How to Introduction


How to Introduction


Tourism KwaZulu-Natal (TKZN) is promoting the entry of new enterprises into the tourism market. This brochure has been produced to guide people wishing to establish their own tourism enterprises. The brochure targets particular fields of business and is designed to provide basic information useful for developing your own business venture. Tourism is a service industry, so the importance of service and dedication to your clients is particularly important because service excellence will help establish a client-base through attracting repeat business and referrals, which may be as, or more, important than initial marketing. The guidelines contained in this brochure will assist you during the thinking and planning of the establishment of a Bed & Breakfast or Guest House, Restaurant, Eating House or Tavern, Tour Guiding Service, Tour Operating Business, Travel Agency, Cultural Village, Community Tourism and Information Office, Hunting and Game Farm, Arts and Crafts Centre, Adventure Tourism Business in KZN, Draw up a Business Plan and applying for Tourism Signage. Contact numbers are provided for professional people who can assist you should you need further assistance. This will help you establish a business that meets the standards that are demanded by the tourism market.

 

•  “A foreign tourist is any person travelling to a place, outside the borders of his/her country, and which is other than his or her usual environment, for a period of less than one year but for at least one night, and whose main purpose of visit is other than the exercise of an activity, remunerated, from within the place visited” (WTO);

 

•  “A domestic tourist is any person travelling to a place, within the borders on his/her country, and which is other than his or her usual environment, for a period of less than one year but for at least one night, and whose main purpose of visit is other than the exercise of an activity, remunerated, from within the place visited.” (WTO).

 

The following relates to most tourism businesses:

 

•  Note that legislation now requires all businesses providing services to tourists to be registered with the provincial Department of Economic Development and Tourism (DEDT). Kindly contact DEDT if you are not sure whether registration is mandatory or optional for your business, as well as for information on how to register. Please telephone (033) 264 9324;

•  Please also note that star grading of accommodation establishments and some other tourism businesses is also strongly recommended. TKZN would like to urge you to have your establishment graded. For further information on grading, please refer to the Tourism Grading Council of South Africa’s website at www.tourismgrading.co.za;

•  Some of the information in this brochure is specific to a particular business and found under the related heading, such as “How to Establish a Bed & Breakfast or Guest House”.

 

USEFUL INFORMATION

 

Other information, which is general and applies to all tourism-related businesses, follows here:

 

MANAGING YOUR BUSINESS

 

Management of your business will involve:

 

•  A decision on the types and packaging of services;

•  Bookkeeping and accounting;

•  Arrangement of VAT and taxes;

•  Record-keeping for your own records, for advertising reasons and for tax purposes;

•  Taking and managing bookings from clients;

•  Employment and labour conditions, including employment equity, labour unions and conditions of employment;

•  Training of staff: it is vitally important that staff are trained in customer care and are professionals in their field;

•  Insurance cover which includes both security and public liability.

 

Chambers of Commerce are a good contact through which to obtain details of organisations that can give advice on the management of your business.

 

BUSINESS ISSUES Structure of Your Business

There are a number of different options for the legal form of your business, in other words, how your business will be seen in terms of the law. Each of these has advantages and disadvantages, not only in terms of ownership, but also as to the way in which they are taxed. There are various types of business enterprises:

 

Sole Proprietor

 

This is also known as a sole trader or sole owner. This means that you own everything in the business and the law does not see any difference between you in your personal capacity and the business. The business can have a different name to yours, e.g.: James Peterson trading as Mountain Tours. You don’t have to register this business separately for tax purposes and the Receiver of Revenue will see you and your business as a single entity.

This is useful in that there are no registration procedures and no extra fees. It does mean though, that you will be responsible in your personal capacity for all the debts of the business, and you cannot bring investors and partners into the business. If your die or retire, the business stops operating.

 

Partnership

 

A partnership is just like a sole proprietor, except that there is more than one person involved. A partnership is not taxed as a single entity either. Each owner is taxed individually on the income generated by his share of the business, included as part of his personal tax returns.

 

It is important to set up a formal partnership agreement to prevent any later dispute amongst the partners, but other than that, there are no registration procedures or extra fees. Again, though, it does mean that you will share equally in the responsibility for any debts incurred by the business.

 

Close Corporation

 

A close corporation, or CC as it is often called, has a relatively simple structure, especially created for the small entrepreneur. The most important difference between this and the first two types is that a CC is a legal entity in its own right – this means that the CC can be sued and not the owners in their personal capacity. In this way, you are not as much at risk (compared to a sole proprietor) in your personal capacity should things go wrong in the business.

