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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.
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
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
..................... Appendix B: Ecotourism Operators.... 124 Chapter Nine: Case Studies of Successful Ecotourism-Style Businesses ..... Marketing Strategies for the Sufua Hotel................................. Appendix C: Practice Forms............................................... Appendices: Appendix A: Extensive EIA’s........... C.......... Yap ........................Magazines and Publications ............ A.......................................................... 119 Travel and Tour Agencies...................................................... Pacific Island Architecture.............................. B. Business Plan for The Pathways Hotel.... Bibliography........................................................................................ 127 127 131 137 150 169 180 194 v ................................................................
you can use this kit to learn the steps needed to establish a successful business venture. WHAT IS ECOTOURISM? The definition of ecotourism varies among different groups of people. protects and preserves the environment. Some people feel that nature tourism. September 17-20. and educates and 1 . educational tourism. but have failed to do so. business owners. Pohnpei. and historical tourism are all parts of ecotourism. 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. We hope that you will find it useful in making your ecotourism dreams come true.INTRODUCTION This Ecotourism Planning Kit is designed for people who wish to establish Ecotourism-based businesses. and to show you that. As a prospective business owner. we will define ecotourism as "a concept that describes a form of development that respects tradition and culture. adventure tourism. cultural tourism. We have included several case studies and examples of ecotourism ventures in the Pacific to illustrate the process you must undertake. however. you can do it. Many of the steps included in this handbook can be found in other "How-To-Set-Up A Small Business" guides. this kit explains the unique obstacles that ecotourism businesses face. Tour group operators. 1991. 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. with a lot of hard work. government officials. others believe that ecotourism is a separate category. and conservationists have spent a great deal of time trying to agree on a common definition. For our purposes.
HAVING A DREAM One of the most important keys to having a successful ecotourism business is to have a dream. ecotourism should be economically sustainable over the long-term.welcomes visitors. Once you have decided what your dream is and are certain that you will really enjoy the experience. this handbook will make the rest of the process easier. Every business on each island is different. For example. you should enjoy diving and working with people. and you can work with agencies who are willing to assist ventures of this nature.your dream belongs only to you. But. then you should reexamine your plans. learn from the information provided here. hang onto your dream. always remember your dream. Find out what it is like to run that kind of operation and determine whether or not you would enjoy a similar experience. and most of all. Once you have a clear vision. it is probably not a good idea to establish a dive tour operation. If you do not enjoy being on boats and diving. So. if you plan to open a dive shop." In addition. Government agencies and existing business owners may be in a much better position to assist you with specific information. believe in yourself! 2 . As you begin setting up the business. It is important to talk to people about your dream especially people who are already in the business. so this guide will explain the general principles. you are already halfway to the finishing point. and that you are interested in every aspect of it. read on. it is essential that you love what you do. Since establishing an ecotourism business will be very timeconsuming. This handbook will help you through the technical aspects of establishing a business. no one can help you create your dream . It is essential that your vision is clear. If the answer is no.
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. 5) Environmental Impact Assessment (EIA): This is a brief guide to developing an environmental impact assessment.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. 3 . with examples of financial spreadsheets and marketing ideas is included. including a list of organizations that may be willing to provide loans or economic assistance for ecotourism ventures. and provide technical assistance in renewable energy and/or descriptions of existing ecotourism operations in the Pacific. 7) Starting Operations: Do a detailed examination of the factors to consider before opening for business. 3) Creating a Business Plan: Take a step-by-step approach to developing a business plan. 2) Project Assessment: Here is a detailed discussion of how to assess an ecotourism business idea. 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. 4) Financial Backing: You will find a discussion of the documents necessary for securing financial backing. 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 something you really want to do. Your most important resource will be the people who have already established businesses. 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? 4 . • A. and the governmental regulations. Take the time to meet these people and learn from them. 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. There may also be steps that are particular to your island that are not mentioned in this handbook. The checklist will give you a broad overview of what needs to be done. 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. the business environment. Every island has its own regulations and rules so all the steps may not apply to you. Following chapters describe each step in the checklist in more detail. many of these steps may also be done at the same time. The order of the steps in the checklist may vary depending on the type of operation.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. environmentally friendly. culturally sensitive. You may already know a lot about setting up and running a business.
rental cars. docks. such as solar panels. wind generators.Are you able to meet the projected start-up costs? B.g. CB radios)? C.g. water supplies. 5 . airports. Consider Your Power Source How will you provide power to your business? From the grid? From a diesel generator? From renewable energy sources. communication services) support your venture? Will your business be easy for visitors to find? Are there transportation options (e. mobile phones... 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. waste removal. 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? Check the Infrastructure Will the existing infrastructure (roads. 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.
a more detailed explanation of every part of a business plan is given in Chapters Three and Four. tour guides. construction of buildings or clearing of land) or permanent (e. waiters.D. you probably already know a lot of the information . 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. STEP 2: DEVELOPING A BUSINESS PLAN: Creating a business plan may seem very frightening. Executive Summary: This section clearly presents data and information from the business plan in five pages or less. however.it may be just a matter of writing it down in the correct format. you should continue to ask these questions and talk to your neighbors so that your business can adapt effectively to changing conditions. • A. The outline of a business plan is described below. 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. The executive summary should touch on all the main points of the business plan and 6 ..g. After your business is operating.g..
and. Make your product or service seem special and different. D. it will be helpful for you to have a written explanation of what your business is. but staying within your budget. Marketing your Service/Product: There are a number of issues you must consider when marketing your service or product. B. (3) establishing sales and distribution channels. C. (8) choosing the best strategies. This will allow you to reevaluate the position of your business in the future and decide whether you have achieved your goals. (4) understanding your competition. even if all your financing needs are already taken care of.should end with a summary statement. (2) defining service/product benefits. (7) meeting your goals. Product/Service: This section of a business plan discusses your particular product or service. Description of Company and Business: This section is especially important if you will be asking for funding. how you are going to run it. These issues will be discussed in much greater detail in Chapter Three. so you need to explain why your product is especially unique and why people should want to purchase it. The main opportunities and advantages of opening a new business should be stated clearly in this statement. 7 . and why you think your business will succeed. Concentrate on the things that make your product or service unique and attractive to your clients. but the major points of interest are: (1) understanding your customer. There may be other operations that provide the same basic products or services that you provide. (5) generating promotion and publicity. (6) pricing. However.
The personal history and relevant business experience about the people who will manage the business should be discussed. Some lending institutions require drawings. In the business plan. It is also useful to describe the special characteristics of the location and explain why you chose that particular spot or building. you should describe the location of your business in as much detail as you can. Try to find out as much information as you can about present and future competition. overtime options. F. You must also find out if there are other people who are planning to establish a business that will compete with your venture. Issues such as pay. G. fringe benefits. so you can determine where your competitive advantage lies. I. Management: Information about your management team should be included in this section.E. and training all need to be considered in this section. or designs of the building or structure that you are going to create. 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. photographs. The duties and responsibilities of each person should be described. Chapter Nine contains some architectural drawings of building created for ecotourism operations. H. Competition: You should know who your direct and indirect competitors are. Location of the Business: You probably already have an idea of where you would like your business to be located. 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 8 . as well as the salary each is to receive.
Supporting Documents: Supporting documents are any type of information that is relevant and lends support to your business plan. Preparing Financial Statements and Finding Financial Backing. as opposed to what you would like to buy. The specifics of working with financial data will be discussed in Chapter Four entitled. 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 9 . J. preparing a financial analysis can help you define some guidelines about what you can buy. but even if you are not seeking a loan.money? It is essential to know the answers to these questions if you are trying to get financial help.
boats. you might explain that a personal loan for $30. There are a number of categories that belong in a balance sheet including: ° Fixed assets ° Other assets ° Current liabilities ° Long-term liabilities 10 . In addition. 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. automobiles. and commercial banks. Balance Sheet: A balance sheet is a financial statement that summarizes the assets. model numbers. Examples of items that should be included in this list are: refrigerators. furniture. 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. In addition to the equipment. dive gear. computers.000 will be used for a down-payment on the purchase of a piece of property. and the cost of the equipment should be included in this list. • A. C. B. and net worth of a business at a given date. development banks. cash registers. For example. Capital equipment is equipment that is used and gets worn out or depletes as you conduct business. Sources and Applications of Funding: This section should explain what types of funding you will be receiving and where you will get it.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. and light fixtures. liabilities. Much of the information included in the financial section needs to be presented in the correct format. There are five main sources of funds for ecotourism businesses: relatives. personal savings. you should be able to describe how you will use the funding. 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. knives. foreign investors. styles.
For the first year. The format of a sample income statement is shown on the next page. in order to break-even financially. 11 . then you can plan and market your service or product accordingly.° Net worth ° Current assets ° Footnotes These categories will be explained in greater detail in Chapter Four. 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. If you know how many customers you need to have. This document is more detailed than the balance sheet. the projected income statement is designed to predict the financial position of your company over a period of time. usually three years. 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. and will involve more work. D. E. Projected Income Statement: While the balance sheet provides a picture of the financial state of your business at a given time.
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): 12 .
Like the projected income statement.. 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.82). (3) To help you decide whether you should look for equity (money given by the owners of the business). 13 . operating profits (money from the business). There are four main functions of the cash flow analysis: (1) To show you how much cash your business will need. Jr.F. or sale of fixed assets (money received from selling something of value). and then quarterly or yearly for the next three to five years. and (4) To help you determine where the cash will come from (Bangs. The format for a simple cash flow projection is shown on the next page. (2) To tell you when the cash will be needed. it is best to view the cash flow projections on a monthly basis for the first year. while the income statement focuses on the value of the assets belonging to the business. 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. p. debt (money received from loans).
14 .SAMPLE CASH FLOW PROJECTION CATEGORY 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 MONTH #1 MONTH #2 *Fixed Cash Disbursements and the format of the Cash Flow Projection will be explained in greater detail in Chapter Four.
In addition to balance sheets or income statements. the Department of Economic Development and Planning. Historical Financial Reports: If you have already been in business then you probably have some previous financial records. you should include previous tax documents in this section. The last thing you want is for your business to be unauthorized because you were not able to complete all the required documents. • 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. be sure that the information you have is up-to-date and relevant. who can provide you with the information you will need in order to get approval. Personal tax forms might be required if there are no previous business tax documents. If you are establishing a new business. The Department of Taxation. It is imperative that you contact the appropriate government officers and representatives. regardless of whether or not this assessment is a requirement. you may have to do some investigating to determine which governmental department is the correct one (or ones) for you to contact. Regulations often change when different people are elected. Environmental impact assessments are used to predict the future state of the environment as a result of economic development activity. but educated guesses are useful and provide a framework for development that is environmentally sustainable.G. it will be helpful to have a document that outlines the effects that your business might have on the environment. STEP 4: ENVIRONMENTAL IMPACT ASSESSMENT (EIA): Not every new business idea will require an environmental impact assessment. then income statements and cash flow projections may have to be estimated. Not all aspects of environmental impact can be exactly measured. however. and the Department of Resources and Development are some examples of the government offices that it might be necessary for you to contact. • 15 . Each governmental system within the Pacific islands is run a little bit differently.
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. • 16 . Things may not always happen the way you plan them. but think creatively and do not give up. The first step is the hardest. 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. and it takes the most courage. Go ahead and start making your dream come true. so take a deep breath and start.
If you want to set up a small resort then you need to find out everything you can about operating a hotel. Our checklist presents a number of questions. mountain treks into virgin rain forests. scuba diving through colorful coral reefs and grottos. Talk to business assistance programs such as the 17 . Do not be shy . 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.there are a number of organizations that can help you. 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. There are many types of businesses that can be ecologically sound and also attract visitors to your island. First of all. and hikes to historic destinations can all be considered ecotourism businesses if they are operated in the proper fashion. bird-watching.CHAPTER TWO: PROJECT ASSESSMENT Ecotourism projects are not limited to lodging facilities. or a small inn. you should find out as much as you can about the business that you would like to establish. Outrigger canoe tours through lush green mangrove forests. Don't get discouraged!! If you really want to establish the business and believe in it. deep sea fishing. then take one step at a time and everything will work out fine. It is important that you know the answers to those questions before you invest a lot of money and time in your project.
Try to determine how much it will cost you to start up the business. based on the information you have.) Talk to owners of existing establishments if they feel comfortable talking to you. It may be difficult to get people to talk to you. and sewage disposal systems. ask the consumers what they like and don't like about the existing establishment. but it is important to get as much first-hand information as possible. 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. because you may eventually be their competitor. Water. get there in a 18 . and Things" (Known as Infrastructure) Many developing economies are constrained by the lack of base infrastructure such as roads. It may be better for you to start off with a very small operation and expand as you gain experience. These visitors need to be able to find your business. employees. it will also be important to talk to managers (if they are different from the owners). 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. In order for your business to be successful. and your local government Office of Resources and Development (or its equivalent. water lines. determine what the managers and employees need to be concerned about on a daily basis. you need to find out as much as you can about every idea you have and then make the best decision. "Roads. Cars. Does it sound like a business you would enjoy establishing and operating for many years? If you have alternative dreams. electricity. and consumers of these establishments. the Small Business Administration (SBA). you must have visitors. Find out what the owners needed to do when they first established the operation. take a look at the information they gave to you.University of Hawaii’s Pacific Business Center Program (PBCP).
and be supported when they reach your operation. but also to know visitor profiles. water. 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. power lines. can you provide transportation for the visitors?) ° Are necessary supplies. dirt road full of potholes. and it may not make sense for you to develop a trail that is located at the end of a treacherous.fairly convenient fashion. such as food. 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? 19 . and diesel fuel available? ° Are sewage services. 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. This means finding out what the visitors to your island are like. It does not make sense for you to build an incredible cultural center that people cannot find. It is important not only to find out how many visitors come to your islands. and communication services easily accessed? You can contact your local tourist board to find statistics on visitors who come to your island.
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. visitors must be able to locate you easily. However. There are a number of expensive. there are other ways to provide water for your business. complicated catchment systems that involve chemicals. 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. Water is treated monthly in an elevated fiberglass tank with Clorox 20 . 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. Mr. pressure pumps. but rather than try to implement a system of this sort. If water is not piped into your area. Evans decided to use a simple gravity flow catchment system that was described in a United Nations booklet. True Story: Don Evans. spent a great deal of time trying to figure out how to provide ice and purified water for visitors. and other various parts. Be sure that infrastructure exists in order for that to happen. Once you are certain that there are enough visitors to support your dream. In other words. Drinking water could be bought in villages and delivered to your business. will you be able to get water in some other fashion? Rainwater can be collected for some uses. you should find out how long it will take to complete the improvements. one of the developers of the Pathways Hotel in Yap. it is time to look at the infrastructure.
) All of these alternatives have costs and benefits. which include human bathroom waste. and. The system works wonderfully. 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. For example. but a concrete or fiberglass tank is used. 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. and there is not much to maintain or repair. So. kitchen food waste and other organic materials such as lawn clippings. filter and clarify waste water through natural biological processes involving plants and sometimes fish (Terry. the government often forbids cesspools in populated areas. do not give up if there are no easily identifiable sources of water. but they may not work very well in certain types of soil and they may pollute ground water. cesspools are easy and cheap. it is safe. Another system which reduces the amount of sewage waste is a composting toilet. or lagoons. it is easy to care for (because there are no moving parts). 9. There are creative ways to overcome many obstacles like obtaining adequate water supplies. There 21 . This toilet digests waste products. p. etc. banana leaves. Also. ° Sewage pond system: consists of a series of ponds which receive. reefs. ° Septic tank: similar to a cesspool. you will need to investigate all of the options and determine which is the best for the environment and for your operation.(the chlorine is then filtered out). Improvisations like this "True Story" may even become a great selling point for your operation. 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.
composting toilets might fit well into the design and purpose of your operation. facsimile machine." then you need to look at alternative energy sources. if not all. 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. contact your local telephone company and see if there is a way to receive their services. Although they may be able to give you some ideas. This should be one of the questions that you ask the owners and managers of existing establishments. This could mean that you need to hire an electrician to calculate your estimated use of voltage/wattage. What types of communication services are available at your place of business? It is necessary to have a phone. There are a number of alternative energy sources which may be able to fill some. 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. It may be more feasible to use 22 . of your energy needs. you will need to calculate your energy needs based on your specific operation. A lodging facility will need more energy than a canoe tour operation. composting toilets in the Micronesian islands (Yap and Kosrae) that do not have any odor associated with them. If the answer is "no.have been a number of technological improvements in composting toilets in the last few years. Once you have figured out approximately how much energy your business will need. If there is not. or some other form of direct communication for potential customers to reach you? If there is no telephone service in your business location. Greenpeace has tested a number of these biological. The first question you need to address is how much energy your business will need. As an ecotourism venture. then you might have to investigate other means of communication such as mobile phones or CB radios.
For example. Some of the above energy sources have been adapted and developed on a small scale for the Pacific islands.S.and micro-hydro projects that serve isolated areas. and clothes drying Some alternative energy systems may be very costly and inappropriate for your needs. such as cooking. You should find out whether or not your government is involved in any alternative energy programs. Check with your government to see if any of these alternate forms of energy are available to you. some Pacific island governments are trying to develop mini. 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. government and other donor nations. These sources include. they may welcome the idea of working together with you to develop alternative energy sources.a combination of sources to meet your energy demand. water heating. Fiji gets approximately 90 percent of its electricity from hydro resources. 23 . With the help of the U.
Consider your ideas from their point of view. Discuss these opportunities and the possible implications of your business with the villagers. your business. Ask them for ideas and ask for approval every time you make an important change in your plan. but in the long run you will be glad you took the time to talk to the neighbors. but it is an investment in your employees. One way to do this is to call a community meeting which all the residents are invited to attend. as well as jobs at the small resort. An alternative method is for you to talk to each person individually. the 200 villagers had light in the evenings. a small ecotourism resort developer wanted to build on an island close to Nuku Alofa. 24 . both in the construction process and during the operational phase. Besides addressing the fears and concerns that the local residents may have. When you first start planning your business. the local people’s respect and enthusiasm may be the most important factor behind your success. You will have to train them. 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. For the first time. include them in the planning process. Do not forget to include this in your assessment work. The village had no power.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. and your community. make a sincere effort to talk to as many people as possible. the developers included the village. When designing a renewable energy system for the resort. Try to hire as many local residents as possible. True Story: In Tonga.
and fans. A. and other business people understand. (Moana's) would like to be established as a manufacturer-retailer of a line of handicrafts from various Pacific islands such as baskets. Jr. A business plan can be very simple or very detailed. starting with American Samoa. tapa cloth. An executive summary in a simple business plan may be less than a page long. a similar type of material will be substituted. lenders. In cases where the authentic material is endangered or difficult to locate. 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. A business plan takes information that you probably already know and puts it into a format that bankers. and in some cases. wood carvings. An example of an Executive Summary is: Auntie Moana's Handicrafts. 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. Handicrafts will not be cheapened in 25 . Executive Summary The executive summary clearly presents all the data and information from the business plan in five pages or less. The handicrafts will be made using authentic designs and materials. in Business Planning Guide. Moana’s plans to sell its product line directly to tourists in outdoor craft centers on islands throughout the Pacific. Inc. The main opportunities and advantages of opening a new business establishment should be discussed clearly. fine mats. The format of Chapters Three and Four is adapted from that described by David H. and the executive summary should end with a concluding summary statement. but it is not really all that hard. Bangs. a more detailed business plan may require a five-page executive summary. to actually produce the handicrafts for visitor viewing.CHAPTER THREE: DEVELOPING A BUSINESS PLAN Creating a business plan may seem very difficult and complicated. Moana's plans to contract with local artists to supply.
