Small Fish Big Ocean

Helping specialist tour operators and activity providers with travel ecommerce

Request for Start-up advice! (Can anyone help?)

Hi there,

    I'm really hoping that someone can answer a few of my questions regarding the following. I've experienced quite some difficulty in ascertaining stead-fast answers and info from the relevant organisations and most of time only get forwarded a pamplet in pdf, which is usually very generic. Most of my queries are pretty simplistic, but I've frustratedly send countless emails and numerous unsuccessful phonecalls and had limited relevant info returned.

Just to give you the basic outline:

I have just registered (3  weeks ago) as a UK based self-employed tour operator, that will run eco-tours in Sri Lanka only (Senalora). We will take no more than 6 travellers at one time, from 1 week to 12 week tours. Adventure activities will be included for example trekking, mountain climbing, wildlife safari's, fishing and eco-based volunteering, as well as the sight-seeing norm. Tailor made packages will be the format and we'll be targeting student/backpackers initially. Our volunteering programmes will include the following: Eco-farm, elephant orphanage and teaching English in rural orphanages and schools. My main employee and Sri Lanka co-ordinator has over 20 years experience as a tourist guide (who I fully trust). We will not be offering flights and use a small (already selected and trained) team of people to help manage and co-ordinate the travellers.  I am a British national. We expect to turnover no more than 20k in our first year and understand how both competitive and cut-throat the industry can be (Distant from VAT/THOMS threshold. that are available. Getting the business of the ground is my main concern, rather than exceeding revenue targets to begin with. I'm prepared to build a reputable business slowly, funded by other avenues of income The website is now live and very nearly complete, if this helps outline what I will be offering.  (I'm still yet to proof read area's so please excuse any grammical errors). www.senalora.com
I have decided to go for professional indemnity to cover both myself and the Sri Lankan coordinator, as well as the obvious public liability insurance. Although on a small budget, we are due to commence marketing next month and hope to attain our first bookings from May onwards (based on enquiries). I will be in the country travelling with the team, coordinator and tourists for at least the first 8 months. I expect to predominantly attract UK, USA and European clients. However, I do have a reliable source for picking up custom from a Sri Lankan tourist organisation in the way of UK/US/EU clients, (whilst they are already travelling there).
 
My questions are as follows;
 
1. Is there any problem with the legality of running as self-employed, as UK based and operating in Sri Lanka. I have had a limited company before and wish to avoid the unnecessary general costs (+ accountancy costs),etc that go with this. We will be operating under the name of 'Senalora', and I will be the sole trader. I have registered with HMRC online, however have heard nothing back as yet. Is this formation type acceptable?
 
1a. Will I have to also register the company/or intended activity in Sri Lanka, even though I'm UK based? Again, after enquiry, no one has been able to fully answer this. If so, will I be open to double taxation on what is technically my personal income? (briefly consulted my previous accountant on registation/tax, however got some rather suggestive advice which later turned out to be quite inaccurate). What is the best way to have the money transferred from Sri Lanka to here, if it is paid by the tourist out there? 
 
2. Is there any license or membership/register to a goverment or trade association that must be aquired, to run volunteering projects in Sri Lanka for me? Or alternatively, is there any volunteering project organisations that I should register with in the UK, as a UK based business, to enable me to operate abroad legally?
 
3. If I am a self-employed tour operator (UK Based/operating in Sri Lanka) and are not intending to offer flights, only custom built packages using my own contacts, then is it legally neccessary for me to be registered with any travel organisation/body, for exampe ATOL? Obviously, registry with such organisations is the ambition/highly recommended, but no one can tell be wehether or not it is actually legally neccessary to begin with? 
 
4. How do you recommend I approach local travel agents to sell my packages in the near future? Do they accept any companies that arn't ATOL (or similar) registered?....If so, then how well established must my company be and what sort of criteria must I meet?
If you need any further info, please let me know! I'll be eternally grateful for any advice!
 
Many thanks
 
Laura Kahane

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Replies to This Discussion

Permalink Reply by Alex Bainbridge on March 28, 2012 at 12:03

Hi Laura

Personally, I would be wary of doing ANYTHING except as a limited liability company...... there are all sorts of risks you are taking - and insurance only goes so far.... hence limited liability companies provide that final protection....

UNLESS of course you are setting up so that the customer contracts directly with your end supplier - and you are just "an affiliate" doing marketing on commission - then you can probably miss all the legal obligations that you outline.

I don't think local travel agents will sell you at all, sadly. Firstly they will struggle to work with you as an individual. Secondly not sure it is the kind of product that they can really sell a lot of - so won't have any time to learn it...... and then they won't be able to pitch it to potential customers as they won't know it.....  Marketing is going to be all about the web....

Permalink Reply by PTS on March 28, 2012 at 13:57

Hi Laura,

 

I agree with Alex regarding acting as a sole trader. It is a big risk to operate a business without any limitation to your liability.

 

Regarding point 1a - As far as I am aware you will only need to have your business registered in the UK for the type of packages you are putting together. However, there are consultants on this forum that will be able to provide you with a more definitive answer.

 

In relation to points 2 and 3 - you will have to adhere to the 1992 Package Travel Regulations as you are combining accommodation and activity/transport. This means that you need to be able to offer full financial protection to your UK customers protecting them against both the failure of your business as well as the failure of your suppliers.

 

In this instance, as you are not offering flights you will not be required to be ATOL protected however, you will need to use alternative forms of financial protection to financially protect your customers. Good examples of these are:

 

  • Trust/Client Account
  • Insurance
  • Bonding

 

As a business we provide financial protection in the form of a client account where the consumer’s money is held in trust until such time as they return from their trip, thus financially securing them against various forms of failure.

