Are you someone that has a lot of business ideas? Do you wonder if the could become profitable ventures and if you could be the person leading the charge?

I have these thoughts all of the time and, in face, I’ve been having them for the past 10 years or so. Whether it was offering my landscaping skills to neighbors or finding a solution to education in rural South Africa, I’ve always been intrigued by the concept of building a company in order to solve a real problem.

It’s my inclination that many people have these thoughts, but they don’t have the proper education or confidence to act on them. They’re not confident in the customer market or they aren’t experienced in managing the financials of a business. Doubt sets in and their potentially value adding business idea floats off into thin air.

In this column, I’m going to introduce a new business idea that’s come up in my personal life and walk you through the mental process of understanding how the idea could turn into a profitable business. The idea that we will be examining today is the mystery vacation.

The Mystery Vacation

About 1 year ago, my girlfriend showed me a picture of her friend at an airport dressed up as Gandoff from the Lord of the Rings. Familiar with the character? In the background of the photo was another person dressed in complete outfit as Golem. Within the photo was airport security, TSA agents, and other people waiting in line at the airport. Not a situation you find yourself in every day.

What is it?

I couldn’t help but to laugh and ask what was happening. She explained that her friend was going on a mystery vacation to Budapest with her soccer team and that the theme for the trip was Lord of the Rings.

I was still a bit lost, so I asked “what is a mystery vacation?”

She replied that a mystery vacation is a vacation organized by one person or couple for a group of friends. They plan everything for the group trip without telling them where they’re going until they get to the airport.

Are there businesses already doing it?

Fast forward to today and my girlfriend and I are organizing our first Mystery Vacation for a group of our friends from Orlando.

When we first started organizing the trip, that entrepreneurial mind of mine started wondering if other people had already built businesses around this core idea. Of course it had already been done, but there wasn’t much competition. When I searched “mystery vacation” on Google, I only found 3 or 4 companies that specialized in the service. Some were more focused on trips within the United States and others were sending groups all around the world. Intelligently, each company had found their niche within the mystery vacation market.

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Breaking Down the Business of the Mystery Vacation

So here we are. We have an idea and we’ve performed some initial research. Many people would stop here and simply dream of what their amazing idea could become. We’re going to take it a step further. Because, why not?

Question #1: What Value Are We Offering?

The mystery vacation offers groups of people the ability to go on a vacation together where they don’t have to plan anything and they get a factor of surprise spun into the vacation.

Question #2: Who Would Be Interested in a Mystery Vacation?

It’s my inclination that people who would be interested in mystery vacations would posses the following characteristics. This is based off of my initial research and nothing else. In order to fully understand the customer market, we would need to get in touch with these potential customers and ask them what their real thoughts are.

Key Characteristics of a Mystery Vacationer

  • Employed full time with significant discretionary income and vacation time
  • Enticed by the idea of surprise and adventure
  • A low level of things (children, pets, responsibilities, etc.) that would limit their time available to travel
  • Trust in startups

While the clientele may widely vary, I think that this customer profile would be an ideal fit for the mystery vacation. I’m going to go out on a limb and say that the business would be targeting millennials between the age of 23 and 35. They’re out of college, earning a decent salary, and making memories with close friends and family.

Question #3: What Would Be Required to Execute the Operations of a Mystery Vacation Company?

At the core of the idea, we have a very clear-cut purpose for each mystery vacation: successfully send the group of people on a vacation to a mystery location that all participants will enjoy and value at the price of what they are paying us to plan it for them.

Understand the customer

  • What’s their budget?
  • What climate do they prefer?
  • What type of activities do they like?
  • What’s their age range?
  • Where have they been before?

Okay, so we’ll need someone on the team that is focused on customer research.

Before the customer research team, we’re also going to need a sales team that is focused on signing up new customers to the program.

Build awareness

Alongside the sales team, we’ll need a marketing team working to grow awareness of the company and forming the foundation of a brand that will appeal to our customer market.

Plan the trip

Okay, now we know about our participants for our first trip. Now we need to plan the trip. This is going to be another team that is constantly searching for travel deals, hotel deals, unique restaurants, etc. that we can send the mystery vacationers to. This will be our vacation research & planning team.

Working together, the vacation planning and customer research team choose the location for the mystery vacation. They book flights, accommodations, and outline all of the activities that the group can participate in while at their mystery location.

Build profitable pricing plans 

Now what? Well, we should probably start to tell the customers about their trip and collect payment. We’ll talk about finances in the next section, but we’ll need a finance manager who is responsible for setting the pricing of the trips and making sure that the team stays within the budgets so that the company earns a profit on each trip planned.

