Snow Planet is a very cool startup success – one with a succession plan.
Everybody loves the idea of a startup. The thrill of the risk. The sheer courage and vision of the founders. The prospect of one day making it big. Startups are cool.
And when it comes to startups, you don’t get a cooler example than SnowPlanet, New Zealand’s first indoor ski facility. Inside it’s very cool, at minus 5 degrees. Outside, it’s aesthetically cool, with its giant shed, bizarrely angled up the hill like a barn built by Picasso. And as an idea, it’s awesomely cool, skiing all year round, 15 minutes from downtown Auckland. The innovative design of the facility makes it unique in the world for its energy efficiency and low cost of construction. The business has been a success with slope visitor numbers of 175,000 to March 2005 exceeding the expected 130,000 for the first year.
All in all, it’s a very cool startup story.
So it’s a little surprising to find that founder and managing director Eduard Ebbinge was already thinking about the end, right from the beginning.
“Whilst exit strategy represented an important part of the business case, I can’t say that it was item one or even two on our list. But a succession plan, and a method of maximising the value of the investment, is certainly a top priority for us.”
Ebbinge is the face of SnowPlanet and its key driver. He left a successful career in corporate finance and has thrown his family’s assets into the high-risk venture. Behind Ebbinge is a group of private investors who have invested millions to make SnowPlanet the success it is already.
But investors like these don’t want to see a business plan with “in the never-never” in the title. “We have some very clear goals about where and how we can drive the value from this business.”
For one thing, the huge investment in the facility, which includes some unique and expensive snow-making technology, requires Ebbinge to drive traffic through the gates. “It’s very important for us to leverage our location. We have to create a destination for Aucklanders to come to. That means thinking of this whole area as an entertainment zone.”
SnowPlanet’s location may turn out to be its true genius. Just north of the CBD and located in farmland next to the motorway, the facility avoids the not-in-my-backyard syndrome and yet acts as a giant billboard for itself. Next door, an existing gokart track and a luge under construction are helping the creation of an entertainment cluster. There’s plenty more land for expansion too. Second, the future potential of SnowPlanet is in the brand.
Ebbinge won’t commit to agreeing with me but he smiles when I say that it’s not hard to imagine SnowPlanet Sydney, for example. Part of the deal is convincing Aucklanders that all year skiing could be as do-able as attending a Super14 game. And probably more fun. For someone who has been advising both sides of the merger and acquisition business, it’s thrilling to have his own skin in the game. “This is a long term investment. It’s not like an Internet business, for example, where the growth is fast and costs are low. It’s operationally complex and what we need to do now is improve, enhance and grow.”
SME for success
SnowPlanet’s an SME business, by any definition. But small doesn’t mean small-minded: it’s a good example of how “big company thinking” can be applied to any operation. Management experts are calling these sort of companies “gazelles”, for their ability to move so fast. (see the next story “Be Small. Act Big”).
“It’s never too late nor too early to begin to plan for growth – and an essential part of the growth story needs to be a succession plan,” says Craig Fisher, a partner and director with accounting firm Hayes Knight.
By succession, Fisher doesn’t just mean selling the business. “Succession planning is really about creating options: to find new investment partners, to list on the stock exchange, to pass it on to another generation, to sell the business outright or through a management buy out or even just to take a step back from the dayto- day involvement. These are all the end result of a succession plan. A good succession strategy begins with the question: ‘what do you want to achieve with this business'?”
Sound simple? Yes, but Kevin Reilly, ASB National Manager Key Accounts, says it’s amazing how few companies and their founders have a succession plan in place or have even talked about it with their partners and spouses – let alone their bank.
“So many business people leave the succession question to the end. But we recommend putting it at the beginning. At its heart it has the question: what is this company for, to a create job for me and maybe my spouse? Or is it to create some serious wealth?