Tourism Enterprise Opportunities - Section 5 Enterprise Selection

Index Page - Introduction - Getting Started - Section 2 - Section 3 - Section 4 - Section 5 - Appendixes

5.1 Enterprise Selection and Moving Forward

You are nearing the end of this guidebook. The next exercise takes you back to your original goals and asks you to evaluate whether or not your chosen tourism/recreation enterprise will satisfy your personal/family/business goals and objectives. Because fitting with your goals is critical to success, answer the questions thoughtfully.

Section 5 also provides an overview of other issues to be addressed with business planning and development. Because these topics are covered in great detail elsewhere, we provide only a summary to help you move forward. Some additional sources of information and assistance are included in the Appendix.

Revisiting Goals
Go back to section 1 and review your goals. Answer the following questions:
1. Does my selected enterprise meet all my goals? Y or N (yes = skip to 7, no = go to 2)
2. Does my enterprise meet any of my goals? Y or N (yes = go to 3, no = skip to 5)
3. Can I adjust my enterprise to match my goals? Y or N (yes = go to 4, no = go to 5)
4. I can adjust my enterprise to match my goals by



(go to 7)
5. Look at the following options and determine if a different level of involvement can change the compatibility of the enterprise and your goals:
- Contract with a tour company/guide/outfitter to do part of the work (like advertising and transportation), while you do the rest.
- Lease some portion of your property to a tour company/guide/outfitter service to take care of everything.
- Do either of these options make the enterprise meet my goals? (yes = go to 7, no = go to 6)
6. Go back to section 2 and evaluate a different enterprise type.
7. My selected enterprise is


Congratulations! You have finished the primary content of this handbook. You should have enough information to take definitive steps to start your business. However, there remains considerable work to do. Below is an outline of the major “next steps” you would need to undertake in any business planning process. A number of other resources, including publications on business planning or tourist enterprise.

This section provides an overview of other issues that need to be addressed with business planning and development. Because these topics are covered in great detail by others we only provide a summarization (or outline) to aid you as you move forward from here. Some additional sources of information and assistance are also included in the Appendixes.

You have finished the primary content of the Handbook. At this point, you should have enough information to take some definitive steps to start your business. However, there is considerable work that you will need to do. Next subchapter is an outline of the major next steps, but these steps are those that you would need to undertake for any business planning process and we don't want to reinvent the wheel. Guidance for further development of your business can be found from a number of other resources including publications on business planning or tourism enterprise development publications.

One publication, specific to tourism/recreation, that we recommend is entitled Agritourism and Nature Tourism in California. This publication covers many of the topics that we have addressed, but provides more in depth discussion of some topics that we will only discuss briefly in this section and in the subsequent appendixes.

Some of the next steps involve important legal and financial questions. It is advisable to consult a lawyer, insurance agent and an accountant, or financial advisor, to get the most accurate information for your specific situation. We will avoid making any specific suggestions about these issues because situations can vary significantly, however, there is considerable assistance available and we identify a few of them in the subsequent sections.

For personal assistance you might visit your local chamber of commerce or the U.S. Small Business Administration or SCORE Service Core of Retired Business Executives.

5.2 Next Steps in More Detail

Listed below are some next steps that you should consider if you are interested in further developing your tourism/recreation enterprise after completing this handbook. These topics are not unique to tourism/recreation; they are associated with business development in general. There are very good sources of information and assistance available from may agencies or organizations. The following list of topics is by no means comprehensive, and should only serve as a guide.

* Completing Your Business Plan
* Legal and Regulatory Issues
o Legal Forms of Business
o Liability & Insurance

Because of the sensitivity of information in this area we highly recommend that you consult a lawyer and an insurance agent about the specific information that you need for your business.

In Appendix C we provide some general information about liability exposure for landowners in Texas that has been prepared by the Real Estate Center at Texas A&M University. However, it will be important for you to give careful
consideration to your situation.

o Regulatory issues

* Risk Management Plans
* Resource Assessment, Site/Activity and Facilities Planning
* Taxes & Employment
* Administrative Planning
* Operation Planning

5.2 Next Steps in More Detail

Completing Your Business Plan

Creating a business plan is an important part of formalizing the ideas you have for your business. It will also be very useful when you approach others for potential collaboration or if you will be looking to get financing. Resources abound for developing a business plan including many books or Web sites. Because of the abundance of business planning books, Web sites, and personalized assistance that is available at no, or little cost, below we only provide an outline of a common form of a business plan. See Appendix A for specific references to “business plan” resources.