000 $420. There will be one local supplier per island who will be responsible for identifying the artisans. Moana's is seeking a loan to start the business. and supervising the local operations in Western Samoa.000 12. the Kingdom of Tonga. Noelani has already lined up the people who are willing to supply the handicrafts.000 20. spent that time involved in community organizations and has befriended a number of local residents. Her adult daughter. 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. 26 . Goods that are representative of the culture are the only types that will be sold.000 10.order to satisfy tourists’ needs. the Republic of Palau. ensuring that a reliable and consistent supply of goods is available.000 78.000 100. (2) the governments of the Pacific islands are interested in promoting ecotourism and any businesses that support ecotourism. Moana's will operate out of a small shop leased from the Pago Pago International Airport. 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. Moana Scanlan worked for the American government and has extensive government and business contacts throughout the Pacific islands. the State of Pohnpei in the Federated States of Micronesia. Noelani. 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. and on Majuro in the Republic of the Marshall Islands.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.
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). adults. 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. These questions are: (1) What business are you in? What do you do (manufacturing. a partnership (two or more owners).B. but a number of key questions should be answered. or will your business have a constant stream of customers? (8) What is your experience in this business or in any type 27 . Description of Company and Business This description should be fairly brief. service)? Who are your clients (tourists.
between the hours of 6:00 a. thus offsetting the reduction in mountain tours. It may be wise to write this section after you have completed the rest of the business plan. do not feel frustrated if you have not yet answered all of them. As you complete the other sections of the business plan. Manny's Educational Mountain and Cave Tours began business in November 1993 as a sole proprietorship. The customers also learn about the legends that are associated with the mountains and the caves that 28 . so the tours are very profitable.(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.m. have lived on Kauai all of their lives. Manny and Marty teach their clientele to be respectful of the local people and their values. 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. the weather is stormy and rainy so demand for mountain tours will not be very high during this period. and 5:00 p. Although tour fees are fairly low. you will have a better idea of how to write this section. Between the months of October and April. During the stormy months. Coastal caves have always been a popular visitor destination and they are easily accessible from the beaches. Manny and Marty. They both have a deep understanding of the traditions and the culture of the people who live on Kauai. the owners. Tours are given any day of the week. there are few overhead costs. inland cave tours are expected to be in higher demand.m.
a good feeling that you are helping local people (since the lodgings are made from local materials and hire local employees). This section should respond to the following questions: (1) What are you selling? As an ecotourism business. 29 .they visit. A hotel that is run for the ecotourist not only provides lodging. Stress the fact that you are building an ecotourism venture and describe why your business fits into this special category. you are not just providing a product or service. If you establish an ecotourism venture. a lifestyle that preserves or enhances the environment. then you already have one differentiating feature: the ecological focus of your business. C. and that clients participate in keeping the areas clean by picking up any litter they encounter. since it may be hard for others to understand what you are trying to do. but also provides education. (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. personal interaction with the culture. The educational and environmental aspects of the tours are very popular and are considered the company's strong points. that no garbage is ever left behind. 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. The tour guides ensure that their customers are educated ahead of time so that they are environmentally sensitive. This may be difficult. (3) Why is your product/service special? If your business is the first of its kind on your island. later in this chapter. and a unique experience. then you may have to educate people about what your business is all about.
ecotourists are individuals who can appreciate the experiences. it took the owner five years to convince lenders that his new idea was a good one. however. Local residents could not envision his dream. the hotel is very successful." The following items should be understood and considered when presenting the description of the market. Today. It would blow away during the first hurricane. D. it was stupid. When you are raised in a thatched roof home and long for a western style home.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. or burn down and the bugs would get in. thatch becomes undesirable. the local residents are proud of the success of his business because it is a positive and special reflection of their culture. The Market In the previous section. 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. (1) Understanding Your Customer: Every person that travels to your island is not necessarily an ecotourist. now. you need to describe your customers. we discussed the importance of describing your ecotourism product/service in the best possible way. It was not very "special" to them. Now that you have identified the benefits that your product/service provides. and not every person is interested in a product or service that is geared towards an ecotourist. It is much easier to convince people of the benefits of your product/service if they already understand what your product/service is. 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. 30 . Generally. These customers or guests comprise a group known as your "market.
Once you know who your customer is. 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.000. ° Average number of years birding is 17. be a customer of your competitor (e. sign up for a dive tour. and talking to people about your business.. You need to know what types of people would like to purchase your product or service. eat at their restaurant). 44% are male. the average age is 45. ° Average household income is $40.g. ° 55% are female. 31 .respect the environment and culture. and are open to the adventures offered by unfamiliar circumstances. If someone wanted to establish a bird watching tour. reading magazines and books. you need to make sure that they know about you. they would find that the demographics on bird watchers are: ° 40% of all bird watchers are between 18 and 45 years of age. bird watching is a very popular activity in countries throughout the world and interest in bird watching is growing rapidly. stay at their hotel. You can determine who your customer is by observing your competitor's customers.
000-$50. 81% attended college. 32 . Many magazines that focus on particular activities such as scuba diving. hobbies include: reading. traveling. sailing. In addition to bird watching. Birders are drawn from a broad spectrum of business occupations. These organizations may also be an effective marketing tool. bicycling.° ° ° ° ° ° ° ° ° 70% have household incomes between $20. gardening. 54% are affiliated with the National Audobon Society. 68% own their homes. 61% have a college degree. and hiking have a demographic profile of their readers. Birders spend more than 100 days a year in some leisure-time activity. domestic or abroad. 34% have advanced degrees. photography. If your business is geared towards a special group (divers. bird watchers.000.000. Chapter Eight contains the names and addresses of magazines and organizations that may be able to provide you with demographic information on certain activities. hiking. 52% are planning or would like to go on a paid birding trip. then contacting the editors of specific magazines could provide you with the demographic information you need. tennis players). hikers. 46% are members of a bird club. 17% have incomes in excess of $50.
courteous.(2) Product Benefits: This idea has already been briefly discussed on page 31 of this chapter. One of the steps in the project assessment was to talk to other people who already owned and operated businesses like yours. so your business has to offer something that your competitors do not have. Speak with your competitors' suppliers. Explain how you will make your product or service convenient for your customer to purchase. Other ecotourism operators may have many of the same features. 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. and describe how your service/product will be sold so that customers are encouraged to return. respects local customs and traditions. Regardless of what your business is. anyone who has contact with your customers should be polite. if your operation is easier to reach than your competitors' operations. and provides the ecotourist with new experiences. What did you learn? Summarize the information that you received from your competitors and from your competitors' customers. (4) Competitive Analysis: Have a clear understanding of what you learned when you were assessing your project. This is different from the characteristics of your product/service. and informative. (3) Sales and Distribution Channels: This section is concerned with making the experience of buying your product/service easy and pleasurable for your customers. they may also be happy to talk to you if they 33 . staying at an ecotourist hotel is good for the environment. they may have additional information. For example. then you have at least one advantage over your competitors. For example. 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.
if your direct competitors try to attract young. local tourism offices. your operation may be designed to serve the same type of customers as your competitors. the benefits of your product. you may wish to concentrate on serving the increase in married visitors. newly-married couples. If you are targeting your business towards older people who spend a lot of time reading. (5) Positioning. You could send out a press release (a piece of paper with all the information about your product/service) to travel guides. you should choose the market that you feel you can serve best. if there is a 25% increase in visiting married couples. If the number of elderly people traveling together has decreased in the past three years. then you need to consider advertising your business in magazines. but specialize in some segment of that market that is underserved. Promotion and Publicity: When you position your product or service. If you are offering a unique or new service or product. or car rental agencies. such at the “budget” traveler or young married couples with children. There are many ways to tell people about your product or service that do not require spending a lot of money. you need to figure out how you are going to attract your customers. they may not be able to accommodate the increase in visitors. If their market is growing. and your competition. airlines. Other information you need to take into consideration is the growth of your market. now that you know what kinds of people will be attracted to your product. then it may not be a good decision to focus on this group. Once you decide who you are going to attract.feel that you are a potential customer. For example. travel magazines. magazine journalists may want to write about it. For example. it is time to decide which people you are going to choose as your customers. you might want to attract single people or groups of elderly people traveling together. It may also be necessary to look at the growth of your competitors' markets. In other words. 34 . tour guides.
others may prefer a tent on a camp site. scenery. In addition to making friends with the villagers. or a relaxing. Le Satapuala Beach Resort offers reasonable rates and close proximity to the International Airport and the ferry terminal to Savaii Island. To find out more. and climate.200 people. Box 1539 Apia. It is an ideal location for visitors in transit. who are always happy to allow visitors to learn about the Samoan way of life. Give us a call and experience the richness and beauty of friendly Western Samoa. please contact: Terry and High Chief To’alepaialii (Toe) G. The visitor has a choice of accommodations: beach fales provide a traditional Samoan style of housing. arrangements can be made to stay with a Samoan family. Le Satapuala Beach Resort is committed to offering visitors a first-hand experience of Samoans and their culture. Satapuala village has a very small population of 1. Samoan fales allow the more adventurous to experience an open Samoan hut with a sleeping mat.O. The resort is owned and managed by High Chief To’alepaialii (Toe). There is live music every Friday and visitors are invited to participate in a traditional Samoan feast every Sunday. In addition. Le Satapuala Beach Resort has a relaxed and friendly atmosphere that allows visitors to participate in the everyday life of Samoans.P. and three daughters. culturally enriching vacation. Western Samoa Phone: 0685 42112 Fax: 0685 42386 35 . his wife. a weekend getaway. visitors will be able to experience the natural beauty of Samoa’s beaches.Sample Press Release LE SATAPUALA BEACH RESORT Located in beautiful Western Samoa.
mountain tour) to split the cost. your competition. Your price will also depend on the quality of the product or service you are offering. the tour agent who created the package tours will be advertising all of the companies included in the tour. A list of magazines and agencies can be found in Chapter Eight. and other places where tourists might go. and culturally acceptable. restaurants. we will discuss how to price your product so that you make enough money to survive. Once the travel editors have experienced your operation. you may receive a more consistent stream of visitors. The brochures should be placed at airports. Be careful 36 . Although you may not make as much profit. and any specific details should also be included in the brochure. hotel. 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. they should agree to write about it in travel magazines or guides. the uniqueness of it. phone numbers. In the financial section (Chapter Four) of the business plan.. the local tourism office. handicraft center. hotels.Another common way for businesses to receive publicity is to provide a complimentary or reduced-price trip to travel editors. The time. dive shop. it can be a very good way to generate some publicity. Focus on those magazines and publications that are concentrated on the Pacific region or are very popular. effort. If you can cooperate with local tourism offices and other ecotourism businesses (e. Talk to some tourists on your island to find out what publications they read when making travel plans. In addition. As an ecotourism operator.g. you are offering a product or service that has been designed to be environmentally sustainable. and your costs. and expense of establishing your dream needs to be reflected in your price. Another way to advertise your product or service is to include your business in tour packages. (6) Pricing Your Product/Service: Knowing how much to charge for your product or service can be very difficult.
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 expect that international visitors will 37 . We will focus on establishing a good.not to undercharge since your business will fail if you cannot cover all of your costs. it may increase to 20-25% of sales. and expanding your business to attract other types of customers. (7) Meeting Your Goals Within a Budget: Most new small business operators do not have a very large budget to spend on advertising. However. (8) Strategies: Implementing an effective marketing strategy means keeping your customers happy. 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. ensuring repeat business from customers. it is very important to realize that promoting your business is an investment in the future. Initially. Decide how much you will be able to spend on advertising based on your forecasted sales. You may wish to spend a little more than usual on advertising in the beginning so that people become aware of your business. we will expand to include international visitors as our clientele. 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. People need to know that you are in business and be aware of services or products you are going to provide. strong relationship with these government workers and their colleagues. 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. Within five years. then.
should describe 38 . it is still necessary to describe the area in which your business will be operating. fax machine. ° Word-of-mouth advertising from co-workers. airports. car rental agencies. and a discussion about how this location will affect your operating costs. 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. friends. television. relatives. a description of other businesses in the area. ° Optional air conditioning. ° A moderate price. and at various tour shops. E. we also hope to educate the international visitor about the lifestyle of the local people and the environment. zoning restrictions. peaceful location which is just a five-minute drive from town. Location of Business In this section you need to describe the location of your business. full-time receptionist with good English). ° Our quiet. for example. a description of the physical features of your building. an analysis of renovations. docks. ° Promotional advertisements that will be placed in the next three editions of the most popular travel magazine. and customers. You should include your business address. and. an explanation of who owns the location. Customers will be attracted by: ° Business amenities (telephone. the rationale for why you chose this place over other places. ° Environmental and cultural orientation. that will be needed and their costs. Our goal is to provide customers with an accommodation service that incorporates the values and the attributes of the island's culture. If your operation does not require a building. A tour company. (if any).make up 50 percent of our customers. ° Attractive brochures distributed to the national tourism office. ° Water 100% of the time.
canoe house (approximately 500 square feet) situated near the boat landing on Sokehs Island. and explain why those areas were chosen. Local tales. By learning from other people's mistakes. decreasing. Determine what the customers like and do not like about your competitors. The building and the docking area belong to the owners of Sea it All Adventures and the area has been zoned for commercial use. or steady. F. or bus. one story. Pohnpei. The back room will be used as a working area and a place to file business documents. This particular area has 10 different sites that will be of interest to visitors. Find out if their business is increasing. you 39 . and historical events will be narrated for the passengers.the areas they are going to take customers. FSM. the atoll of Pakin some 17 miles away. A sample description of the Location of Business is described below: Sea it All Adventures will operate out of a wooden. and find out why. The boat tours make stops on many of the islands. the atoll of Ant. including: a day tour to the world renown Nan Madol. The largest room in the canoe house contains one desk. and Black Pearl Island. Joy Island. Sokehs boat landing is located only one mile outside of the main town of Kolonia and is accessible easily by foot. one chair. where interesting historical sites can be toured with a guide provided by Sea it All Adventures. and a number of benches where customers can wait. you can reduce your chances of failure. There are two toilets so that men and women have separate washrooms. However. Find out how they advertise and how customers heard about their business. cultural themes. thatch roof building. car. two-room. The Competition Take a look at the other businesses in your area and find out what their product or service is like. Customers will spend most of their time on the boat that offers several tours to the various islands located around Pohnpei island.
As an ecotourism business. Jr. etc.) Knowledge Polite Help Culture Environmentally Conscious Adapted from Bangs. p.. You Offer: 40 . (There is a practice form in Appendix C. 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.) Customer Seeks: Competition Offers: Quality Uniqueness Lower Prices Product Styles Reliability Delivery Location Information Availability Credit Card Option Customer Advice Accessories (phone/fax. 36.will probably not be able to be the best in everything. concentrate on those qualities that fit the definition of ecotourism.
have management skills and experience. this company controls a huge percentage of the existing market. They have been in business for about 12 years and have built up loyal clientele among the Japanese. 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. The business side of the operation is run well. A variety of services are offered. scuba certification courses. G. two-man operation that takes tourists out on half-day dives. it is critical that you. and day trips. there have been numerous complaints against this company. including weekend packages. Concerns include anchor damage done to reefs. There are five points that need to be addressed in this section: 41 . disposal of waste into the ocean. most small businesses that fail do so because of managerial weaknesses. This company owns a number of boats and has a huge inventory of equipment. since one of the owners has had extensive business and accounting experience. Indirect competition are dive shops on other Micronesian islands that offer a variety of scuba diving packages. Lenders know this and therefore pay special attention to the experience and success record of your management team. since we plan to target the American and Australian market. However. Their equipment is new (less than two years old) and will last for a while. Management Team If you plan to borrow money. it is not expected to be a main competitor. and destruction to reefs from divers diving with too much weight and breaking the coral. Although. or someone in your business. Both owners have additional jobs. (2) The Deep Explorers--a very large business with a number of diving instructors.Here is a sample description of the Competition section: "Just Jump" Dive Shop has two direct competitors: (1) Scuba Adventures--a small. so the tours are infrequent and scheduled to accommodate the owners’ needs rather than the customers’ needs.
(1) Describe the Personal History: This section should discuss your experience. Focus on success. Lenders don’t appreciate their borrowers driving big cars and living an extravagant life style on borrowed money. one person may end up doing more work. If your team is inexperienced. reasons for going into business. interests. it would be a good idea to recruit an advisor or board members on whom you can focus. Be realistic about how much you should receive. Figure out how much each person needs to live on.” (4) Salaries: This topic needs to be discussed among all the people involved and agreement must be reached on what salaries will be given. Job descriptions should be included as appendices to the business plan. along with resumes of each member of the management team. talents. education. this section should include the age. In addition. including their salary history if it is “impressive. If you are borrowing money. Also include information about the particular skills you have that you feel will be influential in making your business successful. and financial status of each member of the managerial team. 42 . (3) Explain the Duties and Responsibilities: It is important write down and explain the duties and responsibilities of each person. or people may end up making decisions that they are unqualified to make. management experience. It is also necessary to determine who makes the final decisions. and make sure that your financial projections support that amount. salaries in the early years should be minimal. (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. or the experience of the most credible manager on your team. but do not be greedy. If the duties and responsibilities are not defined. business background. This needs to be done for each of the principal owners or investors.
one full-time assistant and two parttime employees. Tuesday through Sunday. and will be expected to work between eight and ten hours per day. you can decide whether you are going to hire people as part-time or full-time employees. and five years from now. training may be very essential to the success of your project.00/hr. Personnel The first step is to determine what kinds of and how many employees you will need. 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. He/she will receive health insurance. cultural. how you are going to pay your employees (hourly or salary). then you will already have access to some of the professional skills you need. Once you know this information. 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. but no overtime pay is expected. and natural history questions that they may receive from ecotourists. what types of fringe benefits. if any. because you want your employees to answer the environmental. This will change over time so be sure to state what your personnel needs are now.(5) Available Resources: Every small business should have access to four specialists. For ecotourism projects. This employee will be a master fisherman and speak English. H. and whether or not you will have to train people. He/she will be paid $8. including the owner. but will probably need to receive training in knowing scientific names of 43 . The one full-time person will be responsible for assisting the owner in leading the fishing expeditions. you will provide. one year from now.
As you write your plan. it will be discussed in Chapter Four. The two other employees will be part-time. may become a fulltime employee. be sure to keep track of where you got the information. and the maintenance person. Preparing Financial Statements and Finding Financial Backing. Supporting Documents As mentioned in the Main Checklist./wk./wk. I. and be responsible for the accounting and bookkeeping aspects of the business. receive $15/hr. regional fishing issues. He/she will receive $4." then save the document. The following items may be included in your 44 . The accountant may be asked to increase his/her hours to 20 hrs. but do not include it in the plan.fish. should demand for our service produce enough revenues. There are no anticipated changes for the first year. J. On-the-job training will be provided by the owner for the part-time employee just discussed.. Financial Analysis Analyzing financial information and preparing the correct documents is an important part of the business plan. if necessary. however. The financial analysis contains a lot of information and. One will work around 10 hrs. This person will also receive no benefits or overtime. supporting documents are any type of information that is relevant and lends support to your business plan.00/hr. try to determine whether or not the document adds credibility to your plan. the owners will hire additional staff./wk. rather than trying to go over it here. and maintaining the equipment. and is expected to work approximately 24 hrs. and environmental protection issues as they pertain to fishing.. If the answer is "no. restocking supplies. The other part-time employee will be responsible for cleaning the boats. 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. This employee will receive no fringe benefits and will receive no overtime pay.
You should know your strengths and weaknesses. Conclusion By now you have a good understanding of who your customers are. and how to inform them of your product/service. 45 . The next step is to determine whether or not your business is financially feasible.g. So. it will be unlikely that you will need all of these documents. brochures. what is involved in making your customers interested in the products or services that you offer. and move on to Chapter Four. K. that your business will make money.. Smaller businesses may have only three or four supporting documents. and to your lenders. advertisements) Since each business is different.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. It is important to you. while larger enterprises may need more. You will need to emphasize your strengths and learn ways to correct or compensate for your weaknesses. get your calculators ready.
you will need to show your financial documents to your prospective lenders.CHAPTER FOUR: PREPARING FINANCIAL STATEMENTS AND FINDING FINANCIAL BACKING Unless you finance your business through personal savings or money from relatives. you should determine your total revenue and then calculate the taxes from that amount. your local tax office. 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. The documents that make up the financial section of the business plan are discussed in this chapter: A. contact local business organizations (Chapter Eight). or an accountant. Much of the financial information found in a business plan is important to keep updated. In the case of the gross revenue tax. 46 . in that it takes a certain percentage of your income based on revenue. regardless of whether they are foreign investors or bankers. If you need clarification on taxes. Prepare the financial documents carefully because many decisions may be made on the basis of the figures you use. A Gross Revenue Tax is different. and how you will spend the money. Sources and Uses of Funding This is a brief statement that describes from where you will receive funding. Use realistic numbers. An example of this statement is shown below. and have some evidence that supports your numbers. The financial documents used to request funding are the same documents found in a business plan. All of the financial statements in this chapter reflect a tax structure that taxes income after all expenses have been deducted.
