Escolar Documentos
Profissional Documentos
Cultura Documentos
by
Sherry M. Bushnell
prepared for
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.
ii
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
iii
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
iv
Magazines and Publications ................................................ 119
Travel and Tour Agencies................................................... 124
v
INTRODUCTION
WHAT IS ECOTOURISM?
HAVING A DREAM
2
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.
2) Project Assessment: Here is a detailed discussion of how
to assess an ecotourism business idea.
3) Creating a Business Plan: Take a step-by-step approach
to developing a business plan, with examples of financial spreadsheets and
marketing ideas is included.
4) Financial Backing: You will find a
discussion of the documents necessary for securing
financial backing, including a list of organizations
that may be willing to provide loans or economic assistance for ecotourism
ventures.
5) Environmental Impact Assessment (EIA): This is a brief guide
to developing an environmental impact assessment.
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.
7) Starting Operations: Do a detailed examination of the factors to
consider before opening for business.
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 provide technical assistance in
renewable energy and/or descriptions of existing ecotourism operations in
the Pacific.
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.
3
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. Every island has its own
regulations and rules so all the steps may not apply to you. There may also
be steps that are particular to your island that are not mentioned in this
handbook. Your most important resource will be the people who have
already established businesses. Take the time to meet these people and
learn from them.
The checklist will give you a broad overview of what needs to be
done. Following chapters describe each step in the checklist in more detail.
You may already know a lot about setting up and running a business; 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. The order of the steps in the checklist may vary
depending on the type of operation, the business environment, and the
governmental regulations; many of these steps may also be done at the
same time.
CHECKLIST
5
D. 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.g., construction of buildings or
clearing of land) or permanent (e.g., tour guides, waiters,
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?
6
should end with a summary statement. The main opportunities and
advantages of opening a new business should be stated clearly in this
statement.
7
E. Location of the Business: You probably already have an idea of
where you would like your business to be located. In the business plan,
you should describe the location
of your business in as much detail
as you can. It is also useful to
describe the special characteristics
of the location and explain why
you chose that particular spot or
building. Some lending
institutions require drawings,
photographs, or designs of the building or structure that you are going to
create. Chapter Nine contains some architectural drawings of building
created for ecotourism operations.
I. 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
money? It is essential to know the answers to these questions if you are
trying to get financial help; but even if you are not seeking a loan,
preparing a financial analysis can help you define some guidelines about
what you can buy, as opposed to what you would like to buy. The
specifics of working with financial data will be discussed in Chapter Four
entitled, Preparing Financial Statements and Finding Financial Backing.
9
• 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.
There are five main sources of funds for ecotourism businesses: relatives,
personal savings, foreign investors, development banks, and commercial
banks. 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. Much of the information
included in the financial section needs to be presented in the correct format.
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.
11
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
F. 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, while the income
statement focuses on the value of the assets belonging to the business.
There are four main functions of the cash flow analysis:
(1) To show you how much cash your business will need;
(2) To tell you when the cash will be needed;
(3) To help you decide whether you should look for equity (money
given by the owners of the business), debt (money received
from loans), operating profits (money from the business), or
sale of fixed assets (money received from selling something of
value); and
(4) To help you determine where the cash will come from (Bangs,
Jr., p.82).
Like the projected income statement, it is best to view the cash flow
projections on a monthly basis for the first year, and then quarterly or
yearly for the next three to five years. 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. The
format for a simple cash flow projection is shown on the next page.
13
SAMPLE CASH FLOW PROJECTION
CATEGORY MONTH #1 MONTH #2
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:
14
G. Historical Financial Reports: If you have already been in
business then you probably have some previous financial records.
In addition to balance sheets or income statements, you should
include previous tax documents in this section. If you are
establishing a new business, then income statements and cash flow
projections may have to be estimated. Personal tax forms might be
required if there are no previous business tax documents.
15
• 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. Go ahead and start making your
dream come true. 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. Things may not always happen the way you plan them, but think
creatively and do not give up. The first step is the hardest, and it takes the
most courage, so take a deep breath and start.
16
CHAPTER TWO: PROJECT ASSESSMENT
18
fairly convenient fashion, and be supported when they reach your
operation. It does not make sense for you to build an incredible cultural
center that people cannot find; 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; and it may not make sense
for you to develop a trail that is located at the end of a treacherous, dirt
road full of potholes. 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, can you provide transportation for the visitors?)
° Are necessary supplies, such as food, water, and diesel fuel
available?
° Are sewage services, power lines, and communication services
easily accessed?
You can contact your local tourist board to find statistics on visitors who
come to your island. It is important not only to find out how many visitors
come to your islands, but also to know visitor profiles. This means finding
out what the visitors to your island are like. 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
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.
Once you are certain that there are enough
visitors to support your dream, it is time to look at the
infrastructure. 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, you should find out how long it will take to
complete the improvements. In other words, visitors must be able to
locate you easily. Be sure that infrastructure exists in order for that to
happen.
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. If water is not piped into your area, will you be able to
get water in some other fashion? Rainwater can be collected for some
uses. Drinking water could be bought in villages and delivered to your
business. However, there are other ways to provide water for your
business.
All of these alternatives have costs and benefits; you will need to
investigate all of the options and determine which is the best for the
environment and for your operation. For example, cesspools are easy and
cheap, but they may not work very well in certain types of soil and they
may pollute ground water, reefs, or lagoons. Also, the government often
forbids cesspools in populated areas. Another system which reduces the
amount of sewage waste is a composting toilet. This toilet digests waste
products, which include human bathroom waste, kitchen food waste and
other organic materials such as lawn clippings, banana leaves, etc. There
21
have been a number of technological improvements in composting toilets
in the last few years. Greenpeace has tested a number of these biological,
composting toilets in the Micronesian islands (Yap and Kosrae) that do not
have any odor associated with them. As an ecotourism venture,
composting toilets might fit well into the design and purpose of your
operation.
What types of communication services are available at your place of
business? It is necessary to have a phone, facsimile machine, or some other
form of direct communication for potential customers to reach you? If
there is no telephone service in your business location, contact your local
telephone company and see if there is a way to receive their services. If
there is not, then you might have to investigate other means of
communication such as mobile phones or CB radios.
22
a combination of sources to meet your energy demand. These sources
include, 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, such as cooking, water
heating, and clothes drying
23
How Do Surrounding Community Residents Feel About Your
Project?
24
CHAPTER THREE: DEVELOPING A BUSINESS PLAN
A. Executive Summary
The executive summary clearly presents all the data and information
from the business plan in five pages or less. An executive summary in a
simple business plan may be less than a page long; a more detailed business
plan may require a five-page executive summary. The main opportunities
and advantages of opening a new business establishment should be
discussed clearly, and the executive summary should end with a concluding
summary statement. An example of an Executive Summary is:
Establishment/Contacts $200,000
Handicraft Purchase 100,000
Transportation 10,000
Packaging and Handling 12,000
Lease Rent for the Shop 78,000
Clerk's Wages 20,000
Total $420,000
26
B. Description of Company and Business
This description should be fairly brief, but a number of key
questions should be
answered. These questions are:
(1) What business are you in?
What do you do (manufacturing, service)?
Who are your clients (tourists, adults, 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), a partnership
(two or more owners),
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; or will your business have a constant stream
of customers?
(8) What is your experience in this business or in any type
27
of business?
(9) Have you researched companies that are in the same
type of business? What have you learned from them?
(10) Have you spoken with prospective suppliers?
Are they willing to offer you managerial/technical help?
Are they interested in working with you?
C. 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. If you establish an ecotourism venture, then you already have one
differentiating feature: the ecological focus of your business. Stress the
fact that you are building an ecotourism venture and describe why your
business fits into this special category. This section should respond to the
following questions:
29
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. It was not very "special" to them; it was
stupid. It would blow away during the first hurricane, or burn down and
the bugs would get in. When you are raised in a thatched roof home and
long for a western style home, thatch becomes undesirable. Local residents
could not envision his dream.
Today, the hotel is very successful; however, it took the owner five
years to convince lenders that his new idea was a good one; now, the local
residents are proud of the success of his business because it is a positive
and special reflection of their culture. 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. It is much easier to
convince people of the benefits of your product/service if they already
understand what your product/service is.
D. The Market
In the previous section, we discussed the importance of describing
your ecotourism product/service in the best possible way. Now that you
have identified the benefits that your product/service provides, you need to
describe your customers. 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. These customers or
guests comprise a group known as your "market." The following items
should be understood and considered when presenting the description of
the market.
31
° 70% have household incomes
between $20,000-$50,000.
° 17% have incomes in excess of
$50,000.
° 68% own their homes.
° 81% attended college; 61% have a
college degree; 34% have advanced degrees.
° In addition to bird watching, hobbies include: reading,
gardening, hiking, traveling, photography.
° 52% are planning or would like to go on a paid birding trip,
domestic or abroad.
° 46% are members of a bird club; 54% are affiliated with the
National Audobon Society.
° Birders are drawn from a broad spectrum of business
occupations.
° Birders spend more than 100 days a year in some leisure-time
activity.
32
(2) Product Benefits: This idea has already been briefly discussed on
page 31 of this chapter. 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?
34
Sample Press Release
36
not to undercharge since your business will fail if you cannot cover all of
your costs.
(7) Meeting Your Goals Within a Budget: Most new small business
operators do not have a very large budget to spend on advertising.
However, it is very important to realize that promoting your business is an
investment in the future. People need to know that you are in business and
be aware of services or products you are going to provide. Decide how
much you will be able to spend on advertising based on your forecasted
sales. 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. You
may wish to spend a little more than usual on advertising in the beginning
so that people become aware of your business.
E. Location of Business
In this section you need to describe the location of your business.
You should include your business address, a description of the physical
features of your building, an explanation of who owns the location, zoning
restrictions, an analysis of renovations, (if any), that will be needed and
their costs, a description of other businesses in the area, the rationale for
why you chose this place over other places, and a discussion about how
this location will affect your operating costs. If your operation does not
require a building, it is still necessary to describe the area in which your
business will be operating. A tour company, for example, should describe
38
the areas they are going to take customers, and explain why those areas
were chosen.
A sample description of the Location of Business is described
below:
F. The Competition
Take a look at the other businesses in your area and find out what
their product or service is like. Find out if their business is increasing,
decreasing, or steady, and find out why. Determine what the customers
like and do not like about your competitors. Find out how they advertise
and how customers heard about their business. By learning from other
people's mistakes, you can reduce your chances of failure. However, you
39
will probably not be able to be the best in everything. As an ecotourism
business, concentrate on those qualities that fit the definition of ecotourism.
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. (There is a practice form in Appendix C.)
40
Here is a sample description of the Competition section:
G. Management Team
If you plan to borrow money, it is critical that you, or someone in
your business, have management skills and experience; most small
businesses that fail do so because of managerial weaknesses. Lenders
know this and therefore pay special attention to the experience and success
record of your management team. There are five points that need to be
addressed in this section:
41
(1) Describe the Personal History: This section should discuss your
experience, or the experience of the most credible manager on your team.
Focus on success. If your team is inexperienced, it would be a good idea
to recruit an advisor or board members on whom you can focus. In
addition, this section should include the age, education, interests, talents,
reasons for going into business, business background, management
experience, and financial status of each member of the managerial team.
This needs to be done for each of the principal owners or investors. Also
include information about the particular skills you have that you feel will be
influential in making your business successful.
(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.
(3) Explain the Duties and Responsibilities: It is important write
down and explain the duties and responsibilities of each person. If the
duties and responsibilities are not defined, one person may end up doing
more work, or people may end up making decisions that they are
unqualified to make. It is also necessary to determine who makes the final
decisions. Job descriptions should be included as appendices to the
business plan, along with resumes of each member of the management
team, including their salary history if it is “impressive.”
(4) Salaries: This topic needs to be discussed among all the people
involved and agreement must be reached on what salaries will be given. Be
realistic about how much you should receive, but do not be greedy. Figure
out how much each person needs to live on, and make sure that your
financial projections support that amount. If you are borrowing money,
salaries in the early years should be minimal. Lenders don’t appreciate
their borrowers driving big cars and living an extravagant life style on
borrowed money.
42
(5) Available Resources: Every small business should have access to
four specialists. 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, then you will already have access to some of the professional
skills you need.
H. Personnel
The first step is to determine what kinds of and how many
employees you will need. This will change over time so be sure to state
what your personnel needs are now, one year from now, and five years
from now. Once you know this information, you can decide whether you
are going to hire people as part-time or full-time employees, how you are
going to pay your employees (hourly or salary), what types of fringe
benefits, if any, you will provide, and whether or not you will have to train
people. For ecotourism projects, training may be very essential to the
success of your project, because you want your employees to answer the
environmental, cultural, and natural history questions that they may receive
from ecotourists.
An example of a personnel description for a small fishing expedition
company is shown below:
I. Financial Analysis
Analyzing financial information and preparing the correct
documents is an important part of the business plan. The financial analysis
contains a lot of information and, rather than trying to go over it here, it
will be discussed in Chapter Four, Preparing Financial Statements and
Finding Financial Backing.
J. Supporting Documents
As mentioned in the Main Checklist, supporting documents are any
type of information that is relevant and lends support to your business plan.
As you write your plan, be sure to keep track of where you got the
information, 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, try to determine whether or not the document adds
credibility to your plan. If the answer is "no," then save the document, but
do not include it in the plan. The following items may be included in your
44
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.g., brochures, advertisements)
Since each business is different, it will be unlikely that you will need
all of these documents. Smaller businesses may have only three or four
supporting documents, while larger enterprises may need more.
