It started with a dance class. Kieren Gaul was an Australian financier and a former member of the Australian national ski team. Paula Skinner Gaul was a strategy consultant with the Boston Consulting Group, working in Sydney, and a former officer in the Canadian army.
Both had signed up to dance in the closing ceremonies of the 2000 Olympics in Sydney. After months of practice together, they became a couple, with a plan to move to Canada and live in the mountains. So they sold their house on the beach in Sydney and settled in Rossland, B.C., where they bought the Red Shutter Inn in 2003 and started to build Big Red Cats, a cat-skiing business.
They are now co-owners of what they say is the world’s largest cat-ski operation. They receive more than 2,000 customers annually, paying for packages that start at $350 a day, generating more than $1-million in annual revenue. The Gauls, both 42, are living the lifestyle they once only dreamed about.
What is cat skiing?
Kieren Gaul: [It’s]kind of like heli-skiing but instead of a helicopter to transport people to fresh powder, we use a large snow cat [tracked vehicles designed to move on snow] It’s all back-country skiing. Every run is into virgin powder snow.
How big is the Big Red Cats operation?
Kieren Gaul: There are around 78 square kilometres, which is about twice the size of Whistler Blackcomb. We have eight main mountains, six snow cats and around 25 staff, mostly ski guides, plus snowmobiles and buses to keep it all running.
How did you start the business?
Kieren Gaul: I came up with the idea of starting up a cat ski operation. At the time, I was thinking strategically about the area. Rossland is right on the mountain and it's accessible by government highway, so it's easy for customers to get here. The ski hill was for sale and I thought maybe I could find a bunch of investors and buy it.
So I did a business plan, but somebody else bought the ski hill because they had a lot more money. But a cat ski operation had been part of that business plan, in the same way that Fernie, B.C., had a good cat ski operation called Island Lake Cat Skiing.
The land around Rossland was quite similar, so the geography was right for it, and there wasn’t a cat ski operation. I thought the most interesting and fun part of my business plan was the cat skiing, and it was small enough that we could do it on our own. So that’s what we did.
What’s your background?
Kieren Gaul: I have a masters degree in applied finance from Macquarie University in Sydney and worked in Australia in treasury finance. I organized debt and manage financial risk for several companies. I was good at finance but had lost my enthusiasm for it but because I had that skiing background, I thought it’d be great to live in the mountains. We were going through a personal transition of starting to have kids and thought it would be nice to be in a small town with lots of good recreational opportunities. So we decided to start a business and give it a whirl.
Paula grew up in London, Ont.. After she left the military to do an MBA at the University of Western Ontario, she went sailing in the South Pacific for about six months, and came to Sydney to get a job. We ended up in dance class together and that was it.
What was the biggest challenge when you started?
Kieren Gaul: We had no idea what we were doing. We’d never run a cat ski operation before and we didn’t know how to build the infrastructure that you need for cat skiing which is a bunch of snow cat roads. It’s tough doing a business when you don’t know what you’re doing initially – like hiring the right guides to do the job.
The community welcomed us so we got a lot of local support and advice, which really helped. There was a lot of paperwork, including a 120-page government application outlining the impact on wildlife and area residents. But we’re pretty fast learners so we adapted quickly. We’ve gone from not knowing anything to being the biggest cat ski operation anywhere in the world. We get lots of guests coming back each year – probably 70 or 80 per cent are repeat business. You get to know people and become friends with them.
How much have you invested?
Kieren Gaul: It’s been progressive. The Red Shutter Inn cost $375,000 and we spent about $400,000 initially to get enough snow cats and build the infrastructure. We’ve reinvested well over $1.2-million over the last six or seven years. We make enough in the winter to carry us year round. We pay ourselves a wage. We keep reinvesting the surplus, so we can keep improving to get the best product that we can.
Paula Gaul: We did have to find an angel investor to help us grow but now we have twice as many customers as we did in 2007. We used it for purchasing more snow cats to improve and double the size of the fleet, building the maintenance facility, and to increase the size of the road network and skiable area, and improve the run quality.
Are you making money?
Kieren Gaul: We’re making a bit of profit. The annual revenue is about $1-million for the cat skiing plus some more for the accommodation. The ski tours make more than the inn. The fixed costs are high with cat skiing, but after a certain number of customers, the costs drop dramatically. The inn has low fixed costs, but the profit margins are less. We’re in a good situation in that we’ve always been cash-flow positive and have continued to reinvest in the business every year. We did a bit of legwork before we opened so it’s probably been eight years now. We’re making a living plus reinvesting and improving each year.