Send them on the mystery vacation

Fast forward to the day of the trip. The group congregates at the airport and receives their information about the vacation. Euphoria! They’re off to their mystery vacation and they have all of the information that they could possibly need to navigate the area and make the most of their vacation.

Provide support

What happens when they run into problems? We’ll probably need a customer support team to make sure that all runs smoothly. Finally, that support team will follow up with the group once they’re finished to get honest feedback on the trip so that the team can make improvements for future mystery vacationers.

Alright, we’re getting somewhere now. Ten minutes ago, we only had a blip of an idea. Now, we have an understanding of the team that would be necessary to run the entire mystery vacation operation. When you gain a stronger understanding of the action steps and the people that need to be involved, your confidence boosts.

Question #4: How Does the Mystery Vacation Make Money?

When thinking about any business idea, you can’t overlook whether it has the potential to make money or not. If you crunch the numbers and the long term profitability or ability to scale isn’t where you’d need it to be, it may not be worth pursuing that particular idea.

Let’s go through a quick breakdown of the financials of the mystery vacation. To start, let’s assume that you and one other person are the only ones working on the business. You two are covering all of the roles that we outlined above making payroll costs quite low to start. We want to make you both some money, but you don’t have the responsibility of paying employees yet.

Mystery Vacation Financial Example

Main Trip Costs to Customer

  • Flights: $300/person domestic and $1,000/person international
  • Accommodation: $50-$100/person per night
  • Food: $25 per meal = $75/day per person
  • Activities: assuming 1-2 activities on the vacation @$100/person = $100-$200/person

On our end, it doesn’t cost much other than research time to book these particular aspects of the mystery vacation.

Potential Pricing Models

In order for the business to make money, I see three major opportunities.

Opportunity #1: Charge a flat % for organizing and planning the trip. 

Let’s say that you have a 4 person mystery trip that you are planning. In total, the trip is going to cost $4,000 for all four vacationers. Since you are performing the service of planning everything for them, you charge an additional 20% for your services. You charge the group $4,800 for the entire trip equating to $1,200 per person.

You and your co-founder make $800 on the trip just from your services.

Opportunity #2: Credit card points and rebate sites

This is a business where you are going to be charging thousands of dollars of travel, accommodations, and other adventures every month. There is an amazing opportunity to make money through the use of advantageous credit cards and rebate sites. Let’s break it down.

On the $4,000 trip, you pay for everything using a variety of credit cards that earn special percentages on travel and accommodations. Let’s say that you earn 5% on the $4,000 that you spend on your credit cards. That’s an additional $200 that the business makes.

On the $4,000 trip, you also find rebate sites (MrRebates.com, eBates.com, Checkout with Chase) where you can earn another 3% on all of your purchases. That’s an additional $120 that the business makes.

In addition to the $800 that you make from the services fee, you earn $320 from credit cards and rebate sites. Our running profit from the trip is now $1,120.

Opportunity #3: Upsell additional services

While your mystery vacation service will come with a set list of features for all trips, there are always additional requests that individuals have when they are traveling. Talk to your customers and find other areas of the business where you can offer your services. Add a standard percentage to these add-ons as well and see your earnings increase.

Gross Profit Generated

Based off of these three opportunities assuming that you won’t be starting with additional services, the business could make $1,120 on its first mystery vacation planned. The gross profit on the trip is ($1,120)/($4,800) = 23%. Not too shabby. If you can complete the planning for the first trip in 2 weeks, you and your co-founder could each make $560 each.

Determine Scale

How many trips can you plan in 1 month with just the two of you? Let’s say that you can pull off 4 each month. At $4,000 per mystery vacation, you are looking at the following financial table.

Revenue from trip: $19,200 ($4,800*4)
Revenue from cc’s and rebates: $480 ($120*4)
Total revenue: $19,680
Costs: $16,000 ($4,000*4)
Gross profit: $3,680

With that monthly income, you could easily begin to pay yourselves a small salary and hire a core team of supporting individuals to help grow the business.

Conclusion

A lot of startup theories and business model generators encourage immediate action in terms of building your product or business. It’s my belief that you first must understand the business in its entirety before you can intelligently tackle its startup and growth.

The Mystery Vacation company definitely has the potential to become a niche business that generates regular monthly income for the people that are running it. However, it is very dependent upon the people that are planning the trips. If the Mystery Vacation company wanted to take the business to the next level, it would need to look into developing software that would make their internal operations much more efficient and cost effective.

This is an activity that I enjoy performing for ideas that pop into my mind. If you’re thinking about a particular business idea and want guidance on determining whether it can become a real company that generates income for you and a set of employees, reach out.