3.    Christian Enabler Drivers

Financial planning and projections will use the anticipated financial statement layouts that will be used in the future to report results of operations and balance sheet information.  Planning will utilize the US dollar as its base currency, especially inasmuch as the company will operate out of the United States, initially, and secure its most significant financial investors from the US.  Inasmuch as the author of this plan is a US citizen, US currency represents the most familiar measure of values, which allows for the most effective application of reasonableness judgments to projection results.  Nevertheless, financial projections will also translate to Tanzanian shillings (TSH) using an appropriate approximation of currency exchange rates.

The face of Christian Enabler income statement projections will report anticipated direct costs as “Cost of Revenues”, yielding a tentative profit labeled “Gross Profit” or “Gross Margin”.  These terms may be used interchangeably, but they mean the same thing.  The major components of Cost of Revenues include the following categories of cost:

  • Labor, mostly relating to labor associated with culturally significant activities,
  • Materials, relating mostly to incidental expenses, generally not significantly affecting profitability,
  • Lodging,
  • Meals, and
  • Travel (most significantly, international travel).

However, in order of cost significance, these costs appear to break down, from most costly, to lease costly, as follows:

  • Travel,
  • Labor,
  • Lodging,
  • Meals, and
  • Materials

When projecting financial results, we always want to know our major costs, because generally represent our greatest risk of mis-projection.  In the case of Christian Enablers, the greatest attention to planning the adventure of co-discipling involves the detail itinerary, or daily activities and carrying out of discipleship.  Each major area of direct costs should be accompanied by a keen knowledge of the “drivers’ of cost.  These drivers relate to the units of measure most significant to the cost being measured.  They may also involve component drivers of cost, but from a high level perspective the key drivers, hence risk carriers, should guide us in reviewing and evaluating the overall reasonableness of our planning.

a.     Travel Costs

Of course, the biggest key driver of variable costs involves the driver of revenues, which in our case, involves the projection of Enablers traveling to Tanzania for their mission adventure.  The number of Enablers also directly impact the direct costs of air travel to and from Tanzania by US Enablers.  In our projections, we’ve used an approximate cost of $2,000 round trip cost per Enabler and mission leader.  If that cost changes, then our projection results will change, correspondingly.

Each mission trip will be preceded by an enrollment period and a cutoff of enrollment date.  At the cutoff date, a verification of international travel costs will be made, fees adjusted if necessary, and plane tickets secured.  Therefore, when we market the cost of the trip to potential Enablers, we will caveat the trip cost with a notice that trip fees might change, according to possible changes in traveler air fare.  However, no one likes such changes.  Consequently, we will strongly resist changes to quoted fees and will only change them if absolutely essential to a reasonable projection to the Company’s coverage of costs.

We will also require that a significant portion of Enabler fees be paid in advance, so that risk of trip cancelation rests with the Enabler rather than the Company.  This risk will require full disclosure during the marketing and commitment process.

b.    Labor Costs

The second biggest driver of variable trip costs involves the cost of labor.  Due to its link to daily activity planning, we include the cost of 1 day safaris with labor costs, rather than travel costs.  This makes up the greatest component of labor costs, by far (about 83%).  Other variable costs involve the minor compensation of mission leaders (mentors or managers), commissions to those who referred potential Enablers to our program, and a cinematographer to help document through video and photo the entire mission experience.  These total about 12% of variable labor costs.  These will also vary mostly based upon the number of Enablers who make the trip.

c.     Lodging and Meals

Although Tanzanian living conditions generally reflect a much less affluent way of life than that of the anticipated Enabler, we believe that lodging and meals will require an American standard of travel experience, rather than that which a typical Tanzanian would expect.  The choice of a standard of lodging and meals responds to a conceptual planning struggle between these alternatives.  However, considerations of traveler expectations, safety and security, and convenience of group gathering for fellowship, seemed to demand the utilization of a hotel type of base, rather than a rented compound of homes.  In addition, it also alleviates the necessity to plan and prepare more carefully for dietary requirements that might not be uniform between travelers.  Reliance upon professional food preparation and service will better assure a dietary standard that reflects adequate assurance of safe preparation, sanitary environment, and comfortable elements of seating and table settings.

Taken together, lodging and meals represents a variable cost per traveler similar to projected labor costs.