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Money, Money, Money!

Hi,

I'm at the beginning of the process of setting up my own travel company, looking to specialise in tours abroad, mostly Europe. They will be package tours so will comply with package holiday regs.

I've been reading some of the great posts on here and I'm now worried that I won't be able to get started given the costs to get sorted out with finacial protection. It seems that TOPP and IPP won't entertain me (not established and not turning over big sms of cash), and TTA is very expensive when I haven't made a penny yet. It seems that you have to pay £650 out to get started (£150 application fee plus £500 a year), plus £95 a month for trustee management.

Are there any other alternatives? How do brand new businesses manage the financial protection? Or am I going to have to reconsider my plan?

Also, until I get myself set up as a limited company, there will be a period when I'll be a sole trader, how can I protect myself from litigation etc?

Any advice appreciated!

Thanks
Angela

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Permalink Reply by Tom Cree on May 25, 2009 at 9:57pm: Hi Angela
Sadly it is not cheap. You can get insurance paid monthly although you are still liable for the whole amount over the year. This gives you the basic liability cover to satisfy TTA and from there you have to take a deep breath and jump in.
If you are including flights you will also have the extra expense (slightly reduced if you are a TTA member) of ATOL with the CAA.
The £95 per month can usually be reduced if you have not traded but that is between you and TTA
I would advise you NOT to go in as a sole trader as you are really asking for a bruise. Form a company, it cost about £50 and at least you are protected.
I may be a bit out of date with some of this as there was a mumble about CAA charging £2 per passenger instead of ATOL but I believe the insurance companies objected as they saw revenue disappearing.
One way you MAY be able to test your market is to operate as an affiliate to other tour operators until you are sure you have a grip on your estimated passenger flows.
Good Luck
Tom; ▶ Reply to This

Permalink Reply by Alex Bainbridge on May 25, 2009 at 10:01pm: Hi Angela

Couple of thoughts come to mind...... but you don't need to answer these questions publicly

1) Have you thought about being a travel agent rather than a tour operator - i.e. selling someone elses tours?

2) TTA really isn't that much in comparison to other startup costs - if finding the money for TTA is challenging you may find it hard to setup at all - as you are probably going to have to find money for your banking system (credit card account), your website, your reservation system (perhaps TourCMS!), initial marketing etc. All have upfront costs.

I think IPP are still taking on startup customers - I know TOPP are holding back at the moment?

Starting a tour operator is tricky without a bit of a pot of money. For example if you have operational issues in your first few tours - sometimes you need to spend money to get your customers sorted out - and hence being a tour operator is more cash intensive than being a travel agent.

Don't let my negative thoughts sway you though - I am the first to back anyone starting up a business.; ▶ Reply to This

Permalink Reply by Angela Burrows on May 26, 2009 at 4:47pm: Thanks for your replies, certainly some food for thought!

I am certainly going to try and register my company as soon as possible, I think that's pretty essential.

I hadn't really thought about being a travel agent at all, I suppose I got one idea in my head and went with that! I'm guessing that travel agents will have their own rules and regulations too? Hmm, time to think again maybe...; ▶ Reply to This

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