hardware needs. The company was quick to respond in a way that it had state of the art facilities in place to cater for future needs. Legal fees accounted for a more significant percentage of the operations costs during the first year of operation. Other institutions were involved in the project, and each agreement between the two incurred considerable costs.
On the legal aspects, the organization is a company. It is a private limited company. As a result, it is a unique entity that is separate and apart from those who own it. It enjoys the rights of people like the right to sue and be sued. It also pays taxes just like the way healthy people do. In case the company wants to merge or join into contracts, there are well laid out procedures of doing the same in a court of law. Owners of the company are shareholders who have invested their shares in the company. The shareholders have their rights. One of the rights that the shareholders enjoy at FreeStyle Company is that they elect a board of directors. The board of directors is responsible for overseeing the daily activities of a firm.
Regarding the liability of the owners, it is limited by the fact that they are not liable to the corporation's debts in case of dilution. The company raises funds by selling stocks since it is a limited liability company. Records are kept strictly by the secretary. One of the most important documents of the company is the articles of association which are filed in the state.
Monthly Cash Budgets
Cash budgets reflect the inflow compared to the outflow of expenses resulting from operating, investment and financing activities during a specific period.
Note 1: The sales figure for year 1 is $260,000 as stated in the financial feasibility part 1 for Free Style. The sales figures from January to December vary because many people tend to go on holidays in December and mid-year.
Note 2: Free Style Company begins its trading with $21,000 on the first date.
Note 3: The total income figure for year 1 is $272,000. This was got by adding the monthly sales figures to $21,000.
Note 4 The expenditure for the FreeStyle company as stated in the feasibility study. The figures vary evenly across all months.
Note 5: Depreciation of the non-current assets for year 1 is $30,600. It is evenly distributed in across the twelve months, so for every month, it spends $2,550.
Note 6: Three owners have decided to pay themselves a profit of $1,000 in year 1, and it is to be distributed in the December bonus.
Note 7: Total expenses are gotten by adding the figures explained in Note 4 and Note 6.
Note 8: The cash balancing figure is calculated by adding a previous cash balance with the total income less total expense. At the end of Year 1, we end up with an overall cash surplus of $115,100
Note 9: The cash balancing figure is calculated by adding a previous cash balance with the company's total income less total expenses.
Note 10: The sales figure for year two is $300,000 as stated in the financial feasibility part 1for the Freestyle company. The sales figures per month are varied slightly due to the summer holiday is busier than the other time.
Note 11: $115,100 is cash balance brought forward into Year 2 from Year 1.
Note 12: The total income figure for Year 2 is $415,100 which was got by adding the monthly sales figures with the $115,100 put at the very first of this year.
Note 13: The expenditure for the FreeStyle company as stated in the feasibility study. The figures vary evenly across all months.
Note 14: The Depreciation of the non-current assets for Year 2 works out at $27,540 this year. Which evenly spread across the 12 months at $2,295
Note 15: Three owners have decided to pay themselves a profit of $2,000 in year 2, and it is to be distributed in the December bonus.
Note 16: the Total expense is got by adding the Notes 13-15.
Note 17: The cash surplus/deficit figures are worked out by taking total expense from total income, at the end of Year 2, and we end up with an overall cash surplus of $255,860.
Note 18: The cash balancing figure is calculated by adding a previous cash balance with the company's total income less total expenses.
Note 19: The sales figure for year two is $380,700 as stated in the financial feasibility part 1for the Freestyle company. The sales figures per month are varied slightly due to the increased of new and returned customers.
Note 20: $256,860 is cash balance brought forward into Year 3 from Year 2.
Note 21: The total income figure for Year 3 is $637,560 which was got by adding the monthly sales figures with the $256,860 put at the very first of this year.
Note 22: The expenditure for the FreeStyle company as stated in the feasibility study. The figures vary evenly across all months.
Note 23: The Depreciation of the non-current assets for Year 2 works out at $24,786 this year. Which evenly spread across the 12 months at $2,065.5
Note 25: the Total expense is got by adding the Notes 22-24.
Note 26: The cash surplus/deficit figures are worked out by taking total expense from total income, at the end of Year 3, and we end up with an overall cash surplus of $475,574.
Note 27: The cash balancing figure is calculated by adding a previous cash balance with the company's total income less total expenses.
Justification of the Revenue
There has been a consistent increase in the revenue for the company over the three year period. During the initial stages of development, the company gained significantly through its investment plans by using the right mix of revenues and blending them with operational efficiencies which ultimately guaranteed success. As stated earlier the company invested heavily in marketing. The company viewed marketing as the key to revenue growth. This explains why revenue was considerably high during the first year. Intelligent and intensive market campaigns were used to increase revenues. As time progressed, the company started a process of evaluation of the capacity of customer service as a variable for revenue growth. Since the company is more of a service company, most of the strategies that were in place ensured that customer service was top-notch. This element was viewed in its entirety as a cost center. According to the management, it was merely a cost of doing the right mix of business.
