Start a tour company by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your tour company. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a tour company?
Unlike many start-up businesses, your tour guide business will require very little starting capital. Many owners start out running the business out of their home, investing in a small storefront or kiosk in the heart of the city, as revenue starts to come in. Those who choose this path report start-up costs of under $2,000.
A few items you’ll need to figure into your budget are:
- Scheduling software
- Marketing materials - business cards and pamphlets
If you plan to offer tours that transport customers from one site to another, a vehicle should be factored into your budget. Options include vans, trolleys, bicycles, and scooters.
What are the ongoing expenses for a tour company?
Until you invest in a workspace, ongoing expenses will be minimal. Payroll will represent the greatest portion of your budget and will vary depending upon the number of guides you employ. If you transport guests, vehicle maintenance and fuel costs should also be considered.
Who is the target market?
While you might get an occasional local customer, the bulk of your business will come from travelers visiting your area on vacation or from students on educational trips.
How does a tour company make money?
A tour guide business makes money from each tour given. Guests are typically charged at a group rate or per individual. The price of each tour also depends on the length of each tour.
How much can you charge customers?
Unless your tours offer a unique experience that others cannot, pricing is a critical component to your organization’s success. Keep pricing competitive with others in your area that offer similar tours. Pricing is defined by a number of factors, including: walking or driving tour, destinations and entry costs, and number of people in each party. Half-day tours average $125, while full-day tours average $200, plus the cost of admission to any attractions that you will tour. Align yourself with management at each attraction to ensure affordable entry and maximize profits.
How much profit can a tour company make?
While this can be a very profitable business, experienced owners caution against expanding too quickly. When a tour isn’t fully booked, it can eat into your profits. Each tour that you offer comes with its own set of costs; however, with a properly designed marketing strategy, your tour guide business stands to draw in a considerable profit in the first year.
How can you make your business more profitable?
Try implementing some of the below strategies to maximize profits:
- If you live in an area that offers a variety of sightseeing activities, consider expanding to a full-service business. Offer packages that include: hotel accommodations, meals, travel arrangements, sightseeing arrangements, and information for downtime.
- Offer packages that include two or more of your local tours.
- Research all that your community has to offer. This will help in designing creative, unique tours that will give your customers an unforgettable experience.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your tour company is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a tour guide business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a tour company
Your marketing strategy should cater to each demographic your business is targeting. Team up with travel agents from across the country and share with them the services you offer, highlighting how your business stands out above the rest. To further reach tourists from across the globe, invest in Internet advertisements through search engines and banner ads on popular websites and social media platforms. Additionally, consider purchasing ad space in restaurants, bus stations, airports, hotels, and other tourist attractions.
Participation on travel blogs and tourist/travel forums will also gain exposure for your business, as will listings in various directories. The World Federation of Tour Guide Associations, National Federation of Tourist Guide Associations, and American Tour Guide Association host conferences for networking and learning everything there is to know about the industry.
How to keep customers coming back
In this industry, repeat customers aren’t the norm. However, it’s important to remember that each customer will share their experience with others. Word of mouth is your most powerful marketing tool, so make sure each guest has a safe, entertaining, and educational experience.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start a Tour Company In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
The self-motivator with a thirst for knowledge who enjoys sharing what they’ve learned with others would do best owning a tour guide business.
What happens during a typical day at a tour company?
In addition to the standard administrative tasks that go with running a business, your day-to-day tasks will include:
- Answering emails and phone calls from current and potential customers
- Scheduling tours
- Fostering relationships with those in the community whose interests you share
- Routinely maintaining vehicles if you transport customers
- Checking in with any staff members who might have questions
- Interacting with customers, taking them on scheduled tours, and answering questions
- Brainstorming and planning new tour ideas
- Maintaining a presence within the community
- Building on your marketing strategy
As your business starts to grow, you’ll want to add different tours and services. Tour guides should interact with customers regularly, gathering feedback and listening to any suggestions they might have. For long-term success you’ll want to continuously evolve your business, coming up with innovative ways to entertain guests.
What are some skills and experiences that will help you build a successful tour company?
While this profession does not require any professional qualifications to get started, there is a high level of skill necessary for success. Whether marketing, scheduling, or guiding, a majority of your time will be spent with people. Thus, it’s critical that you’re skilled at connecting with people. You’ll be guiding individuals from a variety of different backgrounds, so it is important that you make each of them feel comfortable and welcome on your tours.
Your city’s history and entertainment is what connects you to your customers. Those who are most successful are passionate about their city, and they strive to continue learning more about it so they can share their knowledge with others. They have a knack for finding and presenting interesting, little-known facts, and they have a way of making even the most boring subject sound interesting. To remain relevant in the industry, it’s also important that you maintain a certain level of awareness of emerging trends.
When interacting with a large group of people, as tour guides often do, emergencies are bound to happen. You should be able to handle such situations with ease while always maintaining an air of professionalism.
There are a number of companies that offer the training necessary to set your business up for success.
What is the growth potential for a tour company?
As the growth rate in the tour guide industry nears 21.2%, tour guides are poised to be one of the fastest growing industries. Your business’ success will rely on the tourist attractions your area has to offer and your ability to creatively maximize the number of attractions you are able to cover in each tour.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a tour company?
Successful tour guide owners offer the following advice:
- Before getting started, contact your local agencies to identify any rules and regulations specific to your industry.
- One of the biggest challenges you’ll have in the beginning is tour scheduling. Research other companies’ schedules when creating yours, taking into account variations in location, time of day, tour length, etc. It can help to give several practice tours before committing yourself to starting a tour guide business.
- Offer a variety of tours that appeal to the different types of people you’ll encounter.
- When first starting out, don’t try to do too much. Offer a few tours and use that time to feel out your customers, identifying what other parts of the city might interest them most.
How and when to build a team
As the business starts to grow, it's time to start building your team. Each team member must be able easily to walk the scheduled route, on their feet for much of the day. Scripts should be memorized, but your guides should also have the ability to go off script, answering questions, adding appropriate jokes, etc. An older guide is often more well-received, as guests are under the impression that they have more experience in the area.