Six Must-Have Business Strategies for Tour Companies
NOTE: This post was written by Ingrid Edstrom for Polymath LLC prior to the launch of Priestess of Profits. Some content may reference Polymath LLC, which has since been replaced by Priestess of Profits.
Tour companies and the intrepid adventurers behind them help us see the world, experience other cultures, and broaden our horizons. It is often easy to forget that the people leading us on some of the most amazing experiences of our lives are small business owners. Like all business owners, tour operators started their businesses to make a living doing what they love. Generally that doesn’t include their accounting.
Tour companies experience some unique accounting complications that other business owners don’t need to worry about. We interviewed Eric Mindling of Traditions Mexico Cultural Journeys to highlight some of these roadblocks. In this article we are going to show you some of the great tools used by Traditions Mexico and their bookkeepers at Polymath, LLC (now known as Priestess of Profits). Perhaps some of these tools can help other tour companies get to the next level of prosperity!
The Six Struggles
A couple years ago, Eric Mindling was struggling with the same issues that many tour companies struggle with:
- Foreign currency
- Tracking cash spending by tour operators
- Tracking deposits and prepayments from customers
- Maintaining cash flow through the off season
- Setting aside money for taxes
- Knowing which tours are actually profitable and which ones are killing the bottom line
To Eric, the accounting for his business was like a necessary evil. He had more important things to do, like “Connecting People to People,” as the company’s tagline says. Mindling leads a team of people on a mission. “Knowledgeable, experienced, and friendly, our staff and guides work on the ground or behind-the-scenes to help open doors for you into another Mexico that will wonderfully broaden your horizons and deepen your understanding of Mexican traditions and culture.”
Traditions Mexico has been crafting tours since 1997, “with the goal of showing people a Mexico they never knew existed; richly diverse, wise and ancient.”
On the Traditions Mexico website, Mindling is quoted, “Without trying they teach us things we truly need to know, things that we forgot so long ago we don’t even know they’re gone.” The site goes on to explain, ” Our travel experiences deliver something that would be very hard to get on your own; access and knowledge that only comes with decades of immersion, exploration and passion for a region and its people. Our trips are lead by unique individuals who are more cultural ambassadors than guides.”
Similarly, that is exactly what Priestess of Profits does for clients in the unfamiliar territory of accounting. Ingrid is the coach, translator, ambassador, and guide. It is amazing how much more hospitable accounting is once you learn that it’s not out to get you.
“It might as well be a different language,” said Mindling. “I would much rather be in the field than doing the accounting. Now I can have the benefits of both.”
Blast to the Past
When Traditions Mexico first started working with Polymath, there were no clear processes in place. They weren’t tracking their deposits in a separate account. With all the funds mingled, it was impossible to know how long the funds needed to last. Also, if a customer cancelled and needed a refund, those funds needed to come out of the general pool.
In addition to that, if you’re wanting to make purchases off the beaten path near Oaxaca and Chiapas, you aren’t going to be doing it with your credit card.
The Traditions Mexico tour operators have to use cash pesos. Often, they weren’t consistent about keeping receipts or recording their expenses. Each month, they would send envelopes and boxes full of paper scraps to the office in Oaxaca, where the Traditions Mexico Manager-in-Chief, Adriana Guzman, would then enter them into a spreadsheet.
Before working with Ingrid at Polymath, Traditions Mexico had redundant systems. All of their income and expenses were tracked in spreadsheets. They would then send the spreadsheets to a bookkeeper in the US, who would enter that data manually into her QuickBooks Desktop program on her personal computer. That bookkeeper would send the QuickBooks file along to the tax accountant each year, but Mindling never got the opportunity to see his books.
“It’s hard to know what questions to ask when you don’t even speak the language or understand the culture.”
Welcome Changes
That changed in May of 2014 when Traditions Mexico was referred to Ingrid Edstrom of Polymath by their tax accountant. Within a couple of months, Ingrid had the tour company converted to QuickBooks Online. For the first time, Mindling could access all of his company’s financial reports any time, and from anywhere with an internet connection.
“Polymath is really future focused. They are really on the bleeding edge of the technology for their field, which is impressive for such a small company. At first I was confused, thinking that these gals do so much more than bookkeeping. The bookkeeping title is almost a handicap, it downplays their value so much. They are literally changing the definition of what it means to be a bookkeeper. When it comes to accounting, Polymath is about as far from old-school as you can get.”
The first year they worked together, Polymath and Traditions Mexico got to work in QuickBooks Online, training Adriana Guzman to manage the client invoicing directly within the accounting platform. This made it much easier to track the deposits and balances of each client while also eliminating the redundancy created by the manual spreadsheets. They also set up QuickBooks with “class tracking,” which made it possible to run profitability reports for each separate tour for the upcoming season. Polymath could assist Guzman using online video calls and by recording tutorial videos. Polymath also helped to build the team’s workflows, even from thousands of miles away. The change took time, but it was well worth the effort.
“We didn’t know what to do with all the receipts and papers. What expenses could we or couldn’t we deduct? We were guessing until we started asking the right questions. We were making sense of what we were being shown and learning the language. Learning the language removes the fear, but we’re still happy to have Polymath as our guide on this terrain.”