Balance Sheet
Below is the balance sheet for FreeStyle Company in its First year of operation.
Opening Statement of Financial Position For FreeStyle Company
Non-Current Assets $
Motor Vehicles and Equipment 210,000
Furniture & Fixtures 96,000
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306,000
Current Assets
Closing Stock 12,000
Cash $ 36,000
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48,000
Total Assets 310,800
Capital :
A 140,000
B 140,000
Loans 20,800
Total Capital 310,800
Note 1: The first assets total for Year 1was $306,000, this was then depreciated by 10% subsequently throughout the years, ending in Years 3 with fixed assets at $245,382.
Note 2: The stock figure of $12,000 remains constant as the owners of The Freestyle Company agreed on a stock holding policy of $12,000 across the three years.
Note 3: The bank figures quoted here come from the cash budgets. For Year 1 the closing cash balance in December is $115,100, and so this is the figure we here in the bank as of the last day of the year in Year 1. Subsequently, the figures are $256,860 in Year 2 and $478,834 in Year 3.
Note 4: The total assets shows that worked out by adding up the fixed and current assets.
Note 5: The capital input by the owners is $140,000 each. Thus, the total is $280,000.
Note 6: The P&L figure across the three years comes from adding the net profit of each year.
Note 7: This is the payment the owners of Freestyle Company have decided to take which has been distributed accordingly to change in sales figures for the years in the cash budgets. The overall figures have been paid at the end of the year.
Note 8: In the Year 1, Freestyle Company does not pay back any of them, so the full amount of $40,800 is on the balance sheet. In the Year 2, a payment of $20,400 is made, and so there is $20,400 remaining to pay as of the end of Year 2. In Year 3, the loan is paid in full, and so a balance sheet of $0 remains as of the end of Year 3.
Note 9: Cash purchases only for the Freestyle Company, so no figures for creditors.
Note 10: Total liabilities for The Freestyle Company’s situation is calculated by adding up capital, P&L reserves and the loan, which Year 1 is $402,500.
Ratio Analysis
The relative strengths and weaknesses of firms can be analyzed using ratio analysis. It is a tool that performs quantitative analysis on the numbers found in financial statements. The use of ratio analysis gives the owners of the business a better understanding of how the business will perform. Ratio analysis is computed from the information given in the financial statements. It helps the freestyle company to compare the company performance in the three years. The company worked out three ratios combining areas of profitability and capital.
We are going to use six key ratios incorporating the areas of profitability, efficiency, and capital structure. The Ratio can help us to compare the first three years of our business; we can use the data that we get to compare with our competitors.
Note 1: The gross profit margin indicates the margin of profit between sales and cost of sales. It can me measure how much from each euro of the company's revenue is available to cover overheads and other expenses. Although the Freestyle Company just started, it holds a high gross profit margin which indicates that the company can make a reasonable profit, with 65% Year 1 and increased to 69% Year 2 and 75% in Year 3. An increase in sales volume will lead to an increase in gross profit but not necessarily to an increase in gross profit percentage. Thus, the Freestyle Company keeps its overheads in control it will produce high-profit margins. Meanwhile, it is because our customers are increasing.
Note 2: The net operating profit percentage indicates that Freestyle Company net profit as a percentage of sales. This figure tells us how much our revenue remains as profit after all operating expenses have been deducted. The Freestyle Company shows a rapid increase throughout Year 1, 2 and three developing from 6% to 18% to 35%. An increase in this operating profit margin is beneficial to the business and has been established due to an increase in gross profit and viable management decisions such as cost control. The reason why the net operating profit has been increased rapidly it that advertising play a key role, our investment on digital marketing to promote our project; it can attract people who never touched away travel like Freestyle Company. Our figures indicate a proportion of revenue converted to operating income per euro and shows that the profitability of the Freestyle Company is improving over time.
Note 3: With this ratio, we were determining the total capital required to finance the assets of the business. The Freestyle Company achieved ROCE of 35% in Year1, 9.6% in Year 2 and 17% in Year 3. This tells us that for every $ invested in the Freestyle Company both debt and equity. The Company generated $35 in operating profit for Year 1, $9.6 in Year2 and $17 in Year 3.
Note 4: By working out this ratio we calculated the return before interest for an ordinary shareholder, so for the numerator, we deduct loan interest charges for Year 1 and Year 2 from the net profit. For Year 1 the Freestyle Company achieved an ROE 5% which increased in Year 2 17.8% and Year 3 44.9%. We have an incredible increased on ROE which meaning that Freestyle Company is efficient in generating income on any investment. However, going forward our Company will use this ratio carefully when making decisions regarding additional investment.