 

A close corporation needs to be registered, and in most cases the CC is taxed the same way as a company. Registration forms (CK1 and CK7) are available from most stationery shops, or from many accounting and secretarial firms which offer the service of registering a CC on your behalf.

 

Private Company

 

Private companies are established under the Companies Act and consequently are subject to more administrative requirements and stricter accounting procedures. A company has its own legal personality, with its own rights and duties, which are completely separate from those of its members. This means that shareholders are not personally liable for the debts of the company.

 

More information is available from the Companies and Intellectual Property Registration Office (CIPRO).

Contact details are as follows:

Call Centre: 0861 843 384

Website: www.cipro.co.za

Alternatively, ask your business advisor to assist you.

 

You may be registered as a Sole Proprietor, or your business may be registered as a (Pty) Ltd Company, or close corporation (cc).

 

Chambers of Commerce are good contacts through which to obtain details of organisations that can give advice on the structuring of your business. Advice may also be obtained from Business Advice Centres.

 

Marketing and Advertising

 

Marketing and advertising may be done through a variety of mediums such as through printed brochures, internet, television and word-of-mouth. TKZN should be approached to enter your business into their tourism assets database for the Province, which provides, freely available information on tourism facilities. The District Municipality has a copy of the same database. Publicity associations or information offices should be approached to help disseminate your information.

 

Any brochures produced should include an easily readable map of your location (if you have an office) to show clients the way to your premises.

 

There are also benefits to joining trade associations, such as improved marketing opportunities, access to information on the market and liaison with authorities. Trade associations have set codes of conduct to govern the relationships of their members with their clients. Such associations include Southern African Tourism Services Association (SATSA), AFRITOUR, Black Association of Travel Agents of South Africa, and Council of Adventure Travel Associations of South Africa (CATASA).

 

Sources of Information

A useful source of information for tourism-related services is the TKZN website (www.zulu.org.za). TKZN also has a resource centre which may be used to obtain information. Please call 031 366 7500 and ask for the Resource Centre.

 

The Tourism Channel

This comprises the various organisations and the way they link the supplier and the consumer together.   It is important to understand who will use your product or service and who you need to deal with in order ‘sell’ what you have to offer. The ‘channel’ consists of all the intermediaries between you and your business and the tourist who will use it. Such intermediaries include travel agents and wholesalers. TKZN will be able to provide you with advice on how best to promote your particular business.

 

FINANCIAL ISSUES

Sources of Finance

Finance for your proposed business may be obtained from various sources. It can either be in the form of individual savings, loan finance, or in some instances, state subsidies.

 

Sources of loan finance include:

 

•    Business Partners Limited;

•    Ithala Development Finance Corporation Limited;

•    Industrial Development Corporation;

•    Development Bank of Southern Africa (DBSA);

•    Joint Venture Financing;

•    Commercial Banks.

 

The Department of Trade and Industry provides limited subsidies for certain small and medium-sized enterprises in the tourism field. They should be consulted.

 

TKZN may be approached for advice on potential funders.

 

BUSINESS PLAN

 

Loan organisations (like banks) normally require a comprehensive business plan to be prepared when applying for a loan.

 

Such a business plan should include:

•  Business analysis;

•  Financial forecasts, based on rational assumptions and experience;

•  Budgeting guidelines;

•  Schedules determining the amount and kind of finance most appropriate for the business;

•  Details on proposed financing sources;

•  Useful information about the planned business which will aid decision-making by the loan organisation.

 

Advice on business planning may be obtained from:

•    The Tourism Information Services Division of TKZN;

•    Business Advice Centres;

•    The Department of Economic Development and Tourism;

•    Commercial Banks;

•    Business Partners Limited;

•    Ithala Development Finance Corporation Limited;

•    TKZN “How To Draw up a Business Plan” brochure.

 

You may employ consultants to advise you, or to draw up your business plan with you. This would be at your own expense. TKZN could give you a list of such persons who could assist you.

 

FINANCIAL RECORD-KEEPING

 

Good record-keeping systems provide information for managing finances. The key items in record-keeping include:

•  Original records e.g.: keeping your sales slips, receipts, invoices and the like;

•  Journals which record the details of every transaction in chronological order e.g.: the cash book;

•   Ledger, where information obtained from journals is made more usable;

•  Trial balance is a list of all ledger accounts balances taken out to prepare financial statements.

 

Financial statements:

•  Income statement;

•  Balance sheet.