Parts to a Business Plan (General Outline):

* Executive summary
* Mission Statement
* Your business concept or idea
* Measurable goals and objectives
* Background information (industry research and market analysis)
* Management needs and management history
* Marketing strategy
* Financing
* Appendix

Legal forms of business

When starting a new tourism/recreation enterprise you likely will want to consider establishing a formal business separate from your home/ranch. To do this you need to decide what legal form of business to establish. Five common forms of businesses are listed below.

Sole Proprietorship
Partnership
S Corporation
Corporation
Limited Liability Company (LLC)

Each of these business types involves different responsibilities and liability protection. Appendix B provides a short summary provided by the Texas Economics Extension program regarding legal forms of business. This information is available online at:
http://ruralbusiness.tamu.edu/entrep/pdfs/legalform.pdf

It is a good idea to seek legal advice about the proper form of business for your specific situation.

Regulatory Issues

Regulations are another broad and potentially complex topic that can vary significantly depending on location. There can be regulations in force at several jurisdictional levels including federal, state, county or city. In some parts of rural Texas there are few regulations in place in relation to land use and development, however, it is important that a business owner be aware of what regulations are applicable to them and how they might impact their operation.

Regulations will also vary dependent on the type of business that you operate. If you plan on providing overnight guests, or serving food you need to be aware of laws that govern those types of activities. For specific information we recommend that you contact the industry organizations or agencies that are familiar with rules that are applicable.

Most regulations will fall under the following general categories:

* Land use and land development regulations
* Public health and safety regulations
* Environmental health regulations
* Direct marketing regulations
* Business regulations

For specific information on a particular topic in Texas you can refer to the following list of topics and contacts. However, depending on your locality you should also get information from an official source in your area.

Lodging/Overnight accommodations

Texas Hotel/Motel Association
Web site: http://www.texaslodging.com/
Phone: 800-856-4328

Americans with Disabilities Act
Web site: http://www.usdoj.gov/crt/ada/adahom1.htm
Phone: 800-514-0301

Food service

Texas Department of Health (TDH)
Web site: http://www.tdh.state.tx.us/
Phone: 888-963-7111

Texas Restaurant Association
Web site: http://www.restaurantville.com/
Phone: 800-395-2872

Buildings/Facilities/Fire

Local building codes (city offices)
Local fire code (local fire department)

Risk Management—Reducing Liability and Financial Risks

Risk management is an area that is of utmost interest to many people considering a tourism/recreation enterprise because it deals with landowner liability. Careful planning should take place to reduce risk and insure the safety of both visitors and employees. This is because lack of planning can be very costly financially and personally. On the other hand, a well thought out risk management plan can result in improved operations in your entire business. As with business planning resources there are numerous publications available that will provide all the needed information for developing your risk management plans and we don'’t want to re-invent the wheel, however, we do want to emphasize the importance of this part of your next-steps.

In Texas, landowner liability for recreational visitors has been reduced significantly by Chapter 75 of the Texas Civil Practices and Remedies Code (summarized in Appendix C). The two kinds of risks that can challenge tourism/recreation enterprise are 1) ranch/farm safety risks and 2) financial risks (footnote California Chapter 5, p. 3).

The most common strategies to reduce these risks are:

* Avoid certain activities
* Make your operation as safe as possible
* Issue liability waivers
* Select the appropriate legal structure for your business
* Buy insurance
* Learn and follow good management practices when hiring, training, and working with your employees.

Appendix C provides a summary provided by the Real Estate Center regarding recreational visitors as outlined in Chapter 75.

In addition we have provided references to three sources for specific guidance on developing a risk management plan.

Resource Assessment, Site/Activity & Facilities Planning

This section expands on the activities previously completed in Section 2.3 and 2.5 (Worksheet #2, Resource Map, etc). This outline focuses on facilities. This part of the business development process is important because it can be the most costly part of the enterprise. Careful consideration should be given about whether new facilities should be built for a ranch/farm recreation enterprise so as not to overburden a fledging operation with large capital expenditures.

