By nbkc bank
Between 2016 and 2021, roughly 17 million new businesses were created – nearly ten million of those were founded between 2020 and 2021 alone. With a (generally) accepted failure rate of 20 percent in the first year, it’s safe to say that starting a business takes a lot of bravery and grit. In a time with so much uncertainty, we think that’s pretty incredible.
Over the last few years, we’ve seen businesses across all industries take a hit — some more than others. Namely, businesses in accommodations, food services, retail, travel, healthcare, arts, and entertainment. This all makes sense given consumers were staying home more and consuming less — especially in areas that were perceived as non-essential.
This brings us to our first Business Spotlight of 2022 – Fantastic Memories Travel and Mouse Master Travel. These full-service travel agencies focus on family leisure travel, and were scrambling for survival as many individuals had to abandon travel plans at the start of the COVID-19 pandemic. However, thanks to strong business relationships and good business practices, they were able to navigate their way through.
Like many other small businesses, Fantastic Memories Travel and their sister brand, Mouse Master Travel, had to pivot during the coronavirus pandemic.
Up until that point, both agencies were experiencing strong and steady growth through 2018 and 2019 — and even projected to achieve their single highest gross revenue month at the start of 2020.
It was in the second week of March 2020 that Walt Disney World and Disneyland announced their indefinite closures in response to the pandemic. The agencies market and sell Disney destination travel exclusively under the Mouse Master Travel brand, and while this alone was a defining moment for them, these closures were a prelude of what was to come.
Reaching a fork in the road
For the agencies, roughly 90 percent of their revenue was generated by commissions that are paid only after guests travel, leaving them scrambling for next steps when some of their agents found themselves working harder and logging more hours than before lockdowns.
While travel itself was at a standstill, hundreds of guests who already had vacations booked needed assistance processing refunds and re-booking accommodations.
The industry and travel suppliers were reaching a boiling point. Some large corporate travel agencies had even turned off customer service lines at this time, creating additional obstacles for the team as they attempted to assist their guests.
As a small business, they held their standard of customer service extremely high and were dedicated to ensuring their guests’ preferences were carried out. Before they knew it, the team had spent hundreds of hours on the phone between guest communications and waiting out hours-long hold times with travel suppliers.
Despite their strong start to 2020, the agencies’ owner found the company in a position like many other small businesses. By the second quarter of 2020, their revenue had dropped by 272% compared to 2019, and Q4 revenue was off nearly 600%. In the end, revenue for the year dropped over 46%.
All the while, they continued working hard to take care of their guests while debating next steps – try to salvage what they could by selling, or look for some sort of lifeline within their business circle.
For Fantastic Memories Travel, nbkc’s Brian Hoffart and Drake Vidrine were that lifeline.
Staying afloat with the Paycheck Protection Program & nbkc
Passionate about nbkc’s close connection to its business banking clients, it’s no surprise Brian referred Fantastic Memories Travel’s owner to Drake for help even before the Paycheck Protection Program (PPP) was ready to take applications.
Drake helped them prepare their application. His understanding of the PPP’s Round 1 limitations ultimately helped get their application through while other small businesses often faced rejection. That source of cash was vital to getting the agencies through the early stages of the pandemic.
When PPP Round 2 was announced, Fantastic Memories Travel’s owner mistakenly assumed they were not going to be eligible, but nbkc and Drake were there to guide them through the process again.
Drake reached out to explain how PPP Round 2 was different and what records they needed to compile for their application. On March 30, their Round 2 PPP loan was funded, and provided the agencies with the financial cushioning they needed to keep the agency up and running — while positioning them for a solid post-shutdown rebound.
Where are they now?
2021 was still a rocky year for Fantastic Memories Travel, but they could see the light at the end of the tunnel. They finished 2021 strong with Q3 revenue tripling their numbers in Q1, and Q4 revenue came in as their second-highest Q4 ever. That trend continued into this year, achieving their highest Q1 revenue in company history – surpassing their pre-pandemic record. With that revenue growth, the agencies have started working with Treasury Services to increase their ACH limit, and nbkc has remained by their side every step of the way.
While they may not be completely out of the woods yet, their projections suggest that by the end of the 2022 calendar year, they should be at or ahead of where they were at the end of 2019.
PPP loans may have been a vital lifeline for the agencies during the rainiest of days, but that doesn’t take away from the impact of their good business practices. Fantastic Memories Travel never settled for anything less than excellent customer service, and they made good use of their business relationships — both are telltale signs of a successful business.
The definition of success is subjective, but in business, there are a few marks you want to make to increase your odds of survival in tough times.
Make customers a priority.
The customer’s always right — right? Growth and retention are strengthened when customers feel like they're a priority for your business.
Review your marketing strategies.
While you may not increase your marketing spend during a downturn, you’ll want to look for creative ways to stretch every dollar.
Approach staff management with care.
The COVID-19 pandemic certainly shed a light on right and wrong ways to handle staffing challenges. It’s important to remember that everyone hurts during a downturn. But, you can build morale and motivation when you take care of your team and make sure they know how much you value them. If difficult decisions need to be made, over-communicating and providing ample lead time is the best way to approach the situation.
Network amongst your peers and competitors.
Networking with other industry leaders is a must. When you learn how they’re dealing with economic challenges, you’re more informed when it comes to decision making.
Save for a rainy day.
This one goes without saying, but consider a line of credit (LOC). Everyone wants a LOC when they need it, but no one applies for one when they don’t. Once established, a LOC doesn’t cost you anything if you don’t use it, but it’s always there when you need it.
Look for ways to reduce your Accounts Receivable (A/R) collection periods.
You can do this by offering customers discounts and incentives to pay early, more payment options, or by using a more efficient invoicing service, such as autobooks.
Create efficiencies with your Accounts Payable (A/P) process.
Reach out to vendors and negotiate better terms.
Ask your bank if they offer Sweep Services.
This is a great way to reduce the risk of overdrafts.
Reduce unnecessary spending.
A good business owner is always keeping an eye out for excessive spending, and trimming what’s unnecessary can go a long way in a downturn.
Make sure your accounts are protected.
You’ll want to isolate payment accounts where you’ve disclosed your banking information to customers and vendors from your operating accounts. Fraud attempts increase during downturns, and you’ll want to make sure your banking practices are as secure as possible.
Consider employing Positive Pay.
This makes it easy to monitor and approve check and ACH transactions.
Study your cash flow patterns.
This allows you to reduce or move expenses from gaps. When you create a weekly or monthly cash forecast, you can anticipate shortfalls before they happen.
If you’re just getting started as a business owner, or are looking to switch to a bank with superb customer service and an assortment of business solutions, contact a Relationship Banker for an intro or schedule an appointment. We look forward to helping you grow.