K. Conclusion
By now you have a good understanding of who your customers are,
what is involved in making your customers interested in the products or
services that you offer, and how to inform them of your product/service.
You should know your strengths and weaknesses. You will need to
emphasize your strengths and learn ways to correct or compensate for your
weaknesses. The next step is to determine whether or not your business is
financially feasible. It is important to you, and to your lenders, that your
business will make money. So, get your calculators ready, and move on to
Chapter Four.
45
CHAPTER FOUR: PREPARING FINANCIAL
STATEMENTS AND FINDING FINANCIAL
BACKING
46
Danny's Dive Shop
Sources:
Mortgage Loan $50,000.00
Short-Term Loan 20,000.00
Danny's Personal Savings 10,000.00
Relatives' Personal Savings 15,000.00
Total $95,000.00
Uses:
Purchase Boat $15,000.00
Diving Equipment and air compressor 15,000.00
5-Year Lease on land 50,000.00
Inventory 1,000.00
T-shirts
Souvenirs
Working Capital* 14,000.00
Total $95,000.00
*Working Capital: the part of a company's capital which can easily become
cash for paying bills, wages, etc.
47
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. For
example, for a resort business a refrigerator would be described as capital
equipment since it is going to be used by the resort owner. It will not be
sold to customers, it does not have to be replaced very often, and, even if it
were five years old, it could still be sold to someone who wants to buy a
used refrigerator. Items that are in inventory will need to be replaced fairly
often and will not have any resale value. An example of a capital
equipment list is shown on the next page:
48
Capital Equipment List
Castaways Bungalows
January 1994
Major Equipment: Model: Cost or List Price
(whichever is
lower):
Water Heater 375BQ $1,000
Beds for Visitor Rooms (10) Handmade 1,100
Chairs for Visitor Rooms (20) Handmade 900
Beneke Toilets for Visitor Rooms (10) 353 1,500
Chests of Drawers for Visitor Rooms (10) Handmade 700
Writing Tables for Visitor Rooms (10) Handmade 300
Lanai Furniture for Visitor Rooms (10 sets) Handmade 2,000
GE standard refrigerator (1) 765-ABC-432 450
Chairs for Common Area (5) Handmade 500
Sofas for Common Area (2) Handmade 635
Front Desk (1) Handmade 985
Panasonic Facsimile (FAX) Machine (1) 123-XYZ-987 345
Water Purifier (1) Handmade 1,340
Westinghouse Stove (1) 7654 850
Solar Water Panels (10) None 3,450
Dining Room Furniture Handmade 5,600
Ceiling Fans for Visitor Rooms and Custom Made 1,500
Common Area(11)
Steelmaster Filing Cabinets (2) Century 62 465
Local Art for Common Area Handmade 650
Display Cases for Common Area (2) Handmade 250
Cash Register (1) 867 JKL 500
Safe (1) 1965 Diebold Master 250
Total: $25,270
Miscellaneous Minor Equipment:
Pots, pans, plates, silverware, glasses, Handmade $750
table linens
Miscellaneous display trays, boxes Handmade 245
Total: $995
Capital Equipment Total: $26,265
If you are just starting up the business, you will only need to know
the model type and the cost (or list price). As you start operating, this is a
useful list to keep track of the depreciation that gathers on your capital
equipment. It would be wise to keep an "accumulated depreciation"
column next to the list of prices. It is very beneficial for you, or your
accountant, to keep track of the total amount of depreciation because it
49
will help you when you declare your taxes. We will describe depreciation
very briefly so you can understand how it works. For more detailed
information, you should talk to an accountant or a knowledgeable business
person.
When you first buy a piece of equipment, it is worth the amount
that you paid for it. As people use the equipment and it gets older, it is not
worth as much--but it is still worth something. 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. For
example, in year one, you buy a refrigerator for $700. Although you paid
$700 for the refrigerator, you may only “use up” $100 worth of value.
Therefore, in the second year, the refrigerator is not worth $700, it may
only be worth $600.
You may be wondering how you can determine what the value of a
piece of equipment is at the end of each year. 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.
Accountants have come up with a number of ways for people to depreciate
their equipment. 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. This technique is called "Straight-Line
Depreciation." In the example used above, the refrigerator was bought for
$700. After you spoke with the seller, you determined the refrigerator
would last for 10 years. Therefore, every year you would decrease the
value of the refrigerator by $70 ($700/10), and this $70 would be an
expense on your Income Statement. We have just described one way of
depreciating fixed assets; 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.
C. Balance Sheet
A balance sheet is a financial statement that summarizes the assets,
liabilities, and net worth of a business at a given date. The format of a
50
balance sheet is very important and should not be changed. 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.
If you are just starting up a new business you may not need a
balance sheet. It is difficult to estimate these figures. Also, many of the
items listed in a balance sheet are irrelevant to new business people, such as
an accounts receivable category. 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.
This document can be very detailed or very simple, depending on
the size and nature of your business. Just remember to keep it in the
proper format. The order of the categories is important: they are arranged
in order of decreasing liquidity (for assets) and decreasing immediacy (for
liabilities). Liquidity refers to the ease at which something can become
cash. A checking account is very liquid; land is not very liquid. Immediacy
refers to the amount of time you have before something is due.
The format for a balance sheet is shown below:
Name of Business
Day (Month, Day, 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
It might be a good idea at this time to define each of these
categories.
Assets: Generally, assets are anything that has value. In accounting,
and on balance sheets, assets are the intangible and tangible
resources of a business or person, such as accounts and notes
receivable, cash, inventory, equipment, real estate, and goodwill.
Current Assets: This category consists of assets that are cash or can
be changed into cash within one year fairly easily. The assets that
are changed into cash need to take place through "normal" business
activity. For a hotel operator, a refrigerator is not considered a
current asset because it is not something you would normally sell.
In addition to cash, government securities, accounts receivable
(money that people owe you), inventories, and prepaid expenses
(such as insurance or advertising) are all considered current assets.
Fixed Assets: Fixed assets include all of the capital equipment that you
listed in Section B (Capital Equipment List), land, building, and any
improvements you have made to the building. These items are
expected to last for a long time and are used in the creation of your
product or service.
Accumulated Depreciation: In the previous section on page 53,
depreciation was defined and explained. Accumulated
Depreciation is the total amount of depreciation taken off of all
capital equipment and buildings. If you have been in business for
three years, 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. If we use the same refrigerator
example that we used in Section B, accumulated depreciation
would be $210 or ($70 x 3 years) for the refrigerator. On the
balance sheet you would need to add the $210 for the refrigerator
along with all the depreciation for the other equipment.
Net Fixed Assets: This is figured by taking your Fixed Assets and
subtracting your Accumulated Depreciation.
52
Other Assets: Other Assets is a category that is usually used for things
like patents, copyrights, and other intangible goods. You probably
will not have to worry about this category very much.
Total Assets: This is the sum of Current Assets, Net Fixed Assets, and
Other Assets.
Liabilities: Liabilities are the debts of a person or a business.
Current Liabilities: These are debts that you need to pay within one
year. Usually they include items such as wages, salaries, accounts
payable (individuals or businesses to whom you owe money
because of a service or a product they provided you), taxes, some
part of your long-term debt, and any other obligations that you
have to pay off within one year.
Long-Term Liabilities: These are debts that need to be paid over the
long-term, like mortgages, long-term bank loans (to be paid back
over a period of years), and equipment loans (if they are longer than
one year). Be sure that when you calculate long-term liabilities,
you subtract the amount that you are going to pay off in the current
year; this amount should be in the category named Current
Liabilities.
Total Liabilities: This is the sum of Current Liabilities and Long-
Term Liabilities.
Owner's Equity: Sometimes this category is labeled Net Worth. It is
Total Assets minus Total Liabilities.
Total Liabilities and Owner's Equity: This is exactly what it sounds
like.Total Liabilities plus Owner's Equity.
Footnotes: Any information that clarifies what has been stated in the
above categories. This might contain descriptions of an item, the
names of people or businesses that you owe money to, 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
Kealani’s Hula Halau
February 1, 1994
Balance Sheet
CURRENT ASSETS:
Cash $5,600
Accounts Receivable (net) 2,500
Inventory (Souvenirs) 2,345
Pre-paid Expenses 750
Total Current Assets $11,195
FIXED ASSETS:
Building $165,000
a
Lighting Displays 14,500
Stage Props and Costumes 5,950
b
Vans 16,000
Total Fixed Assets $201,450
Less Accumulated Depreciation (96,450)
Net Fixed Assets $105,000
Liabilities
CURRENT LIABILITIES
Accounts Payable c $3,492
Current Portion of Long-Term Debt 1,700
Total Current Liabilities $5,192
LONG-TERM LIABILITIES
Note Payable $750
Bank Loan Payable d 6,500
Total Long-Term Liabilities $7,250
54
Footnotes:
a
From John's Lighting Gallery.
b
Includes three used vans purchased in January.
c
Accounts Payable to:
Island Electric $ 952
Martha's Light Shop 870
Betty's Stitchery 1,350
Water Supply 320
Total $3,492
d
Commercial loan secured by Property A.
55
1 Net Sales:
2 less Cost of Goods Sold:
3 equals Gross Margin:
4 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)
5 Other Expenses:
Interest
6 Total Expenses:
7 Profit (Loss) Pre-Tax:
8 Taxes:
9 Net Profit (Loss):
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.
For example, if a customer on a tour to a waterfall broke his ankle, you, as
56
the tour operator, might want to give the customer his money back. You
would not count this customer's fee as part of your total sales. Only
include the actual amount of money you will be receiving. If you are a new
business, you will need to estimate this number based on the information
you have gathered.
(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.
This category also includes the amount of inventory you might have. For
example, if you have 100 handicraft products that have already been made,
but have not been sold, the cost of making them will be included in this
category.
(3) Gross Margin: This is (1) Net Sales minus (2) Cost of Goods
Sold. 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.
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).
(4) Operating Expenses: These expenses are mainly the fixed costs
that we will discuss in the break-even analysis. These expenses must be
paid no matter what happens and regardless of the number of customers
you receive. Be sure to list all your expenses. If they seem insignificant,
put them in a miscellaneous category, but, do not forget or leave out any
expenses.
(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. However, expenses in
this category are non-operating. This means that the expenses are not
directly related in running the business. 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. Others are gains or losses you might have
realized from selling old equipment or having something stolen.
(6) Total Expenses: This is the sum of (4) Operating Expenses and
(5) Other Expenses.
57
(7) Profit (Loss) Pre-Tax: This is (3) Gross Margin minus (6) Total
Expenses. Income taxes that you may have to pay will be based on this
figure. Gross revenue taxes are determined by the amount of your net
sales.
(8) Taxes: Your taxes will depend on where you live and the tax laws
of your place of business. See the local business assistance organization,
your tax office, or an accountant for help in determining your taxes.
(9) Net Profit (Loss): This is (7) Profit (Loss) Pre-Tax minus (8)
Taxes. This amount will reflect the success or failure of your business.
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. As mentioned earlier, you will have to make an
educated guess based on all the information you have already gathered.
David Bangs, Jr. has a good method of determining a "realistic as possible"
sales forecast.
(1) Determine what your main product lines or service lines are:
For example, an ecotourism lodge that only provides shelter for
ecotourists has only one line of business: accommodation. If this
same lodge also has a restaurant/bar at which people can drink and
eat at, then this lodge has two lines of business: accommodation
and restaurant services. If this same lodge offers boat tours to the
other side of the island, then this would be considered a third line of
business: recreation.
(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, such as weather or the state of the
economy.
(3) Estimate the level of sales you would receive if everything
went perfectly (high); for example, your marketing strategies were
extremely popular and there was always high demand for your
products or services.
58
(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.
You will need to do this for each period that you prepare a
Projected Income Statement. If you prepare an Income Statement that is
broken down by months, then you will need to calculate a sales forecast for
each month. The table presented below may help you in determining your
sales forecasts:
Once you have these figures, you can start filling out the Projected
Income Statement forms. A sample Projected Income Statement is shown
on the following page:
59
1 Experience Paradise’s Projected Income Statement
2 Category Year 1 Year 2 Year 3
3
4 Sales
5 Accommodations $35,000 $50,000 $75,000
6 Tour Trips 22,000 26,000 30,000
7 Restaurant/Bar 31,000 40,000 75,000
8 Total Sales $88,000 $116,000 $180,000
9
10 (v)Cost of Supplies 24,800 31,400 60,000
11 (v)Variable Labor 7,600 9,000 11,000
12 Cost of Goods Sold $32,400 $40,400 $71,000
13
14 Gross Margin $55,600 $75,600 $131,200
15
16 Operating Expenses
17 (f)Salaries and Wages 20,000 20,000 30,000
18 (v/f) Payroll Taxes and Benefits 2,000 2,000 3,000
19 (f)Rent 5,500 0 0
20 (f)Utilities 1,800 1,920 2,160
21 (f) Maintenance and Cleaning 100 100 150
22 (f)Office Supplies 200 100 100
23 (v/f)Automobiles and Trucks 500 500 750
24 (f)Insurance 450 875 875
25 (f)Legal and Accounting 1,500 400 400
26 (f)Advertising/Promotion 2,010 5,000 4,000
27 (f)Depreciation 12,500 12,500 12,500
28 (f)Telephone charges 250 300 350
29 (f)Miscellaneous 700 700 950
30 Total Operating Expenses $47,510 $44,395 $55,235
31
32 Other Expenses
33 Interest (Mortgage) $1,140 $3,170 $3,170
34 Interest (Short-Term Loan) 2,192 2,192 2,192
35 Total Other Expenses $3,332 $5,362 $5,362
36
37 Total Expenses $50,842 $49,757 $60,597
38
39 Net Profit (Loss) Pre-Tax $4,758 $25,843 $70,603
40
41 Taxes (estimated 20% of #39) $ 952 $5,169 $14,121
42 Net Profit (Loss) $3,806 $20,674 $56,482
(v) = variable costs; (f) = fixed costs
60
William and his partner Jim, plan to start a small hotel named
Experience Paradise. A restaurant, bar, and tour business will also be
operated out of the hotel premises. Explanations and assumptions for the
numbers in Experience Paradise’s Projected Income Statement on the
previous page are described below by line number.