000.000. You will not sell this equipment as part of doing business. 47 . and light fixtures.000. Examples of items that should be included in this list are refrigerators. automobiles. etc.00 *Working Capital: the part of a company's capital which can easily become cash for paying bills.00 $95.000.00 15. computers. Capital Equipment List This list describes the equipment that will be purchased in order for you to create your product or offer your service. wages. this equipment is necessary for you to maintain your daily operation.00 $15.00 10.000. B.000.Danny's Dive Shop Sources: Mortgage Loan Short-Term Loan Danny's Personal Savings Relatives' Personal Savings Total Uses: Purchase Boat Diving Equipment and air compressor 5-Year Lease on land Inventory T-shirts Souvenirs Working Capital* Total $50.00 14.00 20.00 $95. furniture.000.000. boats. diving gear.000.00 50.000.00 1.000. cash registers.00 15.
even if it were five years old. and. An example of a capital equipment list is shown on the next page: 48 . Items that are in inventory will need to be replaced fairly often and will not have any resale value. It will not be sold to customers. for a resort business a refrigerator would be described as capital equipment since it is going to be used by the resort owner. For example. it could still be sold to someone who wants to buy a used refrigerator. it does not have to be replaced very often.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.
450 5.500 465 650 250 500 250 $25. glasses. to keep track of the total amount of depreciation because it 49 .000 450 500 635 985 345 1. As you start operating.340 850 3. pans. boxes Handmade Total: Capital Equipment Total: Cost or List Price (whichever is lower): $1.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.000 1. plates. It would be wise to keep an "accumulated depreciation" column next to the list of prices.100 900 1. this is a useful list to keep track of the depreciation that gathers on your capital equipment.265 If you are just starting up the business. Handmade table linens Miscellaneous display trays.270 $750 245 $995 $26. It is very beneficial for you. silverware.600 1. or your accountant.500 700 300 2. you will only need to know the model type and the cost (or list price).
will help you when you declare your taxes. 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. Therefore." In the example used above. When you first buy a piece of equipment. the refrigerator was bought for $700. every year you would decrease the value of the refrigerator by $70 ($700/10). the refrigerator is not worth $700. you should talk to an accountant or a knowledgeable business person. Accountants have come up with a number of ways for people to depreciate their equipment. We will describe depreciation very briefly so you can understand how it works. Although you paid $700 for the refrigerator. you may only “use up” $100 worth of value. This technique is called "Straight-Line Depreciation. it may only be worth $600. liabilities. We have just described one way of depreciating fixed assets. 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. You may be wondering how you can determine what the value of a piece of equipment is at the end of each year. For example. you buy a refrigerator for $700. 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. The format of a 50 . in year one. Balance Sheet A balance sheet is a financial statement that summarizes the assets. C. For more detailed information. 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. and this $70 would be an expense on your Income Statement. it is worth the amount that you paid for it. After you spoke with the seller. and net worth of a business at a given date. it is not worth as much--but it is still worth something. you determined the refrigerator would last for 10 years. Therefore. As people use the equipment and it gets older. in the second year.
such as an accounts receivable category. The order of the categories is important: they are arranged in order of decreasing liquidity (for assets) and decreasing immediacy (for liabilities). Also. A checking account is very liquid. 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. 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. Liquidity refers to the ease at which something can become cash. The format for a balance sheet is shown below: Name of Business Day (Month. 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 . Day. land is not very liquid. This document can be very detailed or very simple. many of the items listed in a balance sheet are irrelevant to new business people. Immediacy refers to the amount of time you have before something is due. If you are just starting up a new business you may not need a balance sheet.balance sheet is very important and should not be changed. It is difficult to estimate these figures. depending on the size and nature of your business. Just remember to keep it in the proper format.
In addition to cash. Current Assets: This category consists of assets that are cash or can be changed into cash within one year fairly easily. Accumulated Depreciation: In the previous section on page 53. Assets: Generally. and any improvements you have made to the building. Fixed Assets: Fixed assets include all of the capital equipment that you listed in Section B (Capital Equipment List). accounts receivable (money that people owe you). Net Fixed Assets: This is figured by taking your Fixed Assets and subtracting your Accumulated Depreciation. On the balance sheet you would need to add the $210 for the refrigerator along with all the depreciation for the other equipment. and goodwill. If you have been in business for three years. For a hotel operator. 52 . inventories. and on balance sheets. inventory. If we use the same refrigerator example that we used in Section B. 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. real estate. These items are expected to last for a long time and are used in the creation of your product or service. The assets that are changed into cash need to take place through "normal" business activity. In accounting. Accumulated Depreciation is the total amount of depreciation taken off of all capital equipment and buildings. a refrigerator is not considered a current asset because it is not something you would normally sell. building. assets are anything that has value. land. equipment. cash. such as accounts and notes receivable. accumulated depreciation would be $210 or ($70 x 3 years) for the refrigerator. and prepaid expenses (such as insurance or advertising) are all considered current assets.It might be a good idea at this time to define each of these categories. government securities. depreciation was defined and explained. assets are the intangible and tangible resources of a business or person.
Total Liabilities plus Owner's Equity. Be sure that when you calculate long-term liabilities. Usually they include items such as wages. this amount should be in the category named Current Liabilities. Total Liabilities: This is the sum of Current Liabilities and LongTerm Liabilities. and equipment loans (if they are longer than one year). and Other Assets. Liabilities: Liabilities are the debts of a person or a business. This might contain descriptions of an item. Footnotes: Any information that clarifies what has been stated in the above categories. accounts payable (individuals or businesses to whom you owe money because of a service or a product they provided you). Total Liabilities and Owner's Equity: This is exactly what it sounds like. some part of your long-term debt.Other Assets: Other Assets is a category that is usually used for things like patents. salaries. and other intangible goods. Current Liabilities: These are debts that you need to pay within one year. You probably will not have to worry about this category very much. you subtract the amount that you are going to pay off in the current year. It is Total Assets minus Total Liabilities. Total Assets: This is the sum of Current Assets. Net Fixed Assets. long-term bank loans (to be paid back over a period of years). and any other obligations that you have to pay off within one year. Owner's Equity: Sometimes this category is labeled Net Worth. like mortgages. taxes. copyrights. 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 . Long-Term Liabilities: These are debts that need to be paid over the long-term. the names of people or businesses that you owe money to.
492 1.000 $201.500 $7.195 $165. 1994 Balance Sheet CURRENT ASSETS: Cash Accounts Receivable (net) Inventory (Souvenirs) Pre-paid Expenses Total Current Assets FIXED ASSETS: Building a Lighting Displays Stage Props and Costumes b Vans 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 $5.950 16.600 2.753 $116.Kealani’s Hula Halau February 1.250 $12.000 14.195 $3.000 $116.700 $5.500 5.442 $103.500 2.450) $105.450 (96.345 750 $11.192 $750 6.195 54 .
you should be able to make some educated estimates. you may be required to make a Projected Income Statement for every month. b Includes three used vans purchased in January. but be careful not to change the order of the categories.492 d Commercial loan secured by Property A. usually three years. You can make slight changes depending on the expenses that your business has. 55 . The main categories in the Projected Income Statement are: D. and should not be drastically changed.Footnotes: a From John's Lighting Gallery. describe how you came up with that figure. Projected Income Statement The balance sheet provides a picture of the financial state of your business at a given time. Be as realistic as you can about your estimates.350 Water Supply 320 Total $3. Quarterly statements may be satisfactory for years two and three. and ALWAYS document your assumptions. but by using the information you gathered when you were assessing the feasibility of your project. the Projected Income Statement is designed to forecast the financial position of your company over a period of time. just like the balance sheet. Try not to be too conservative or overly optimistic. You may have to estimate many of the expenses until you are actually running the operation. The Projected Income Statement has a standard format. In the first year. If you estimate that your electricity bill is going to be $20 a month. c Accounts Payable to: Island Electric $ 952 Martha's Light Shop 870 Betty's Stitchery 1.
For example. if a customer on a tour to a waterfall broke his ankle.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) Other Expenses: Interest Total Expenses: Profit (Loss) Pre-Tax: Taxes: Net Profit (Loss): 5 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. you. as 56 .
(3) Gross Margin: This is (1) Net Sales minus (2) Cost of Goods Sold. If they seem insignificant. However. (4) Operating Expenses: These expenses are mainly the fixed costs that we will discuss in the break-even analysis. expenses in this category are non-operating.the tour operator. the cost of making them will be included in this category. Others are gains or losses you might have realized from selling old equipment or having something stolen. Be sure to list all your expenses. put them in a miscellaneous category. (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. (6) Total Expenses: This is the sum of (4) Operating Expenses and (5) Other Expenses. 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. 57 . Only include the actual amount of money you will be receiving. 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). 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. you will need to estimate this number based on the information you have gathered. This category also includes the amount of inventory you might have. For example. might want to give the customer his money back. You would not count this customer's fee as part of your total sales. These expenses must be paid no matter what happens and regardless of the number of customers you receive. This means that the expenses are not directly related in running the business. but have not been sold. but. do not forget or leave out any expenses. If you are a new business. if you have 100 handicraft products that have already been made. (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.
you will have to make an educated guess based on all the information you have already gathered. If this same lodge also has a restaurant/bar at which people can drink and eat at. If this same lodge offers boat tours to the other side of the island. Income taxes that you may have to pay will be based on this figure. (8) Taxes: Your taxes will depend on where you live and the tax laws of your place of business. for example. (3) Estimate the level of sales you would receive if everything went perfectly (high). your tax office.(7) Profit (Loss) Pre-Tax: This is (3) Gross Margin minus (6) Total Expenses. your marketing strategies were extremely popular and there was always high demand for your products or services. an ecotourism lodge that only provides shelter for ecotourists has only one line of business: accommodation. (1) Determine what your main product lines or service lines are: For example. As mentioned earlier. 58 . Gross revenue taxes are determined by the amount of your net sales. or an accountant for help in determining your taxes. This amount will reflect the success or failure of your business. such as weather or the state of the economy. then this would be considered a third line of business: recreation. has a good method of determining a "realistic as possible" sales forecast. David Bangs. (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. See the local business assistance organization. then this lodge has two lines of business: accommodation and restaurant services. (9) Net Profit (Loss): This is (7) Profit (Loss) Pre-Tax minus (8) Taxes. 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. Jr.
then you will need to calculate a sales forecast for each month. If you prepare an Income Statement that is broken down by months. A sample Projected Income Statement is shown on the following page: 59 . year) Sales: Low Product/Service 1 __________ Product/Service 2 __________ Product/Service 3 __________ Product/Service 4 __________ Total Sales: __________ Most Likely High __________ _________ __________ __________ __________ __________ _________ _________ _________ _________ Once you have these figures. You will need to do this for each period that you prepare a Projected Income Statement. you can start filling out the Projected Income Statement forms.(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. year) to (month. The table presented below may help you in determining your sales forecasts: Sales Forecast: For (month.
603 $14.500 300 700 $44.843 $5.000 60.000 26.000 0 2.000 $180.482 (v) = variable costs.600 $32.362 $60.800 100 200 500 450 1.597 $70.600 $75.170 2.806 $3.362 $49.758 $ 952 $3.000 2.000 22.800 7.000 75.000 $88.920 100 100 500 875 400 5.000 12.121 $56.500 250 700 $47.000 31.500 2.000 $116.000 30.000 11.500 350 950 $55.010 12.600 $50. (f) = fixed costs 60 .674 $3.510 20.170 2.169 $20.235 $1.000 2.140 2.200 20.192 $5.400 9.000 $131.000 $71.000 5.500 1.1 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 Sales Experience Paradise’s Projected Income Statement Year 1 Year 2 Year 3 Accommodations Tour Trips Restaurant/Bar Total Sales (v)Cost of Supplies (v)Variable Labor Cost of Goods Sold 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 (f)Miscellaneous Total Operating Expenses Other Expenses Interest (Mortgage) Interest (Short-Term Loan) Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax Taxes (estimated 20% of #39) Net Profit (Loss) $35.000 $40.395 30.000 12.332 $50.842 $4.192 $3.000 3.000 31.400 $75.400 $55.000 40.000 0 1.757 $25.192 $5.000 24.160 150 100 750 875 400 4.
and the prices will be reasonable. hopes to have more clientele in the third year. In the second year. he will make a strong effort to attract the local market to their establishment. and tour business will also be operated out of the hotel premises. but there will be little direct advertising off island for the tours. William expects that revenues from tours will steadily increase as guest count increases. (10) Cost of Supplies: The cost of supplies averages about 40 percent of total sales and the supplies are used mainly in the 61 . A large selection of food and drinks will be available. and therefore. A restaurant. (4) Sales: This section lists the revenues received from each of three sources . tours. William plans to advertise extensively. 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.accommodations. he expects the restaurant/bar to be generating sales equal to that of the hotel. During this time. and the restaurant and bar. plan to start a small hotel named Experience Paradise.William and his partner Jim. (6) Tour Trips:. By the end of the third year. efforts will be concentrated on getting the business going and operating smoothly. In the second year. (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. The tours will be open to guests from all hotels and any interested local people. the atmosphere will be conducive to sitting and talking. Brochures will be distributed to all places that tourists visit. (8) Total Sales: This is reached by adding (5) plus (6) plus (7). 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. Explanations and assumptions for the numbers in Experience Paradise’s Projected Income Statement on the previous page are described below by line number.
50/hour.000/year for each of the two owners Year Two: $10. In year three. one part-time waitress. (11) Variable Labor: One full-time maid. an additional cook and waitress will be hired. (18) Payroll Taxes and Benefits: William and Jim determined that this will be 10 percent of (17) Salaries and Wages. (14) Gross Margin: This amount is (8) Total Sales minus (12) Cost of Goods Sold. (17) Salaries and Wages: Year One: $10. 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. (16) Operating Expenses: Most of the expenses included in this section are fixed costs.00/hour. one part-time cook.000/year for each of the two owners or $10.000/year for each of the two owners and $10.000/year for each of the two owners Year Three: Either $15. and annual bonuses. (12) Cost of Goods Sold: This is reached by adding (10) Cost of Supplies plus (11) Variable Labor.000/year for an additional manager depending on conditions at that time. The rates will be $5. They do not vary with the amount of business being conducted. who will be paid $7. and one part-time tour guide will be hired in year one. except for the cook. This will include payroll taxes. This number was determined based on actual figures obtained from similar businesses. In year two.restaurant. another part-time maid will be hired along with another parttime tour guide. The 62 . The owners will also work in the restaurant when needed. health care. The hotel and tour operations use little inventory so these two businesses have low variable material costs.
such as a stapler. (23) Automobiles and Trucks: Gas expenses. accounting books. 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. (22) Office Supplies: Since year one will be the first year of business. thereafter. Years two and three reflect the property insurance that needs to be paid on the purchase of the property. The interest on the mortgage can be seen in line (33) in the category Interest (Mortgage). $160/month in the second year. (21) Maintenance and Cleaning: This is money used for repairs to room furniture and kitchen equipment. Only the interest is shown on the Income Statement. pencils. the utility bill will be approximately $150/month in the first year. paper. For each year. this amount is not expected to be very high in the initial years of running the business. the principal and the interest payments are shown in the Cash Flow Projection which is discussed in Section F. These services are needed initially. and other things will need to be purchased. pens. Since all of the furniture is new. Based on the utility company's rate schedule. and $180/month in the third year. The tour section of William's business needs vehicles to transport their clientele to and from the starting points of the tours. oil changes. and general upkeep for the autos/trucks of the company belong in this category. but they will not be 63 . (25) Legal and Accounting: The first year has high legal and accounting expenses. a number of office supplies.property will be bought in January of the second year and mortgage payments will replace rent. fax paper. office supplies will be restricted to $100/year. (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. $200 will be allocated for office supplies in the first year. (24) Insurance: This section includes liability and vehicle insurance.
The amount is expected to increase as the number of guests increase. (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. they will already have the money to do so. and travel guides. This will be done through brochures sent to travel agents and local tourism offices.5%. (30) Total Operating Expenses: This is the sum of lines (17) through (29).000 loan for six years at 11. it is expected that two percent of total sales will be spent on advertising and promotion. it is a reminder that the equipment they have will be declining in value as they operate their business. At the end of year two. so smaller amounts are budgeted. Although William and Jim will not actually pay this money.needed on a daily basis once the business has been established. travel magazines. the restaurant and bar will be advertised on the local radio and in the local newspapers. (34) Interest (Short-Term Loan): This is the interest on a $35. (29) Miscellaneous: These are all of their expenses that are too small to be itemized. They are going to try and set aside about the same amount of money. 64 . Posters and articles will be sent to international tour agencies.000. (26) Advertising/Promotion: In years one and three. but are not operating expenses. year one) worth $125. In addition.5%.000 mortgage for 15 years at 9. It is expected that the accountant's services might be needed at selected times during years two and three. (27) Depreciation: Ten-year Straight-Line depreciation on equipment (beginning January. In year two. (33) Interest (Mortgage): This is the interest on a $55. four percent of total sales will be spent on advertising and promotion. there will be a large advertising push for international tourists. (32) Other Expenses: These are expenses that may be fairly significant. so that when the equipment needs to be replaced.
and some of the expenses that are especially important to your business. (37) Total Expenses: This is reached by adding line (30) Total Operating Expenses plus line (35) Total Other Expenses. Remember to use figures that are as accurate and realistic as possible. You should explain categories that will clarify your assumptions to your lender or business partner. During the first year. It is also important to remember that you will need a set of Projected Income Statements. (41) Taxes: William and Jim estimate that their taxes will be around 20 percent of their profits. such as your sales categories. interest categories. in a certain time frame. or how much money you need to make. (39) Net Profit (Loss) Pre-Tax: This is computed by taking the (14) Gross Margin minus (37) Total Expenses. for the next two years. but that is a normal situation for small businesses. it is not necessary to explain every category. If you "breakeven" it means that you neither earn nor lose any money. . you may need to break them down by quarters. in order to break-even financially.(35) Total Other Expenses: This is the sum of the interest expense on lines (33) and (34). you will need to figure out your costs on a monthly basis. William and Jim are not planning to make a lot of money in the first couple of years. you will arrive at your overall Net Profit (or Loss) for the year. As you get involved in your business it may be easy to forget about the money you 65 E. (42) Net Profit (Loss): By subtracting (41) Taxes from (39) Net Profit (Loss) Pre-Tax. This number will depend on the tax structure of your own area. like we did in this example. When you are creating your own Projected Income Statement. Break-Even Analysis The Break-Even analysis section is designed to show you how many customers you need to have.
00. suppose a customer at your ecotourism lodge eats dinner prepared by the lodge's restaurant. salaries. then you need to re-evaluate how you plan to run the hotel. You might be charged $20. and your salary. you will still be responsible for paying the $20. so do your costs. Also. Even if you never use the phone. your current expenses.have already invested in your business. A break-even analysis is one way of ensuring that you do not forget all the costs of being in business. administrative costs. 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.on a daily. or perhaps you should start with more or less units. knowing the break-even point will help you figure out if your business has a good chance of surviving. As your level of sales increases. Variable Costs: These are costs that change depending on the number of customers you have. The customer pays $10. no matter how many units you sell or how many customers you have. you need to understand the difference between fixed and variable costs. Your profit is not $10. however.00 fee. and the cost of 66 . it gives you an idea .00/month just for having the phone hooked up to the system. Even more so. Fixed costs include items such as: rent. the amount of money you make should cover all of the original expenses. the electricity that it cost to prepare the food. the wage of the person who cooked the food. or monthly basis . In other words. and "hidden costs" such as interest and depreciation. or you need to cut back some costs.of how much you need to sell in order to pay your bills. you can compare your sales to the break-even point and know if you had a good or bad day. because you must pay for the food that was prepared. One example might be the basic telephone bill. the janitor who cleaned up. Fixed Costs: These are costs that stay the same. weekly. These costs will remain the same regardless of whether or not you conduct any business. For example. Before explaining how to calculate your break-even point. when you close the register at the end of the day and add up the receipts.00 for his meal. Maybe you need to increase your rates. when you are making plans.
