Bitponics is a new project backed by kickstarter which allows you to monitor your plants on line to assess the moisture, soil content and temperature and determine the optimum needs of your garden. This is a great inexpensive idea for people like me who don’t quite have green fingers. Read More here
One of the newer additions to social media is Foursquare. This basic concept is that people check in when they are visiting places such as cafes shops etc and the person who visits the one place the most becomes the mayor of that place. To learn more look at this website http://foursquare.com/businesses/
Some businesses are using this concept to their advantage by creating added value for people who use the foursquare concept. This builds your current customers in to more loyal customers and can also attract new customers.
One icecream shop gave the mayor for each day a free icecream and increased their business substantially. If there is a choice between shops and you may get something extra from one place then it is most likely you will choose that place.
Another example is a hotel who offer a bar discount to their patrons who check in on four square http://www.hotelworldnetwork.com/customer-loyalty-programs/aloft-introduces-social-networking-rewards-9746
All these things create loyalty with customers and increase your exposure on the web. What can you do with this type of advertising media to improve your business?
There are three main types of business structures in New Zealand to choose from when purchasing a business and the type of structure you use will be determined by the needs you have and which structure will best suit your individual circumstances.
1) Sole Trader
A sole trader operates the business on his or her own. This is easy to set up in that there are no legal requirements for registration or formal processes to follow. The owner in this business structure does everything themselves controlling, owning and managing the business. They are entitled to employ staff to help run the business but are entitled to all profits and are personally liable for all taxes and debts.
There are some disadvantage to this structure including that you have unlimited liability for your debts which may put your personal assets at risk. It can also be harder to secure loans or investors in the business and the sole trade structure can only last for the lifetime of the person.
Partnerships are where two or more people run the business together. Each partner shares responsibility for running the business shares the profits and shares the liabilities. Partnerships are usually formed with a formal partnership agreement. The profits from a partnership are not taxed in the partnership but are distributed to the partners as per the partnership agreement and taxed as individual income for that person.
The partnership structure is not as common as in the past as more people are now able to use a company structure. One of the disadvantages of a partnership is that each partner is liable for all debts within the partnership even those incurred by another partner and thus may put personal assets at risk. Also if there is a conflict within the partnership, a partner wishes to leave or a partner dies it can cause problems in the running of the business.
3) Limited Liability Company
A company is a formal and legal entity in its own right and is separate from its shareholders (group of people who own the company. Because of the formal structure the company governs the relationship between shareholders, directors and creditors and so usually fosters more confidence in a business than the previous two structures.
The liability of the shareholders is limited to their stake within the company, unless they have given personal guarantees, the company has traded while insolvent or has been trading recklessly, and so provides more protection for investors. This can make it easier to attract investors or loans. It is important for directors to clearly understand their responsibilities under the company structure though as the limited liability can be eroded by personal guarantees.
These are the three main company structures but there are other structures which may be relevant to your personal situation. It is very important when purchasing a business that you consult with your professional such as accountant or lawyer to determine which is the best option for you.
Information Sources: http://www.business.govt.nz/companies
At all times but especially in these tough economic times it is common for moteliers to be reviewing their business and looking at ways they can increase their profit. This is an integral part of operating your own business be it a motel or any other type of business. The ideas and solutions which you arrive at must however be analysed properly to ensure they are in fact a benefit and not a detriment to your business.
What is your core product? This is the backbone of your business and will be the bread and butter profit for you. Many will say well all motels have the same core product. They all have rooms with a bed and bathroom. It is true that all motels have rooms with a bed and bathroom but all of these rooms are not the same. Some are luxury rooms with expensive fittings and unique bathroom accessories, some are rooms of a modern design with standard fittings and some are older rooms with older style fittings and chattels. These are all motel rooms but each offers a different core product to their customer.
Find your identity from your core product and build on this. What are you good at and what are you not good at? If you have a luxury style complex you will not be good at servicing the needs of the budget conscious client. An older style mid range complex will not be good at servicing the needs of a client looking for luxury. What is it that you are best at? Establish your core product find your identity and build on this.
When you are looking at expanding your business you must look at the ideas in relation to your core product. You cannot be all things to all people! When analyzing a new idea put yourself in your clients shoes; is it something they would want. Would a luxury client want a frozen meal to zap in the microwave or would an anti-pasta platter be more appropriate? What can you add to your product that your current customers would want to pay extra for? It is a far more economical way of making profit by taking more revenue from your current clients than by spending marketing dollars to try and attract new clients.
When you implement a new idea it is like any other aspect of your business you must be able to monitor and measure the effect of it. If you have a new product on offer then you must set a time frame (say monthly) to measure how many customers have taken up this product and how much profit was made from it after all costs were taken out. Ask your clients for feedback. Was the product beneficial, would they use it again, how could it be improved? Then it is vital to act on the information and measurements you have gathered. If you have given a product sufficient time to develop and it is not making profit or being used then you must put it in the tried but didn’t work basket and move to the next idea. Business is a perpetual cycle of evaluation and ideas.