 

The minimum requirements for a small business operation are:

•  Cash Book;

•  Cash Control Systems;

•  Assets Register;

•  Debtors Record;

•  Creditors Record.

 

BUDGETING

Budgets are based on past experience, current state of affairs and future expectations. Budgets will help provide an estimate of financial requirements in the execution of plans in the business operation.

 

Types of budgets include:

•  Sales budget: a forecast of expected monthly income;

•  Materials budget: expected purchases;

•  Capital budget: expected fixed assets expenditure, e.g.: machinery, land and the like;

•  Cash budget: expected working capital requirements over a specific period.

 

TARIFF STRUCTURES

Tariffs should be based on those of your competitors and a detailed analysis of income and expenditure for the proposed operation. Research will therefore be needed in order to set realistic tariffs.

 

Advice on setting of tariffs may be obtained from:

•  TKZN tourism asset database/product management system (website);

•  Publicity Associations or tourism information offices;

•  SA Tourism.

 

VOLUNTARY REQUIREMENTS

Membership of the Southern Africa Tourist Services Association (SATSA) is advisable to ensure that minimum standards are adhered to. Membership of SATSA can be used as a marketing tool and provides tourists with an assurance that certain standards are being maintained. The requirements for membership of SATSA are available from the SATSA website: www.satsa.com or requests for application forms should be addressed to:

The Secretary of SATSA, PO Box 900, Ferndale, 2160

SATSA represents the private sector organisations which service the incoming Southern African tourism industry. Membership includes airlines, coach operators, accommodation establishments, vehicle hire companies, attractions, conference organisers and related marketing organisations.

 

•  You must have a registered Private Limited Company ((Pty) Ltd Co) or a registered close corporation (CC). Sole Proprietors are not eligible for membership;

•  There is an application fee of R1 090,00 (including VAT). The annual subscription for Chapter membership is R3 615,00 (including VAT). The annual subscription for National membership is R6 450,00 (including VAT). The subscriptions are in addition to the entrance fee;

•  The first year is a provisional membership only and is subject to SATSA approving your full membership;

•  The costs of joining and subscribing are reviewed every few years;

•  The SATSA application form requires the applicant to sign an Agreement to abide by the SATSA Code of Conduct;

•  The company must produce a copy of its brochure (describing services offered and prices) used for marketing the organisation. SATSA evaluates whether the product being offered falls within the SATSA parameters and ensures that prices are market-related;

•  If the applicant is not a South African citizen then he/she must produce proof of residency in South Africa and a copy of his/her work permit;

•  The application is to be made in the name of the company or close corporation, not in the name of the individual owner(s);

•  The application will require details of general public liability insurance (this type of insurance is to cover your business in the event of someone slipping on your carpet (for example) and they sue you for negligence);

•  The application must be accompanied by a letter from the firm’s accountants/auditors indicating that they are the appointed auditors and that the firm’s financial record books confirm that the company is in a sound financial position;

•  Please see www.satsa.com, for updates and new categories.

 

Tourism  Enterprise  Partnership  (TEP)  –      this  is  a  joint  initiative  of  DEAT  and  the  Business  Trust,  whose objective  is  to  encourage  and  facilitate  the  growth  and  expansion  of  SMMEs  within  the  tourism  economy, resulting in job creation and increased turnover. TEP is also able to contribute financially to your business in  a  variety  of  areas,  including  marketing,  business  plan  development,  training  and  licencing.  They  do not  finance assets  or  operational  costs,  nor  do  they  provide  start-up  capital.  They  can  be  contacted  on (011) 880 3790, at their head office, or website, www.tep.co.za, or email info@tep.co.za. The Durban office is located  at  36  Essenwood  Road,  Musgrave  or  PO  Box  70789,  Overport,  4067,  telephone:  (031)  201  0788, email: kzn@tep.co.za.

Small Enterprise Development Agency (SEDA) – is the Department of Trade and Industry’s agency which supports the development of small business in South Africa. They provide a range of services including network development, information packaging, tender advice, franchise referral, incubation and ongoing monitoring. They can be contacted via their website on www.seda.org.za or by telephone on 086 010 37033.

 

The Industrial Development Corporation (IDC) –  the IDC’s Tourism Business Unit finances large capital expenditure in tourism businesses in the form of loans for amounts of more than R1 million. The owner of the business needs to contribute at least 40% of the total cost of the project, but this could be reduced to 20% of the total for empowerment projects. The IDC can be contacted via its website on www.idc.co.za or by telephone on (011) 269 3000.