(4) Sales: This section lists the revenues received from each of
three sources - accommodations, tours, and the restaurant and 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. During this time, efforts
will be concentrated on getting the business going and operating
smoothly. In the second year, William plans to advertise extensively,
and therefore, hopes to have more clientele in the third year.
(6) Tour Trips:. 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. The tours will be
open to guests from all hotels and any interested local people.
William expects that revenues from tours will steadily increase as
guest count increases, but there will be little direct advertising off
island for the tours. Brochures will be distributed to all places that
tourists visit.
(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. In the second year, he will make a
strong effort to attract the local market to their establishment. A
large selection of food and drinks will be available; the atmosphere
will be conducive to sitting and talking; and the prices will be
reasonable. By the end of the third year, he expects the
restaurant/bar to be generating sales equal to that of the hotel.
(8) Total Sales: This is reached by adding (5) plus (6) plus (7).
(10) Cost of Supplies: The cost of supplies averages about 40
percent of total sales and the supplies are used mainly in the
61
restaurant. This number was determined based on actual figures
obtained from similar businesses. The hotel and tour operations use
little inventory so these two businesses have low variable material
costs.
(11) Variable Labor: One full-time maid, one part-time cook,
one part-time waitress, and one part-time tour guide will be hired in
year one. In year two, an additional cook and waitress will be hired.
The owners will also work in the restaurant when needed. In year
three, another part-time maid will be hired along with another part-
time tour guide. The rates will be $5.00/hour, except for the cook,
who will be paid $7.50/hour.
(12) Cost of Goods Sold: This is reached by adding (10) Cost of
Supplies plus (11) Variable Labor.
(14) Gross Margin: This amount is (8) Total Sales minus (12)
Cost of Goods Sold.
(16) Operating Expenses: Most of the expenses included in this
section are fixed costs. They do not vary with the amount of business
being conducted.
(17) Salaries and Wages:
Year One: $10,000/year for each of the two owners
Year Two: $10,000/year for each of the two owners
Year Three: Either $15,000/year for each of the two
owners
or
$10,000/year for each of the two owners and
$10,000/year for an additional manager
depending on conditions at that time.
(18) Payroll Taxes and Benefits: William and Jim determined
that this will be 10 percent of (17) Salaries and Wages. This will
include payroll taxes, health care, and annual bonuses. 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. The
62
property will be bought in January of the second year and mortgage
payments will replace rent. The interest on the mortgage can be seen
in line (33) in the category Interest (Mortgage). Only the interest is
shown on the Income Statement; the principal and the interest
payments are shown in the Cash Flow Projection which is discussed
in Section F.
(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. Based on the utility company's rate schedule, the
utility bill will be approximately $150/month in the first year,
$160/month in the second year, and $180/month in the third year.
(21) Maintenance and Cleaning: This is money used for repairs
to room furniture and kitchen equipment. Since all of the furniture is
new, this amount is not expected to be very high in the initial years of
running the business.
(22) Office Supplies: Since year one will be the first year of
business, a number of office supplies, such as a stapler, pencils, pens,
paper, fax paper, accounting books, and other things will need to be
purchased. $200 will be allocated for office supplies in the first year.
For each year, thereafter, office supplies will be restricted to
$100/year.
(23) Automobiles and Trucks: Gas expenses, oil changes, and
general upkeep for the autos/trucks of the company belong in this
category. The tour section of William's business needs vehicles to
transport their clientele to and from the starting points of the tours.
(24) Insurance: This section includes liability and vehicle
insurance. Years two and three reflect the property insurance that
needs to be paid on the purchase of the property.
(25) Legal and Accounting: The first year has high legal and
accounting expenses; 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. These services are needed initially, but they will not be
63
needed on a daily basis once the business has been established. It is
expected that the accountant's services might be needed at selected
times during years two and three, so smaller amounts are budgeted.
(26) Advertising/Promotion: In years one and three, it is
expected that two percent of total sales will be spent on advertising
and promotion. This will be done through brochures sent to travel
agents and local tourism offices. In addition, the restaurant and bar
will be advertised on the local radio and in the local newspapers. At
the end of year two, there will be a large advertising push for
international tourists. Posters and articles will be sent to international
tour agencies, travel magazines, and travel guides. In year two, four
percent of total sales will be spent on advertising and promotion.
(27) Depreciation: Ten-year Straight-Line depreciation on
equipment (beginning January, year one) worth $125,000. Although
William and Jim will not actually pay this money, it is a reminder that
the equipment they have will be declining in value as they operate
their business. They are going to try and set aside about the same
amount of money, so that when the equipment needs to be replaced,
they will already have the money to do so.
(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. The amount is expected to increase as the number
of guests increase.
(29) Miscellaneous: These are all of their expenses that are too
small to be itemized.
(30) Total Operating Expenses: This is the sum of lines (17)
through (29).
(32) Other Expenses: These are expenses that may be fairly
significant, but are not operating expenses.
(33) Interest (Mortgage): This is the interest on a $55,000
mortgage for 15 years at 9.5%.
(34) Interest (Short-Term Loan): This is the interest on a
$35,000 loan for six years at 11.5%.
64
(35) Total Other Expenses: This is the sum of the interest
expense on lines (33) and (34).
(37) Total Expenses: This is reached by adding line (30) Total
Operating Expenses plus line (35) Total Other Expenses.
E. Break-Even Analysis
The Break-Even analysis 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, in order to break-even financially. If you "break-
even" it means that you neither earn nor lose any money. As you get
involved in your business it may be easy to forget about the money you
65
have already invested in your business; however, the amount of money you
make should cover all of the original expenses, your current expenses, and
your salary. A break-even analysis is one way of ensuring that you do not
forget all the costs of being in business.
Even more so, it gives you an idea - on a daily, weekly, or monthly
basis - of how much you need to sell in order to pay your bills. In other
words, when you close the register at the end of the day and add up the
receipts, you can compare your sales to the break-even point and know if
you had a good or bad day.
Also, when you are making plans, knowing the break-even point
will help you figure out if your business has a good chance of surviving. 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, then you need to re-evaluate
how you plan to run the hotel. Maybe you need to increase your rates, or
you need to cut back some costs, or perhaps you should start with more or
less units.
Before explaining how to calculate your break-even point, you need
to understand the difference between fixed and variable costs.
Fixed Costs: These are costs that stay the same, no matter how many
units you sell or how many customers you have. These costs will remain
the same regardless of whether or not you conduct any business. Fixed
costs include items such as: rent, salaries, administrative costs, and "hidden
costs" such as interest and depreciation. One example might be the basic
telephone bill. You might be charged $20.00/month just for having the
phone hooked up to the system. Even if you never use the phone, you will
still be responsible for paying the $20.00 fee.
Variable Costs: These are costs that change depending on the number of
customers you have. As your level of sales increases, so do your costs.
For example, suppose a customer at your ecotourism lodge eats dinner
prepared by the lodge's restaurant. The customer pays $10.00 for his meal.
Your profit is not $10.00, because you must pay for the food that was
prepared, the wage of the person who cooked the food, the electricity that
it cost to prepare the food, the janitor who cleaned up, and the cost of
66
removing the garbage. If all of the costs add up to $7.00, then you actually
made a profit of only $3.00. However, the $3.00 profit shown in this
example will not be constant for every $10.00 meal because there are many
other variables to consider. If 100 people decide to eat at your restaurant,
you need to purchase a lot more food. This may be better for you, because
you will get a better per unit price on something if you buy a lot of it. On
the other hand, if you want to buy some crab and there is a short supply of
it, you may have to spend a lot more. All of these costs need to be
considered when you determine your break-even analysis. Variable costs
may decrease or increase as your level of sales, or the amount of
customers you have, increases or decreases.
67
This formula is:
S = FC ÷ GM
where,
Gross Margin: Gross margin refers to the amount of money you will
make after you pay out your variable costs. 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. The following steps will
explain how to find your projected break-even point.
Step 1: Find the Gross Margin ( in dollars) from your Projected Income
Statement. The Gross Margin (in dollars) will be Total Sales minus
the Cost of Goods Sold.
Step 2: Find the Total Sales figure from the Projected Income Statement.
Step 3: Divide the Gross Margin by Total Sales (GM ÷ Total Sales).
Step 4: Determine your Fixed Costs.
Step 5: Divide the Fixed Costs by your result in Step 3.
This should give you the amount of money you will need to make in order
to break-even. 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. For example, say you determined that you will need to
make $20,000/year to break-even. If each customer pays an average of $100,
then you will need 200 ($20,000 ÷$100) customers. A sample break-even
analysis for an ecotourism hotel is on the next page:
68
Jungle Paradise Hotel
Break-Even Analysis
12000
10000
Break-even = $8,877/month
S
D
a 8000
o
l
l
e 6000
l
s
a
r 4000
i
s
n Fixed Costs = $2,042/month
2000
0
Ja n Fe b M ar A pr Jun Jul Aug Se p O ct Nov De c
Monthly Sales
69
This graph illustrates when Jungle Paradise will reach its break-even
point. In this case, it is estimated that in September of 1993, Jungle
Paradise will be making over $8,877. Notice that in each month, Jungle
Paradise makes more than the fixed costs. 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. This is acceptable; however, you
should always be able to pay for all of your fixed costs. If you are unable
to cover your fixed costs, you will need to make some major changes in
your business. If you are finding that your break-even point is unrealistic,
you may have to cut back on some of your costs, or reevaluate the prices
that you are planning to charge. Keeping your costs down is just as
important as generating sales.
Another item you must consider is that fixed costs do not
necessarily remain the same forever. If your business is very profitable and
you need to rent another building, your fixed costs are going to rise; if your
tours are sold-out every day, you may have to hire another full-time person
who will receive a salary; if your dive adventures are popular, you may
need to buy another boat. Any of these situations would cause your fixed
costs to rise; they need to be taken into account when updating your break-
even analysis.
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. In the
above example, let's imagine that the owners of Jungle Paradise wished for
$8,000 profit in the first year. What would their break-even point have be
to achieve this profit level?
70
FC = $24,500
VC = $21,400
Total Sales (projected) = $95,000
GM = 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.
71
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.
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!
72
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.
73
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:
74
Experience Paradise’s Cash Flow Projections, Year 1
1 Category March April May June July August
2
3 Cash Receipts
4 Rooms $2,000 $2,200 $2,400 $2,600 $4,500 $4,000
5 Tour Trips 1,300 1,350 1,400 2,000 3,000 2,600
6 Restaurant/Bar 1,500 1,950 2,100 2,000 4,000 3,500
7 Other Sources 35,400 350 250 350 400 420
8 Total Cash Receipts $40,200 $5,850 $6,150 $6,950 $11,900 $10,520
9
10 Cash Disbursements
11 Cost of Goods 1,520 1,550 1,610 1,890 3,390 3,150
(Supplies)
12 Variable Labor 600 600 700 600 600 700
13 Advertising 800 250 600
14 Insurance 200
15 Legal and Accounting 1,000 125 125
16 *Fixed Cash 2,129 2,129 2,129 2,129 2,129 2,129
Disbursements
17 Mortgage (rent) 550 550 550 550 550 550
18 Term Loan 669 669 669 669 669 669
19 Others(see notes) 10,000
20
21 Total Cash $7,468 $5,873 $5,658 $16,438 $7,463 $7,198
Disbursements
22
23 Net Cash Flow $32,732 (- 23) 492 (-9,488) 4,437 3,322
24
25 Cumulative Cash $32,732 $32,709 $33,201 $23,713 $28,150 $31,472
Flow
26
27 *Fixed Cash Disbursement (FCD)
28 Utilities $1,800
29 Salaries 20,000
30 Payroll Taxes and 2,000
Benefits
31 Automobiles and 500
Trucks
32 Office Supplies 200
33 Maintenance and 100
Cleaning
34 Telephone 250
35 Miscellaneous 700
36 Total: FCD\year $25,550
37 FCD/month $2,129
75
Experience Paradise’s Cash Flow Projections, Year 1 (cont.)
