Understanding Your Business Potential

Ever wondered how to predict your sales for the coming month or year? It’s not as difficult as you might think. There are 4 key pieces of information you need to know in the tourism and hospitality business in order to make some assumptions (educated guesses) about what your business potential might be for the future. If you are a Firecircle 5x5 Method™ member and you’ve made it to Step Five, then you already know that to ‘forecast’ your sales and expenses for a future time period, you need to understand:

1.   Your season
2.   Your inventory
3.   Your occupancy (or demand)
4.   Your pricing bandwidth

Your season is represented by the number of days of the week, month and year you are open for business and offering certain products. If you are a tourism business that operates only in the summer, then your season might be somewhere between May to September. Or perhaps you are open all year round? How many days are you open and operating? Do you only offer your tourism products on the weekend? 5-days per week? Every day of your season?

The next thing you will need to know is how much Inventory you are offering for sale on each of those operating days. If you have a 2 room B&B, you have 2 rooms available every day that you’re open for business. If you’re open for 120 days of the year, that would mean you have 2 rooms x 120 days = 240 units of inventory to sell. You have 240 ‘room nights’ to sell. Make sense? And if you are offering a walking tour 2 x per day for 120 days, you have 240 tours to sell and then you must multiply this by how many people you can take on the tours. 

Let’s say that you do walking tours for 12 people and you do this 2 x per day. You must multiply the number of tours you do x the number of people per tour. In this case, 12 people x 2 tours per day = 24 tour ‘spots’ or ‘seats’ per day. If you are running these tours every day of your 120 day season, then you would say that you have 24 tour spots x 120 days = 2,880 tour spots (or units of inventory) for the season. Wow, that’s a lot of inventory to sell!

Try this simple, fillable PDF worksheet to work out your own Seasonality and Inventory. And then join the Circle to see just how these numbers illuminate the full potential for your business once you apply Occupancy and Price.