 

The Tourism Grading Council of South Africa (TGCSA) – the mandate of the TGCSA is to provide a framework and process for grading across all relevant sectors of the tourism economy in South Africa. Telephone – (011) 895 3186 or go to their website www.tourismgrading.co.za.

 

Black Business Supplier Development Programme (BBSDP) – aims to promote the growth of black enterprises by helping to create business linkages between black SMMEs, corporates and the public sector. BBSDP can be contacted via its contact centre by telephone on 0861 843 384 or (012) 394 1495.

 

Khula Enterprises – the Khula Credit Guarantee Scheme was established to provide access to finance to people wanting to start a small business but who might not have had the opportunity to accumulate wealth or other assets to use as collateral for a bank or business loan. For further information and to contact Khula Enterprises, the telephone number in Durban is (031) 301 1916/7, or email tembakazik@khulakzn.org.za.

 

Small Business Unit at Commercial Banks – all commercial banks offer loans to approved clients. Ask for the Small Business Unit at your bank, or any other commercial bank, trying a few so as to get the best deal.

 

Also refer to the DEAT booklet, ‘How to Start and Grow your Tourism Business’, Tel: 086 111 2468, or fax (012) 322 2476.

 

THIS SECTION ON VOLUNTARY REQUIREMENTS APPLIES SPECIFICALLY TO ‘HOW TO ESTABLISH A BED & BREAKFAST OR GUEST HOUSE’

 

The criteria set out in SA Tourism’s voluntary grading system, which has been established in terms of the Tourism Act (72 of 1993), are also useful as practical guidelines for achieving a specific standard of service. Participation in the grading system provides a good marketing tool and ensures a high level of service. Booklets may be purchased from SA Tourism which outline the minimum standards required for the grading system.

 

SA Tourism keeps a record of all persons with accommodation establishments who are members of this scheme, and of all establishments that are graded and classified in terms of the scheme. Owners of establishments that are part of the grading scheme must be prepared to undergo periodic assessments by SA Tourism and must pay an annual accreditation fee as determined by SA Tourism.

 

THIS SECTION ON VOLUNTARY REQUIREMENTS APPLIES SPECIFICALLY TO ‘HOW TO ESTABLISH A TOUR GUIDING SERVICE’ AND ‘HOW TO ESTABLISH A TOUR OPERATING BUSINESS’

• The applicant is required to sign an affidavit stating that they will only use vehicles with the relevant road transportation permit and that the drivers or tour guides will be registered with SA Tourism or with the Field Guide Association of South Africa (FGASA);

•  The wheels operator should be aware that in the event of having to use a replacement vehicle to move tourists around, a temporary road transportation permit must be applied for. This is usually readily obtainable in the case of a breakdown of a permitted vehicle;

•  Wheels operators need passenger liability insurance. The minimum is R5 million per vehicle per occurrence. This is expensive insurance but examples of claims in the case of recent bus accidents make it essential as it protects both the company and the tourists;

•  The application must be accompanied by a letter from the firm’s accountants/auditors indicating that they are the appointed auditors and that the firm’s financial record books confirm that the company is in a sound financial position;

•  The driver of a vehicle transporting tourists also has to be a registered tourist guide. If the driver is not a registered tourist guide then the tour party has to be accompanied by a registered tourist guide;

•  Prospective tourist guides should recognise that the industry is being adversely impacted by illegal operators who enter the market without meeting the legal requirements and as a result, the market is becoming over-traded.

 

THIS SECTION ON VOLUNTARY REQUIREMENTS APPLIES SPECIFICALLY TO ‘HOW TO ESTABLISH A TRAVEL AGENCY’

Membership of ASATA is advisable to ensure that minimum service standards are adhered to. Membership of ASATA can be used as a marketing tool and provides tourists with an assurance that certain standards are being maintained. The ASATA logo engenders public confidence and underwrites the integrity and reliability of the travel agent.

 

ASATA provides a sounding board in the form of monthly meetings where ideas are shared and members are kept abreast with the latest developments in the travel industry.