1 Category Sept. Oct. Nov. Dec. Jan. Feb. Total
2
3 Cash Receipts
4 Rooms $1,800 $1,900 $2,000 $3,750 $4,250 $3,600 $35,000
5 Tour Trips 1,500 1,500 1,400 1,550 2,400 2,000 $22,000
6 Restaurant/Bar 1,600 1,550 1,850 3,450 4,000 3,500 $31,000
7 Other Sources 210 260 210 450 460 430 $39,190
8 Total Cash $5,110 $5,210 $5,460 $9,200 $11,110 $9,530 $127,190
Receipts
9
10 Cash Disbursements
11 Cost of Goods 1,410 1,480 1,600 2,250 2,710 2,240 $24,800
(Supplies)
12 Variable Labor 600 600 700 600 600 700 $7,600
13 Advertising 360 $2,010
14 Insurance 250 $ 450
15 Legal and 125 125 $1,500
Accounting
16 *Fixed Cash 2,129 2,129 2,129 2,129 2,129 2,129 $25,548
Disbursements
17 Mortgage (rent) 550 550 550 550 570 570 $6,640
18 Term Loan 669 669 669 669 669 669 $8,028
19 Others(see notes) 35,000 $45,000
20
21 Total Cash $5,358 $5,553 $6,008 $6,198 $42,053 $6,308 $121,576
Disbursements
22
23 Net Cash Flow (- 248) (- 343) (- 548) 3,002 (-30,943) 3,222 $ 5,614
24
25 Cumulative Cash $31,224 $30,881 $30,333 $33,335 $2,392 $5,614
Flow
26
27
28
29
30
31
32
33
34
35
36
37
76
(3-6) Cash Receipts: Since all business is conducted on a
cash/check/credit card basis, Experience Paradise will receive
immediate payment for its products and services. Business is
expected to be slower than usual from September to November,
because it is off-season for tourists. Notice that the total cash
receipts received from each part of the business (accommodations,
tour trips, and restaurant/bar) is the same as the amount found in the
sales category of the Projected Income Statement (Section D).
(7) Other Sources: In March of the first year, this business
received a $35,000 short-term loan. It is also expected that donations
and sales of trinkets made of natural materials will raise an additional
$200-$500/month.
(8) Total Cash Receipts: This is the sum of all revenues
received from each division of the business on lines (4) through (7).
(10) Cash Disbursements: This is the amount of money required
to cover your expenses. It may be spent every month (for example,
electricity bill), or only once a year (insurance), or even once every
three months. It is important to know when the money needs to be
paid. If all of the major expenses are due in January, it will be very
difficult to pay them and still run a profitable business. You should
try to spread out your expenses so that your business is stable.
(11) Cost of Goods (Supplies): These figures are the same as on
your Projected Income Statement (line 10). Notice that the year one
total on the Projected Income Statement is the same as the total on
the year one Cash Flow Projection.
(12) Variable Labor: These figures are the same as on your
Projected Income Statement (line 11).
(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, bar and restaurant. $250 will
be spent in April. An additional $600 in brochures and radio
advertising will be spent in June, since it is the start of the peak
tourist season. In November, $360 will be spent on a promotion for
77
the restaurant part of the business. Notice that the year one total on
the Projected Income Statement is the same as the total on the year
one Cash Flow Projection.
(14) Insurance: Insurance costs in the first calendar year were
$20/month, payable as one payment at the beginning of the year.
Experience Paradise opened in March, so in the first year, they only
had to pay for 10 months. As you can see from line (14) in the Cash
Flow Projections, William paid $200 in March. In January,
Experience Paradise paid the insurance for the upcoming year; a
total of $250. Although the insurance company determines its fee on
the number of months, it is a cash expense to the business only once a
year.
(15) Legal and Accounting: During the first month, William and
Jim needed a number of professional services in this area which cost
$1,000. In addition to this initial start-up expense, the hotel expects
to use $500 more in legal and accounting fees. These fees are
charged on a quarterly basis. Legal and accounting fees of $125 are
paid every three months (April, July, October, and January).
(16) and (27-37) Fixed Cash Disbursements (FCD): These are
payments that are relatively independent of sales and fairly constant
from month to month. These expenses are added together and then
evenly distributed throughout the year. All of the expenses that are
part of fixed cash disbursements are shown in lines (28) through (35).
Notice that all of the figures are the same as the yearly totals in the
income projection statement. The fixed cash disbursement total is
shown on line (36). This is found by adding the numbers in lines (28)
through (35). Notice that it says FCD/year. All of the numbers listed
in the fixed cash disbursement are yearly expenses, so the total figure
is also a yearly number. In order to determine the monthly payment,
divide line (36) by 12. In other words, line (37) = line (36)÷12. If
you look at line (37), the total FCD/month is determined to be
$2,129. On line (16), $2,129 is the cash disbursement in every
month.
78
(17) Mortgage (rent): In this section you should list your
payments for rent or your mortgage payments. In the example, rent
is $550/month until January. It was stated in the Projected Income
Statement that the building was going to be purchased in January. At
that time, Experience Paradise will have to cover the mortgage
payments. A mortgage of $55,000 for 15 years at 9.5% interest
requires a monthly payments of $570. These numbers will differ from
the numbers on the Projected Income Statement. This is because
$570 includes the principal of the loan and the interest. This is the
amount of cash you will have to pay each month. The Projected
Income Statement is only concerned with the total amount of interest
to be paid over the life of the loan.
(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. In this case, it is $669/month for six years.
(19) Others: If there are any additional large or special payments
that will occur, you will list the figures in this category. You should
explain each of the payments. In the example:
June: Payment for kitchen equipment purchase due in full.
January: Purchase of building.
(21) Total Cash Disbursements: This is the sum of lines (11)
through (19).
(23) Net Cash Flow: This tells you how much cash is coming
into, or going out of, your business. If the number is in parentheses (
), then you lost money in that month. For example, in April,
Experience Paradise lost $23. They paid $23 more than they
received in sales. If you take the amount of line (8) Total Cash
Receipts and subtract the amount on line (21) Total Cash
Disbursements in the example, you will get the Net Cash Flow for
that month.
(25) Cumulative Cash Flow: Line (25) shows how much money
is really left at the end of a month. Even if you lose money in
February, you may still have a positive balance because you might
79
have made a lot of money in January. You find these numbers by
adding the amount of (23) Net Cash Flow to the previous month's
(25) Cumulative Cash Flow. In the example, March had a cumulative
cash flow of $32,732 which is the same as its (23) Net Cash Flow.
This is because it is the first month of business, and there is no profit
or loss from the previous month. In April, the cumulative cash flow
is $32,709. This number is found by taking $32,732 (the Cumulative
Cash Flow in March) plus (-$23) (the Net Cash Flow in April).
(27) Fixed Cash Disbursements: Lines (27) through (37) itemize
the Fixed Cash Disbursements which are part of (16) Cash
Disbursements. Please note that the categories and figures are
exactly the same as those on the Income Statement. They are added
together and then arranged out over the year on a monthly basis in
line (16).
80
probably the most difficult for entrepreneurs to complete because it is so
detailed. Just remember, taking the time and the effort to find this
information and making these documents can provide you with useful tools
to make good decisions.
81
Generally, development banks support tourism-based businesses, especially
those that will create jobs for local people. For them to be able to lend you
money, you must furnish them with realistic information.
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. First of all, this person must have an excellent credit rating.
Secondly, there must be a very strong desire to establish and make the
business successful. You, as an entrepreneur, must be willing to work long
hours and sacrifice your personal savings to make your dream come true.
You must also understand that even if your business fails, you are still
responsible for paying back all of the money that you borrowed.
82
CHAPTER FIVE: PREPARING AN ENVIRONMENTAL
IMPACT ASSESSMENT
83
listed in Chapter Eight of this handbook. Much of the information in this
section comes from a training manual entitled, How to Assess
Environmental Impacts on Tropical Islands and Coastal Areas, by Richard
A. Carpenter and James E. Maragos. This manual was paid for by the
Asian Development Bank and prepared by the Environment and Policy
Institute at the East-West Center.
84
(2) Identification of possible impacts to the site from previous
experiences
For example:
° There used to be many trees, but many of them have been cut
down for fire wood for cooking;
° The reduction of trees has caused a number of birds to
disappear;
° The introduction of electricity has drastically changed the
traditions of the villagers;
° Litter has made the sight very unattractive;
° Sewage problems from the village has contaminated the water
supply.
85
A second type of EIA is called a Quantitative and Explanatory
Impact Assessment. It involves a lot more time and effort. It is probably
not worth it to have such a detailed plan, unless it is required by your
government. If it is, see Appendix A for more information.
Take a look at the three steps discussed in the Preliminary EIA
statement and do a thorough job of describing your business site. It may be
helpful to do this together with a number of your friends or business
associates. 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. The EIA will be one reflection of your sincerity in
developing a responsible, successful business, so preparing a complete EIA
will benefit you.
86
CHAPTER SIX: RECEIVING OFFICIAL AND
GOVERNMENTAL APPROVAL
No one can guarantee governmental
approval for your business idea, but there are a
number of things you can do which may help you
receive the proper authorization. Every business on
every island is going to have to fulfill requirements
specific to its government and culture. 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. Each Pacific island has
different government regulations; you may have to do some investigating
to determine which governmental office is the appropriate one to help you.
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. Listed below are the steps
that you should follow:
87
state and national governments. If you do not know where to start, contact
the Department of Taxation, the Department of Commerce, the
Department of Planning, and/or the Department of Resources and
Development (or their equivalent). These departments will be able to point
you in the right direction. Be prepared to meet with a lot of different
government officials. 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
88
the time you may get conflicting information, so when you have found the
right person, try to work with them every time. And be nice; ideally, this
person will become a personal advocate or supporter of your plan.
89
(E) Build a Positive Relationship with Government Officials
As is true in most business situations, it will be to your benefit to
have a positive relationship with government
officials. In general, government officials are
usually willing to support you, if you are
willing to support them. Being aware of
changes in government offices is a good
business practice. You should know about
the philosophies that current office-holders
have and know how that will affect your
business. If you are thinking of expanding your business, it may be better
for you to try and work with government officials that agree with your
principals and are sympathetic to your needs. It will be difficult to run a
business smoothly if you have made enemies within the government. Know
what changes are taking place, know how the changes will affect you, and
work with your knowledge to create the results that are the most beneficial
to you.
90
CHAPTER SEVEN: STARTING UP YOUR OPERATION
91
Construct the buildings with local labor
and materials. Ecotourists like to stay in
places they feel are a part of the local culture.
Buy only the equipment and supplies that are absolutely essential
to your operations in the beginning. You can always buy additional
items as you need them, but it would be a waste of money to buy things
that are not necessary and do not get used very often. Vasili Moelagi
Jackson, a very successful ecotourism operator in Western Samoa,
recommends that every new ecotourism business buy a facsimile (fax)
machine if they are connected to a phone line. The fax machine has
allowed her to confirm direct bookings with clients, and enabled her to
market her services better.
Keep good records of what you have spent your money on. This is
important for a number of reasons. First of all, establishing a business
can get expensive very fast, if you are not careful. You do not want to
run out of money when you are only halfway through it. Secondly, if
you borrowed money, lenders (banks or investors) might want to know
how you have spent the money they lent you. Thirdly, if you plan to
borrow more money in the future for expansion or improvements, it
will be helpful to show lending institutions some of the costs you
incurred as you were establishing your business. Lastly, it is just good
business sense to keep track of your expenses.
92
Keep complete lists of the equipments that you get. If you have
kept good records of how you spent your money, then you should
already have a fairly detailed list of the
equipment you have. Also, if you prepared a
Capital Equipment List, which is described in
Chapter Four, then you will already have
followed this piece of advice. It is necessary
that you update the list on a fairly consistent
basis. Items will need to be deleted and added to the list as you get rid
of something or purchase a new piece of equipment.
Keep track of things that have worked and things that have failed.
You may want to keep some of this information confidential by keeping
a diary. When you are busy working, you may not be able to remember
everything you hear. 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, you might also document why something was
successful or why it failed. This will help you in the future if you ever
make changes to your existing business, or expand your business.
93
Keep track of the differences between the projected figures on
your financial statements and the real figures.
It is easier to do this on a monthly basis than try
to remember everything at the end of the year.
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,
and to set priorities about purchases and hiring.
If you have overspent in the Salaries and Wages
category, they you may not be able to afford a
van or some other needed equipment. This will also help you make
better estimates for the following years. 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. Accurate financial
statements will also be helpful if you wish to seek lending in the future.
Determine how many workers you will need when you first open
the doors of your ecotourism venture. Hire only as many employees
as are necessary. You can always hire more workers in the future as
you need them. If you hire too many workers and have to lay off (fire)
some of them because you do not have enough business, it will not help
your reputation in the local community.
Decide how you are going to locate your employees. 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. Once you have answered these questions, you
will need to recruit your employees, provide any necessary training, and
help them feel comfortable in their new positions.
94
Make copies of all the important documents you have that pertain
to your business. This will include loan agreements, contracts, lease
agreements, financial documents, receipts for any major purchases,
warranties, government certificates, letters of support/approval from
government officials or guests, tax records, and any other information
that seems important to you. If you have
put together a business plan, this might be
included in the list of important documents.
You might want to purchase a fireproof
safe to keep these documents and other
valuables. In addition, 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.
95
Stock up on items you will need to run your business. As you start
setting up operations, keep a list of all the things you will need, big and
small. As the opportunity arises, stock up on the
items you have listed. For example, if you are
setting up an ecotourism resort, you will need to
have furniture for the rooms and the common
area. Even if all of the buildings are not yet
completed, you can still hire someone to make the
chairs. You can stock up on paper, cleaning supplies, and office
equipment, when you have the chance. If you do it a little at a time, it
might not be so overwhelming. Just remember that you should keep
track of your expenses and buy only what you will need and use.
96
If you plan to market your business as an ecotourism venture, then
you need to be sure that your building structures and your services
meet the standards of ecotourists. The following checklist,
developed by Andersen (1993), provides a guide for you to follow as
you develop your business:
° Divert water off paths and roads before the flow becomes so strong
that it creates significant erosion problems.
97
° Construct buildings around natural vegetation.