This may be better for you. 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. If 100 people decide to eat at your restaurant. If all of the costs add up to $7. the $3. because you will get a better per unit price on something if you buy a lot of it.00. then you actually made a profit of only $3. as shown below.00 meal because there are many other variables to consider. or the amount of customers you have. However.00 profit shown in this example will not be constant for every $10. On the other hand.00. and you do not know how many customers will be purchasing your product or service. All of these costs need to be considered when you determine your break-even analysis.removing the garbage. you may have to spend a lot more. increases or decreases. you need to purchase a lot more food. The best way to determine your projected break-even sales amount is to use a different formula. Variable costs may decrease or increase as your level of sales. 67 . if you want to buy some crab and there is a short supply of it.
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. The following steps will explain how to find your projected break-even point.000/year to break-even. say you determined that you will need to make $20. Step 5: Divide the Fixed Costs by your result in Step 3. A sample break-even analysis for an ecotourism hotel is on the next page: 68 . The Gross Margin (in dollars) will be Total Sales minus the Cost of Goods Sold.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. then you will need 200 ($20. Step 3: Divide the Gross Margin by Total Sales (GM ÷ Total Sales). Step 2: Find the Total Sales figure from the Projected Income Statement.000 ÷$100) customers. If each customer pays an average of $100. Step 1: Find the Gross Margin ( in dollars) from your Projected Income Statement. For example. This should give you the amount of money you will need to make in order to break-even. 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. Step 4: Determine your Fixed Costs.
522÷12) FC = $24.877/month ($106.400 ÷ 95.500/year Gross Margin GM = (21.042/month 2000 0 Ja n Fe b M ar A pr Jun Jul Aug Se p O ct Nov De c Monthly Sales 69 .000) = . by Month 12000 10000 S a l e s Break-even = $8.Jungle Paradise Hotel Break-Even Analysis Fixed Costs: FC = $24. break-even sales = S = FC ÷ GM = ($24.500 ÷ .522/year On a monthly basis: S = $8.500 ÷ 12 = $2042/month Break-Even Analysis for Year 1993.23) = $106.877/month D o l l a r i s n 8000 6000 4000 Fixed Costs = $2.23 = 23% Therefore.
Jungle Paradise makes more than the fixed costs. you should always be able to pay for all of your fixed costs. In this case. or reevaluate the prices that you are planning to charge. This is acceptable. if your tours are sold-out every day. What would their break-even point have be to achieve this profit level? 70 . In the above example. If your business is very profitable and you need to rent another building. you may have to hire another full-time person who will receive a salary. If you are unable to cover your fixed costs. they need to be taken into account when updating your breakeven analysis. Any of these situations would cause your fixed costs to rise. If you are finding that your break-even point is unrealistic. Jungle Paradise will be making over $8. Notice that in each month. Keeping your costs down is just as important as generating sales. 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.This graph illustrates when Jungle Paradise will reach its break-even point. if your dive adventures are popular. Another item you must consider is that fixed costs do not necessarily remain the same forever. let's imagine that the owners of Jungle Paradise wished for $8. however. you may need to buy another boat.000 profit in the first year. your fixed costs are going to rise. it is estimated that in September of 1993. 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. you will need to make some major changes in your business. you may have to cut back on some of your costs.877.
FC VC Total Sales (projected) GM 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
= $24,500 = $21,400 = $95,000 = 23% = .23
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) (b) (c) (d) (e) Goal Break-even Sales (annually) Break-even Sales (monthly) Break-even Sales (weekly) Break-even Sales (daily) Break-even Sales (annually+certain Profit [P] ) Formula S=FC ÷GM Result in (a)÷12 Result in (a)÷52 Result in (a)÷365 S=(FC+P)÷GM (e.g. P=8,000) Result $24,500÷.23=$106,522/yr 106,522÷12= 8,877/mo 106,522÷52= 2,049/wk 106,522÷365=292/day (24,500+8,000)÷.23=141,304/yr
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 . (f) Goal # of customers needed annually to break-even # of customers needed monthly to break-even # of customers needed weekly to break-even # of customers needed daily to break-even # of customers needed annually to break-even with profit of $8,000 Formula Result in (a)÷100 Result $106,522÷100= 1065 customers/yr $8877÷100= 89 customers/mo $2,049÷100= 21 customers/wk $292÷100= 3 customers/day $141,304÷100= 1413 customers/yr
Result in (b)÷100
Result in (c)÷100
Result in (d)÷100
Results in (e)÷100
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!
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.
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:
000 4.129 550 669 $7.390 600 125 2.472 *Fixed Cash Disbursement (FCD) Utilities $1.000 Payroll Taxes and 2.150 1.873 (.000 400 $11.732 $32.400 2.129 75 .129 550 669 10.129 550 669 $7.23) $32.129 550 669 $5.1 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 Cash Receipts Experience Paradise’s Cash Flow Projections.000 350 $6.000 2.500 35.437 $28.732 $2.322 $31.500 420 $10.300 1.438 (-9. Year 1 March April May June $2.200 1.950 1.400 1.610 700 $2.500 3.850 1.600 3.713 July $4.000 2.550 600 250 125 2.520 600 800 200 1.550 FCD/month $2.150 700 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) Total Cash Disbursements Net Cash Flow Cumulative Cash Flow 2.350 1.600 2.200 1.150 August $4.000 $16.000 1.100 250 $6.463 4.520 3.950 350 $5.800 Salaries 20.400 $40.129 550 669 $7.900 3.709 $2.000 2.658 492 $33.000 Benefits Automobiles and 500 Trucks Office Supplies 200 Maintenance and 100 Cleaning Telephone 250 Miscellaneous 700 Total: FCD\year $25.129 550 669 $5.201 2.468 $32.890 600 600 2.488) $23.198 3.
010 $ 450 $1.500 1.400 1.000 $39.002 $33. Jan.500 1.750 1.129 550 669 $6.553 (.881 2.550 260 $5.053 (-30.800 1.600 2.008 (.129 550 669 $5.250 600 2.710 600 250 125 2.250 2. Dec.308 3.335 2. Year 1 (cont.460 $3.) Sept.129 570 669 $6.614 2.333 2.400 4.240 700 $24.000 $22.640 $8.548) $30.800 $7. $3.110 $1.129 550 669 $6.392 2.210 $2.200 $4.110 Feb.614 76 .358 (.000 $31.550 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 31 32 33 34 35 36 37 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) Total Cash Disbursements Net Cash Flow Cumulative Cash Flow Experience Paradise’s Cash Flow Projections.576 $ 5.248) $31.500 430 $9.850 210 $5. $1.190 1.410 600 1. Oct.000 460 $11.530 Total $35.028 $45.600 $2.222 $5.343) $30.000 $121.224 2.943) $2.548 $6.900 1.600 700 360 2.190 $127.450 450 $9.198 3. Nov.000 3.000 1.480 600 125 1.000 $42.500 $25.129 550 669 $5.600 210 $5.129 570 669 35.
or even once every three months. (8) Total Cash Receipts: This is the sum of all revenues received from each division of the business on lines (4) through (7). (12) Variable Labor: These figures are the same as on your Projected Income Statement (line 11). because it is off-season for tourists. electricity bill). Business is expected to be slower than usual from September to November. and restaurant/bar) is the same as the amount found in the sales category of the Projected Income Statement (Section D). You should try to spread out your expenses so that your business is stable. it will be very difficult to pay them and still run a profitable business. Notice that the total cash receipts received from each part of the business (accommodations.000 short-term loan. bar and restaurant. It is also expected that donations and sales of trinkets made of natural materials will raise an additional $200-$500/month. Experience Paradise will receive immediate payment for its products and services. (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. (7) Other Sources: In March of the first year. tour trips. It may be spent every month (for example. since it is the start of the peak tourist season. (11) Cost of Goods (Supplies): These figures are the same as on your Projected Income Statement (line 10). this business received a $35. It is important to know when the money needs to be paid. $250 will be spent in April. If all of the major expenses are due in January. (10) Cash Disbursements: This is the amount of money required to cover your expenses. or only once a year (insurance). An additional $600 in brochures and radio advertising will be spent in June. In November. Notice that the year one total on the Projected Income Statement is the same as the total on the year one Cash Flow Projection.(3-6) Cash Receipts: Since all business is conducted on a cash/check/credit card basis. $360 will be spent on a promotion for 77 .
(14) Insurance: Insurance costs in the first calendar year were $20/month. On line (16). This is found by adding the numbers in lines (28) through (35).000. In order to determine the monthly payment. they only had to pay for 10 months. Notice that all of the figures are the same as the yearly totals in the income projection statement. As you can see from line (14) in the Cash Flow Projections. If you look at line (37). a total of $250. In other words. Experience Paradise opened in March. it is a cash expense to the business only once a year. and January). October. $2. July. These expenses are added together and then evenly distributed throughout the year. so the total figure is also a yearly number.129 is the cash disbursement in every month. divide line (36) by 12. so in the first year.129. William paid $200 in March. Experience Paradise paid the insurance for the upcoming year. the hotel expects to use $500 more in legal and accounting fees. Notice that it says FCD/year. line (37) = line (36)÷12. (16) and (27-37) Fixed Cash Disbursements (FCD): These are payments that are relatively independent of sales and fairly constant from month to month. Notice that the year one total on the Projected Income Statement is the same as the total on the year one Cash Flow Projection. In January. All of the numbers listed in the fixed cash disbursement are yearly expenses. (15) Legal and Accounting: During the first month. In addition to this initial start-up expense. 78 .the restaurant part of the business. These fees are charged on a quarterly basis. payable as one payment at the beginning of the year. the total FCD/month is determined to be $2. William and Jim needed a number of professional services in this area which cost $1. All of the expenses that are part of fixed cash disbursements are shown in lines (28) through (35). The fixed cash disbursement total is shown on line (36). Although the insurance company determines its fee on the number of months. Legal and accounting fees of $125 are paid every three months (April.
The Projected Income Statement is only concerned with the total amount of interest to be paid over the life of the loan. Experience Paradise will have to cover the mortgage payments. or going out of. January: Purchase of building. (21) Total Cash Disbursements: This is the sum of lines (11) through (19). (25) Cumulative Cash Flow: Line (25) shows how much money is really left at the end of a month. you may still have a positive balance because you might 79 . For example. (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. (23) Net Cash Flow: This tells you how much cash is coming into. your business. This is the amount of cash you will have to pay each month. rent is $550/month until January. If you take the amount of line (8) Total Cash Receipts and subtract the amount on line (21) Total Cash Disbursements in the example. it is $669/month for six years. These numbers will differ from the numbers on the Projected Income Statement. In this case. you will list the figures in this category. A mortgage of $55. Even if you lose money in February. you will get the Net Cash Flow for that month.000 for 15 years at 9. in April. They paid $23 more than they received in sales. then you lost money in that month. At that time.(17) Mortgage (rent): In this section you should list your payments for rent or your mortgage payments.5% interest requires a monthly payments of $570. (19) Others: If there are any additional large or special payments that will occur. Experience Paradise lost $23. If the number is in parentheses ( ). In the example: June: Payment for kitchen equipment purchase due in full. In the example. You should explain each of the payments. It was stated in the Projected Income Statement that the building was going to be purchased in January. This is because $570 includes the principal of the loan and the interest.
Please note that the categories and figures are exactly the same as those on the Income Statement. you will know if your are going to make a profit and you can monitor your progress. If you prepare a Cash Flow Projection Statement and notice that this type of problem might occur. This number is found by taking $32. The Cash Flow Projection Statement is a tool for you to make important decisions. You may realize that your advertising budget is too large. however. A Cash Flow Projection Statement is also useful for detecting expenses that might be too high.732 which is the same as its (23) Net Cash Flow.732 (the Cumulative Cash Flow in March) plus (-$23) (the Net Cash Flow in April). There is one more thing you will need to do in order to complete your financial analysis.have made a lot of money in January. In April.709. the cumulative cash flow is $32. but you do not have to look at another worksheet or calculate any more numbers. If you determine sales and expenses on an annual basis. you may be able to negotiate with your suppliers to spread out your payments. This is because it is the first month of business. They are added together and then arranged out over the year on a monthly basis in line (16). Once you make the realization. you can do something to correct the situation. (27) Fixed Cash Disbursements: Lines (27) through (37) itemize the Fixed Cash Disbursements which are part of (16) Cash Disbursements. March had a cumulative cash flow of $32. In the example. You find these numbers by adding the amount of (23) Net Cash Flow to the previous month's (25) Cumulative Cash Flow. Congratulations!!!! You Made It Through This Section!!!!! Well. The financial analysis section is 80 . you may not be able pay all your bills on time. and there is no profit or loss from the previous month. 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. almost. If all of your expenses need to be paid in one month.
what investments you have made. you should include previous tax documents in this section. If you are establishing a new business. and Cash Flow Projections are very helpful in getting a loan. 81 . break-even analysis. what you have done with profits. then Income Statements and Cash Flow Projections may have to be realistically estimated. remember to keep track of all of your financial information. Banks are able to investigate your credit rating. It is much harder to obtain a loan from a commercial bank if you are trying to set up a new business. Financial documents. Commercial banks are generally willing to finance loans for existing businesses. and other important information. If you are just starting out in business. If you ever plan to expand your business in the future and will be looking for financial backing. how you have minimized losses. G. and your credit rating will be extremely important. then commercial banks will be interested in you. This information is important because it shows lenders or buyers that you can operate a successful business. you will need to support your ideas with financial documents. Income Statement projections. Lenders can determine many things from your previous records: how you have managed your business. Personal tax statements may be requested. Banks need evidence to prove that you are a good business person.probably the most difficult for entrepreneurs to complete because it is so detailed. taking the time and the effort to find this information and making these documents can provide you with useful tools to make good decisions. The development banks may be more helpful if your business is the type they have decided they want to support. such as balance sheets. Just remember. In addition to balance sheets or Income Statements. then you probably have some previous financial documentation. Historical Financial Reports If you have already been in any type of business. Another important thing to have is a good credit rating (this means that you have paid back your previous loans on time). If you can prove to the bank that you have the ability to run a business and pay back your loans. so make sure you pay back money that you borrow.
as an entrepreneur. you are still responsible for paying back all of the money that you borrowed. Secondly. you must furnish them with realistic information. development banks support tourism-based businesses. 82 . must be willing to work long hours and sacrifice your personal savings to make your dream come true. For them to be able to lend you money. First of all. 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. there must be a very strong desire to establish and make the business successful. especially those that will create jobs for local people.Generally. You must also understand that even if your business fails. this person must have an excellent credit rating. You.
bankers. therefore. it would be best to get some professional help. and your neighbors. it will reduce the quality of a visitor's experience.CHAPTER FIVE: PREPARING AN ENVIRONMENTAL IMPACT ASSESSMENT An Environmental Impact Assessment may not be required by your government.appreciate them. and pass on your knowledge to others. Agencies and institutions that can help you prepare these assessments are 83 . Ecotourism businesses are usually small and will not require in-depth or complicated analysis. you should make know how your business activity will affect the environment. as well as in their content. and gradually force them to travel elsewhere. we will not discuss Environmental Impact Assessments that discuss extended benefitcost analysis techniques or risk assessment. protect them. Environmental Impact Assessments There are various ways of preparing Environmental Impact Assessments that differ in the level of detail. However. Showing potential visitors that you are serious about preserving the environment. 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. learn about them. and potential visitors that you are sincere about establishing an ecotourism business. If you would like to conduct a very thorough EIA. and natural surroundings also adds value to your service. Preparing an Environmental Impact Assessment will also show people such as government officials. the natural surroundings. If the environment or surroundings are polluted. Do not take the environment and your natural surroundings for granted . culture. if you are establishing an ecotourism venture.
This manual was paid for by the Asian Development Bank and prepared by the Environment and Policy Institute at the East-West Center. How to Assess Environmental Impacts on Tropical Islands and Coastal Areas. there should be a low level of impact on the surrounding areas. Carpenter and James E. Maragos. Preliminary Environmental Assessment or Initial Environmental Examination: This is the simplest type of Environmental Impact Assessment. Much of the information in this section comes from a training manual entitled. by Richard A.listed in Chapter Eight of this handbook. 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. You. 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? 84 . as an entrepreneur of an ecotourism business.
Explanation of your plan to monitor your surroundings and. ° Check the sewage system every week to ensure that there are no leaks into the water supply.(2) Identification of possible impacts to the site from previous experiences For example: ° There used to be many trees. walking off of clearly-marked paths. and destroying plant and animal life. 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. ° Make a plan to educate your visitors to be sensitive to the environment by not breaking off pieces of coral. and that your visitors are not a negative influence on the lifestyles of the local people. ° Sewage problems from the village has contaminated the water supply. ° Talk to the village headman at least once a week to ensure that the villagers are happy. but many of them have been cut down for fire wood for cooking. plans to correct any existing problems based on what you know and what you have learned from looking at the site For example. ° The reduction of trees has caused a number of birds to disappear. ° The introduction of electricity has drastically changed the traditions of the villagers. if necessary. (3) 85 . ° Litter has made the sight very unattractive. investigate why the changes have occurred and correct the problem.
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. It may be helpful to do this together with a number of your friends or business associates. If it is. It is probably not worth it to have such a detailed plan. successful business. so preparing a complete EIA will benefit you. The EIA will be one reflection of your sincerity in developing a responsible.A second type of EIA is called a Quantitative and Explanatory Impact Assessment. It involves a lot more time and effort. 86 . unless it is required by your government. Take a look at the three steps discussed in the Preliminary EIA statement and do a thorough job of describing your business site. see Appendix A for more information.
you may have to receive permission from the Department of Immigration. 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. Many government officials may want to be informed about your business and may request submission of various documents. but there are a number of things you can do which may help you receive the proper authorization. If you are going to conduct activities that may be dangerous. As an ecotourism business you may have to work with departments that are concerned with business licenses. you may have to work with the Department of Health.CHAPTER SIX: RECEIVING OFFICIAL AND GOVERNMENTAL APPROVAL No one can guarantee governmental approval for your business idea. If you are planning to bring in foreign labor. Each Pacific island has different government regulations. 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. Certain infrastructure needs will be required for your business. you may have to do some investigating to determine which governmental office is the appropriate one to help you. You will also need to know which level of government has the authority to make the approvals you need. the environment. and tourism. You may need to go to both 87 . as well as several others. so you may have to work with whichever office is responsible for planning. Every business on every island is going to have to fulfill requirements specific to its government and culture. 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.
contact the Department of Taxation. Be prepared to meet with a lot of different government officials. and/or the Department of Resources and Development (or their equivalent). 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. 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. contact his/her supervisor. If you do not completely understand what information the government department needs. the Department of Commerce. and even weaken your case. ask the official to explain it again. If the person you are talking to is unclear of what you need to do. Ask the department head or chairperson who they want you to work with. Even though this may seem embarrassing. if you meet with the wrong person. the Department of Planning. it is better to ask than to spend a lot of time collecting the wrong information.state and national governments. You can waste time. These departments will be able to point you in the right direction. you must determine who can be of assistance and who has the authority to make decisions. It never hurts to start at the top. If you do not know where to start. If you talk to different people all 88 .