Most importantly be good at what you are, “Stick to your knitting” and grow your business from this to be the best of its own particular kind.
Seeing this recent release in regard to Tourism New Zealands latest campaign made me think about how important it is for motels to take advantage of opportunities. One motel operator will look at this and say wow I hope some of these people stay with me. Another operator will look at it and say Wow there will soon be a lot of people surfing the net looking for Ski related holidays in New Zealand. I need to add a package or a reference to Skiing in New Zealand to my web site so they find me.
Which one are you and how are you going to make the most of every opportunity you see?
Campaign aims to drive Aussies to NZ slopes again
Tourism New Zealand launched Sunday its new early-bird ski campaign aimed at attracting keen Australian skiers and snowboarders to NZ’s slopes.
The tourism body said television commercials would run in Sydney and Brisbane for the next two weeks encouraging Aussies to make early bookings.
It also aims to repeat last year’s early campaign success according to Tourism New Zealand Chief Executive Kevin Bowler.
“Last year was the first year Tourism New Zealand and the industry went into market with an early ski campaign and we had a strong ski season, with the industry here reporting an influx of Australians on the slopes” he said.
In 2009, New Zealand’s slopes welcomed around 70,000 Australians with Australian holiday arrivals over the winter season of June, July and August up 28% compared to the same period in 2008.
Source = e-Travel Blackboard: J.L
Do most managers lease or own the motel?
Do they hire managers or manage it themselves?
Is it more of a lifestyle or a big business investment?
These were some questions posed after one of my recent articles and so I thought they would be a great topic to follow on with. As most of you who have stayed in motels will know they can all be very very different. This is reflected in both the experience you get from staying in a particular motel, and also the experience for someone owning that motel.
Most motels are run under a lease situation. Without doing any specific research an educated guess would put the figure of lease motels at about 90 – 95% of all motels. This means that about 95% of motels have one entity owning and operating the business and they in turn lease the land & buildings from a different entity. On some occasions this can be the same person using two entities for tax purposes and on other occasions the two entities are completely separate people.
The decision as to buying a motel business only ( usually referred to as “the lease”) or a freehold going concern which includes the business, land and buildings is often governed by the amount of money available to invest. The return on investment for a business (lease) ranges from approx 20 -25% , a freehold going concern return on investment is around the 10% figure. Please bear in mind that these are rule of thumb figures and can not be applied rigidly to all motels as there are many other contributing factors in each motel.
If we take a scenario where someone has $1 000 000.00 to invest they may expect to achieve a $100 000.00 return on a freehold going concern or a $250 000.00 return on a lease. This would in turn dictate the type of lifestyle they could achieve in the motel. The freehold going concern may be an older 9 unit motel whereby the owner was required to do much of the physical cleaning themselves. Alternatively the lease may be a newer complex with more units and thus the owner is required to be in a more managerial type position with staff available to undertake the physical work. The lifestyle choice comes down to what the purchaser is most comfortable with
It is not just a difference between a freehold going concern and a lease which will give a different lifestyle but also within the different types of motels. A lease priced at $350 000 may have a $70 000 cash surplus ( earnings less expenses but prior to interest, tax depreciation and drawings). This would probably necessitate you having to do some physical cleaning and is sometimes described by non-motel people as buying yourself a job. It is very important to remember with motels however that as an owner there are practically no living expenses. Accommodation, phone, vehicles, power and insurance amongst other things are paid for by the business and a tax adjustment made at the end of the year. If employed elsewhere a person would need to earn the amount of these costs plus a third again for tax to get the same benefit. With living costs already taken out it can be argued that the cash surplus is a return on your total investment with no need to adjust for owners salaries as in most other businesses.
As we get to the more expensive lease operations the returns are percentage wise the same but dollar wise obviously more. Someone investing in a larger lease showing a return of $250 000 would expect a return of approx 25%. This would give them a business where they would do less of the hands on work and more management and promotion of the business. Once again all the living expenses are included in the business. If someone purchased this and employed a manager they could still probably expect after deducting a managers salary a return of about 18%. As we are seeing more of the larger more profitable motels within the industry the practice of having a lease business run under management has become more prevalent.
As you can see from all this motels can be both a lifestyle and a big business or a combination of both. There are many different and unique factors in each motel so the purchaser must be aware of these differences and ensure they choose a complex which will meet their needs. It is essential therefore to use the services of an experienced motel broker who understands motels, how they operate, the differences between them and how this all relates to the purchaser. Being empowered to make an informed decision at this stage can prevent a lot of distress after the purchase is complete.