98
° Provide building forms and images in harmony with the natural
environment. Design building on long-term environmental
standards and not necessarily on short-term material standards.
99
Waste Management Issues
100
CHAPTER EIGHT: AGENCIES AND ORGANIZATIONS
INVOLVED IN ECOTOURISM
Bureau of Reclamation
Contracts and Repayment Division
Department of the Interior
Washington, 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)
101
Conservation and Environmental Protection Division
Agricultural Stabilization and Conservation Service
U.S. Department of Agriculture
P.O. Box 2415
Washington, DC 20013
Tel: (202) 720-9073
(Water Bank Program - To conserve surface waters, preserve and improve
migratory waterfowl habitat and wildlife resources and secure other
environmental benefits and agricultural production limitations)
Conservation International
1015 18th Street NW, #1000
Washington, DC 20036
Attn: Jill McLaughlin
Tel: (202) 429-5660
Fax: (202) 887-5188
(Non-profit organization dedicated to saving threatened ecosystems;
publications available)
Environmental Center
University of Hawaii
2550 Campus Road
Honolulu, HI 96822
Attn: Mr. John Harrison, Coordinator
Tel: (808) 956-7361
Fax: (808) 956-3980
(Will do environment impact studies)
102
Export Council for Renewable Energy
777 North Capitol Street, NE
Suite 805
Washington, DC 20002-4226
Attn: Ms. Judy Seigel, 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)
103
Resources Institute (Energy & Minerals)
East-West Center
1777 East-West Road
Honolulu, HI 96848
Attn: Dr. Fereidun Fesharapi, Director
Tel: (808) 944-7560
104
RESOURCES FOR SMALL BUSINESS DEVELOPMENT
Sea Grant
MSB 230
University of Hawaii
Honolulu, HI 96822
Attn: Dr. Raymond Tabata, Coastal Research Agent
Tel: (808) 956-2866
Fax: (808) 956-2858
105
U.S. Federal Government Programs
106
SCORE/ACE
Small Business Administration
Prince Kuhio Federal Building, Room 2314
Honolulu, HI 96850
Attn: Sally Dugger, 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)
107
American Samoa
Business Incubator
Northern Marianas College
P.O. Box 1250
Saipan, MP 96950
Attn: Mr. Eric Plinske, Assistant Manager
Tel: (670) 235-1551
Fax: (670) 235-5383
108
Visitor Industry Program
Northern Marianas College
P.O. Box 1250
Saipan, MP 96950
Attn: Mr. Antonio V. DeLeon Guerrero, Tourism Instructor and
Coordinator
Tel: (670) 234-5498
Fax: (670) 234-0759
109
Guam
Department of Commerce
Government of Guam
590 South Marine Drive, Suite 601
Tamuning, GU 96911
Attn: Mr. Peter Barcinas, Director
Tel: (671) 646-5841
Fax: (671) 646-7242
Fiji
110
Private Firms
Palau
111
Republic of the Marshall Islands
Bank of Guam
P.O. Box BW
Agana, Guam 96910
Tel: (670) 472-8865-7
112
FSM Development Bank
Headquarters
P.O. Box M
Kolonia, Pohnpei 96941
Contact: Mr. Norman Clow, Senior Loan Officer
Tel: (691) 320-2840
Fax: (691) 320-2842
Branch Offices
P.O. Box 648
Kolonia, Pohnpei 96941
Tel: (691) 320-2624
Chuuk
P.O. Box 786
Weno, Chuuk 96942
Tel: (691) 330-2760
Fax: (691) 330-4149
Yap
P.O. Box 81
Colonia, Yap 96943
Tel: (691) 350-2165
Fax: (691) 350-2249
Kosrae
P.O. Box 104
Lelu, Kosrae 96944
Tel: (691) 370-3070
Fax: (691) 370-2170
113
Marshall Islands Development Bank
P.O. Box 1048
Majuro, MH 96960
Tel: (692) 625-3230
Fax: (692) 625-3309
114
American Hotel and Motel Association
1201 New York Avenue, NW, Suite 600
Washington, DC 20005-3931
Attn: Mr. Thierry Roch, Director of Member Relations
Tel: (202) 289-3152
Fax: (202) 289-3158
(Promotes hotel/motel business through publicity and promotion
programs. Also serves as educational institute)
Tourism Associates
3640 SW Dosch Road
Portland, OR 97201
Attn: Sharr Prohaska, President
Tel: (503) 227-3307
Fax: (503) 274-9858
(Ecotourism planning and development, works with indigenous groups,
interested in rural tourism development)
115
Greenpeace International
Ecotourism Project
139 Townsend Street
San Francisco, CA 94107
Attn: Mr. David Rappaport [(503) 687-1043]
Tel: (415) 512-9025
Fax: (415) 512-8699
(Works with Pacific Island Ecotourism projects)
116
The International Ecotourism Education Foundation
P.O. Box 676
Falls Church, VA 22040
Attn: Ms. Yvonne Rodgers, Executive Director
Tel: (703) 534-5430
Fax: (703) 534-5109
(Alliance of tourism and environmental educators, tourism industry
members, and travelers committed to promoting environmentally sound
tourism principles through education; publishes newsletter)
117
Travel Collaborative
14 Arrow Street
Cambridge, MA 02138
Attn: M.J. Kietzke
Tel: (617) 497-8151
Fax: (617) 492-3720
(Organization that works to connect various consumers with
environmentally responsible businesses; official travel agents for Co-op
America)
118
Magazines and Publications
Conde'Nast Traveler
360 Madison Avenue
New York, NY 10017
1-800-777-0700
(Coverage of ecotourism destinations)
E Magazine
The Earth Action Network, Inc.
P.O. Box 5098
Westport, CT 06881
Tel: (203) 854-5559
(Popular magazine for environmentalists)
119
EcoTraveler
7730 SW Mohawk
Tualatin, OR 97062
(A new magazine that promotes social responsibility and environmental
sensitivity along with descriptions of ecotourism operations)
Hotel/Travel Index
Ziff-Davis Publishing Company
One Park Avenue
New York, NY 10016
Insight Guides
APA Productions
Prentice Hall Press
One Gulf & Western Plaza
New York, NY 10023
(Guidebooks for different places; writes short articles on places to stay
and activities)
120
Islands International Magazine
Islands Publishing Company
3886 State Street
Santa Barbara, CA 93105
Tel: (805) 682-7177
Fax: (805) 569-0349
(Magazine which covers stories relating to islands and their environments.
It presents awards to places that are sensitive to environments)
121
Mr. Jim Molnar (Travel Column) Seattle Times Travel Section
P.O. Box 70
Seattle, WA 98111
Tel: (206) 464-2245
(Editorial column on travel)
Outside Magazine
1165 North Clark Street
Chicago, IL 60610
Tel: (312) 951-0990
(Normally covers adventures and wilderness experiences; it has a travel
advertising section)
Smithsonian Magazine
P.O. Box 55593
Boulder, CO 55522
Tel: (202) 357-4700
(Magazine for members of the Smithsonian Natural History
Museums/Smithsonian Institution)
122
Specialty Travel Index: Directory of Special Interest Travel
305 San Anselmo Avenue
San Anselmo, CA 94960
Tel: (415) 459-4900
Fax: (415) 459-4975
(The primary trade index of small/alternative tours for agents, tour
operators, and consumers)
123
Travellife Magazine
505 Market Street
Whittle Communications
Knoxville, TN 37902
Tel: (615) 595-5774
(May promote your business if you send press release)
124
Journeys International
4011 Jackson Road
Ann Arbor, MI 48103
Tel: 1-800-255-8735
Fax: (313) 655-2945
(International tour organization focused on ecotourism)
125
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
126
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.
Carey Smoot
Sourcetropical Inc.
44-229 Kaneohe Bay Dr.
Kaneohe, HI 96744
Tel: (808) 254-4002
Fax: (808) 254-6472
127
Cliff Terry
TRB/Architects, Ltd.
Pauaha Tower, Suite 1110
1001 Bishop Street
Honolulu, HI 96813
Tel: (808) 528-2020
Fax: (808) 523-1264
128
Mel Fielding
P.O. Box 534
Honolulu, HI 96809
Tel: (808) 537-4478
129
David L. Andersen, AIA
Tourism Design Consultant
The Andersen Group Architects, Ltd.
Suite 211, 7601 Wayzata Boulevard
Minneapolis, MN 55426
Tel: (612) 593-0950
Fax: (612) 593-0033
130
B. Marketing Strategies for the Sufua Hotel
131
how I would market the hotel. As luck would have it, the word got out to
a few people that we were building a hotel in Savaii, Western Samoa, and
they came to stay with us. It was with these initial contacts that we began
our first steps in marketing the hotel. The two main things I did with these
and later guests became the foundation for our marketing efforts.
First, I spent quality time with these guests. I began to see patterns
in the types of things they liked to do. I learned about their interests,
occupations, the kind of reading materials they enjoyed, and other
miscellaneous information from these discussions. I discovered the type of
person that was attracted to my hotel.
I learned that most of the visitors read travel guides. They liked to
experience things that were off the beaten path, and were curious about
cultures different from their own. These guests wanted a vacation that was
both educational and relaxing. With this knowledge, I had some idea about
what type of market I needed to target. To this day, I continue to spend
time with my guests, and I keep records of their interests to assist me in
future marketing efforts.
The second thing I did was pass out cards with information about
the hotel. I asked guests to give cards to their friends and travel agents.
Visitors who really enjoyed their stay were happy to spread the word about
my business. They turned out to be an extremely effective marketing tool.
I discovered that it was a more sophisticated form of word-of-mouth
advertising. Although word-of-mouth advertising is very effective, people
may misplace or forget names, phone numbers, and other essential
information. By giving them the cards to pass out, it became easier for
potential guests to contact us.
PRODUCT BENEFITS
The Sufua Hotel offers visitors the opportunity to experience
Western Samoa in its traditional and natural state. We offer our guests a
rich cultural experience through the traditional architecture of the hotel,
genuine Western Samoan food, educational tours, and the opportunity to
meet and share stories with Samoans. It is my hope that our guests leave
132
their vacation from Savaii with a new appreciation and understanding of
the Western Samoan way of life.
Operation of the Sufua Hotel does not harm the environment and
we use local products as much as possible. Visitors know that they will be
able to experience what the real Samoa is all about and not a watered-
down tourist version. Not only are people able to relax and unwind when
they come to our hotel, but they are also able to leave with an
understanding and an appreciation of the Samoan people.
133
agencies to give them information about our hotel and to thank those who
have sent guests. I always present gifts to key people in the hope that they
will remember me and my hotel. I think that the best gift is something that
stays on their desk so they will remember me.
I personally contacted approximately 40% of the tour operators
that book with the hotel today. The other 60% of our tour operators read
about the hotel in travel guides, newspapers, books, and travel magazines
before contacting us for more information.
Approximately 85% of our guests researched the destination before
they came. With this in mind, I make sure our hotel is well represented in
the media. I contact well known travel writers and invite them to our
facility. Some of the more effective travel guides for our hotel have been
Lonely Planet, Frommers, Fodders, South Pacific Handbook and the
Sierra Club.
I always survey our customers to find out how they heard about the
hotel; this is one of the best ways to determine which forms of advertising
are the most effective. In addition to surveying customers, I stay in close
contact with the Western Samoa and Tonga Visitors Bureaus, as well as
wholesalers, and retailers. I ask them how inquiring customers learned
about the hotel. I have concentrated my advertising efforts in the areas
which I have deemed to be the most effective.
COMPETITIVE ISSUES
When I started my business, I looked at my competition and
thought about how I could be successful. I had to develop a product that
was different to the customer. When I started the Sufua Hotel, it was the
only hotel on the island. While this may have been an advantage in some
respects, in reality it meant that the island had no sales connections or prior
exposure to potential customers. Competition in Apia was already
established. In addition to Apia, the Sufua Hotel was competing with other
Pacific islands that offered similar accommodations.
134
POSITIONING, PUBLICITY, 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 . In addition, I was able to attract a
wide range of customers because the accommodations were moderately
priced.
Brochures were, and still are, a great promotional tool for us. We
distribute them worldwide through travel agents, friends, previous
customers, rental car agencies, and anywhere else possible.
Articles from travel writers, airline magazines, and travel guides
promoting the Sufua Hotel are other excellent sources for promotion. I
invite travel guide writers and authors to stay at my hotel free of charge.
In exchange, they write about the Sufua Hotel in their publications.
Clearly the best promotion is from satisfied customers who go
home and tell their friends. Word of mouth advertising is free and the most
effective way of promoting a product. I also promote the optional tours by
making presentations. I have made over 120 presentations to schools,
villages, and organizations about the environment, our culture and the
importance of keeping our heritage. Not only is this an excellent learning
experience, but it also exposes our tours to many people. In the future, I
plan on making presentations to non-governmental organizations world-
wide.
In my experience, the most important thing to consider is the
involvement, support and cooperation of local community members.
Therefore, local publicity is necessary to build trust. I use local radio
advertising and signs to publicize activities and special events. I employ
many local people to dance and make handicrafts for the guests on tour.
135
Visitors Bureaus to understand how international events might affect the
Sufua Hotel. I adjusted the rates so that they are competitive and enable
me to make a profit.
STRATEGIES:
I have expanded the tour options available to visitors so that they
are more appealing to customers. I now offer mangrove swamp, hiking,
cultural, 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
C. BUSINESS PLAN: THE PATHWAYS HOTEL, YAP
EXECUTIVE SUMMARY
Yap is known for its spectacular scuba diving, traditional way of
life, and tropical climate. As more people look for remote destinations to
relax and enjoy nature, Yap will become increasingly attractive to tourists.