Most nature-based tourism/recreation businesses do not produce large incomes so paying off large capital expenditures could take considerable time. Adapting existing facilities to a new use is a prudent approach until the size, scope and potential of the new venture is better understood.

However, simply converting and old house to guest-house will not suffice. Remember, that tourist typically have high expectations when they are on vacation. The activities and services associated with ranch/farm tourism and recreation need to be developed to provide a quality experience. Careful consideration needs to be given to issues of hospitality, facilities, scheduling and programming. The following outline can provide a starting point for your resource inventory and site/activity planning efforts.

When you conduct a resource inventory you should:

* Identify and assess potential recreational use areas, trails, etc. (include photos, detailed descriptions and maps).
* Identify and assess existing facilities (include photos, detailed descriptions, and specific recommendations for
necessary improvements).

Site/activity planning refers to how you plan to match your facilities up with the activities that you will provide.

* Conduct site assessments for areas that you have identified for recreational activity development include maps.
o Be sure to identify places of special interest or use (historical, cultural, geological, etc.)
o Give careful consideration to identify vulnerable areas and their characteristics, such as:
+ Threatened/endangered species and habitats
+ Wetlands
+ Riparian zones
+ Recharge zones and features
+ Nesting sites or other vulnerable habitats
+ Cultural or archeologically significant sites
o Develop plans for access/non-access and management
+ How will visitors get to the site
+ How will visitors move while at the site
* Use the site assessments and other resources to develop a site and facilities development plan. (This means you should develop a plan and have it written down on paper.) Using maps in any form is very useful, even if they are hand drawn.

However, using other base maps such as topographical, GIS, or arial photos would be even better.
o Your plan should meet the goals for your entire enterprise (e.g. personal/family, customer satisfaction, resource protection, etc.).
o Your interpretive plan provides a way to develop the methods to meet these goals (e.g. quality experience, visitor management, etc.).
o Develop your plan with resource protection and sustainability in mind.
o A natural resource based business'’s long-term existence in dependent on careful consideration to impacts.
o Develop your plan to avoid or minimize impacts.
+ Impacts are most often associated with the types and locations of facilities/amenities.
+ Impacts can also be minimized by the type of construction methods that are used.
o Plan your site with accessibility in mind, give consideration to:
+ Your market/audience.
+ ADA (Americans with Disabilities Act).
o Your facilities plan should include a map and outline (current, future) the following considerations.
+ Locations
+ Characteristics
# Uses, what kind activities will take place
# Sizes, how many people does it need to accommodate
# Style, materials, utilities, waste disposal, etc.
# Codes and standards
# Development stages—usually a tourism/recreation business will not build all the facilities it will ultimately need at the start of the business. This is to avoid overburdening the business with capital expenditures. The
facilities development plan should include:
* The sequence that the facilities will be developed.
* The phases of the project’s development.

Taxes

Taxes can be very complicated. We recommend you consult with a professional about taxes associated with small businesses and be sure and consider the following (Potts):

* Self-employment
* Tax Preparation
* Social Security Taxes State Taxes
* Sales Tax
* Hotel Occupancy Tax
* Special Deductions
* Tax Credits.

Employment

Hiring employees creates a new group of business management issues. However, most ranchers/farmers have dealt with hired help so some issues may not be entirely new. In any case, it is important to note again that a tourism/recreation business is very different from traditional agriculture.

Someone once said that “nature tourism is like people ranching. We would caution that perspective. People, or your customers, have much greater expectations and needs than livestock or crops. Be sure to give careful consideration to who you hire and what responsibilities they will have and if they match with the individuals capabilities (e.g. work with people, level of professionalism, etc.).

The following list outlines a few things you should consider, however state and local regulations may have different requirements. For Texas, you should contact the Texas Workforce Commission to get specific information about state and federal laws applicable to employers. Appendix E has a list of resources for landowners considering hiring employees.

* Will employees live in town, or will I provide them a place on site?
* What changes in my insurance policy will I need to have employees?
* What will workman's comp cost and is it required?
* How much will employees cost and how will I manage them?
* Am I required to withhold income taxes and if so how much?

Administrative Planning

Appendix G provides a brief overview of considerations you need to make for supporting your business administratively from Nature-Based Tourism Enterprises: guidelines for success by *Potts and Rourke, 2000.