89 . Fourthly. 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. And be nice.the time you may get conflicting information. It is better for you to make the effort and ensure that you have the most recent. you may have to present it in a way that is consistent with the government's requirements. For example. up-to-date information than to prepare the wrong documents. if you have to make any changes in your business idea. (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. (C) Check Back Periodically As you go through the process of gathering the information that is required by government departments. It will also be beneficial for you to explain to the new person what documents you are working on in order to receive approval. if you are supposed to supply the department with information about how to finance your project. it is a good idea to consult with the government contact person. and you may not have been informed of the change. First of all. regulations sometimes change. This is helpful for a number of reasons. If a new person takes over the duties of your original contact person. try to work with them every time. This action may mitigate any possible misunderstandings in the future. ideally. it will be best for you to introduce yourself and your business idea to him/her as soon as possible. so when you have found the right person. this person will become a personal advocate or supporter of your plan. A third reason is to confirm that you are preparing the documents in a way that is acceptable to the government office. check back periodically with your contact person.
train local workers. It will be difficult to run a business smoothly if you have made enemies within the government. Know what changes are taking place.(E) Build a Positive Relationship with Government Officials As is true in most business situations. if you are willing to support them. and provide a chance for local people to participate in owning and running their own business. Being aware of changes in government offices is a good business practice. more money stays on the island and in the hands of the local people. nature. Ecotourism businesses do not have to be small. government officials are usually willing to support you. Be sure to document. On the other hand. it will be to your benefit to have a positive relationship with government officials. and work with your knowledge to create the results that are the most beneficial to you. and education. (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. they can be medium-sized or even be run as a large-scale operation. 90 . know how the changes will affect you. If you are thinking of expanding your business. In general. work with local people to settle land claim differences. Mass tourism resorts and affiliate businesses often involve large inflows of foreign investment and large outflows of earnings from tourism-related activities. culture. ecotourism businesses bring money directly into the island's economy. You should know about the philosophies that current office-holders have and know how that will affect your business. and show the government officials how your island and the local people will benefit from your business. What is important is that ecotourism operations are defined by their commitment to the environment. This is a myth. it may be better for you to try and work with government officials that agree with your principals and are sympathetic to your needs. Since ecotourism businesses use a large proportion of local labor and materials.
there is no way that you can be a successful ecotourism operator. The information contained in this chapter does not have to be done in any particular order. if you cannot succeed in managing the operations. If possible. As you go through the list. 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. you must get started. 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. Twenty-five responses were received and the advice given in this section is derived from their responses. or one that has experience and interest in developing ecotourism facilities. they can only be implemented if you are profitable. Although the ecotourism factors are crucial to your business.CHAPTER SEVEN: STARTING UP YOUR OPERATION After all the planning is done. Sixty-five ecotourism operators in the Pacific islands were surveyed in October 1993. but the list may help you determine what types of things you must do to get established. Some of their plans for ecotourism architecture are shown at the end of the book. The most important thing to remember is that you are running a business. Other things that might need to be considered are listed below: Hire professionals. it might be helpful to mark all the suggestions that are applicable to your business idea. hire a local contractor. Read the advice carefullly because their experiences and insights can help protect you from potential problems and frustration. Some of it may not even be relevant to your business. current ecotourism operators have provided some advice for new entrepreneurs. 91 . In this section.
but it would be a waste of money to buy things that are not necessary and do not get used very often. Encourage them to give you ideas and participate in decision-making. 92 . Ecotourists like to stay in places they feel are a part of the local culture. Thirdly. Secondly. You can always buy additional items as you need them. if you are not careful. if you plan to borrow more money in the future for expansion or improvements. and enabled her to market her services better. it is just good business sense to keep track of your expenses. lenders (banks or investors) might want to know how you have spent the money they lent you. recommends that every new ecotourism business buy a facsimile (fax) machine if they are connected to a phone line.Construct the buildings with local labor and materials. Vasili Moelagi Jackson. if you borrowed money. Buy only the equipment and supplies that are absolutely essential to your operations in the beginning. The fax machine has allowed her to confirm direct bookings with clients. a very successful ecotourism operator in Western Samoa. Talk to the local residents every step of the way. You do not want to run out of money when you are only halfway through it. Find ways for the residents to participate that are financially and emotionally rewarding. This is important for a number of reasons. Lastly. it will be helpful to show lending institutions some of the costs you incurred as you were establishing your business. establishing a business can get expensive very fast. Keep good records of what you have spent your money on. First of all.
If you have kept good records of how you spent your money. You may want to keep some of this information confidential by keeping a diary. then you will already have followed this piece of advice. Keep track of things that have worked and things that have failed. It is necessary that you update the list on a fairly consistent basis. you might also document why something was successful or why it failed. Items will need to be deleted and added to the list as you get rid of something or purchase a new piece of equipment. When you are busy working. or expand your business. which is described in Chapter Four. if you prepared a Capital Equipment List. This will help you in the future if you ever make changes to your existing business. 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. then you should already have a fairly detailed list of the equipment you have.Keep complete lists of the equipments that you get. 93 . Also. you may not be able to remember everything you hear.
This will also help you make better estimates for the following years. 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.Keep track of the differences between the projected figures on your financial statements and the real figures. You can always hire more workers in the future as you need them. 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. Accurate financial statements will also be helpful if you wish to seek lending in the future. and to set priorities about purchases and hiring. Hire only as many employees as are necessary. you will need to recruit your employees. it will not help your reputation in the local community. provide any necessary training. If you have overspent in the Salaries and Wages category. 94 . If you hire too many workers and have to lay off (fire) some of them because you do not have enough business. and help them feel comfortable in their new positions. Determine how many workers you will need when you first open the doors of your ecotourism venture. they you may not be able to afford a van or some other needed equipment. Once you have answered these questions. 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. Decide how you are going to locate your employees. It is easier to do this on a monthly basis than try to remember everything at the end of the year.
but do not compromise your dream. 95 . but just keep looking toward your dream at the end. government certificates. this might be included in the list of important documents. contracts. and any other information that seems important to you.be open to new ways of doing things and other people’s needs. If you have put together a business plan.Make copies of all the important documents you have that pertain to your business. This may seem contradictory and very difficult to accomplish. This piece of advice was given quite often. Some things may be more difficult in the Pacific islands due to lack of infrastructure. lease agreements. Maintain a good sense of humor. It is important to be flexible in your ideas. warranties. however. In addition. Opening a business anywhere is difficult. financial documents. Different people have different ideas . it is possible. Your dream contains some important values and ideals that you believe in. You might want to purchase a fireproof safe to keep these documents and other valuables. 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. This will include loan agreements. and it has a lot of merit. letters of support/approval from government officials or guests. the size of the economies. receipts for any major purchases. without comprimising your values. and there may be many ways to achieve your dream. tax records. You may have to alter things along the way. The best therapy for a bad day is to laugh at it and try to learn from it. or land ownership problems.
you can still hire someone to make the chairs. stock up on the items you have listed. Whenever you make a decision that might impact one of these systems. and your knowledge with your guests. big and small. Keep in mind that you are trying to minimize negative impacts on the environment. When the visitors leave. do what you can to prevent negative effects. they will remember you as a friend. which is great for business. 96 . treat them as friends.Stock up on items you will need to run your business. but it encourages people to come back. you will need to have furniture for the rooms and the common area. it might not be so overwhelming. You can stock up on paper. cleaning supplies. Once you are receiving visitors. your food. Even if all of the buildings are not yet completed. If you do it a little at a time. For example. nature. 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. As the opportunity arises. Just remember that you should keep track of your expenses and buy only what you will need and use. when you have the chance. Listen to advice from others and make the decision that you feel is the best. if you are setting up an ecotourism resort. As you start setting up operations. and office equipment. Share your customs. Talk to people about your ideas and try to understand what may happen. not as a business person. keep a list of all the things you will need. Not only does this fulfill the objectives of ecotourism. and culture.
Divert water off paths and roads before the flow becomes so strong that it creates significant erosion problems. or paths. Construct paths or walkways that do not interfere with habitats or lifestyles of local residents or wildlife. The following checklist. When you construct buildings. This is because the structures were built around the trees and the vegetation that already existed. roads. 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. Use naturally-felled trees or thatch whenever possible (such as trees which have fallen down from wind or other natural causes). Do not clear a lot of plants or vegetation from the shoreline and beachfront areas.If you plan to market your business as an ecotourism venture. For example. ° ° ° ° ° 97 . make sure your construction will not cause erosion. then you need to be sure that your building structures and your services meet the standards of ecotourists. some of the sleeping houses at The Village Hotel on Pohnpei have strange shapes.
Use low impact techniques. and cultural images wherever that approach is environmentally sound. Provide signs along paths that educate visitors. ° ° ° Building Design Issues ° Assure that the designs reflect seasonal variations such as rainy seasons and solar angles (e. The Village Hotel uses natural wind currents. Discreetly label plant/tree types around the immediate lodging facilities to acquaint visitors with species they may encounter in the surrounding preserved/protected areas. enhance appreciation of natural environment.. such as boardwalks. and clearly establish rules of conduct. Strictly limit the use of automobiles and other vehicles.° ° ° Construct buildings around natural vegetation. Provide additional rules in guest units. ° 98 . and each sleeping house has a view of the sunrise or the sunset). materials.g. Design buildings that utilize local construction techniques. 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. instead of paved or unpaved trails 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). Provide ecotourists with reference materials (if available) for them to learn more about the environment and your culture. and rodent control. Give special design consideration to insect. reptile. Design building on long-term environmental standards and not necessarily on short-term material standards. ° ° 99 . adjacent to paths wherever possible. The sensitive approach to design should minimize opportunities for intrusion rather than the killing of pests. local craftspeople and artists wherever possible. 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. Take advantage of local materials.° Provide building forms and images in harmony with the natural environment. Locate water lines to minimize disruption of earth. Design facilities to enhance natural ventilation and avoid unnecessary consumption of energy.
Waste Management Issues ° Utilize appropriate technologies for the treatment of organic wastes such as composting. or biogas tanks. It will take a lot of work and patience. Provide for environmentally sound methods of trash removal. ° ° ° ° 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. Provide facilities for recycling.and you will have made your dream come true. Provide trash storage secure from animals and insects. almost every respondent said that in spite of all the problems and hardship. In addition. they would all do it again. septic tanks. Look at methods to recycle wastewater for nonpotable uses and to treat tainted waters before their return to the natural environment. but it is worth it . 100 .
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. SW Washington. 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.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. Tom Hall.S.. Program Specialist Tel: (202) 586-8302 (Information on federal programs providing foreign buyer assistance) 101 . Room 359 Honolulu. DC 20585 Attn: Mr. Department of Energy 1000 Independence Ave.
publications available) Environmental Center University of Hawaii 2550 Campus Road Honolulu. Coordinator Tel: (808) 956-7361 Fax: (808) 956-3980 (Will do environment impact studies) 102 .O. Box 2415 Washington.Conservation and Environmental Protection Division Agricultural Stabilization and Conservation Service U. HI 96822 Attn: Mr.S. preserve and improve migratory waterfowl habitat and wildlife resources and secure other environmental benefits and agricultural production limitations) Conservation International 1015 18th Street NW.To conserve surface waters. John Harrison. DC 20036 Attn: Jill McLaughlin Tel: (202) 429-5660 Fax: (202) 887-5188 (Non-profit organization dedicated to saving threatened ecosystems. DC 20013 Tel: (202) 720-9073 (Water Bank Program . Department of Agriculture P. #1000 Washington.
foreign assistance programs and services in renewable energy) 103 . DC 20002-4226 Attn: Ms. 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. Judy Seigel. Agency for International Development Room 508. DC 20002 Attn: Ms. DC 20523-1810 Attn: Mr. NE Suite 805 Washington. N.S. Suite 805 Washington.S. Renewable Energy Director Tel: (703) 875-4694 Fax: (703) 875-4053 (Information on experience with renewable energy in developing country applications. SA-18 Washington. and availability of U. Ross Pumfrey. 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.E.Export Council for Renewable Energy 777 North Capitol Street. may also help small businesses) Office of Energy and Infrastructure Research and Development U.
designing and installing watershed works of improvement. HI 96848 Attn: Dr. institutions and individuals in the control of water pollution) 104 . and public water-based fish.O. control.S. sedimentation. in sharing costs of flood prevention. DC 20013 Attn: Deputy Chief for Programs Tel: (202) 205-0027 (Watershed Protection and Flood Prevention Technical Assistance assistance in planning. DC 20460 (Water Pollution Control . Department of Agriculture P. wildlife and recreation.Resources Institute (Energy & Minerals) East-West Center 1777 East-West Road Honolulu. Director Tel: (808) 944-7560 Soil Conservation Service U.provides grants to help agencies. Box 2890 Washington. drainage. irrigation. 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. Fereidun Fesharapi.
Williams. A-413 University of Hawaii at Manoa 2404 Maile Way Honolulu. Director Tel: (808) 956-6286 Fax: (808) 956-6278 (The Pacific Business Center offers a variety of informational. Hawaii 96822 Attn: Ms. and business-related services to small businesses and governments in the Pacific) Pacific Islands Development Program East-West Center 1777 East-West Road Honolulu. Director Tel: 944-7745 Sea Grant MSB 230 University of Hawaii Honolulu.RESOURCES FOR SMALL BUSINESS DEVELOPMENT University of Hawaii Sources Pacific Business Center Program College of Business Administration. Raymond Tabata. Coastal Research Agent Tel: (808) 956-2866 Fax: (808) 956-2858 105 . HI 96822 Attn: Dr. HI 96848 Attn: Dr. Sitivini Halapua. Angela L. technical.
Honolulu. Room 7123 Honolulu. or developing a healthy economic climate in rural communities) 106 . municipalities. 4) water storage facilities. 3) shift in land use facilities.S.S. control. HI 96850 Attn: Mr.to provide loan assistance for 1) rural and community public outdoor-oriented. conservation. corporations. developing or financing business. and 5) special purpose equipment to carry out the above purposes). (Rural Businesses and Industrial Loans . and use facilities. Federal Government Programs EDA/ U. counties or individuals for the purpose of improving. trusts. waterbased recreation facilities.U. partnerships. also. tribes. 2) soil and water development. District Director Tel: (808) 541-2556 Fax: (808) 541-3162 (Resource Conservation and Development Loans . Frank McChesney. HI 96813 Attn: Thao Khamoui. Department of Commerce 4106 Federal Building Box 50264 300 Ala Moana Blvd.guaranteed/insured loans to cooperatives. Economic Development Representative Tel: (808) 541-3391 Fax: (808) 541-3138 Farmers Home Administration Prince Kuhio Federal Building.
guaranteed/insured loans. Small Business Administration 238 Archbishop Flores Street. Director Tel: (671) 472-7308 Fax: (671) 472-7365 (Management Assistance to Small Businesses . HI 96850 Attn: Sally Dugger.S. (Loans for Small Businesses . expand or convert facilities. Room 508 Agana.advisory services and counseling.direct loans.SCORE/ACE Small Business Administration Prince Kuhio Federal Building. dissemination of technical information to help prospective as well as present small business persons to improve skills to manage and operate a business) and. to purchase building equipment or materials. training. Room 2314 Honolulu. preserving and strengthening small businesses owned by low income persons. or located in areas of high unemployment. Lujan. for working capital) 107 . GU 96910 Attn: Mr. direct loans to independently owned and operated small businesses to construct. 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.L. Jose M. advisory services and counseling to assist in establishing.
O. Executive Director Tel: (670) 234-7145 Fax: (670) 234-7144 108 . Box 1250 Saipan. MP 96950 Attn: Mr. Eric Plinske. James H.American Samoa Amerian Samoa Government Ecomonic Development Planning Office Commerce and Industry Division Pago Pago. Box 2149 Saipan. Business Development Specialist Tel: (684) 633-5155 Fax: (684) 633-4195 Commonwealth of the Northern Mariana Islands Business Incubator Northern Marianas College P.O. Assistant Manager Tel: (670) 235-1551 Fax: (670) 235-5383 Commonwealth Development Authority Watkin’s Building. Ripple. Alex Zodiacal. AS 96799 Attn: Mr. MP 96950 Attn: Mr. Gualo Rai P.
FM 96942 Attn: Mr. O.O. FM 96943 Attn: Mr. Pohnpei. MP 96950 Attn: Mr. Box 1250 Saipan. DeLeon Guerrero. Antonio V. Chuuk State.O. Simiram Sipenuk. Box 36 Colonia. Business Advisor Tel: (691) 350-2184 Tel: (691) 350-4113 109 . Director Tel: (691) 320-2735 Fax: (691) 320-5997 Yap Commerce and Industries Division Department of Resources and Development P.Visitor Industry Program Northern Marianas College P. Tom Bennett. Executive Director Tel: (691) 330-4133 Fax: (691) 330-4194 Pohnpei State Government Department of Commerce and Industry Kolonia. Tourism Instructor and Coordinator Tel: (670) 234-5498 Fax: (670) 234-0759 Federated States of Micronesia Chuuk Visitors Bureau P. Yap. FM 96941 Attn: Mr. Box FQ Moan. William Iriarte.
GU 96911 Attn: Mr.Guam Department of Commerce Government of Guam 590 South Marine Drive. 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 . Peter Barcinas. Box 13119 Suva. GU 96911 Attn: Mr.O.P. Kimberly Lujan. Chief Economic Planner Tel: (671) 649-4141 Fax: (671) 649-4146 Fiji Tourism Council of the South Pacific G. Suite 911 590 South Marine Drive Tamuning. Fiji Tel: (679) 304-177 Fax: (679) 301-995 Attn: Mr. Director Tel: (671) 646-5841 Fax: (671) 646-7242 Guam Economic Development Authority ITC Building. Suite 601 Tamuning. Levani Tuinabua.
computers.O. management. Box 256 Koror. President Tel: (808) 883-8000 Fax: (808) 883-8838 (Offers sales. HI 96738 Attn: Ms. Box 383970 Waikoloa. marketing. management. bookkeeping. and consulting on business site development. specializes in selling islands and small resort hotel sites) Palau Palau .O. Reginald Bennet Tel: (680) 488-2650 (Help with advertising. Karen Jeffrey. employee training. Box 9 Koror.Private Firms Pacific Island Investments P. basic business skills. Palau 96940 Attn: Mr.O. Palau 96940 Tel: (680) 488-2793 Fax: (680) 488-1453 111 . and others) Palau Visitors Authority P. obtaining a loan.Small Business Resource Center Palau Community College P.
Box 5159 Ebeye. AS 96799 Contact: Mr.O. MH 96960 Tel: (692) 625-3417 Fax: (692) 625-3158 Banks and Development Banks American Samoa Development Bank P.O. Guam 96910 Tel: (670) 472-8865-7 112 . Box BW Agana. Box 9 Pago Pago. Box 1185 Majuro.Republic of the Marshall Islands Kwajalein Atoll Development Authority (KADA) P. MH 96970 Tel: (692) 329-3100 Fax: (692) 329-3297 Marshall Islands Development Authority (MIDA) P. President Tel: (684) 633-4031 Fax: (691) 320-2842 Bank of Guam P. Nuese Punimata.O.O.
Box 648 Kolonia. Box M Kolonia. Pohnpei 96941 Tel: (691) 320-2624 Chuuk P.FSM Development Bank Headquarters P. Senior Loan Officer Tel: (691) 320-2840 Fax: (691) 320-2842 Branch Offices P. Box 786 Weno. Norman Clow. Box 104 Lelu. Kosrae 96944 Tel: (691) 370-3070 Fax: (691) 370-2170 113 .O. Pohnpei 96941 Contact: Mr. Box 81 Colonia. Yap 96943 Tel: (691) 350-2165 Fax: (691) 350-2249 Kosrae P. Chuuk 96942 Tel: (691) 330-2760 Fax: (691) 330-4149 Yap P.O.O.O.O.
Box 1048 Majuro. MH 96960 Tel: (692) 625-3230 Fax: (692) 625-3309 Pacific Islands Development Bank Suite 600 J. and offers consulting services) 114 . #160 Englewood. publishes books. Renee Karlin Tel: (303) 649-9016 Fax: (303) 649-9017 (A trade organization that promotes the integration of enviromentally responsible natural resource management. 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. CO 80111 Attn: Ms. GCIC Building 414 West Soledad Avenue Agana. offers seminars.Marshall Islands Development Bank P. provides referrals. Will Cooper. and protection of social values through tourism.O. GU 96910 Contact: Mr. economic viability. Revere Parkway.