The Pathways Hotel will provide accommodations in an atmosphere that
upholds Yapese customs, promotes and strengthens traditions, and
educates visitors about the Yapese lifestyle. The Pathways is owned and
operated by people who are committed to being environmentally friendly
and culturally sensitive. The eight local-style cottages, restaurant, and bar
will not only provide tourists with a relaxing place to stay, but will fulfill
the visitors’ fantasies of staying somewhere exotic. In additions to
supporting Yap’s diving industry, The Pathways Hotel will diversify the
tourist industry by attracting a different market of visitors.
The Pathways Hotel is approaching the Federated States of
Micronesia Development Bank for a start up loan of $300,000 at 10%
interest over 20 years for the building of the hotel. This money will be
used to construct the buildings, furnish the rooms, provide initial operating
supplies and give access to working capital.
137
The rooms will be available year-round with rates of $85 per night
for rooms without air-conditioning and $95 for rooms with air-
conditioning. The restaurant will serve breakfast from 6:30am to 9:30am
each morning. Meal prices will range between $5 and $10. The bar will be
open between the hours of 4:30pm and 9:00pm each evening.
The Pathways Hotel will be the first hotel on Yap. With the
planned eight room hotel, restaurant, and bar, 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 peak seasons for
the hotel are projected to be the summer months of July, August and
September, as well as the Christmas holidays. The consistent climate in
Yap will offer visitors the opportunity to visit throughout the year. The
increase in tourism throughout Micronesia is an encouraging sign for Yap’s
visitor industry.
PRODUCT/ SERVICE
An American construction company with experience in the design
and building of energy-efficient, traditional style buildings will be employed
to build the initial phase of the hotel. Local workers will be employed
during the second and final phase. The cottages for the Pathways will be
made from thatched roofing, coconut rope lashings, log supports, and
intricate woven reeds, bamboo, and nipa leaves. The interiors will be
modern and comfortably furnished with amenities such as air-conditioning,
ceiling fans, refrigerators, and a private balcony. The rooms will be
cleaned on a daily basis. Guests will have a choice between air-conditioned
and non-air-conditioned rooms. Free transportation to and from the airport
and hotel will be provided.
The Pathways Hotel will benefit the local people of Yap, tourists
and the government. Local Yapese will benefit in a number of ways. First,
there will be new jobs available which will also provide the opportunity to
learn new skills. Secondly, other businesses will prosper as tourists and
employees spend their money within the local community. Possibilities for
optional tours and other new service related work will develop. The
people of Yap will further benefit through the revival and practice of
138
Yapese traditional dances and cultural shows. It is our hope that the hotel
will be a platform for reviving culture due to the interaction with visitors.
The government will benefit from increased excise taxes and room
taxes collected from the Pathways Hotel. Visitors to Yap will bring foreign
currency which will be spent on taxis, restaurants, arts and crafts, scuba
diving, fishing and other tourist-related activities.
Yap is an interesting place for visitors because of the traditional
stone money "currency", stone village paths, colorful traditional dances,
island legends and scuba diving with manta rays. Due to Yap’s isolation
and its lack of visitors in the past, visitors perceive Yap as a pristine,
exotic, culturally rich, and romantic place to visit. The Pathways Hotel on
Yap provides a service that fits visitors’ perceptions.
THE MARKET
In the past, tourism has not been pursued on the island of Yap.
While other Micronesian islands have successfully engaged in a profitable
tourist industry, Yap has not been able to attract tourists because of its
distant location and lack of accommodations. The tourist industry in Guam
has increased its room occupancy rate over the past few years. Saipan is
building an additional 1200 hotel rooms and has maintained high
occupancy rates. The Palauan tourist industry is growing and is expected
to continue growing in the future. The future expansion of tourism in Yap
looks promising because of Yap’s location between Guam and Palau.
These are strong indicators that a hotel business in Yap will be profitable.
Continental Airlines has three flights a week to Yap which is on the
popular route between Guam and Palau. Primary customers will comprise
Japanese, Guamanian, American, and Australian citizens. Visitors from
these areas comprise the traditional market that vacations in Micronesia.
The Pathways will advertise in diving magazines and travel guides.
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. Tourism offices, restaurants, and dive shops will be given
brochures to hand out to customers.
139
MANAGEMENT
The Pathways will be run as a partnership. Lifetime residents of
Yap, Stan and Flora Fillmed, have worked a combined 25 years in Yap.
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. The
partners will hire a General Manager to take care of the daily operations of
the hotel, restaurant and bar. 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.
(2) The Pathways has the potential to be a financially profitable
business for the owners,
(3) The Pathways will provide jobs which may improve the quality of
life for its employees.
PERSONNEL
The Pathways will employ eight full-time employees and six part-
time workers. Local staff will be trained in a variety of hotel and restaurant
procedures. Two full-time and three part-time staff will handle front desk
responsibilities. They will process guest check-in and check-out. They will
have reservations responsibilities as well. One full-time cook and one part-
time cook will serve the daily breakfast. Two full-time bartenders will be
trained for the beverage operation. The Pathways will need three part-time
housekeepers. Administrative responsibilities and the management of daily
operations will be handled by the General Manager. Full-time employees
will receive medical insurance. Part-time employees can have partial
coverage based on the plan they choose.
FINANCING
Mr. Evans and Mr. and Mrs. Fillmed are requesting financing of
$300,000 in order to build The Pathways Hotel. One of the partners owns
the land on which the hotel will be built and is willing to offer it as
collateral. The financial analysis section on pages 152-159 clearly displays
the potential profitability of The Pathways Hotel. The Pathways Projected
140
Income Statements and Cash Flow Projections for the first three years of
operation are shown.
The Projected Income Statements reflect The Pathways Hotel’s
ability to repay the loan. 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.
Expenses were determined by price quotes from suppliers and service
providers. By forecasting the revenue and expenses, the Pathways is able
to project an operating profit in the sixth month of business ( see Projected
Income Statement on pages 156-159).
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. The figures were based on
an average occupancy of 62% over the first year of operations. Based on
the above financial projections, The Pathways Hotel will clearly be able to
meet all of its financial responsibilities.
CONCLUSION
The owners of The Pathways Hotel are committed to sharing all of
Yap’s assets. By building The Pathways Hotel, tourists who come to Yap
will not only have a place to stay, but they will be provided with the
opportunity to experience Yapese culture and tradition in ways that are not
available to them now. With the increase in tourism throughout the Pacific
islands, and the natural beauty of Yap and its people, The Pathways will
truly contain the necessary ingredients for a successful and profitable
business. The Pathways Hotel will be able to pay its debtors, provide jobs
for the local people, enhance the local traditions, increase the government’s
revenues, give tourists a pleasurable “Yapese” vacation experience and
provide the owners with a chance to make their dreams come true.
.
141
Cash Flow Projections
CATEGORY Jan. Feb. Mar. Apr. May June
Cash Receipts
Room Sales 6,680 7,640 8,600 9,560 10,520 11,480
Food & Beverage Sales 1,304 1,592 1,880 2,168 2,456 2,744
Other Sources [a] 10,000 0 0 0 0 0
Total Cash Receipts 17,984 9,232 10,480 11,728 12,976 14,224
Cash Disbursements
Cost of Goods 522 637 752 867 982 1,098
Variable Expense (rooms) 267 306 344 382 421 459
Advertising 400 0 0 400 0 0
Insurance 550 550 550 550 550 550
Legal and Accounting 120 0 0 120 0 0
Delivery Expenses 350 350 350 350 350 350
Wholesaler Commission 668 764 860 956 1,052 1,148
Fixed Cash Disbursements 7,626 7,626 7,626 7,626 7,626 7,626
Term Loan 2,895 2,895 2,895 2,895 2,895 2,895
142
Cash Flow Projections (cont.)
CATEGORY July Aug. Sep. Oct. Nov. Dec. Total
Cash Receipts
Room Sales 12,440 14,744 12,245 11,864 13,784 13,400 132,957
Food & Beverage Sales 3,032 3,723 2,985 2,859 3,435 3,320 31,498
Other Sources [a] 0 0 0 0 0 0 10,000
Total Cash Receipts 15,472 18,467 15,230 14,723 17,219 16,720 174,455
Cash Disbursements
Cost of Goods 1,213 1,489 1,194 1,144 1,374 1,328 12,599
Variable Expense (rooms) 498 590 490 475 551 536 5,318
Advertising 400 0 0 400 0 0 1,600
Insurance 550 550 550 550 550 550 6,600
Legal and Accounting 120 0 0 120 0 0 480
Delivery Expenses 350 350 350 350 350 350 4,200
Wholesaler Commission 1,244 1,474 1,225 1,186 1,378 1,340 13,296
Fixed Cash Disbursements 7,626 7,626 7,626 7,626 7,626 7,626 91,512
Term Loan 2,895 2,895 2,895 2,895 2,895 2,895 34,740
Total Cash Disbursements 14,895 14,974 14,329 14,746 14,725 14,625 170,345
Net Cash Flow 577 3,493 901 (23) 2,494 2,095 4,110
143
Cash Flow Projections, Year Two
CATEGORY 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
Cash Receipts
Room Sales 43,769 39,654 48,621 46,562 178,606
Food & Beverage Sales 5,682 4,959 6,179 5,899 22,719
Other Sources 0 0 0 0 0
Total Cash Receipts 49,451 44,613 54,800 52,461 201,325
Cash Disbursements
Cost of Goods 2,273 1,984 2,472 2,360 9,088
Variable Expense (rooms) 1,751 1,586 1,945 1,862 7,144
Advertising 400 400 400 400 1,600
Insurance 1650 1650 1650 1650 6,600
Legal and Accounting 120 120 120 120 480
Delivery Expenses 1,250 1,250 1,250 1,250 5,000
Wholesaler Commission 4,377 3,965 4,862 4,656 17,861
Fixed Cash Disbursements 22,953 22,953 22,953 22,953 91,812
Term Loan 8,685 8,685 8,685 8,685 34,740
144
Cash Flow Projections - Year Three
CATEGORY 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
Cash Receipts
Room Sales 44,659 40,921 50,742 47,779 184,101
Food & Beverage Sales 5,996 5,667 7,092 6,435 25,190
Other sources 0 0 0 0 0
Total Cash Receipts 50,655 46,588 57,834 54,214 209,291
Cash Disbursements
Cost of Goods 2,398 2,267 2,837 2,574 10,076
Variable Expense (rooms) 1,786 1,637 2,030 1,911 7,364
Advertising 450 450 450 450 1,800
Insurance 1650 1650 1650 1650 6,600
Legal and Accounting 135 135 135 135 540
Delivery Expenses 1,350 1,350 1,350 1,350 5,400
Wholesaler Commission 4,466 4,092 5,074 4,778 18,410
Fixed Cash Disbursements 23,615 23,615 23,615 23,615 94,458
Term Loan 8,685 8,685 8,685 8,685 34,740
145
Income Statement Projections, Year One
CATEGORY Jan. Feb. Mar. Apr. May June
Sales
Room Sales 6,680 7,640 8,600 9,560 10,520 11,480
Food & Beverage Sales 1,304 1,592 1,880 2,168 2,456 2,744
Total Sales 7,984 9,232 10,480 11,728 12,976 14,224
Operating Expenses
Utilities 330 350 365 390 440 480
Salaries & Wages 6,400 6,400 6,400 6,400 6,400 6,400
Payroll Taxes & Benefits[C] 256 256 256 256 256 256
Advertising 134 133 133 134 133 133
Office Supplies 100 100 100 100 100 100
Insurance 550 550 550 550 550 550
Maintenance 100 100 100 100 100 100
Legal and Accounting 20 20 20 260 20 20
Delivery Expenses 350 350 350 350 350 350
Licenses 70 70 70 70 70 70
Telephone/Fax 115 120 125 130 145 150
Wholesaler Commission[D] 668 764 860 956 1,052 1,148
Depreciation[E] 955 955 955 955 955 955
Miscellaneous 100 100 100 100 100 100
Total Operating Expenses 10,148 10,268 10,384 10,751 10,671 10,812
Other Expenses
Interest (Term Loan) 1,687 1,657 1,626 1,594 1,562 1,528
Total Other Expenses 1,687 1,657 1,626 1,594 1,562 1,528
Net Profit (Loss) Pre-Tax (4,640) (3,635) (2,626) (1,867) (660) 327
146
Income Statement Projections, Year One (cont.)