The list below provides the general categories that you should consider. These items and how much effort they require on your part will depend significantly on the size and kind of operation you decide upon. However, much like your business plan, your business administration plan provides the organizational structure for your operation. Careful planning during the initial stages can pay off significantly and can eliminate many frustrations that this part of a business can create. While doing your planning be sure to be looking towards the future to prepare for the growth of your business. You should plan for contingencies and for what you hope to accomplish with your business in the long term. This way transitions during times of growth in your business will be much less problematic.

* Forms of payment
* Reservation requests
Reservations are often made through telephone, mail, or over the Internet. Customers trying to make reservations expect to get through in the first couple of tries, and expect to talk to a knowledgeable person.

Use preprinted forms to gather the necessary information in a uniform format. Once a deposit is received send a reply to the customer, and be sure to keep a record for yourself. Enter all reservations into a date book or calendar, and make this readily available to those handling reservations. (*Potts and Rourke, 2000)
* Office equipment and supplies

Personal computers are huge assets for a small business. These can keep records, give correspondence a professional look, and even give you access to the internet which has a wealth of helpful information on it. Also common office supplies, like stationary, staplers, etc, will be necessary. (*Potts and Rourke, 2000)
* Bookkeeping and accounting

Set up an accounting/record keeping system prior to starting your business. Keeping good records increases your chance of small business survival. Accurate records will help you make future decisions with real information rather than guesswork.

Using an accountant can greatly helps organize information for tax purposes, but other information should be organized for making future business decisions. For example, keeping accurate information about customers who come to your place will allow you to profile them in the future. (*Potts and Rourke, 2000)

Operation Planning

Developing an Operations Plan (excerpt from Potts by permission)

To develop a plan of operations, you should begin by deciding a few things:

* The activities to be carried out in the operation of the business
* Who will carry out these activities
* How will their jobs be defined (job descriptions)
* What talents are necessary to make the business operate smoothly
* How any inadequacies will be handled
* The objectives for the major activities, and the policies and procedures for reaching them.

An important facet of the operations procedure is the development of safety procedures, rules and regulations for clientele and staff. Sufficient resources and time should be allocated to assure their safety. A well-organized excursion into nature begins with an educational session covering safety requirements. Clientele should also be made aware of the need for conservation and preservation.

Job Responsibility & Saftety Procedures

Job Responsibility

It takes a lot of effort to run a success recreation and nature tourism business; therefore organizing job responsibilities
are important to make sure everything goes smoothly. Since most small businesses operate with relatively few employees (1-10) the tendency is to say everyone is responsible for everything. However, it is highly recommended to divide out duties, or at least put individuals in charge of specific parts/tasks. Create a chart similar to the one below to organize your enterprises employees.

Employee Name - (Enterprise Part) - [Task Description] - {Due Date/ Cycle}
Me (Farm Tour) [Trim trails] {Quarterly}
Me (Farm Tour) [Prepare/revise tour agenda] {Each tour}
Nancy (wife) (Farm Tour) [Prepare name tags and ice tea] {Each tour}

Safety procedures

Safety procedures should be written out for each activity/service you offer in order to ensure safety for your customers. For example, if you are operating a horseback-riding program you may require guests to wear helmets, heeled leather soled boots, and denim jeans. You might also require them to go through a horse orientation course before being allowed to ride. It is important to convey these safety procedures to your guests, and usually takes them seeing them several times.

Consider some of the multiple ways safety procedures can be conveyed: brochures, waivers of consent, posted signs, and verbal

communication through your employees. Creativity can be useful in sharing safety procedures. Clientele should also be made aware of the need for conservation and preservation.

Safety procedures should also include the actions that employees should take in the event that an accident or other injury should take place. These procedures will be different based on the severity of an injury, one may require a band-aid and ice while another might require your employee to immediately contact EMS services. Your employees need to know what the procedure is if a guest is not following the safety rules. It is also important to have safety regulations for your employees, so they will know what is acceptable, safe conduct while working with your customers.

Know the route to the closest hospital and when they accept patients.

*Nature Based Tourism Enterprises: Guideline for Success by T.D. Potts and T. A. Rourke. Strom Thurmond Institute of Government & Public Affairs. Available online at http://www.strom.clemson.edu/publications/Potts/nbt2000.pdf

Index Page - Introduction - Getting Started - Section 2 - Section 3 - Section 4 - Section 5 - Appendixes