OR 97201 Attn: Sharr Prohaska. Box 755 North Bennington. conference organizers. and offers entry in rosters that are given to the media. Suite 600 Washington. publishes a quarterly newsletter and books. works with indigenous groups.American Hotel and Motel Association 1201 New York Avenue. Membership Director Tel: (802) 447-2121 Fax: (802) 447-2122 (Operates as a membership resource center. Also serves as educational institute) Tourism Associates 3640 SW Dosch Road Portland. and other institutions) 115 . Director of Member Relations Tel: (202) 289-3152 Fax: (202) 289-3158 (Promotes hotel/motel business through publicity and promotion programs. NW. Laurae Lyster. President Tel: (503) 227-3307 Fax: (503) 274-9858 (Ecotourism planning and development. VT 05257 Attn: Ms.O. DC 20005-3931 Attn: Mr. Thierry Roch. governments. interested in rural tourism development) The Ecotourism Society P. provides referrals.
HI 96822 Attn: Joseph Patoski. 4th Floor Washington. Deals with technical matters of tourism.W. Works with both government and private enterprise) 116 . N. 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.Greenpeace International Ecotourism Project 139 Townsend Street San Francisco.. DC 20006 Tel: (202) 458-3582 Fax: (202) 458-6163 (Develops inter-American cooperation concerning travel. CA 94107 Attn: Mr. 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. George Hall Honolulu.
S. Box 676 Falls Church. DC 20052 Attn: Dr. NY 10022 Attn: Margaret Carnright. N.L. H.K. Travel Manager Tel: (212) 979-3000 Fax: (212) 353-0190 (Connected to the Audobon Magazine.W.The International Ecotourism Education Foundation P. Yvonne Rodgers. Bldg. publishes newsletter) International Institute for Tourism Studies George Washington University Travel & Tourism Program. Donald Hawkins Tel: (202) 994-0458 (Conducts management workshops on Ecotourism & Heritage Tourism) National Audubon Society 700 Broadway New York. VA 22040 Attn: Ms. Executive Director Tel: (703) 534-5430 Fax: (703) 534-5109 (Alliance of tourism and environmental educators.. and travelers committed to promoting environmentally sound tourism principles through education. Washington.O. which has a very large potential ecotourism readership) 117 . tourism industry members. K 817 23rd Street.
DC 20037 Attn: Ms. Elizabeth Boo. DC 20036 Tel: (202) 785-5567 (Assists travelers by providing accurate destination. NW Suite 500 Washington. facility and service reports. MA 02138 Attn: M. Kietzke Tel: (617) 497-8151 Fax: (617) 492-3720 (Organization that works to connect various consumers with environmentally responsible businesses.Travel Collaborative 14 Arrow Street Cambridge. Strives for preserving historic sites and nature conservation) World Wildlife Fund Membership Travel Program 1250 24th Street. Ecotourism Specialist Tel: (202) 293-4800 (Non-Profit Organization focused on preserving wildlife and the environment. promotes ecotourism projects in the Pacific) 118 .J. NW Washington. official travel agents for Co-op America) Society of American Travel Writers 1155 Connecticut Avenue. Protects person’s freedom of travel.
CT 06881 Tel: (203) 854-5559 (Popular magazine for environmentalists) Earthtrips: A Conservation International Book Living Planet Press 558 Rose Avenue Venice. P. 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. Box 5098 Westport. CO 80302 Tel: (303) 442-1969 Fax: (303) 442-4875 (Contact Lisa Jones for information about Travel. CA 90291 Tel: (213) 396-0188 (Consumer guide to ecotourism ventures) 119 .Magazines and Publications The Buzzworm Magazine Guide to Ecotravel or Buzzworm: The Environmental Journal 2305 Canyon Blvd.O. Inc.. #206 Boulder.
EcoTraveler 7730 SW Mohawk Tualatin. some ecotourism is included) Insight Guides APA Productions Prentice Hall Press One Gulf & Western Plaza New York. NJ 07605 (Guide to ecotourism ventures) Hotel/Travel Index Ziff-Davis Publishing Company One Park Avenue New York. writes short articles on places to stay and activities) 120 . 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. PA 18049 Tel: (215) 967-4135 (Business advice and strategies for small businesses concerned with the environment. NY 10016 In Business: A Magazine for Eco-Entrepreneurs 419 State Avenue Emmaus. NY 10023 (Guidebooks for different places.
AZ 85018 Tel/Fax: (602) 468-1926 (Writer/editor on economic development. It presents awards to places that are sensitive to environments) Journal of Sustainable Tourism Channel View Publications Frankfurt Lodge Clevedon Hall. specialist in Pacific region travel) 121 . Cheery Lynn Road Phoenix.Islands International Magazine Islands Publishing Company 3886 State Street Santa Barbara. Avon. CA 94107 Tel: (415) 546-7128 (Magazine that supports local cultures and responsible tourism) Mr. Victoria Road Clevedon. England BS21 7SJ (Looks for ecotourism businesses as case studies) Just Go! An Ecotravel Magazine 544 Second Street San Francisco. CA 93105 Tel: (805) 682-7177 Fax: (805) 569-0349 (Magazine which covers stories relating to islands and their environments. Terry Lawhead 4246 E.
O. 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.Mr. IL 60610 Tel: (312) 951-0990 (Normally covers adventures and wilderness experiences.W. N. CO 55522 Tel: (202) 357-4700 (Magazine for members of the Smithsonian Natural History Museums/Smithsonian Institution) 122 . Box 55593 Boulder. Washington. it has a travel advertising section) Smithsonian Magazine P.O. Jim Molnar (Travel Column) Seattle Times Travel Section P.. Box 70 Seattle. WA 98111 Tel: (206) 464-2245 (Editorial column on travel) National Geographic Traveler Magazine 17th & M Sts.
She would appreciate information for a regular publication supplement called "Island Destinations. naturebased attractions.Specialty Travel Index: Directory of Special Interest Travel 305 San Anselmo Avenue San Anselmo. Washington. and consumers) Tour & Travel News Miller Freeman Publishing Company 600 Harrison Street San Francisco. 2 Lafayette Centre 1133 21st Street N. CA 94107 Attn: Diane Merlino Tel: (415) 905-4923 Fax: (415) 905-2232 (A global magazine which is distributed directly to travel agents.W. DC 20036 Tel: (202) 293-1433 (Directory with names of travel press contacts around the world. and special events such as island festivals) Travel Industry Association of America International Travel News Directory Communications Dept. tour operators." She is interested in materials about hotels. Promotes domestic and international travel through campaigns. education and improvement of services) 123 . Increases public awareness on the importance of travel to the economy. CA 94960 Tel: (415) 459-4900 Fax: (415) 459-4975 (The primary trade index of small/alternative tours for agents.
Suite 325 El Segundo.O. CA 90245 Tel: (310) 536-0051 Fax: (310) 536-6266 (Specializes in tours to the Pacific) 124 . TN 37902 Tel: (615) 595-5774 (May promote your business if you send press release) Unique and Exotic Travel Reporter 6716 Eastside Drive NE. WA 98422 Attn: Pat Chesebro. #12 Tacoma. Box 759 Pinehurst.Travellife Magazine 505 Market Street Whittle Communications Knoxville. 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. 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.
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)
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)
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.
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.
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.
Mel tailors designs and buildings to the needs of his clients. This 23-room hotel. reed walls and wood floors has become a showcase of island architecture.O. restaurant. Mel has over 30 years of commercial and residential architectural experience in the Pacific Rim. and bar with thatched roofing. 129 . He has become well known in the Pacific region for the famed Village Hotel in Pohnpei. HI 96809 Tel: (808) 537-4478 MEL FIELDING.Mel Fielding P. With his flexible approach and versatility. MEL FIELDING also offers energy planning and interior design services. Box 534 Honolulu.
government studies and non-profit groups who envision tourism as part of a conservation program. LTD. they provide tourists with an appreciation of biological and cultural diversity on this planet. David is internationally known for his research and design work on ecotourism facilities. (No sketches available. 7601 Wayzata Boulevard Minneapolis. MN 55426 Tel: (612) 593-0950 Fax: (612) 593-0033 THE ANDERSEN GROUP ARCHITECTS. He believes that ecotourism facilities represent a window to the natural world. Ltd.) 130 . Beyond their hospitality role. Suite 211. Ltd. AIA Tourism Design Consultant The Andersen Group Architects.David L. is available as a design consultant for private development. The Andersen Group Architects. Andersen.
If you find our later that your ideas about marketing were not that successful. If you learn something new. The following is an account of how the owner of the Sufua Hotel in Savaii. as the time for the opening grew closer. Western Samoa marketed her ecotourism hotel when she first opened. The following account describes one ecotourism operator’s experiences in learning about her customers and the best ways to reach them. and pride. and explains some of the things she learned along the way. 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. Marketing Strategies for the Sufua Hotel When businesses first open their doors. bringing about a revival of traditional Samoan dances. handicrafts. Ecotourism businesses are no different. In 1985. it is difficult for them to know how to best market products and services. discuss the things that you plan to do or are already doing. you can always try other strategies. I realized that I had not thought about 131 . The information contained here is useful for new ecotourism operators because it is a good example of being flexible. while allowing guests to learn the Samoan culture and way of life. The categories listed in this example are those found in the marketing section of the business plan. 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. At first. I began to build the Sufua Hotel because I knew people would enjoy the opportunity to learn about the real Samoa. The Sufua Hotel has had a positive impact on the local economy. the owner of the Sufua Hotel began her business with a vision that foreigners would truly enjoy Samoan Hospitality.B. UNDERSTANDING YOUR CUSTOMER In 1985. However. 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. The vision and determination of one individual has made the Sufua Hotel the pride of this Samoan community.
genuine Western Samoan food. I discovered that it was a more sophisticated form of word-of-mouth advertising. and I keep records of their interests to assist me in future marketing efforts. I had some idea about what type of market I needed to target. I began to see patterns in the types of things they liked to do. it became easier for potential guests to contact us. To this day. They turned out to be an extremely effective marketing tool. I asked guests to give cards to their friends and travel agents. It was with these initial contacts that we began our first steps in marketing the hotel. First. phone numbers. With this knowledge. We offer our guests a rich cultural experience through the traditional architecture of the hotel. PRODUCT BENEFITS The Sufua Hotel offers visitors the opportunity to experience Western Samoa in its traditional and natural state.how I would market the hotel. and other essential information. and the opportunity to meet and share stories with Samoans. By giving them the cards to pass out. The second thing I did was pass out cards with information about the hotel. the word got out to a few people that we were building a hotel in Savaii. and they came to stay with us. It is my hope that our guests leave 132 . educational tours. Visitors who really enjoyed their stay were happy to spread the word about my business. I discovered the type of person that was attracted to my hotel. I continue to spend time with my guests. As luck would have it. The two main things I did with these and later guests became the foundation for our marketing efforts. Although word-of-mouth advertising is very effective. They liked to experience things that were off the beaten path. Western Samoa. occupations. I spent quality time with these guests. the kind of reading materials they enjoyed. and other miscellaneous information from these discussions. I learned that most of the visitors read travel guides. These guests wanted a vacation that was both educational and relaxing. and were curious about cultures different from their own. I learned about their interests. people may misplace or forget names.
and by asking guests which travel agents they had used. 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 also sent my sister to Apia to encourage visitors to come to the hotel. but they are also able to leave with an understanding and an appreciation of the Samoan people. 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. I aggressively contacted overseas tour operators and let them know about our unique hotel. In order for me to market our product overseas. I use a variety of sales and distribution channels to reach our potential customers. directories. 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. Needless to say. the most important recommendation I have is to purchase a phone and a facsimile (fax) machine. During the early months of business I did not have a phone or fax machine. Whenever I travel. the capital of Western Samoa. I stop at travel 133 . Visitors know that they will be able to experience what the real Samoa is all about and not a watereddown tourist version. 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. Not only are people able to relax and unwind when they come to our hotel. I sent travel guide writers and these agents brochures and invited them to stay at the hotel free of charge. I found out about these operators through travel guides. travel magazines. Operation of the Sufua Hotel does not harm the environment and we use local products as much as possible. I called her every day to find out how many guests had made reservations at Savaii for the following day. I knew that many tourists were already going to Apia.their vacation from Savaii with a new appreciation and understanding of the Western Samoan way of life.
Frommers. newspapers. I had to develop a product that was different to the customer. Approximately 85% of our guests researched the destination before they came. in reality it meant that the island had no sales connections or prior exposure to potential customers. I have concentrated my advertising efforts in the areas which I have deemed to be the most effective. I think that the best gift is something that stays on their desk so they will remember me. The other 60% of our tour operators read about the hotel in travel guides. Fodders. books. I personally contacted approximately 40% of the tour operators that book with the hotel today. South Pacific Handbook and the Sierra Club. I looked at my competition and thought about how I could be successful. Some of the more effective travel guides for our hotel have been Lonely Planet. I make sure our hotel is well represented in the media. this is one of the best ways to determine which forms of advertising are the most effective. and retailers. the Sufua Hotel was competing with other Pacific islands that offered similar accommodations. I always survey our customers to find out how they heard about the hotel. 134 . I ask them how inquiring customers learned about the hotel. as well as wholesalers. While this may have been an advantage in some respects. With this in mind.agencies to give them information about our hotel and to thank those who have sent guests. When I started the Sufua Hotel. I contact well known travel writers and invite them to our facility. it was the only hotel on the island. In addition to Apia. I stay in close contact with the Western Samoa and Tonga Visitors Bureaus. COMPETITIVE ISSUES When I started my business. I always present gifts to key people in the hope that they will remember me and my hotel. In addition to surveying customers. Competition in Apia was already established. and travel magazines before contacting us for more information.
a great promotional tool for us. the most important thing to consider is the involvement. I read the Pacific Travel News. Articles from travel writers. Word of mouth advertising is free and the most effective way of promoting a product. PUBLICITY. I have made over 120 presentations to schools. Brochures were. In the future. local publicity is necessary to build trust. regional. 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 . support and cooperation of local community members. friends. rental car agencies. and organizations about the environment. and travel guides promoting the Sufua Hotel are other excellent sources for promotion.POSITIONING. I plan on making presentations to non-governmental organizations worldwide. I spend many hours updating myself on local. previous customers. I also promote the optional tours by making presentations. In addition. Pacific Asia Travel Association studies. Therefore. airline magazines. they write about the Sufua Hotel in their publications. PRICING YOUR PRODUCT/SERVICE In order to determine the price of our accommodations. but it also exposes our tours to many people. In exchange. I employ many local people to dance and make handicrafts for the guests on tour. Clearly the best promotion is from satisfied customers who go home and tell their friends. We distribute them worldwide through travel agents. I had to consider both the competitions’ prices and the expenses at the hotel. our culture and the importance of keeping our heritage. Not only is this an excellent learning experience. I use local radio advertising and signs to publicize activities and special events. I invite travel guide writers and authors to stay at my hotel free of charge. and still are. and anywhere else possible. and global travel trends and spending behavior. I was able to attract a wide range of customers because the accommodations were moderately priced. villages. and information from local and regional 135 . In my experience.
entertaining travel agents and travel writers. and paid advertising in airline magazines. I adjusted the rates so that they are competitive and enable me to make a profit. 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 . STRATEGIES: I have expanded the tour options available to visitors so that they are more appealing to customers. the cost of printing cards that guests give to friends. the cost of printing brochures. I now offer mangrove swamp. This figure varies depending on new travel developments and new advertising opportunities. cultural.Visitors Bureaus to understand how international events might affect the Sufua Hotel. hiking. My advertising budget includes marketing trips. MEETING YOUR GOALS WITHIN A BUDGET My advertising budget is currently between 10-15 percent of our total sales.
The Pathways Hotel will diversify the tourist industry by attracting a different market of visitors. restaurant. restaurant. but will fulfill the visitors’ fantasies of staying somewhere exotic. As more people look for remote destinations to relax and enjoy nature. DESCRIPTION OF COMPANY AND BUSINESS The Pathways Hotel is in the service business and will provide accommodations to visitors. The Pathways Hotel will provide accommodations in an atmosphere that upholds Yapese customs. 137 .C. using local-style architecture. It will be owned and operated by an American doctor. The company will be run as a partnership. and tropical climate.000 at 10% interest over 20 years for the building of the hotel. promotes and strengthens traditions. BUSINESS PLAN: THE PATHWAYS HOTEL. provide initial operating supplies and give access to working capital. and food and beverages to both local residents and visitors . Yap will become increasingly attractive to tourists. the Pathways Hotel will be able to fulfill its objective. furnish the rooms. YAP EXECUTIVE SUMMARY Yap is known for its spectacular scuba diving. and educates visitors about the Yapese lifestyle. and being environmentally friendly. and bar. This money will be used to construct the buildings. and his Yapese partners. Stan and Flora Fillmed. provide visitors with a culturally enriching experience. traditional way of life. The Pathways Hotel is approaching the Federated States of Micronesia Development Bank for a start up loan of $300. In additions to supporting Yap’s diving industry. and become economically sustainable. The Pathways will employ 14 full and part-time staff to handle operations of the hotel. By hiring local workers. and bar will not only provide tourists with a relaxing place to stay. Don Evans. One mission of the Pathways Hotel is to enhance and reinforce the traditional values of the Yapese people. The eight local-style cottages. The Pathways is owned and operated by people who are committed to being environmentally friendly and culturally sensitive.
other businesses will prosper as tourists and employees spend their money within the local community. Free transportation to and from the airport and hotel will be provided. The consistent climate in Yap will offer visitors the opportunity to visit throughout the year. and a private balcony. Guests will have a choice between air-conditioned and non-air-conditioned rooms. Local Yapese will benefit in a number of ways. refrigerators. The Pathways Hotel will benefit the local people of Yap. Meal prices will range between $5 and $10. The interiors will be modern and comfortably furnished with amenities such as air-conditioning. With the planned eight room hotel. The restaurant will serve breakfast from 6:30am to 9:30am each morning. Local workers will be employed during the second and final phase. First. log supports. The increase in tourism throughout Micronesia is an encouraging sign for Yap’s visitor industry. as well as the Christmas holidays. The cottages for the Pathways will be made from thatched roofing. restaurant. ceiling fans. and intricate woven reeds. 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 rooms will be cleaned on a daily basis. coconut rope lashings. PRODUCT/ SERVICE An American construction company with experience in the design and building of energy-efficient. tourists and the government.). August and September. The bar will be open between the hours of 4:30pm and 9:00pm each evening. there will be new jobs available which will also provide the opportunity to learn new skills. and nipa leaves. and bar. The peak seasons for the hotel are projected to be the summer months of July. Secondly. bamboo. traditional style buildings will be employed to build the initial phase of the hotel. The people of Yap will further benefit through the revival and practice of 138 . Possibilities for optional tours and other new service related work will develop. The Pathways Hotel will be the first hotel on Yap.The rooms will be available year-round with rates of $85 per night for rooms without air-conditioning and $95 for rooms with airconditioning.
Visitors from these areas comprise the traditional market that vacations in Micronesia. and romantic place to visit. The Palauan tourist industry is growing and is expected to continue growing in the future. Primary customers will comprise Japanese. culturally rich. Yap has not been able to attract tourists because of its distant location and lack of accommodations. Yap is an interesting place for visitors because of the traditional stone money "currency". The Pathways Hotel on Yap provides a service that fits visitors’ perceptions. Continental Airlines has three flights a week to Yap which is on the popular route between Guam and Palau. exotic. colorful traditional dances. While other Micronesian islands have successfully engaged in a profitable tourist industry. The tourist industry in Guam has increased its room occupancy rate over the past few years. Visitors to Yap will bring foreign currency which will be spent on taxis. 139 . island legends and scuba diving with manta rays. The government will benefit from increased excise taxes and room taxes collected from the Pathways Hotel. Guamanian. Saipan is building an additional 1200 hotel rooms and has maintained high occupancy rates. restaurants. and Australian citizens. The future expansion of tourism in Yap looks promising because of Yap’s location between Guam and Palau. THE MARKET In the past. arts and crafts. These are strong indicators that a hotel business in Yap will be profitable. scuba diving. Due to Yap’s isolation and its lack of visitors in the past. American. stone village paths. restaurants. tourism has not been pursued on the island of Yap. Tourism offices. The Pathways will advertise in diving magazines and travel guides. and dive shops will be given brochures to hand out to customers. fishing and other tourist-related activities. It is our hope that the hotel will be a platform for reviving culture due to the interaction with visitors. visitors perceive Yap as a pristine.Yapese traditional dances and cultural shows. 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.