The requirements for membership of ASATA are as follows: Requests for application forms should be addressed to: The Executive Director of ASATA

PO Box 650539

Benmore, 2010

South Africa

Tel: (011) 327 7803

Fax: (011) 327 7827

 

•  Any person, firm or corporation may be considered for full membership provided he is engaged in Southern Africa in the sale of travel and the facilities of travel and who meets the criteria as determined by the Association and approved respective councils;

•  Applications for membership must meet standards and criteria in the following areas: premises from which they operate; qualifications of their management and staff; business capital; financial stability; security and no criminal record. The application may be referred to the Membership Council for consideration of the proposed premises and calibre of the proposed staff;

•  Full membership is only granted subject to agreeing to abide by the ASATA Constitution and Rules, Code of Conduct, Terms of Reference and all other agreements entered into by the Association and its respective sections;

•  New membership will not be granted until satisfactory reports are received by the Section Committee and the  applicant  agrees  by  signing  the  application  that  it  will  not  advertise  or  in  any  way  represent itself as being a member of ASATA until written confirmation for the application is received;

•   In order to ensure financial integrity and professionalism of members to their clients, the audit report is of paramount importance. In terms of the Terms of Reference of the respective sections, it must be returned to the Executive Director on completion of the application form. Thereafter, depending on the type of business (sole proprietor, CC or other), the audit report will be required annually, within 6 months of the financial year end. This information will be inspected by the Executive Director and the Treasurer of ASATA and the confidentiality thereof will be secured. Any circumstances of financial irregularity that may appear will be dealt with in terms of the section ‘Terms of Reference’ and the ASATA Constitution;

•    The application for membership should be submitted with the prescribed application fee. This will be credited to the applicant’s account should the application be approved;

•  The membership fee is payable immediately after the application is approved and such approval will be confirmed in writing on receipt of the subscription;

•    If, at the expiry of a period of 3 months from the receipt of an application by ASATA, any information required by ASATA is still outstanding or any action on the part of the application has not been carried out, the application shall be deemed to be abandoned and the application fee shall be forfeited to ASATA;

•  The ASATA logo is a registered trademark. All members are required to sign the Trademark Agreement and to remove this mark from stationery and premises immediately, when membership lapses;

•    ASATA shall be advised of any change of trading name, address or shareholding immediately, when the same comes into effect.

 

THIS SECTION ON VOLUNTARY REQUIREMENTS APPLIES SPECIFICALLY TO ‘HOW TO ESTABLISH A COMMUNITY TOURISM AND INFORMATION OFFICE’

TKZN and the District Municipality, in consultation with CTOs, are developing a set of minimum and recommended standards for CTOs in the Province. CTOs that meet these standards will be provided with an accreditation plaque with the logos of TKZN and its District Municipality. This will enhance the reputation of the CTO in the eyes of the public. There are both prerequisites and recommendations for qualifying as an accredited CTO.

 

The prerequisites are as follows:

•  Good visibility of road signs and of the centre itself;

•  The office should be open to the public for 5.5 days per week and during the lunch hour;

•  Access to a telephone and fax;

•  The centre should display an after-hours illuminated information board;

•  The centre should provide accurate and timely information;

•  Local information provided should be extensive, while regional and provincial information may be more general;

•  Staff should have specialised local knowledge;

•  The centre should have ablution facilities;

•  There should be a display illustrating the services provided by the centre;

•  The enterprise should have the permission of the local or District Municipality to operate.

 

The recommended criteria are as follows:

•    The centre should be open on public holidays and on Sundays;

•    Access to email and a web site and the TKZN tourism database;

•    The centre should provide general information of the national level;

•    Staff should be multi-lingual;

•    Staff should dress in uniforms;

•    Access to adequate parking for cars and buses;

•    Access to public telephones;

•    Access to audio and video equipment.

TKZN and the District Municipality will carry out an evaluation of the accredited CTOs on an annual basis.

Membership of the South African Community Tourism Association (SACTA) is recommended to ensure that minimum standards are adhered to. Membership involves application to SACTA which has certain criteria which must be followed in order to be approved.

 

THIS SECTION ON VOLUNTARY REQUIREMENTS APPLIES SPECIFICALLY TO ‘HOW TO ESTABLISH A HUNTING AND GAME FARM’

The application will require details of general public liability insurance (this type of insurance is to cover your business in the event of someone slipping on your carpet (for example) and they sue you for negligence).

 

The application must be accompanied by a letter from the firm’s accountants/auditors indicating that they are the appointed auditors and that the firm’s financial record books confirm that the company is in a sound financial position. The application must also be accompanied by two letters of recommendation from existing fully paid up SATSA members.

 

If you intend providing accommodation on your farm, the criteria set out in SA Tourism’s voluntary grading system which has been established in terms of the Tourism Act, are also useful as practical guidelines for achieving a specific standard of service. Booklets may be purchased from SA Tourism, which outline the minimum standards required for the grading system. SA Tourism keeps a record of all persons with accommodation establishments who are members of this scheme and of all establishments that are graded and classified in terms of the scheme.

 

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