Classic Tours, Inc.: Financial Projections for Starting a Business

3 Pages Posted: 5 Apr 2010

See all articles by Richard Brownlee

Richard Brownlee

University of Virginia - Darden School of Business

Abstract

The purpose of this case is to allow students to confront the issues related to starting a new service business, such as evaluation of the business concept, identification of different customer segments, and assessment of the comprehensive service package necessary for long-term success in a competitive service industry. Students are also asked to record projected transactions, prepare projected financial statements, and perform a break-even analysis. It is intended for use early in a course on financial accounting and reporting.A companion case, “Classic Tours, Inc.: Strategic and Financial Issues in Starting a Business,” (UVA-C-2141), was subsequently written for use in such courses as Starting New Ventures or Entrepreneurship, where greater emphasis would be placed on the strategic considerations and somewhat less emphasis would be placed on the financial details.

Excerpt

UVA-C-2106

Rev. Sept. 3, 2013

CLASSIC TOURS, INC.:

FINANCIAL PROJECTIONS FOR STARTING A BUSINESS

In April 1994, Diane Monroe reviewed her plans for the September 1 opening of her educational travel agency in Fredericksburg, Virginia. Diane had received her undergraduate degree in history from Capital University in 1986. She had lived in Columbus, Ohio, from 1984 until she and her husband, Larry, moved to Fredericksburg in August 1993. He had taught at Ohio State University prior to joining the faculty of Mary Washington College at the end of the 1993 academic year. Diane had worked for three years following graduation at a travel agency in Columbus. In October 1989, she had joined a travel agency specializing in educational tours. During her three and a half years there, she had enjoyed working with middle school teachers and students and had learned a lot about the educational tour business. She had also developed strong relationships with about 25 teachers who had organized and led student tour groups each year from 1990 to 1993. When they had learned that Diane was leaving the agency, most of these teachers had said they would like to do business with her again if she ever worked for a similar agency.

After six months of searching for suitable employment in Fredericksburg, Diane decided to form her own educational travel agency, Classic Tours, Inc. Because of her proximity to Washington, DC, she thought it best, at least for a while, to restrict her business to arranging student trips to the nation's capital. She immediately contacted her former clients and was pleased to learn that 20 of them were delighted to have the opportunity to do business with her again. Diane spent the next three months planning her agency, interviewing potential employees, establishing a banking relationship, looking for a suitable office location, and meeting with Washington hotel managers, bus owners and operators, escort personnel, and other people who would be an essential part of her comprehensive service package.

. . .

Keywords: break-even analysis, financial-statement objectives, new-venture management, small business

Suggested Citation

Brownlee, Richard, Classic Tours, Inc.: Financial Projections for Starting a Business. Darden Case No. UVA-C-2106, Available at SSRN: https://ssrn.com/abstract=1583286

Richard Brownlee (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4800 (Phone)

HOME PAGE: http://www.darden.edu/faculty/Brownlee.htm

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
11
Abstract Views
1,151
PlumX Metrics