PERSONNEL The Pathways will employ eight full-time employees and six parttime workers. They will process guest check-in and check-out. Fillmed are requesting financing of $300. The Pathways Projected 140 . One full-time cook and one parttime cook will serve the daily breakfast. Part-time employees can have partial coverage based on the plan they choose. The Pathways will need three part-time housekeepers. Two full-time and three part-time staff will handle front desk responsibilities. They will have reservations responsibilities as well. Full-time employees will receive medical insurance. The partners will hire a General Manager to take care of the daily operations of the hotel. Administrative responsibilities and the management of daily operations will be handled by the General Manager. (3) The Pathways will provide jobs which may improve the quality of life for its employees. (2) The Pathways has the potential to be a financially profitable business for the owners. have worked a combined 25 years in Yap. 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. One of the partners owns the land on which the hotel will be built and is willing to offer it as collateral. Lifetime residents of Yap.MANAGEMENT The Pathways will be run as a partnership. Local staff will be trained in a variety of hotel and restaurant procedures.000 in order to build The Pathways Hotel. 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. Two full-time bartenders will be trained for the beverage operation. FINANCING Mr. The financial analysis section on pages 152-159 clearly displays the potential profitability of The Pathways Hotel. and Mrs. restaurant and bar. Evans and Mr. Stan and Flora Fillmed.
The Projected Income Statements reflect The Pathways Hotel’s ability to repay the loan. the Pathways is able to project an operating profit in the sixth month of business ( see Projected Income Statement on pages 156-159). With the increase in tourism throughout the Pacific islands. By building The Pathways Hotel. By forecasting the revenue and expenses. Further supporting documentation available upon request. tourists who come to Yap will not only have a place to stay. enhance the local traditions. increase the government’s revenues. Based on the above financial projections. 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. 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. The Pathways Hotel will be able to pay its debtors. Expenses were determined by price quotes from suppliers and service providers. The Pathways will truly contain the necessary ingredients for a successful and profitable business. but they will be provided with the opportunity to experience Yapese culture and tradition in ways that are not available to them now. The figures were based on an average occupancy of 62% over the first year of operations. and the natural beauty of Yap and its people. CONCLUSION The owners of The Pathways Hotel are committed to sharing all of Yap’s assets. provide jobs for the local people. . give tourists a pleasurable “Yapese” vacation experience and provide the owners with a chance to make their dreams come true.Income Statements and Cash Flow Projections for the first three years of operation are shown. 141 . The Pathways Hotel will clearly be able to meet all of its financial responsibilities.
200 Maintenance 1.052 7.419) (4.480 2.880 0 10.876 (900) (5.640 1.626 2.728 867 382 400 550 120 350 956 7.625) May 10.626 2.976 982 421 0 550 0 350 1. 8.984 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 2.600 1.377 (2.127 (3.895 14.800 Miscellaneous 1.592 0 9.895) 691 Mar.560 2. 9.897) (2.126 98 (5.168 0 11.800 Payroll Taxes & Benefits 3.000 Total Cash Receipts 17.895 Total Cash Disbursements 13.Cash Flow Projections CATEGORY Jan.512 7.895 13.895 13.744 0 14.525) June 11. Cash Receipts Room Sales 6.586 4.400 Salaries & Wages 76.200 Licenses 840 Telephone/Fax 1. 7.147 (2.206) Apr.586 Feb.098 459 0 550 0 350 1.200 Total FCD/year Total FCD/month 91.626 a: Working Capital from the loan 142 .072 Office Supplies 1.626 Term Loan 2.148 7.626 2.480 752 344 0 550 0 350 860 7.626 2.232 637 306 0 550 0 350 764 7.398 Net Cash Flow Cumulative Cash Flow 4.427) Fixed Cash Disbursements (FCD) Utilities 5.304 Other Sources [a] 10.895 14.224 1.520 2.895 13.456 0 12.680 Food & Beverage Sales 1.
340 7.864 2.455 12.110 (457) (479) 143 .626 2.400 3.895 14.957 31.296 91.626 2.626 2.744 3.512 34.186 7.194 490 0 550 0 350 1.626 Term Loan 2.374 551 0 550 0 350 1.740 170.144 475 400 550 120 350 1. 13.000 174.725 2.895 Net Cash Flow Cumulative Cash Flow 577 (4.746 (23) Nov.895 14.225 7.895 14.) CATEGORY July Cash Receipts Room Sales 12.599 5.895 14. 14.Cash Flow Projections (cont.472 Cash Disbursements Cost of Goods 1.625 2.110 Total 132.489 590 0 550 0 350 1.244 Fixed Cash Disbursements 7.328 536 0 550 0 350 1.318 1.440 Food & Beverage Sales 3.974 3.723 0 18. 12.230 1.474 7.784 3.345 4. 11. 13.895 Total Cash Disbursements 14.850) Aug.985 0 15.859 0 14.213 Variable Expense (rooms) 498 Advertising 400 Insurance 550 Legal and Accounting 120 Delivery Expenses 350 Wholesaler Commission 1.493 (1.015 Dec.095 4.600 6.219 1.720 1.358) Sep.320 0 16.032 Other Sources [a] 0 Total Cash Receipts 15.378 7.723 1.498 10.435 0 17.626 2.895 14.245 2.600 480 4.467 1.200 13.329 901 Oct.626 2.494 2.
463 22. 43.800 Miscellaneous 1.020 12.682 0 49.600 480 5. 48.250 4.613 1.122 3rd Qtr.685 43.179 0 54.200 Licenses 840 Telephone/Fax 1.586 4th Qtr.461 2.337 10.945 400 1650 120 1.273 1.654 4.324 27. 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.719 0 201.812 22.862 22.001 Fixed Cash Disbursements (FCD) Utilities 5.451 2.Cash Flow Projections.899 0 52.953 8. 46.593 2.800 2.000 17.458 5.525 31.072 Office Supplies 1.621 6.656 22.088 7.325 9.800 Payroll Taxes & Benefits 3.200 Maintenance 1.606 22.965 22.953 8.993 10.751 400 1650 120 1.812 34.685 44.377 22.959 0 44.200 Total FCD/year Total FCD/qtr 91.250 3.861 91.110 Total 178.953 8.472 1.953 8.250 4.862 400 1650 120 1.936 8.360 1.953 144 .562 5.144 1.984 1.685 42.740 174.700 Salaries & Wages 76.250 4.586 400 1650 120 1.600 6.769 5.685 43.102 2nd Qtr. 39.
685 45.092 0 57.740 179.190 0 209.410 94.834 2.708 39.800 1.200 3.786 450 1650 135 1.168 1. 44.659 5.214 2.615 8.779 6.535 6. 47.837 2.009 51.574 1.200 1.637 450 1650 135 1.350 4.200 94.615 145 .880 2.685 43.778 23.911 450 1650 135 1.655 2.466 23.588 2.230 2nd Qtr.013 Total 184.400 18.947 4th Qtr.066 61.364 1.615 8.291 10.685 45.825 12.921 5.903 5.600 540 5.938 3rd Qtr.030 450 1650 135 1.742 7.092 23.615 8.350 5.074 23.458 34. 40.350 4.Cash Flow Projections .435 0 54.350 4. 1st Qtr.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.267 1.076 7.458 23.120 37.850 79.685 44.996 0 50.800 6.388 29. 50.615 8.667 0 46.398 1.101 25.200 840 1.148 9.
520 2.Income Statement Projections.268 1.456 12.384 365 6. 9.744 14. 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 .340 327 Cost of Goods (Food)[A] 522 Variable Expense (rooms)[B] 267 Cost of Goods Sold 789 Gross Margin 7.403 11.626) Apr.594 1.010 (2.148 Other Expenses Interest (Term Loan) Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax 1.400 256 134 100 550 100 260 350 70 130 956 955 100 10.250 10.984 Feb.052 955 100 10.592 9.657 1. 8.680 1.232 637 306 942 8.640 1.562 12.400 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 10.480 2.480 752 344 1.635) Mar.600 1.168 11.384 1.304 7.557 12.626 1. 6.562 1.657 11.528 1.400 256 133 100 550 100 20 350 70 150 1. Year One CATEGORY Sales Room Sales Food & Beverage Sales Total Sales Jan.594 12.400 256 133 100 550 100 20 350 70 125 860 955 100 10.687 1.751 1.573 440 6.728 867 382 1.224 1.880 10.667 480 6.687 11.925 (3.478 390 6.400 256 133 100 550 100 20 350 70 145 1. 7.148 955 100 10.867) May 10.626 12.195 Operating Expenses Utilities 330 Salaries & Wages 6.640) A: Cost of Goods = 40% of Total Food and Beverage Sales B:Variable Expenses (Rooms) is for things like soap.233 (660) June 11.098 459 1.400 256 133 100 550 100 20 350 70 120 764 955 100 10.528 12.560 2.671 1.835 (4.976 982 421 1.812 1.345 (1.290 350 6.096 9.
320 31. Dec. Oct.837 2.723 17.328 12.856 146.Income Statement Projections.494 1.219 16.195 851 2.498 15.494 1.459 13.224 1.456 12.423 1.472 18.489 590 2.072 1.349 1.710 1.864 13.800 13. 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 .245 11.294 14.230 14.352 12.310 18.340 955 955 955 955 100 100 100 100 10.200 840 1.684 1. 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.369 147.428 12.600 1.985 2.744 3.059 1.400 6.076 1.378 1.349 5.677 1.076 12.866 11.538 495 475 530 520 6.148 1.194 490 1.600 1.310 18.435 3.079 12.957 2.925 1. Total 12. Sep.400 6.460 1.318 1.400 256 256 256 256 133 134 133 133 100 100 100 100 550 550 550 550 100 100 100 100 20 20 20 20 350 350 350 350 70 70 70 70 175 170 165 165 1.400 256 256 134 133 100 100 550 550 100 100 20 20 350 350 70 70 170 170 1.599 536 5.864 17.032 3.859 3.400 76.387 1.253 12.107 11.387 1.546 13.105 15.455 1.218 1.934 11.917 13.618 1. Nov.400 132.487 (686) A: Cost of Goods = 40% of Total Food and Beverage Sales B:Variable Expenses (Rooms) is for things like soap.423 1.800 3.720 164.244 1.186 1.388 485 540 6.400 6.723 15.711 12.459 1.784 13.225 1.144 475 1.467 1.400 6.440 14.296 11.762 16.213 498 1.374 551 1.200 6.929 10.200 129.200 480 4.334 3.474 955 955 100 100 10.
Income Statement Projections.024 45.899 52.859 148 .861 11.222 37.384 1.200 480 5.800 3.072 1.800 2.377 2.879 2. Year Two CATEGORY Sales Room Sales Food & Beverage Sales Total Sales Cost of Goods (Food) Variable Expense (rooms) Cost of Goods Sold Gross Margin 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 Other Expenses Interest (Term Loan) Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax 1st Qtr.200 768 400 300 1650 300 60 1.984 1.427 1.232 185.570 41.250 210 450 3. 46.465 19.263 3.472 1.250 210 470 4.865 300 34.959 44.239 1.945 4.865 300 33.600 1.250 210 425 4.769 5.300 3rd Qtr.130 3.813 13.586 3.325 9.290 8.965 2.305 19.088 7.613 1.200 768 400 300 1650 300 60 1.031 4th Qtr.200 768 400 300 1650 300 300 1.654 4.743 4.480 3.460 1. 48.621 6.461 2.606 22.719 201.250 210 455 4.480 36.200 6.849 11.495 19.865 300 33.138 2nd Qtr.352 13.656 2.600 1.970 36.235 36.360 1.222 3.273 1.700 76.200 768 400 300 1650 300 60 1. 39.451 2.750 3.540 3.865 300 33.093 5.000 840 1.800 17.682 49.562 5.751 4.144 16.422 13.043 1. 43.435 19.200 134.750 37.970 2.416 50.862 2.422 148.862 4.179 54.390 Total 178.222 48.
50.485 49.800 792 450 300 1650 300 330 1.074 2.667 46.800 792 450 300 1650 300 70 1.792 5.214 2.466 2.267 1.291 10.904 42.738 9.445 149 .800 792 450 300 1650 300 70 1.200 6.440 191.092 57.800 792 450 300 1650 300 70 1.956 12.185 46.921 5.800 18.092 2.Income Statement Projections. Year Three CATEGORY Sales Room Sales Food & Beverage Sales Total Sales Cost of Goods (Food) Variable Expense (rooms) Cost of Goods Sold Gross Margin 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 Other Expenses Interest (Term Loan) Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax 1st Qtr.523 36.800 1.851 1.465 19.470 2nd Qtr.736 2.786 4.410 19.637 3.350 210 455 4.659 5.410 11.076 7.350 210 420 4.778 2.742 7.101 25.435 19. 40.865 300 35.834 2.291 2.151 1.773 9.328 2.151 36.151 2.406 43.190 209.911 4.574 1.435 54.200 540 5.968 4th Qtr. 47.866 52.779 6.892 2.805 5.684 3rd Qtr.179 9.668 2.350 210 450 5.488 2.837 2.350 210 475 4. 44.398 1.540 19.588 2.729 Total 184.736 37.655 2.030 4.523 2.865 300 34.738 148.364 17.460 1.996 50.200 3.865 300 34.200 138.600 1.443 1.479 15.328 37.269 1.865 300 34.850 79.400 840 1.168 1.
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"Adventure Cruising: A Niche Operation in the Gulf Hauraki Maritime Park. "Managing for Growth: Regulation Versus the Market. pp." Ecological Tourism and Small Business in the Pacific. Auckland. Conference Proceedings. October 12-14. Pohnpei. Conference Proceedings. Honolulu. Auckland. W. October 12-14. Dave. Francis S. Anne M. 160 . 1992. Palikir. Oelrichs..." Ecotourism Business in the Pacific. Conference Proceedings. Pigneguy.N.. FSM. 1992. "Encouraging Environmentally Sound Tourism Development. pp. October 12-14. Conference Proceedings." The Sunday Star-Bulletin & Advertiser. pp. pp. Orcutt. November 15. Conference Proceedings." Ecotourism Business in the Pacific. Pohnpei. Dee. Conference Proceedings. 1992. pp. New Zealand. "Endemic Tourism: A Profitable Industry in a Sustainable Environment. Francis S. pp. Hawai’i. Auckland." Ecotourism Business in the Pacific. "Cultural and Ecotourism . 1992. Auckland. "Tourists Want to Learn. FSM." Ecotourism Business in the Pacific. 122-5. 111-7. October 12-14. 1992. 1991. "Training Local Resource Experts for Ecotourism.Building a Sense of Place. Conference Proceedings. 1992." Ecotourism Business in the Pacific. New Zealand. Oda. Ian. New Zealand. Rapaport. Palikir. 14-23. 118-21. New Zealand. 75-8. September 17-20. October 12-14. New Zealand. Plimmer. 10510. pp. 121-2.. Oda. Auckland. 1991.the Pacific. September 17-20.
Rapaport, Dave, "Micronesia Demonstration Biological Toilet Project," Final Report, Greenpeace Pacific Campaign, San Francisco, California, March 1993. Rausch, Paul, "Ecotourism in the Pacific: Developing a Sustainable Experience for the 21st Century," The International Link, University of Hawai’i, Vol. 3, No. 2, Spring 1993, p. 5. Richards, David C., "Small Enterprise Development and Conservation Programs," Ecotourism Management Workshop, Conference Proceedings, Graduate Program in Tourism Asministration International Institute of Tourism Studies, The George Washington University, Washington, D.C., 1991, pp. 150-3. Richardson, Janet, "Australia Takes Sustainable Tourism Route," The Ecotourism Society Newsletter, Vol. 3, No. 2, Spring 1993, pp. 1, 5. Russ, Rodney, "New Zealand Ecotourism: The Role of the Private Sector - Player and Referee," Ecotourism Business in the Pacific, Conference Proceedings, Auckland, New Zealand, October 12-14, 1992, pp. 111-7. Ryen, Dag, "The Forgotten U.S. States," State Government News, A Publication of the Council of State Governments, Vol. 36, No. 2, February 1993, pp. 16-21, 26. Ryen, Dag, and Russell Paule-Riggs, "The Island Agenda," State Government News, A Publication of the Council of State Governments, Vol. 36, No. 2, February 1993, pp. 22-5. Sanson, Lou, "New Zealand's Subantarctic Islands: A Case Study in the Development of Ecotourism Policy," Ecotourism Business in the Pacific, Conference Proceedings, Auckland, New Zealand, October 1214, 1992, pp. 141-50.
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you will need to count or estimate the approximate number of hibiscus shrubs. The steps included in this statement are as follows: Items at the site are noticed. you need to gather a lot more information. 169 (1) . For example. you might state. counted. examined. Based on this information. In this EIA statement. imagine that you noticed hibiscus shrubs growing on the site. age. pink. and condition of the flowers. you will be able to predict that in five years. you are supposed to identify obvious characteristics of the site. In the first EIA statement.APPENDIX A A. 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. you will probably need to hire a professional to help you put together this statement. there are various colors such as red. Quantitative and Explanatory Environmental Impact Assessment: This EIA statement looks at the information explained in the first EIAon page 59 in even more detail. and analyzed In the first EIA statement. you will need to discuss the trends of the hibiscus shrub. You will need to examine the condition of the shrubs and explain if they are healthy or diseased." In the quantitative and explanatory EIA. and yellow. describe in detail the colors. white. or have a lot of knowledge in the area. "There are a number of hibiscus shrubs growing on the site. if all of the hibiscus shrubs are young. For example. Unless you have been educated in environmental studies.
(3) (4) 170 . is it the same depth at all points? ° Does the river consist of fresh water or brackish water? 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? 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. mangrove forests. and maybe map.(2) Describe major natural systems: You will need to describe. 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. and coastal waters. ° Increased sewage disposal in underground cesspools will make the water unhealthy to drink. In addition. visitors break off pieces of coral to take home as souvenirs. natural systems such as rivers.
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.
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.
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.
Environmental Consequences of Tourism
Activity Consequences to Environment Solid Waste 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 -Water quality goes down -Oxygen in water decreases -environment poisoned -Groundwater contamination -Drainage from landfills or dumps -Smoke and fumes from burning -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 -Waste management -User/impact fees
-Water and air quality reduced - species/habitat poisoned -Fish caught in trash -Clean-up costs
-Public health risk -Economic loss (tourism) -Aesthetics
-Lots of trash cans -Routine clean-up -Adequate treatment and disposal technology
Environmental Consequences of Tourism (cont.)
Tourist Activities (sightseeing, reef walking, souvenir collecting)
-More people in area -Increased contact with different cultures and lifestyles -Resource depletion -Change in ecosystem structure -Degradation of important cultural/ historic or recreational areas -Welfare losses 1. Commercialization of culture/ religious practices 2. Quality of life 3. Subsistence 4. Economic (fisheries)
Consequences to Environment Ecosystem Impact
-Secondary development -Enhanced access/high density
-Urbanization -Overfishing/resources depletion -Change in ecosystem structure
-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 -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
Environmental Consequences of Tourism (cont.)