 

Insurance is an option that allows you to pay on a per passenger basis to financially protect your customers.

 

Bonding is another option that can often be quite expensive for the sort of turnover you are expecting and often quite difficult for new start ups. Again, consultants on this forum will be able to provide you with more information relating to the last 2 options.

 

Point 4: Whilst pitching to Travel Agents is a good source of business again, I would have to agree with Alex with regards to using the internet to gain the majority of your business. The benefit you will have is that as your product is niche you will be able to appeal to a wide market when looking for your products.

 

I hope this information proves helpful to you and I am sure other members of this forum will also have some invaluable advice for you.

 

Regards

 

Kris Hall

PTS - Business Development Manager

Permalink Reply by Matt Purser on March 29, 2012 at 12:48
Hi Laura

If you are putting together two or more elements you will need to provide some level of financial protection. That could be done by joining a trade association but it could also be through insurance or a trust account.

There is no problem from a legal point of view, acting as a sole trader but an accountant/solicitor may advise you against this. Even as a Director of a limited company, if there was an accident, the customer still has he opportunity to personally sue the Directors, so this does not immediately protect you.

I do not see any reason why you would need to set up in Sri Lanka as well. There will be plenty of UK registered tour operators that specialise in a specific destination, and they are not required to register in that destinations as well.

Hope this help

Matt
www.traveltradeconsultancy.co.uk
Permalink Reply by Steven Vermeiren on April 3, 2012 at 14:26

Hi Laura,

I can only really advise on point 4. Contact STA travel - they sell many different products from many different tour operators. The STA travel experts share knowledge and if your tours were selling well then I am sure the word would spread.

Best regards,

Sten

Permalink Reply by Laura Kahane on April 3, 2012 at 17:04

Hi there to you all,

       Thanks so much for all of your advice to date. I've been away for the last week and was could quite so rapidly as I'd of liked to. Every comment is of exceptional value to me and I've decided to alter the formation and direction, going on your advice. These changes have obviously prompted a whole string of questions now, however I'll try not to bombard you.

1. Firstly, are there any highly recommended (good value/affordable) forms of protection for start-ups, that are in thier infancy and have low capital access, but meet the neccessary minimum requirements for the regulations? i.e Name of insurers/trade associations. Regarding trust accounts, on average what does the third party company charge for managing the clients money?

2. Secondly, If I were to regularly source clients (for example gap year students), whilst they were already travelling in the destination country (Sri Lanka), but they are British citizens, would it still be neccessary for me to comply with the package travel regs?

 

Far more queries to come, yet I'm grossly appreciative of your professional help so far!

 

Many thanks

 

 

Permalink Reply by PTS on April 3, 2012 at 18:04
Hi Laura,

I work for a business called PTS (as per my avatar) that provides and inexpensive way to financially protect your clients inline with the 1992 Package Travel Regulations.

By keeping all of your client's money safely held in 'trust' you can guarantee that they will be fully protected.

As an additional benefit we provide merchant facilities which can be notoriously difficulty to obtain as well as some much needed back office software to effectively manage your work load.

Costs start from £1500 per annum with all admin work (supplier payments) being completed by PTS admin staff for around £10 - £30 per booking.

Please feel free to contact me for more information.

Regards

Kris Hall
07808648001
Permalink Reply by Matt on April 4, 2012 at 13:49

Hi Laura,

1. The Travel Trust Association (TTA) is a trade association that provides trust accounts for its members. This in-turn gives the member full compliance with the Package Travel Regulations, and access to a T-ATOL, to give full compliance with the ATOL Regulations (if the member wishes to build and sell their own tailor-made flight based packages).
TTA membership is a low cost model for new or existing Sole Traders, Partnerships or Limited Companies that gives a business all the tools to trade, including low cost merchant facilities, GDS systems, business insurance, travel insurance, 400 suppliers (accommodation, packages, cruise, flights, etc), and full industry support.
Although TTA members are independent businesses you can join TAPS (central payment system) for free -if you wish- where suppliers are paid for you weekly.
Costs for TTA membership is broken down throughout the year into monthly fees (standard £95 per month) and a £500 yearly fee.  

2) TTA members financially protect everything they sell regardless of product, nationality of consumer or cost.

For further information on the TTA please feel free to contact me directly.

Kind regards,

Matt Skilton

(01483) 545783
matt.skilton@traveltrust.co.uk

 

 

Permalink Reply by Dee Edwards on April 25, 2012 at 12:53

1. From what you've said on turnover, I don't think so.

2. No. If you were based in Sri Lanka and targeting gap year students (UK or otherwise) already in Sri Lanka, there's no need for you to comply with European or UK PTR.  You will of course need to make sure you comply with any regulations in Sri Lanka in regards to running a business/sole trader and a tourism business. You could use avenues like trip advisor (see other threads for great work Melissa from Thailand is doing) for marketing.

A lot of operators in Sri Lanka also directly market to UK consumers online, even whole packages, using UK websites. As a prime example see the Sri Lanka section of responsibletravel.com You'll have to look through as there is a combination of UK operators on there (with financial protection) but a fair chunk are Sri Lankan operators in which case there is no financial protection (beyond if say they have merchant facilities in which case the consumer could claim on their credit card).

Permalink Reply by Dee Edwards on April 25, 2012 at 12:55

Re TOMS/VAT

It's not something you have to worry about much as you are planning to operate in Sri Lanka (outside the EU) only.

Permalink Reply by Matt Purser on April 8, 2012 at 16:58
Hi Laura

I would be more than happy to give you some free initial advice on this.

Regards

Matt
www.traveltradeconsultancy.co.uk

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