The following year, after witnessing the tour season for the first time, it was clear that the next major pain point for the company was tracking cash. Polymath set Traditions Mexico up with Expensify. Expensify is a third-party software application that integrates with QuickBooks Online. It can snap a picture of a receipt and upload it to a special site where Guzman can review it before simply approving it for entry into QuickBooks. What’s best, Expensify will convert transactions from foreign currency into the native currency of the QuickBooks file as of the exchange rate on the day of the purchase. Also, it works even when offline. Guides can record receipts off the beaten path, and they will sync when you return to civilization.
Now Eric had accurate tracking and reporting of his income and expenses. He could actually see how Traditions Mexico was doing. It was doing a little too well.
Tax Time!
Traditions Mexico is a cash-based business with a tour season that goes from October through March. However, their fiscal year still begins in January. With the pre-payments for tours, the company ends up paying taxes on some of the following year’s business, even though the business owner doesn’t think about the season that way.
In addition, the company always files an extension. It doesn’t make sense to have to deal with answering questions and signing tax forms while wrapping up the busy season in another country.
As a result, Mindling didn’t know the depth of his 2015 tax liability until his tax accountant started preparing his return in the late summer of 2016. That was when Polymath introduced Traditions Mexico to their Profit Advisory services.
Running Business at a Profit
Mindling wasn’t kidding when he said that Polymath does “so much more than bookkeeping.” With their in-depth Profit Advisory Service Package, the team at Polymath acts as a financial catalyst, bringing coaching and visionary strategy to the relationship.
With Polymath’s guidance, Traditions Mexico had a plan within just a couple of months. Separate accounts were set up for keeping track of the tour deposits separately from owner pay, tax savings, and operating cash. Now Mindling had a clear idea of how much money he had, how long it needed to last, and when he would be getting more. His taxes were filed before the extension deadline, and the tax payment was made on time.
“I love the clarity and structure. It is such a relief from the worry that our funds won’t last long term, especially with taxes. Having that level of an organization system and someone to help me manage it brings me great peace.”
The Six Strategies for Tour Business Success
Currently Eric Mindling is on tour in Oaxaca, and twice a month he does a quick review of his books and moves money according to the profitable cash-flow system that Polymath helped him establish. Adriana manages the daily transactions for both the customer invoices and the cash pesos in Expensify. Polymath makes sure that their QuickBooks Online matches the reality of their bank statements. Each month Polymath meets with Eric in a video call to ensure that he has the answers he needs to his important business questions, allowing him to make educated decisions for his company and his team.
Together Polymath and Traditions Mexico have developed a system that can help many more tour companies to thrive, rather than merely survive. By sharing these strategies, we can all work to make the world a better place, built on a foundation of thriving small businesses. We can eradicate entrepreneurial poverty all over the globe, and we can do it by focusing on an industry that promotes peace, deepens understanding between cultures, and celebrates diversity. This is now the goal of Ingrid Edstrom’s current project: Priestess of Profits.
- Find the right accounting professional. There are a lot of bookkeepers and tax accountants out there who have not yet caught up with where the accounting industry is going. One beautiful thing about the tour industry is that it is full of adventurous people who are eager to learn new things, embrace change, and are not allergic to technology. You need the same in the professionals you work with. If your accounting pro isn’t a good fit for you, you’re allowed to find another one.
- Get on the cloud. By using QuickBooks Online, Traditions Mexico and Polymath are able to collaborate from anywhere. Now, rather than abdicating control of his company financials, Polymath is empowering Eric Mindling to lead his company and delegate responsibility from a knowledgeable position. It also enables you to use class tracking to report on the profitability of each tour, so you know which ones to do again next year.
- Use an app to track your cash spending. Why take the chance of having undocumented expenses denied by the IRS in an audit? Also, Traditions Mexico is fortunate that they have an awesome, honest team. Not all businesses are so lucky. Internal fraud occurs most often where we least expect it. Trust is not an internal control. Hold your team accountable for their cash on hand. Modern technology has made it easy, even with foreign currency.
- Use a separate account to track your customer deposits and pre-payments. Don’t touch those funds until you are inside the time period where the money is no longer refundable. It may take a little time and discipline, but getting out of the habit of stealing from tomorrow to pay for today is well worth it. The next step is saving for the day after tomorrow.
- Budget your cash flow. Similar to eating right and working out, the sooner you begin and decide to stick with it, the sooner you will see results on the health of your bottom line. Working with your financial professional to create a clear plan for profitable cash flow will also make sure that the tax man never comes knocking.
- Focus on your dream. Why did you decide to get into this business? Was it to spend hours each day beating your head against the wall that is your bookkeeping process? Didn’t think so. You are allowed to focus on what you do best, and delegate the things that are not your primary forte. You can grow your weaknesses by inches, but you can improve your strengths by miles. Focus on your passion, your vision, and the joy that you bring to others. There are other people in the world with different strengths who will be happy to do the same for you. Find the connections and relationships that will help your business thrive, not just survive.
If you are a tour company operator who would like to participate in great conversations on business strategy for your industry, please join the Cultural and Adventure Tour Leaders Business Strategy Group on Facebook. Membership in the group is free. To learn more about Ingrid’s current endeavors at Priestess of Profits and their business education resources, visit www.PriestessOfProfits.com. To learn more about Traditions Mexico, visit www.TraditionsMexico.com.
