Small business finances

This was a topic discussed at the national workshop “Using Wildlife for Tourism: Opportunities, Threats, Responsibilities” in 2012.

Please feel free to add your thoughts in the comments section at the foot of this page

Small business finances relevant to wildlife tourism: Insurance, licenses, promotion etc.

(Moderator Ronda Green, chair WTA, with assistance from Rod Hughes (OAMPS), Barry Davies (Gondwana Guides) and Denise Goodfellow)

From the workshop program:

Insurance

Insurance premiums sky-rocketed after certain trends in litigation and the collapse of insurer HIH, perhaps exacerbated by the fall of the twin towers, and a number of small businesses collapsed. Several people working as solo guides simply cannot afford the insurance to keep operating each year, and many other potential or actual small businesses are in a similar situation. WTA has in the past engaged in discussions with insurance brokers to ascertain whether groups of small operators could take out a group insurance, in similar fashion to other groups (such as football teams) but has generally been advised it is not possible because of the great variation in risk between different kinds of activity.

We have also investigated whether we can co-insure farmers in our tourism policies (similar to the co-insurance with national parks when leading tours into these) such that we can pay farmers for the privilege of taking small groups of tourists onto their properties.  The philosophy behind this is that (1) it opens up more potential for tours, (2) it helps to take the pressure off national parks and (3) our national parks will never be enough to conserve all biodiversity, so we must conserve as much as possible on private lands, but when farmers are penalized rather than rewarded it is understandable that we do not always find full cooperation in this. Arranging insurance to satisfy the first two goals is fairly straightforward, but WTA has been advised in the past that if we are to pay the farmers, the framers will themselves need to take out expensive insurance premiums, which defeats the purpose of trying to set-up this ‘user-pays’ system. However, our insurance adviser Rod Hughes, who will be participating in this discussion, considers the above to be possible, and will also be on hand to answer other queries about insurance

Questions to consider:

  • Is it possible for a group such as WTA members to obtain a group deal on insurance to reduce premiums?  What would we need to do to achieve this?
  • Is it possible for tour operators to co-insure farmers whose properties they pay to take guests, thus providing a benefit for farmers who leave wildlife and native habitats on their property without making it necessary for them to pay expensive premiums?
  • Other insurance queries?
  • Are there ways in which government could assist with an easing of premiums for both tourism operators and farmers (either financially or through legislation)?

Bureaucracy

From Barry Davies:

“We all find it difficult and expensive dealing with government agencies in our own states. For small operators the costs and complications make it almost prohibitive and quite frankly if it wasn’t a lifestyle choice most would be better off working for someone else. However, if it is difficult intrastate it becomes a lot more complex and expensive working interstate. Each state has its own system of licensing transport operators and issuing passenger authorities. Whilst there are federal regulations governing the heavy transport industry these don’t apply to tourism operators. How do we go about getting a nationally recognized transport accreditation for tourism operators?

Questions to consider:

  • What are some of the major bureaucratic hurdles for tourism businesses, especially small businesses, in providing quality wildlife experiences
  • What are some of the major bureaucratic hurdles for tourism businesses, especially small businesses, to keep costs down so they can continue to be viable?
  • Are there ways in which government could assist with a streamlining of bureaucracy for tourism businesses (e.g. getting a nationally recognized transport accreditation for tourism operators, other streamlining, more accessible information on requirements)
  • What are some of the dangers of making it too easy (e.g. easing restrictions that could result in more environmental impact)?

Low-cost promotion

Tourism has been through some tough times lately, and some methods of promotion get very expensive without adequate return.  For the use of media and online social media, wildlife tourism operations should be at somewhat of an advantage to some of the more general tourism, as the wildlife itself should be generally more attention-grabbing than hotel beds or swimming pools, but what are the best ways of doing this, and what are the taboos?

Questions to consider:

  •  Using the media (press releases etc.) to promote an interest in seeing wildlife in general and individua businesses
  • How to most effectively use word of mouth
  • Should you reward guests for recommending your product or does this make it seem less genuine?
  • What are some of the more effective ways of using social media, and what are the taboos on these?
Some of the points raised at the discussion were:
  • There are incongruencies about the different requirements that tourism operators travel across states. These issues are particularly relevant for small businesses because requirements in the different states include permits or licenses that not only demand investment of money but they are also time consuming. It can get very unwieldy for operators leading tours around Australia, which is a little absurd as it is all one country throughout the continent. We need more standardising and more willingness by the states and territories to accept each others’ licensing.
  • Creating a premium pool for a group of small tourism operators can bring more benefits when getting the insurance cover such as better claim scales. The insurance company can be also more interested if there is a sufficient number of operators involved,  as having higher sums of money involved the group is taken more seriously.
  • There is not much hope about Government involvement in insurance schemes, as they cannot dictate what insurance companies can charge for public liability premiums
  • Insurance companies need to know the common issues that wildlife tourism operators face in order to develop adequate premiums that are adjusted to their actual needs. They also need to know the solutions that operators want to see; therefore, more integrated efforts need to be dedicated to identify all these important details that can make a difference when dealing with insurance companies. More voices have a greater impact than only one.
  • Promotional investment can be reduced by making connections by being creative and finding ways people can be attracted. Online social media is probably much more cost-effective than advertising in magazines
Have your say by contributing to the comments column below

 

2 Responses to “Small business finances”

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  1. small business mentoring says:

    But liberals never ever break the law. Yea, right.

  2. Ronda Green says:

    Another query involves whether Australia can adopt the New Zealand system, whereby claims go through a tribunal before going to court, and the more ridiculous ones can be thrown out before they ever reach court, which would be good for insurance companies and operators.
    I have received the following response from Rod:

    “In New Zealand they have a completely different system in regard to liability – a ‘no fault’ system which has been operating from somewhere around the 1970’s. It is run by the Accident Compensation Corporation (refer http://www.acc.co.nz). In broad terms it can be compared to no fault third party schemes for injury in motor vehicle accidents that operate in Australia. If you do a Google search for ‘New Zealand No Fault System’ you will find a number of references that you may find useful.
    This system is a gigantic change to the ‘duty of care’ principle that applies in most countries, including UK, USA and Australia. Over the years there has been some discussion on the merits of such a system for Australia, but to date it has not been seen as a viable alternative worthy of implementation (or perhaps even serious consideration).”

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