Activity Consequences to Environment Ecosystem Impact Employment of Local Residents
-Shift of labor resources from government service to private -Round-the-clock work shifts -Loss of productive capacity in other work -Change in lifestyle -Dependence on imported goods -Disruption of family values -Cultural conflicts -Social differentiation -Reliance on cash income -New mobility -Employee training -Housing shortages -Overburdening of infrastructure -Social gaps (outsiders fill high-level jobs)
Employment of Immigrant Labor
-Housing impact fees -Employee training
Recreation 3.) Activity Consequences to Environment Landscaping (long-term) -Fertilizer/pesticides Site Clearance/Grading -Barren landscape -Altered soil profile -Altered topography -Altered drainage characteristics -Soil erosion -Water quality degradation -Instream and coastal habitats/ species loss -Increased risk of land slippage -Degraded coastal surface -Increased runoff -Destruction of cultural resources & archaeological sites -Welfare losses 1. flood 2. Economic (fisheries) -Loss of potentially productive land -Cultural displacement -Aesthetics -Catastrophic risk 1. loss of landform stability -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 Ecosystem Impact -Land poisoned -Oxygen in land/water decreases Human Impact -Public health risk -Welfare losses 1. Subsistence 2.Environmental Consequences of Tourism (cont. Recreation 3. Economic (fisheries) Mitigation -Chemical management -Intercept treat runoff water 175 . Subsistence 2.
Quality of life 2. Disease introduction 2. Subsistence -Aesthetics -Noise and emission control ordinances -Toxic substance controls -Timing to avoid migratory or spawning -Improve over original Construction/Labor Importation -Immigrant worker population -Sewage -Temporary housing Ecosystem Impact -Water quality degradation Human Impact -Public health risk 1.Environmental Consequences of Tourism (cont.) Activity Consequences to Environment Construction Activities -Noise -Fugitive dust -Machinery emissions -Congestion/traffic -Structural addition to coast and landscape -Disturbance of animals -Poison environment -Water quality degradation -lower oxygen in land/water -Worker safety -Public health risk -Respiratory irritation -Welfare losses 1. Sanitation problems -Overburdening of infrastructure -Overburdening of public facilities -Cultural conflicts -Loss of labor from productive sectors Mitigation -Minimize contact of temporary workers and local people -Construction of housing adequate for post-construction period -Infrastructure enhancement integrated with project design 176 .
Cultural Displacement: Cultures can no longer exist the same way as they did in the past. rare species -Natural/cultural resource loss -Welfare losses 1. Traditional culture is replaced or transformed. Drainage Berm: A ledge or shoulder.) Activity Consequences to Environment Construction/Landscaping -Introduction of exotic species -Fertilizer/pesticides -Toxicity: species/habitat loss -Downstream eutrophication -Displacement of indigenous. and things. cities.Environmental Consequences of Tourism (cont. some definitions are provided below: Aesthetics: Sensitivity to art and beauty. Subsistence 2. Recreation -Use of native plants -Management of chemical products Ecosystem Impact Human Impact Mitigation Since many of the words in the table are not very common. 177 . Compensatory Enhancement: To make something more beautiful. along the side of the road to facilitate water drainage. Denuded: To make bare or naked. or of better quality. to destroy all plant and animal life in an area. character. etc. Degradation: Decrease in quality. in exchange for the original. Biological Oxygen Demand: The amount of oxygen needed to decompose the organic matter in waste water. showing good taste. Archaeological Sites: Places that have the remains or ruins of ancient people.
fish swim in polluted water and then are eaten by people. wide hole in the ground that allows solid matter to settle to the bottom while the liquid stays on the top. Revegetation: The act or process of growing plants again.(ex. like rainwater that cannot be absorbed into the ground. Land Slippage: Landslide. and sometimes. Eutrophication: A decrease of oxygen in a body of water. or region: said of plants. etc. 178 . Runoff: Something that runs off.Endemic: Indigenous. Ordinances: Laws. Pathogenic Organisms: Bacteria (germs) that produce diseases. or hill. animals. Mitigation: Ways to reduce or make the consequences less severe. such as a plain. Respiratory Irritation: Something that causes you to have trouble breathing.) to a desirable slope. Indigenous: Native. or produced naturally in a region or country. often wet and marshy. Grading: To level or reduce (a road. valley. nation. etc. Leaching: To remove or dissolve by filtering. customs. Receptacles: Trash cans. often to find something old. Settling Basin: A large. especially birds and fish. who get the poison along with the fish. sperm or young). ground. Spawning: To produce (eggs. 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. Native. Excavation: A hole made by digging. Swales: Low areas of land. but animal life does not.) Fugitive Dust: Dust that flies around. so that plant life survives. Migratory: Moving from one place to another with the change in seasons. growing. existing. Suspended Solids: Solid waste that does not get decomposed quickly. Landscaping: To improve or change the features of appearance of a piece of property. Native to a particular country. Food Web Toxic Accumulation: Poisons that build up in certain food chains.
179 . mountains.Topography: The surface features of a region including rivers. User/Impact Fees: A payment made by the person who uses something or affects it in some way. a condition caused by poison. Toxicity: The amount of poison in something. etc. lakes.
Box 338 Auckland. If you did not receive a questionnaire and would have liked to respond to it. Tiritiri Matangi and visiting the islands that dot the Coromandel Coast. Visitors can take day trips or spend up to 5 days exploring the islands of Great Barrier. For more information. so that in the future.. Special features include a botanical cruise. we can contact you if we are involved with any similar projects.O. bird observation cruises. Ltd.APPENDIX B DESCRIPTIONS OF EXISTING ECOTOURISM OPERATORS The businesses described in this appendix responded to our questionnaire of ecotourism operators. natural history expeditions. and rare and endangered species cruises.: This company offers a variety of cruises aboard a wooden ship names "Te Aroha. Little Barrier. New Zealand Tel: (64) 9-444-9342 Fax: (64) 9-444-9342 180 . please let us at the Pacific Business Center know about your business. please call: Ms. Ltd. Adventure Cruising Company. Dee Pigneguy Adventure Cruising Co. P." With accommodations for 22 passengers. Kawau. a history and conservation cruise. the Te Aroha is navigated by Mike and Dee Pigneguy around the Hauraki Gulf.
whale watching.O.O. In addition to adventure and historical interpretation. or any combination of the three activities. contact: Ms. Angelika Frank Assistant Manager Fafa Island Resort P. the Fafa Island Resort consists of a number of fales (bungalows) that are built using local materials such as coconut timber and thatching. biking.EcoTours of Hawai'i: This company allows visitors to experience the splendor of Hawai'i by hiking. The motto of this traditional place is "Come as a guest. For more information. astronomical events or historic themes. Kingdom of Tonga Tel: (676) 22800 Fax: (676) 23592 181 . leave as a friend. please contact: Hugh R. kayaking." To find out more about becoming a friend. Box 2193 Kamuela. Food is made from local fruits and vegetables. Montgomery Proprietor Hawaiian Walkways P. Box 1444 Nuku'alofa. The tours can take place on one island or they can be designed so that travel to two or more islands is possible. EcoTours of Hawai'i can create special packages that include eclipses. HI 96743 Tel: (808) 885-7759 Fax: (808) 885-6957 Fafa Island Resort: Located in the Kingdom of Tonga.
Ltd.O. Barrett is able to provide his visitors with an education and a deep understanding of the Maori people. Box 2193 Kamuela. 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. For more information. located on the island of Hawai’i. New Zealand Tel: (64) 04-298-6044 Fax: (64) 04-297-2474 182 . please call: Mr. HI 96743 Tel: (808) 885-7759 Fax: (808) 885-6957 Kapiti Tours.: John W. sweeping upland meadows and ancient Hawaiian trails along the coast with hidden pools and fishponds. Box 113 Paraparaumu. rain forest streams and waterfalls.O. By working closely with the Maori Tribe. Barrett Managing Director Kapiti Tours.Hawaiian Walkways: Hawaiian Walkways. Montgomery Proprietor Hawaiian Walkways P. Barrett operates this nature and cultural heritage tour operation in New Zealand. John W. P. Ltd. Please contact: Hugh R. Mr. offers custom hiking tours taking in the natural beauty of Mauna Kea and Mauna Loa volcanoes.
land tours. cultural experiences.fish for brown trout. diving expeditions. or even participate in rain forest study trips.Lake Moeraki Wilderness Lodge: Lake Moeraki is considered New Zealand's foremost nature lodge. For more information. Western Samoa Tel: (0685) 42212 Fax: (0685) 42386 183 . his wife Terry. a campsite.O. and their three children. live music. and fishing tours. In addition to accommodation. a sleeping mat in a Samoan fale. One can go on penguin and seal tours. Le Satapuala allows its visitors to experience as much of the Samoan culture as they would like. Box 1539 Apia. canoe the gentle lake waters or walk through rain forest and coastal tracks. handicrafts. 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. please contact: Gerry McSweeney and Anne Saunders Directors/Owners Wilderness Lodge Lake Moeraki Private Bag 772 Hokitika. 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. With a choice of accommodation ranging from an entire beach fale. please contact your hosts: Terry and High Chief To'alepaialii (Toe) G. ocean tours. or actual homestay. You can do your own thing . For more information. the resort offers its guests the chance to experience a traditional Samoan feast. run by high chief To'alepaialii (Toe).P.
He will custom tailor any type of tour to fit your preferences. FM 96941 Tel: (691) 320-2888. Box 4228 Apia. 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. legends. Day tours. Please contact: William Kostka Manager Micro Tours P. weekend tours with overnight stays in a Samoan family's house.Manono Village Tours: This company offers a number of different tours to meet the needs of their visitors. Fay Ala'Ilima Manono Village Tours P. and dependable. snorkeling.O. please contact: Ms. He arranges tours for sightseeing. picnicking. and work study programs are all offered. 320-3683 Fax: (691) 320-5528 184 . They will explain local culture. Box 275 Pohnpei. boat riding. and land-touring. and the story of Pohnpei to visitors. Western Samoa Fax: (685) 26905 Micro Tours: A young and enthusiastic man runs this business in Pohnpei. 320-5409. This business is family-run and the guides are friendly. fishing. For more information on this interactive program.O. responsible.
New Zealand Tel: (0064) 7-838-3119 Fax: (0064) 7-839-3125 185 . This company will focus on giving visitors a cultural and historical interpretations of sites that are visited. educational. this company had not actually conducted its first tour. and research activities related to the archaeological site of Nan Madol located in Pohnpei State. 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. historical. HI 96749 Tel: (808) 966-8827 Fax: (808) 966-8827 Natural History Tours of New Zealand: At the time of their response. Box 9123 Hamilton. They have received funding from a government agency and are about to embark on this new venture. please contact: Carole Nervig Executive Director Nan Madol Foundation HCR 2-13043 Keaau. All activities of the Foundation will be approved by state and local governments and traditional leaders.O. Federated States of Micronesia. For more information on the Foundation and its objectives.Nan Madol Foundation: This Foundation is a non-profit organization that was created to fund cultural. protective. Please contact: Mark Mitchell Director Natural History Tours of New Zealand P.
and fishing trips. you will be able to see spectacular marine life such as schooling sharks. P. giant clams. Palau PW 96940 Tel: (680) 488-2206 or 488-2009 Fax: (680) 488-3014 Nett Cultural Center: Located in Pohnpei.O. Neco Marine can also fulfill visitors' urges to go on mangrove swamp or hiking tours. Box 129 Koror.II wrecks make diving an exciting adventure in Palau. manta rays. barracudas.Neco Marine: If you are interested in diving in Palau. The cultural center also provides traditional music and dance experiences. the hundreds of W. In addition. Neco Marine is the place to go.W. FM 96941 Tel: (691) 320-3622 186 . Neco Marine offers diving. the Nett Cultural Center offers visitors an opportunity to experience life on this Micronesian island. Etpison Reservations/Purchasing Manager Neco Marine Corp. For more information. and lion fish. please contact: Nett Cultural Center P. Please contact: Mandy T. There is also a PADI training facility so you can learn to scuba dive while you are there. Box 305 Kolonia. While diving with Neco Marine.O. Pohnpei. snorkeling. soft corals.
stone ruins similar to those at Nan Madol. Yap. visitors to Pohnpei have the chance to experience the beauty of mangrove swamps. and culturally sensitive to the goal that their island values must be preserved. FM 96943 Tel: (691) 350-3310 Fax: (691) 350-2066 Pwudoi Sanctuary: Located a few miles past the FSM capital of Palikir. For more information. FM 96941 Tel: (691) 320-2211 or 320-5278 187 . Box 718 Colonia. Visitors will also see hollow trees which house colonies of sheath-tailed bats. please contact: Don Evans Pathways Hotel P. and children playing with freshwater eels. Francisco Ionas Box 774 Pohnpei.The Pathways Hotel: The Pathways Hotel is owned and operated by Yapese who are trying to be environmentally sensible. The Pathways Hotel offers a carefully built local-style cottage in which guests can leisurely examine the thatching.O. Please call: Mr. There is a raised walkway built entirely of mangrove wood which winds through mangrove thickets teeming with a variety of plant and animal life. bamboo and nipa leaves. 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. the log supports and intricate patterns of reeds. the coconut rope lashing. There is also a beautiful view as it is located on a hillside overlooking Chamorro Bay.
While interacting with Tongans from Atata Island. Western Samoa Tel: (685) 51271 Fax: (685) 51272 188 . fresh-water springs./Royal Sunset Island Resort P.O. 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. the Royal Sunset Island Resort offers accommodation in individual fales (bungalows) on the beach.Royal Sunset Island Resort: Located on Atata island in the Kingdom of Tonga. To relax at this isolated paradise. diving. Special excursions are available in which visitors can help save some villages from over-using the land in agriculture or logging. Please contact: Mrs. visitors have a variety of activities to choose from including scuba diving. A number of tours are also available that take visitors to see fruit bats. Box 960 Nuku'alofa. Moelagi Jackson Proprietress Sufua Hotel Private Bag Saleologa Savaii. contact: David and Terry Hunt Pacific Islands Resort Ltd. and shopping for handicrafts. and cave pools. sport fishing. lava fields. cliffs. beaches. Visitors will be able to meet Samoans in their own surroundings and will be welcome to join the family or village in their festivities. sailing. rain forests.
While they were not operating at the time this questionnaire was sent out. 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. Box 9590 Apia.O. Roger and Ama offer tours to historical sites on the island and can arrange traditional music/dance experiences. For more information. The hotel plans to hire only local employees and is determined to represent the Samoan culture in an appropriate way. Western Samoa Tel: (685) 51206 or 51296 Fax: (685) 51291 189 . Please contact: Roger and Ama Gidlow The Savaiian Hotel Lalomalava. please contact: George Hadley Governing Director Samoa Express. Limited P. Faasaleleaga Savaii.Samoa Express. In addition to the rooms. in the village of Lalomalava. Limited: This company is in the process of establishing an ecotourism hotel and handicraft center in Western Samoa. they do plan to open soon.
. The operation sells mainly baskets and wood carvings but has other handicrafts for sale as well. Mr. Manager South Sea Curios P.O.. The founder of the company. 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. Ltd." Guides are environment-conscious and knowledgeable about the areas to which they take visitors. has participated in a number of ecotourism workshops and conferences and has consistently encouraged environmental development. Ltd.: This company.Sea Canoe Thailand Co. AS 96799 Tel: (684) 633-1850 190 . please contact: Lee Ruark. John Gray Sea Canoe Thailand Co. For more information. To find out more. John Gray. Box 3927 Pago Pago. located in Thailand. contact: Mr. 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.
Box 22. volcano tours. For more information. so that visitors are able to experience the richness of the culture in Vanuatu.O. Rodney Russ Southern Heritage Expeditions P. Jim McGeough Managing Director Tanna Beach Resort P. Rodney Russ.Southern Heritage Expeditions: This tour company is located in New Zealand and is managed by Mr. and exposure to traditional music and dance are all options when you stay at this resort. Mr. ocean tours. Canterbury. Please contact: Mr. please contact: Mr. diving. Box 27 Tanna Island. 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. Russ and his employees provide visitors with natural history expeditions and cruises. N.O. cultural education. Vanuatu Tel: (678) 68610 or 25770 Fax: (678) 25792 191 . Hiking tours. Waitori. The huts are made out of local products. Southern Heritage Expeditions specializes in tours that educate the visitor about the natural surroundings and the history of the places that are visited.
The Village has a superb restaurant. Box 1265 Auckland. white-wicker furniture. a bar.Tiri Tours: Operating out of New Zealand. In 1991. 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. Deacon and his employees are enthusiastic about their tours and work well together with the local people. diving. The Village consists of individual cottages made out of local materials and constructed using timeless Pohnpeian carpentry techniques. Mr. While the exterior looks like an island chief's house. the interiors have elegant bathrooms. Please contact: Bob or Patti Arthur Managers The Village Box 339 Pohnpei. whirling wooden fans and attractive island-print fabrics. 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. and offers hiking. Pohnpei. oversized beds. ocean and fishing tours. FM 96941 Tel: (691) 320-2797 Fax: (691) 320-3797 192 .O. In addition to the hotel. Bob and Patti Arthur won the prestigious Ecotourism Award presented by the Overseas Private Investment Corporation. Please contact: Frank Deacon Director Tiri Tours P.
Willis' Bed and Breakfast introduces guests to traditional-style "umu" cooking. Box 5572 Pago Pago. please contact: Barry Willis Willis' Bed and Breakfast P. AS 96799 Tel: (684) 633-4499 193 . relaxing accommodations.Willis' Bed and Breakfast: In addition to affordable. For more information about staying in this "down-to-earth" place. Guests are able to stay in comfortable lodging and participate in fishing expeditions.O.
APPENDIX C In the following pages you will find a number of business plan forms to use for practice. 194 .
) Knowledge Polite Help Culture Environmentally Conscious Others: Competition Offers: You Offer: 195 .Customer Seeks: Quality Uniqueness Lower Prices Product Styles Reliability Delivery Location Information Availability Credit Card Option Customer Advice Accessories (phone/fax. etc.
Capital Equipment List Major Equipment: Model: Cost or List Price (whichever is lower) Miscellaneous Minor Equipment: Total: Capital Equipment Total: 196 .
Sales Forecast: For (month. year) to (month. year) Sales: Low Product/Service 1 __________ Product/Service 2 __________ Product/Service 3 __________ Product/Service 4 __________ Total Sales: __________ Most Likely High __________ _________ __________ __________ __________ __________ _________ _________ _________ _________ 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 b Vans 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 .
(f) = fixed costs 199 .1 2 3 4 5 6 7 8 9 10 11 CATEGORY Monthly Projected Income Statement Month 1 Month 2 Month 3 Month 4 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 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 29 30 31 32 33 34 (f)Miscellaneous Total Operating Expenses Other Expenses Interest (Mortgage) Interest (Short-Term Loan) 35 36 37 38 39 40 41 42 Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax Taxes Net Profit (Loss) (v) = variable costs.
3rd Qtr. 4th Qtr 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 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 29 30 31 32 33 34 (f)Miscellaneous Total Operating Expenses Other Expenses Interest (Mortgage) Interest (Short-Term Loan) 35 36 37 38 39 40 41 42 Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax Taxes Net Profit (Loss) (v) = variable costs. (f) = fixed costs 200 . 2nd Qtr.1 2 3 4 5 6 7 8 9 10 11 Category Quarterly Projected Income Statement 1st Qtr.
1 2 3 4 5 6 7 8 9 10 11 Category Yearly Projected Income Statement Year 1 Year 2 Year 3 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 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 29 30 31 32 33 34 (f)Miscellaneous Total Operating Expenses Other Expenses Interest (Mortgage) Interest (Short-Term Loan) 35 36 37 38 39 40 41 42 Total Other Expenses Total Expenses Net Profit (Loss) Pre-Tax Taxes Net Profit (Loss) (v) = variable costs. (f) = fixed costs 201 .
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Category Cash Receipts (List Categories) Monthly Cash Flow Projections Month 1 Month 2 Month 3 Month 4 Total Cash Receipts Cash Disbursements Cost of Goods (Supplies) Variable Labor Advertising Insurance Legal and Accounting *Fixed Cash Disbursements Mortgage (rent) Term Loan 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Others(see notes) Total Cash Disbursements Net Cash Flow Cumulative Cash Flow *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 202 .
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Category Quarterly Cash Flow Projections 1st Qtr. 3rd 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 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Others(see notes) Total Cash Disbursements Net Cash Flow Cumulative Cash Flow *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 203 . 2nd Qtr. 4th Qtr.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Category Yearly Cash Flow Projections Year 1 Year 2 Year 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 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Others(see notes) Total Cash Disbursements Net Cash Flow Cumulative Cash Flow *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 204 .
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