CATEGORY July Aug. Sep. Oct. Nov. Dec. Total
Sales
Room Sales 12,440 14,744 12,245 11,864 13,784 13,400 132,957
Food & Beverage Sales 3,032 3,723 2,985 2,859 3,435 3,320 31,498
Total Sales 15,472 18,467 15,230 14,723 17,219 16,720 164,455
Cost of Goods (Food)[A] 1,213 1,489 1,194 1,144 1,374 1,328 12,599
Variable Expense (rooms)[B] 498 590 490 475 551 536 5,318
Cost of Goods Sold 1,710 2,079 1,684 1,618 1,925 1,864 17,917
Operating Expenses
Utilities 485 540 495 475 530 520 5,400
Salaries & Wages 6,400 6,400 6,400 6,400 6,400 6,400 76,800
Payroll Taxes & Benefits[C] 256 256 256 256 256 256 3,072
Advertising 134 133 133 134 133 133 1,600
Office Supplies 100 100 100 100 100 100 1,200
Insurance 550 550 550 550 550 550 6,600
Maintenance 100 100 100 100 100 100 1,200
Legal and Accounting 20 20 20 20 20 20 480
Delivery Expenses 350 350 350 350 350 350 4,200
Licenses 70 70 70 70 70 70 840
Telephone/Fax 170 170 175 170 165 165 1,800
Wholesaler Commission[D] 1,244 1,474 1,225 1,186 1,378 1,340 13,296
Depreciation[E] 955 955 955 955 955 955 11,460
Miscellaneous 100 100 100 100 100 100 1,200
Total Operating Expenses 10,934 11,218 10,929 10,866 11,107 11,059 129,148
Other Expenses
Interest (Term Loan) 1,494 1,459 1,423 1,387 1,349 1,310 18,076
Total Other Expenses 1,494 1,459 1,423 1,387 1,349 1,310 18,076
Net Profit (Loss) Pre-Tax 1,334 3,711 1,195 851 2,837 2,487 (686)
147
Income Statement Projections, Year Two
CATEGORY 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
Sales
Room Sales 43,769 39,654 48,621 46,562 178,606
Food & Beverage Sales 5,682 4,959 6,179 5,899 22,719
Total Sales 49,451 44,613 54,800 52,461 201,325
Operating Expenses
Utilities 1,435 1,305 1,495 1,465 5,700
Salaries & Wages 19,200 19,200 19,200 19,200 76,800
Payroll Taxes & Benefits 768 768 768 768 3,072
Advertising 400 400 400 400 1,600
Office Supplies 300 300 300 300 1,200
Insurance 1650 1650 1650 1650 6,600
Maintenance 300 300 300 300 1,200
Legal and Accounting 60 300 60 60 480
Delivery Expenses 1,250 1,250 1,250 1,250 5,000
Licenses 210 210 210 210 840
Telephone/Fax 425 450 470 455 1,800
Wholesaler Commission 4,377 3,965 4,862 4,656 17,861
Depreciation 2,865 2,865 2,865 2,865 11,460
Miscellaneous 300 300 300 300 1,200
Total Operating Expenses 33,540 33,263 34,130 33,879 134,813
Other Expenses
Interest (Term Loan) 3,750 3,480 3,222 2,970 13,422
Total Other Expenses 3,750 3,480 3,222 2,970 13,422
148
Income Statement Projections, Year Three
CATEGORY 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
Sales
Room Sales 44,659 40,921 50,742 47,779 184,101
Food & Beverage Sales 5,996 5,667 7,092 6,435 25,190
Total Sales 50,655 46,588 57,834 54,214 209,291
Operating Expenses
Utilities 1,435 1,410 1,540 1,465 5,850
Salaries & Wages 19,800 19,800 19,800 19,800 79,200
Payroll Taxes & Benefits 792 792 792 792 3,168
Advertising 450 450 450 450 1,800
Office Supplies 300 300 300 300 1,200
Insurance 1650 1650 1650 1650 6,600
Maintenance 300 300 300 300 1,200
Legal and Accounting 70 330 70 70 540
Delivery Expenses 1,350 1,350 1,350 1,350 5,400
Licenses 210 210 210 210 840
Telephone/Fax 455 420 450 475 1,800
Wholesaler Commission 4,466 4,092 5,074 4,778 18,410
Depreciation 2,865 2,865 2,865 2,865 11,460
Miscellaneous 300 300 300 300 1,200
Total Operating Expenses 34,443 34,269 35,151 34,805 138,668
Other Expenses
Interest (Term Loan) 2,736 2,523 2,328 2,151 9,738
Total Other Expenses 2,736 2,523 2,328 2,151 9,738
149
BIBLIOGRAPHY
ARTICLES
Alpine, Andy, "Diving in Palau Amongst the Fairy Tale Islands," Specialty
Travel Index, Issue 22, Spring/Summer 1991, pp. 144-5.
Amos, Mata'utia Amos Galea'i, "Tourism & You, Part III," Samoa News,
January 22, 1993.
Amos, Mata'utia Amos Galea'i, "Tourism and You, Part IV," Samoa News,
January 29, 1993.
Amos, Mata'utia Amos Galea'i, "Tourism & You, Part VI," Samoa News,
February 12, 1993.
Andersen, David L., "A Window to the Natural World: The Design of
Ecotourism Facilities," Ecotourism: A Guide for Planners and
Managers, The Ecotourism Society, North Bennington, Vermont,
1993, pp. 116-33.
150
Arbor, Kelly, "Historian says ‘Eco-tourism’ not Benefiting Isles' Natives,"
Honolulu Star Bulletin, Saturday, March 13, 1993, p. A-2.
151
Carroll, Rick, "The Winds of Change," Island Destinations, April 26, 1993,
pp. 52-6.
Egan, Timothy, "Can Tourists Learn to Tread Lightly?," The New York
Times, February 21, 1993, pp. 15, 32.
152
Fuavao, Vili A., "Operating Within Natural Policy and Legal
Environments," Ecotourism Business in the Pacific, Conference
Proceedings, Auckland, New Zealand, October 12-14, 1992, pp. 151-3.
Fullard-Leo, Betty, "Going for the Green," Aloha, Vol. 16, No. 3,
May/June 1993, pp. 36-43.
Graefe, Alan R., and Jerry J. Vaske, "A Framework for Managing Quality
in the Tourist Experience," Ecotourism Management Workshop,
Graduate Program in Tourism Administration International Institute of
Tourism Studies, The George Washington University in cooperation
with The Ecotourism Society, June 18-22, 1991, pp. 75-82.
153
Gray, John, "Earth First Can be Good Business," Ecotourism Business in
the Pacific, Conference Proceedings, Auckland, New Zealand, October
12-14, 1992, pp. 107-10.
Hezel, Francis X., SJ, "Culture in Crisis: Trends in the Pacific Today," The
Micronesian Counselor, No. 10, May 1993, pp. 1-8.
154
Hills, Howard, "Project Financing," Ecotourism Management Workshop,
Graduate Program in Tourism Administration International Institute of
Tourism Studies, The George Washington University in cooperation
with The Ecotourism Society, June 18-22, 1991, pp. 84-107.
Horwich, Robert H., Dail Murray, Ernesto Saqui, Jonathan Lyon, and
Dolores Godfrey, "Ecotourism and Community Development: A View
from Belize," Ecotourism: A Guide for Planners and Managers, The
Ecotourism Society, North Bennington, Vermont, 1993, pp. 152-68.
Improving the Quality of Life with Renewable Energy, U.S. Agency for
International Development, Washington, D.C., June 1992.
155
Jones, Lisa, "Re-establishing a Sense of Place," Island Destinations, April
26, 1993, pp. 50-1.
156
Krivatsy, Adam, "Private Planning for Tourism," The Impact of Tourism
Development in the Pacific, Conference Proceedings, Environmental
and Resource Studies Programme, Trent University, Canada, 1982, pp.
180-202.
Kudu, Donald, "The Role and Activities of the Tourism Council of the
South Pacific, Particularly in Relation to Ecotourism Development,"
Ecotourism Business in the Pacific, Conference Proceedings, Auckland,
New Zealand, October 12-14, 1992, pp. 154-60.
Lauren, Niki, "Preserving Paradise," Spirit of Aloha, Vol. 18, No. 1, Aloha
Airlines, January 16, 1993, pp. 16-8, 51.
157
cooperation with The Ecotourism Society, June 18-22, 1991, pp. 116-
33.
MacNeille, Suzanne, "Where the Ecotours Are," The New York Times,
February 21, 1993, pp. 15, 26.
Manley, Barry, "Protecting the Goose and Her Golden Egg," Ecotourism
Business in the Pacific, Conference Proceedings, Auckland, New
Zealand, October 12-14, 1992, pp. 6-7.
158
Masterton, Anne M., "Protecting Precious Resources," Island Destinations,
April 26, 1993, pp. 8-12.
159
the Pacific, Conference Proceedings, Palikir, Pohnpei, FSM, September
17-20, 1991, pp. 121-2.
Oda, Francis S., "Tourists Want to Learn," The Sunday Star-Bulletin &
Advertiser, Honolulu, Hawai’i, November 15, 1992.
160
Rapaport, Dave, "Micronesia Demonstration Biological Toilet Project,"
Final Report, Greenpeace Pacific Campaign, San Francisco, California,
March 1993.
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.
161
Selengut, Stanley, "New Priorities Motivate Eco-Lodge Developer," Going
Green, A Supplement to Tour and Travel News, October 25, 1993, p.
22.
162
Stark, Elizabeth, "Ecotourism," Galley, August 14, 1992, pp. 1-11.
"Tourism Can Help. But Government Should Read this Warning Too,"
Islands Business Pacific, March 1993, p. 14.
163
Valentine, Peter S., "Ecotourism and Nature Conservation: A Definition
with Some Recent Developments in Micronesia," Tourism
Management, Vol. 14, No. 2, April 1993, pp. 107-15.
164
Yamashiro, Jane M., "The Role of the Community Colleges in Bridging
Cultural Changes," Ecotourism Business in the Pacific, Conference
Proceedings, Auckland, New Zealand, October 12-14, 1992, pp. 86-8.
BOOKS
Bangs, Jr., David H., The Business Planning Guide: Creating a Plan for
Success in Your Own Business, sixth edition, Upstart Publishing
Company, Inc., Dover, New Hampshire, 1992.
Grotta, Daniel and Sally Wiener Grotta, The Green Travel Sourcebook,
John Wiley & Sons, Inc., New York, New York, 1992.
165
Kaiser, Jr., CPA, Charles, and Larry E. Helber, Tourism Planning and
Development, CBI Publishing Company, Inc., Boston, Massachusetts,
1978.
Rizer, Jim and Jim Hansen, Energy in the Pacific Islands: Issues and
Statistics, East-West Center, Honolulu, Hawai’i, 1992.
Special Interest Tourism, Betty Weiler and Colin Michael Hall, eds.,
Belhaven Press, London, England, 1992.
BROCHURES/DIRECTORIES/PAMPHLETS
American Samoa: Your Crossroad for Investment in the New Pacific,
Economic Development Planning Office, American Samoa
Government, American Samoa, 1991.
166
A Directory of Marketing Resources, Shelley Attix, ed., Leeward
Community College, Office of Special Programs & Community
Services, Hawai’i, 1992.
Ecotourism: A Profile for Resorts, (Draft for Review), Sea Reach Ltd.,
Oregon, February 1993.
Improving the Quality of Life with Renewable Energy, U.S. Agency for
International Development, Washington, DC, 1992.
167
Renewable Energy, Food Processing and Ecotourism for the Pacific
Islands, Conference Abstracts, Royal Waikoloan Hotel Resort, Kona,
Hawai’i, November 16 - 19, 1992.
Sea Reach Ltd: The World Revealed Through Interpretation, Sea Reach,
Ltd., Oregon.
Valentine, Peter S., Epinein Marine Park, Pohnpei State, FSM: A Nature-
Based Tourism Enterprise, A report prepared for the Environment and
Policy Institute, East-West Center, Honolulu, 1991.
168
APPENDIX A
A. Quantitative and Explanatory Environmental Impact
Assessment:
This EIA statement looks at the information explained in the first
EIAon page 59 in even more detail. Unless you have been educated in
environmental studies, or have a lot of knowledge in the area, you will
probably need to hire a professional to help you put together this
statement. The steps included in this statement are as follows:
169
(2) Describe major natural systems: You will need to describe,
and maybe map, natural systems such as rivers, mangrove
forests, and coastal waters.
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; is it the same depth at all points?
° Does the river consist of fresh water or brackish water?
170
(5) 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.
(6) 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.
171
Environmental Consequences of Tourism
Ecosystem Impact -Water and air quality reduced -Water quality goes down
- species/habitat poisoned -Oxygen in water decreases
-Fish caught in trash -environment poisoned
-Clean-up costs -Groundwater contamination
-Drainage from landfills or dumps
-Smoke and fumes from burning
172
Environmental Consequences of Tourism (cont.)
173
Environmental Consequences of Tourism (cont.)
174
Environmental Consequences of Tourism (cont.)
175
Environmental Consequences of Tourism (cont.)
176
Environmental Consequences of Tourism (cont.)
Activity Construction/Landscaping
Consequences to -Introduction of exotic species
-Fertilizer/pesticides
Environment -Toxicity: species/habitat loss
-Downstream eutrophication
Since many of the words in the table are not very common, some
definitions are provided below:
177
Endemic: Indigenous; Native; Native to a particular country, nation, or
region: said of plants, animals, and sometimes, customs, etc.
Eutrophication: A decrease of oxygen in a body of water, so that plant
life survives, but animal life does not.
Excavation: A hole made by digging, often to find something old.
Food Web Toxic Accumulation: Poisons that build up in certain food
chains.(ex. fish swim in polluted water and then are eaten by
people, who get the poison along with the fish.)
Fugitive Dust: Dust that flies around.
Grading: To level or reduce (a road, ground, etc.) to a desirable slope.
Indigenous: Native; existing, growing, or produced naturally in a region
or country.
Land Slippage: Landslide; 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, such as a plain, valley, or hill.
Landscaping: To improve or change the features of appearance of a
piece of property.
Leaching: To remove or dissolve by filtering.
Migratory: Moving from one place to another with the change in seasons,
especially birds and fish.
Mitigation: Ways to reduce or make the consequences less severe.
Ordinances: Laws.
Pathogenic Organisms: Bacteria (germs) that produce diseases.
Receptacles: Trash cans.
