How
Much Does It Cost
To Get Started?
Many beginners
want to know what it will cost them to "get started" as
a home-based travel agent. It's a somewhat tricky question to answer,
because everyone is different, with different goals and different
needs. I like to say that the cost of getting started can range from
pocket change to several thousand dollars. Let's take a closer look.
It is actually
possible to start for "free." The quotation marks are there
to indicate that even what's free can cost you something in time,
energy, postage, phone calls, shoe leather, business fees, transportation,
and any number of other miscellaneous expenditures. But the fact remains
that it is possible to become an outside agent with no "upfront
fee."
The classic
way to do that is to find an agency, usually a local agency, to take
you on as an outside sales representative. No money changes hands.
You agree to find clients and book their travel. The agency agrees
to allow you to use their IATA number with suppliers and to collect
and disburse commissions to you according to an agreed-upon formula,
which is negotiated when you and the agency draw up your contract.
The problem
with this scenario is that it can be difficult to find an agency willing
to take you on. It's a little different, of course, if you are an
experienced agent with an inside track record and (preferably) a following.
But even experienced agents can find it hard to locate an amenable
local agency. Another issue (it's not quite a "problem') is that
the commission splits offered in this situation are typically lower
than the splits you can find elsewhere.
My very first
association with a host agency was under an arrangement like this
and it didn't cost me a penny. If you're interested in pursing this
strategy, my home study course surveys the pros and cons and offers
advice on how to "sell" yourself to an agency.
Most fledgling
home-based agents, however, start out by paying a fee to a host agency
that specializes, to a greater or lesser extent, in dealing with outside
agents (or "running an outside agent network" as it's sometimes
referred to in the trade). The fee can range anywhere from a few hundred
dollars to nearly $10,000.
I suppose
one reason for this is that many new agents don't know there's any
alternative. But there are a number of very good reasons to take this
route. In fact, many experienced agents and even former agency owners
have chosen to start their home-based ventures in this fashion. I
examine the reasons in some detail in the home study course but among
the most important are:
* It's fast.
You can be up and running in a matter of days in many cases.
* You get
a better commission split. I have found that commission splits of
60/40 and 70/30, with no hidden costs, are pretty common with a moderate
upfront fee. Commission splits of up to 80/20 are possible (although
these deals usually come with some strings attached).
Beginners
should be leery of 100% commission offers. Usually those deals will
only make financial sense to experienced agents who can produce volume
quickly.
Why do the
upfront fees vary so widely? In theory, the more you pay the more
you get - in terms of training, support, and miscellaneous hand holding.
That's the theory. In some cases, it seems that the host agencies
are charging a given fee because they think they can get it.
The host agencies, to give them their due, have a valid interest in
discouraging those who will not become productive agents and a high
sign up fee is a good way to do that. A productive agent will quickly
amortize his or her upfront investment.
In addition
to any costs of signing up with a host there are an array of miscellaneous
expenses that are common to starting up any business, although a home-based
agent can keep those to a minimum.
Probably the
must-have accessory is a business card and these are very cheap. You
should also register with your local and/or state government if that
is required. Surprisingly, many people don't bother. However, once
you want a business checking account (and you will sooner or later)
you will have to register with the county courthouse in your business
name. I did that recently, after a move, and it cost me all of $7.
Many of these
"additional" business expenses can be spread out over time
so as to keep your upfront cost to a minimum. Hopefully, many of these
initial outlays will be quickly recovered in commission income.
I suppose
I could say that one essential start up cost is my home study course
and that, at just $139, it is a true bargain. But would I be that presumptuous?
Seriously
though, it is a small price to pay for knowledge that will put you
on an equal footing with the host agencies and suppliers with whom
you'll be dealing. The component on choosing a host agency - "How To Choose A Host Agency " - has the
potential to save you thousands of dollars in sign up fees and earn
you thousands more in the form of more generous commissions.
On top of
that, I offer the most generous guarantee in the industry.
If you are
ready to make this investment in your future as a successful home-based
travel agent, CLICK HERE. If you'd
like more information before you make your decision, read the article
"How To Succeed As A Home-Based Travel
Agent."
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