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Whether you’re just starting out in the tour and activity industry or you’ve been in the business for a while, having an understanding of your expenses can be a challenge. However, running a travel company requires that you have adept knowledge of each and every cost in order for you to accurately set pricing(opens in a new tab), pay staff, and gain a profit. Expenses include anything and everything from software to fuel to taxes, so where should we begin?


Overhead Expenses

Let’s start with the most obvious: what some call operating or running costs. Essentially, these are the day-to-day expenses of running your business. Staff is the first expense that comes to mind. If you’re a sole owner and operator then you can ignore this point and just worry about your profits. But for those with a team, it means being aware of minimum wage requirements, insurance for your employees, and perhaps even superannuation or pension costs in addition to reasonable wage valuation. If you’re running tours internationally and hiring locals (which you should be doing), this means being aware of local insurance and pension payment requirements as well.

Beyond staff costs, other overheads might include petty cash, transport, flights, equipment, servicing and maintenance, or fuel. If you’re using your vehicles a lot, planning for varying fuel prices can be difficult. In this category, it is helpful to separate your expenses into fixed (the ones that remain the same regardless of bookings) and variable (the ones that change based on customers or your output). The best practice is to overestimate costs, as it’s always better to discover you have a little more money at the end of the month or quarter than a little less!


Marketing Expenses

Marketing costs can be nicely wrapped up in the phrase, “You need to spend money to make money.” Because if you don’t have your line in the water, you won’t get any bites. Advertising expenses can vary significantly from your brand to the platform you use. For new businesses, we recommend looking into social media ads(opens in a new tab) as a starting point but be sure that your social media presence is up and running first(opens in a new tab). This means interacting and engaging with other profiles to build up your own audience. The best part, this will only cost you time. Another big factor in marketing is ensuring you are using the right methods to specifically target your audience. If you’re trying to sell your tours to a more senior crowd, then social media may not be your first point of call, or perhaps you’ll find that these potential customers are more likely to be found on Facebook rather than Instagram for example. As social media is increasingly being utilised by more than just millennials it remains a valuable tool for just about any demographic so it shouldn’t be ignored. Other advertising options might include print media, email marketing, or even visitor bureaus(opens in a new tab).

Google Adwords(opens in a new tab) is another marketing tool that many turn to. Knowing what Adwords to purchase can be a complicated task and we would recommend building up your SEO before delving into the deep end of buying keywords. Additionally, Adwords can take some time to take effect, so if you are going to invest, start small and reassess after a few months.


Annual Business Expenses

A hectic schedule can mean that you’re caught up in the fine details but it is important not to forget big-ticket items. Business taxes, permits, insurances (employee, building, vehicle, accident, etc.), lease payments, bank fees, and accounting costs can sometimes be a surprise when the end of the financial year rolls around. If you’re at all unsure about organising your own accounts, paying for an accountant doesn’t have to be expensive and can save you a lot of time and potentially money loss in the long run(opens in a new tab). An accountant might know what items you don’t need to pay tax on because of your business type or size. In some countries, having an accountant is required by law. In every case, it is always better to get advice than wade solo into murky waters.

For new businesses, some other expenses might include start-up costs. Although this could be a whole post alone, keep in mind things like branding expenses(opens in a new tab), trademarking or registration fees, and license or permit costs.


Software and Other Digital Expenses

Our final category is virtual. For better or worse, being successful in today’s market means having an online presence. Having a website that is beautiful, well-organised, and easy to use(opens in a new tab) can mean a world of difference to your bookings (and making websites that generate sales is our speciality). Saving up the funds to purchase a modern site should definitely be kept in your budget, although for many tour and activity operators this is understandably a longer-term goal. Moreover, once you have your site built, consider the ongoing cost of site maintenance so that it remains updated and appealing. An additional expense is booking software. There are a wealth of options available, each with their own pros and cons(opens in a new tab). We recommend doing your research before you sign on, with some taking a percentage of your bookings (like OTAs) and others taking a fee. See what you like and what works best for your business. Other online investments might include, email marketing software, integrated chat platforms(opens in a new tab), online waiver services(opens in a new tab), or photo delivery providers(opens in a new tab). And this list can grow as long as you like!


Emergency Expenses

One final expense to always keep in mind is having an emergency saving fund. By taking a small percentage of your monthly or quarterly profits you can ensure that you’re secure and prepared for any unexpected event or if disaster strikes(opens in a new tab). Just like the current pandemic, you never know when you might be left in the lurch. Having an understanding of all of your costs also means knowing that unexpected expenses can be hiding around the corner.


Running a business is not easy, but being organised and prepared for as many obstacles as you can will make the process that much easier. Good luck!

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