Respiratory Irritation: Something that causes you to have trouble
breathing.
Revegetation: The act or process of growing plants again.
Runoff: Something that runs off, like rainwater that cannot be absorbed
into the ground.
Settling Basin: A large, wide hole in the ground that allows solid matter
to settle to the bottom while the liquid stays on the top.
Spawning: To produce (eggs, sperm or young).
Suspended Solids: Solid waste that does not get decomposed quickly.
Swales: Low areas of land, often wet and marshy.
178
Topography: The surface features of a region including rivers, lakes,
mountains, etc.
Toxicity: The amount of poison in something; a condition caused by
poison.
User/Impact Fees: A payment made by the person who uses something or
affects it in some way.
179
APPENDIX B
DESCRIPTIONS OF EXISTING ECOTOURISM OPERATORS
The businesses described in this appendix responded to our
questionnaire of ecotourism operators. If you did not receive a
questionnaire and would have liked to respond to it; please let us at the
Pacific Business Center know about your business, so that in the future, we
can contact you if we are involved with any similar projects.
180
EcoTours of Hawai'i: This company allows visitors to experience the
splendor of Hawai'i by hiking, biking, kayaking, or any combination of the
three activities. The tours can take place on one island or they can be
designed so that travel to two or more islands is possible. In addition to
adventure and historical interpretation, EcoTours of Hawai'i can create
special packages that include eclipses, whale watching, astronomical events
or historic themes. For more information, please contact:
Hugh R. Montgomery
Proprietor
Hawaiian Walkways
P.O. Box 2193
Kamuela, HI 96743
Tel: (808) 885-7759
Fax: (808) 885-6957
Fafa Island Resort: Located in the Kingdom of Tonga, the Fafa Island
Resort consists of a number of fales (bungalows) that are built using local
materials such as coconut timber and thatching. Food is made from local
fruits and vegetables. The motto of this traditional place is "Come as a
guest, leave as a friend." To find out more about becoming a friend,
contact:
Ms. Angelika Frank
Assistant Manager
Fafa Island Resort
P.O. Box 1444
Nuku'alofa, Kingdom of Tonga
Tel: (676) 22800
Fax: (676) 23592
181
Hawaiian Walkways: Hawaiian Walkways, located on the island of
Hawai’i, offers custom hiking tours taking in the natural beauty of Mauna
Kea and Mauna Loa volcanoes, rain forest streams and waterfalls,
sweeping upland meadows and ancient Hawaiian trails along the coast with
hidden pools and fishponds. 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.
Please contact:
Hugh R. Montgomery
Proprietor
Hawaiian Walkways
P.O. Box 2193
Kamuela, HI 96743
Tel: (808) 885-7759
Fax: (808) 885-6957
Kapiti Tours, Ltd.: John W. Barrett operates this nature and cultural
heritage tour operation in New Zealand. By working closely with the
Maori Tribe, Mr. Barrett is able to provide his visitors with an education
and a deep understanding of the Maori people. For more information,
please call:
Mr. John W. Barrett
Managing Director
Kapiti Tours, Ltd.
P.O. Box 113
Paraparaumu, New Zealand
Tel: (64) 04-298-6044
Fax: (64) 04-297-2474
182
Lake Moeraki Wilderness Lodge: Lake Moeraki is considered New
Zealand's foremost nature lodge. You can do your own thing - fish for
brown trout, canoe the gentle lake waters or walk through rain forest and
coastal tracks. 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. One can go on penguin and
seal tours, or even participate in rain forest study trips. For more
information, please contact:
Gerry McSweeney and Anne Saunders
Directors/Owners
Wilderness Lodge Lake Moeraki
Private Bag 772
Hokitika, New Zealand
Tel: (0064) 3-7500-881
Fax: (0064) 3-7500-882
183
Manono Village Tours: This company offers a number of different tours
to meet the needs of their visitors. Day tours, weekend tours with
overnight stays in a Samoan family's house, and work study programs are
all offered. 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. For more information on this interactive program, please contact:
Ms. Fay Ala'Ilima
Manono Village Tours
P.O. Box 4228
Apia, Western Samoa
Fax: (685) 26905
184
Nan Madol Foundation: This Foundation is a non-profit organization
that was created to fund cultural, historical, protective, educational, and
research activities related to the archaeological site of Nan Madol located
in Pohnpei State, Federated States of Micronesia. 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. All activities of the
Foundation will be approved by state and local governments and traditional
leaders. For more information on the Foundation and its objectives, please
contact:
Carole Nervig
Executive Director
Nan Madol Foundation
HCR 2-13043
Keaau, HI 96749
Tel: (808) 966-8827
Fax: (808) 966-8827
185
Neco Marine: If you are interested in diving in Palau, Neco Marine is the
place to go. Neco Marine offers diving, snorkeling, and fishing trips.
There is also a PADI training facility so you can learn to scuba dive while
you are there. While diving with Neco Marine, you will be able to see
spectacular marine life such as schooling sharks, barracudas, manta rays,
giant clams, soft corals, and lion fish. In addition, the hundreds of W.W.II
wrecks make diving an exciting adventure in Palau. Neco Marine can also
fulfill visitors' urges to go on mangrove swamp or hiking tours. Please
contact:
Mandy T. Etpison
Reservations/Purchasing Manager
Neco Marine Corp.
P.O. Box 129
Koror, Palau PW 96940
Tel: (680) 488-2206 or 488-2009
Fax: (680) 488-3014
186
The Pathways Hotel: The Pathways Hotel is owned and operated by
Yapese who are trying to be environmentally sensible, and culturally
sensitive to the goal that their island values must be preserved. The
Pathways Hotel offers a carefully built local-style cottage in which guests
can leisurely examine the thatching, the coconut rope lashing, the log
supports and intricate patterns of reeds, bamboo and nipa leaves. There is
also a beautiful view as it is located on a hillside overlooking Chamorro
Bay. For more information, please contact:
Don Evans
Pathways Hotel
P.O. Box 718
Colonia, Yap, FM 96943
Tel: (691) 350-3310
Fax: (691) 350-2066
Pwudoi Sanctuary: Located a few miles past the FSM capital of Palikir,
visitors to Pohnpei have the chance to experience the beauty of mangrove
swamps. There is a raised walkway built entirely of mangrove wood which
winds through mangrove thickets teeming with a variety of plant and
animal life. Visitors will also see hollow trees which house colonies of
sheath-tailed bats, stone ruins similar to those at Nan Madol, and children
playing with freshwater eels. 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. Please call:
Mr. Francisco Ionas
Box 774
Pohnpei, FM 96941
Tel: (691) 320-2211 or 320-5278
187
Royal Sunset Island Resort: Located on Atata island in the Kingdom of
Tonga, the Royal Sunset Island Resort offers accommodation in individual
fales (bungalows) on the beach. While interacting with Tongans from
Atata Island, visitors have a variety of activities to choose from including
scuba diving, sailing, sport fishing, diving, and shopping for handicrafts.
To relax at this isolated paradise, contact:
David and Terry Hunt
Pacific Islands Resort Ltd./Royal Sunset Island Resort
P.O. Box 960
Nuku'alofa, 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. Visitors will be able
to meet Samoans in their own surroundings and will be welcome to join the
family or village in their festivities. Special excursions are available in
which visitors can help save some villages from over-using the land in
agriculture or logging. A number of tours are also available that take
visitors to see fruit bats, beaches, cliffs, rain forests, fresh-water springs,
lava fields, and cave pools. Please contact:
Mrs. Moelagi Jackson
Proprietress
Sufua Hotel
Private Bag
Saleologa
Savaii, Western Samoa
Tel: (685) 51271
Fax: (685) 51272
188
Samoa Express, Limited: This company is in the process of establishing
an ecotourism hotel and handicraft center in Western Samoa. While they
were not operating at the time this questionnaire was sent out, they do plan
to open soon. The hotel plans to hire only local employees and is
determined to represent the Samoan culture in an appropriate way. For
more information, please contact:
George Hadley
Governing Director
Samoa Express, Limited
P.O. Box 9590
Apia, 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, in the village of Lalomalava. In addition to the rooms,
Roger and Ama offer tours to historical sites on the island and can arrange
traditional music/dance experiences. Please contact:
Roger and Ama Gidlow
The Savaiian Hotel
Lalomalava, Faasaleleaga
Savaii, Western Samoa
Tel: (685) 51206 or 51296
Fax: (685) 51291
189
Sea Canoe Thailand Co., Ltd.: This company, located in Thailand, 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." Guides are
environment-conscious and knowledgeable about the areas to which they
take visitors. The founder of the company, Mr. John Gray, has participated
in a number of ecotourism workshops and conferences and has consistently
encouraged environmental development. To find out more, contact:
Mr. John Gray
Sea Canoe Thailand Co., Ltd.
367/3 Yaowaras Road
Phuket 83000
Thailand
Tel: (66) 76-213055
Fax: (66) 76-121172
190
Southern Heritage Expeditions: This tour company is located in New
Zealand and is managed by Mr. Rodney Russ. Mr. Russ and his employees
provide visitors with natural history expeditions and cruises. Southern
Heritage Expeditions specializes in tours that educate the visitor about the
natural surroundings and the history of the places that are visited. Please
contact:
Mr. Rodney Russ
Southern Heritage Expeditions
P.O. Box 22,
Waitori, N. Canterbury, New Zealand
Tel: (0064) 3-314-4393
Fax: (0064) 3-314-4137
191
Tiri Tours: Operating out of New Zealand, 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. Mr. Deacon
and his employees are enthusiastic about their tours and work well together
with the local people. Please contact:
Frank Deacon
Director
Tiri Tours
P.O. Box 1265
Auckland, New Zealand
Tel: (64) 9-366-4049
Fax: (64) 9-846-5900
192
Willis' Bed and Breakfast: In addition to affordable, relaxing
accommodations, Willis' Bed and Breakfast introduces guests to
traditional-style "umu" cooking. Guests are able to stay in comfortable
lodging and participate in fishing expeditions. For more information about
staying in this "down-to-earth" place, please contact:
Barry Willis
Willis' Bed and Breakfast
P.O. Box 5572
Pago Pago, AS 96799
Tel: (684) 633-4499
193
APPENDIX C
194
Customer Seeks: Competition Offers: You Offer:
Quality
Uniqueness
Lower Prices
Product Styles
Reliability
Delivery
Location
Information
Availability
Credit Card Option
Customer Advice
Accessories (phone/fax, etc.)
Knowledge
Polite Help
Culture
Environmentally Conscious
Others:
195
Capital Equipment List
Total:
Capital Equipment Total:
196
Sales Forecast: For (month, year) to (month, year)
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
198
1 Monthly Projected Income Statement
2 CATEGORY Month 1 Month 2 Month 3 Month 4
3
4 Sales (List Categories)
5
6
7
8 Total Sales
9
10 (v)Cost of Supplies
11 (v)Variable Labor
29 (f)Miscellaneous
30 Total Operating Expenses
31
32 Other Expenses
33 Interest (Mortgage)
34 Interest (Short-Term Loan)
29 (f)Miscellaneous
30 Total Operating Expenses
31
32 Other Expenses
33 Interest (Mortgage)
34 Interest (Short-Term Loan)
29 (f)Miscellaneous
30 Total Operating Expenses
31
32 Other Expenses
33 Interest (Mortgage)
34 Interest (Short-Term Loan)
19 Others(see notes)
20
21 Total Cash
Disbursements
22
23 Net Cash Flow
24
25 Cumulative Cash Flow
26
27 *Fixed Cash Disbursement (FCD)
28 Utilities
29 Salaries
30 Payroll Taxes and
Benefits
31 Automobiles and
Trucks
32 Office Supplies
33 Maintenance and
Cleaning
34 Telephone
35 Miscellaneous
36 Total: FCD/year
37 FCD/month
202
Quarterly Cash Flow Projections
1 Category 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
2
3 Cash Receipts (List
Categories)
4
5
6
7
8 Total Cash Receipts
9
10 Cash Disbursements
11 Cost of Goods
(Supplies)
12 Variable Labor
13 Advertising
14 Insurance
15 Legal and Accounting
16 *Fixed Cash
Disbursements
17 Mortgage (rent)
18 Term Loan
19 Others(see notes)
20
21 Total Cash
Disbursements
22
23 Net Cash Flow
24
25 Cumulative Cash Flow
26
27 *Fixed Cash
Disbursement (FCD)
28 Utilities
29 Salaries
30 Payroll Taxes and
Benefits
31 Automobiles and Trucks
32 Office Supplies
33 Maintenance and
Cleaning
34 Telephone
35 Miscellaneous
36 Total: FCD/year
37 FCD/month
203
Yearly Cash Flow Projections
1 Category Year 1 Year 2 Year 3
2
3 Cash Receipts (List
Categories)
4
5
6
7
8 Total Cash Receipts
9
10 Cash Disbursements
11 Cost of Goods
(Supplies)
12 Variable Labor
13 Advertising
14 Insurance
15 Legal and Accounting
16 *Fixed Cash
Disbursements
17 Mortgage (rent)
18 Term Loan
19 Others(see notes)
20
21 Total Cash
Disbursements
22
23 Net Cash Flow
24
25 Cumulative Cash Flow
26
27 *Fixed Cash
Disbursement (FCD)
28 Utilities
29 Salaries
30 Payroll Taxes and
Benefits
31 Automobiles and Trucks
32 Office Supplies
33 Maintenance and
Cleaning
34 Telephone
35 Miscellaneous
36 Total: FCD/year
37 FCD/month
204