Note 5: The non-current assets turnover indicates how much each $1 invested in non-current assets generates in sales. By this, we can measure the utilization that the Freestyle Company is obtaining from its investment in fixed assets. In Year 1 the ratio was 0.85 telling us that for every $1 invested in non-current assets, sales amounted to $0.85 In Year 2 this increased to $0.98 and in Year 3 increased again to $1.24.
Note 6: Interest cover indicates how many times profit covers interest payments on debt before interest. Due to The Freestyle Company having a high-interest cover means the less likely interest payments will not be met and so this results in low financial risk.
Feasibility&Risk Assessment
The owners of FreeStyle Company have examined income statement and statement of financial position to determine the accuracy, accountability, and reliability of their business. The balance sheet helps to show the stability of the business while the income statements show the annual profit gotten by the company. First of all, the Freestyle Company has an outstanding first three years, for instance, sales have increased $120,700 from Year 1 to Year 3, with operating profit increasing from $14,100 to $125,514. Moreover, the ROOE increases rapidly from 5% to 44.9% from Year 1 to Year 3 due to an increase in sales. The overheads have increased over the three years, but that will not have the harmful effect on Company performance. The financial statements provide limited information, so it does not factor tax in this study.
In its financial statements, freestyle company does not factor in tax. The cash budgets help Freestyle Company to examine the usage of cash and their sources. The owner should closely monitor transport inventory turnover to minimize wastage through loss and misuse of funds. The owners of the company invested heavily in the company. The starting capital was used to stock, furniture, fittings and a motor vehicle. The freestyle company is located in an urban setup. This feasibility has been conducted with the assumption that its offices are located in an urban town, and there are few competitors. Freestyle company has taken into consideration technology advancement, and we acknowledge advertisement as a tool for improving our marketing strategies. Daily cash flows may indicate that the revenues and costs do not add up due to inefficiencies in some sectors.#p#分页标题#e#
Additionally, the costs may be too high such that the business ends up making losses. Nevertheless, the company has an adequate team of professionals who are there to ensure that the books of accounts are always accurate and can be used to reflect the actual nature of the market. In addition to that, they are vital to the day to day decision making aspects.
Reporting cash is becoming a key indicator of financial performance, and the FreeStyle has paid considerable attention to the three years projected. The most critical indicators in the case of The FreeStyle are personal design and travel group. The two owners have the highest risk in the business. This finance $280000 in payment of wages, rent and some early to buy necessities. High rents can be a potential risk to the company.
Our company's early growth is slow because it takes time to build up customers and credibility. Through the use of digital marketing, we believe that the company will soon be able to attract a large number of customers because of its unique service design and a new concept of tourism. The profit has increased $114,414 during the first three years. This will allow us to consider expanding our business to attract more investors. However, it might be a danger when you have a good and stable increased in profit, and you want more investment.
From a regulatory perspective, the scope of the service in the locality is viable as long as the employees strive for perfection with each passing day. It is the first company in the area to invest in tourism, and therefore all aspects of the next competition have been reduced to a bare minimum. Many performance indicators are likely to determine whether the company is headed in the right direction. As seen in the statement of financial position and the profit and loss accounts, it is evident that it is headed for success. One of the basic mantras that has guided the company is a reduction of costs while increasing the revenue from the viable avenues. Additionally, there are business interests which the company is in the process of actualization.
The number of tourists is expected to double in the coming months due to favorable government policies. One of the risks that are anticipated is that a competitor may enter the business. However, the business has invested in real advertising that has ensured it sinks into the whole fabric of the society such that it becomes the undisputed leader of tourism. In conclusion, freestyle is generating high profits from the number of tourists and locals who access our services. From year four onwards, freestyle company needs to open new offices in other towns and also increase these number of vehicles and drivers.
In conclusion, freestyle is generating high profits from the number of tourists and locals who access our services. From year four onwards, freestyle company needs to open new offices in other towns and also increase this number of vehicles and drivers, we will consider designing products that will attract more customers, and we are going to do some activities to give back to the returned customers to increase their loyalty. We believe that the personal funds of the owner for $140,000 each will inspire the morale of the enterprise. If our business can get have a better performance after three years, we might consider applying for a loan from the bank and invite investment. Eventually, as an overall reflection, we believe that this is a new type of tourism company with value in the future.
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Tomczyk, Przemysław, TymoteuszDoligalski, and PiotrZaborek. "Does customer analysis affect firm performance? Quantitative evidence from the Polish insurance market." Journal of Business Research 69.9 (2016): 3652-3658.
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