Paula Gaul: Both costs and revenues have been higher than expected, and while it hasn’t made a huge profit, it’s been a great business to be in from a lifestyle perspective.
Does it work having your spouse as your business partner?
Paula Gaul: I’m married to a really good person so it works out okay. I think it would be a much more difficult challenge if we both weren’t running the business together because it’s so all-encompassing. We understand because we’re both running it but if one person was doing it and the other wasn’t, it would be really difficult. We really don’t talk about anything else. That’s all there is – and our daughters who are 10, eight and six. We talk about our kids and business. In spring, we might talk about something else.
Kieren Gaul: It’s fantastic. There’s so much going on that we’re communicating from first thing in the morning till late at night. It would be difficult to make it work without that sort of partnership.
Who does what?
Kieren Gaul: I do all the guiding outside stuff and Paula does all the inside administration and marketing. I’ll help with some of the office things, but under her direction. When it’s about the outside, I direct what we’re doing. Out of 25 staff, 18 or 19 are ([seasonal]guides. Then we have a couple of lodge managers, an office person, mechanics and snowcat drivers.
How do you make decisions?
Kieren Gaul: We discuss the issues. If it’s in a sphere that Paula looks after with administration or marketing, it’s her final decision. We’ll discuss it but ultimately, it’s her decision. If it’s in my sphere of the guiding and outside, we’ll discuss it, but I’ll make the decision.
What’s challenging about running the business?
Kieren Gaul: The most difficult thing is the seasonality issue. We’re only open for guests from December to March, and maybe a few days in April. We’re so busy then trying to keep the whole thing moving that it’s almost impossible to step back from it. That’s not the best in terms of management. You need to pull back a bit but it’s so busy that you can’t. For those four months in the winter, we’re working 12 to 16 hours days to make it all go.
What about work/life balance?
Kieren Gaul: In the winter, we don’t have a personal balance but we make up for it in the spring and summer. We’re only open for winter guests so we’ve got a lot of flexibility with our time. In the spring, there’s a lot of clean-up and getting organized. In the summer and fall, we’re out with the chain saws opening up new areas, with new roads and runs.
Who’s your customer?
Kieren Gaul: Roughly, 85 per cent are men, mostly 25 to 50 years old. Calgary and Seattle are the main cities our customers come from. Then Boston, Toronto, Denver, Portland and Vancouver. We also get a lot of people from Norway. A few came some years ago, told their friends and it ballooned from there. It’s just word-of-mouth; we don’t have a marketing strategy with Norwegians but they just keep coming. We make sure they have a good time so they’ll tell more friends. Another thing that’s been lucky for us is that the ski technology has gotten much better in the past few years, so it’s much easier to ski on the back country snow and powder. That’s probably expanded our market enormously.
Paula Gaul: A lot of baby boomers who may have thought it was too extreme to go cat skiing actually find it easy. They have these big, fat-shaped skis that are really easy to turn. They don’t need to have really strong legs any more, so it’s extended the lifetime of a skier. We have people in their sixties and seventies coming out who are in great shape.
It’s very social. We’ll have guys coming in doing bachelor parties because they want to do something fun with their friends. It’s a great bonding experience so they end up coming back every year. We’ll take teenagers out from 12 and up ,but they have to come with their parents if they’re minors.
What is your marketing strategy?
Kieren Gaul: We don’t do much advertising because we don’t have the budget for it ,but we do ski shows in the city where we can talk to a lot of customers who are interested in skiing. We’re lucky that we have a product that is so desirable that we’re able to trade with a lot of shows without having to pay too much. That works out well, but the best thing is word of mouth.
Paula Gaul: The Internet and having a website are key. It would have been a lot harder to do this before the age of the Internet. We do a little bit of Google advertising but having an up-to-date website and our Facebook page attracts a lot of people. I’m pretty astounded at the reach numbers I’m getting. Social media helps with the word of mouth. People post pictures of themselves cat skiing in deep snow, tag themselves and tell all their friends. If you were running this business 30 years ago, it would have been a lot slower to grow. Our whole segment of the ski industry has grown quite a lot.
Isn’t it dangerous? What about avalanches?
Kieren Gaul: It’s very safe. There’s a certain level of danger that we can’t eliminate but in the course of cat skiing in the last 40 years, in B.C., across all the operations, there’s been two avalanche fatalities. We have guides regularly monitoring the area and measuring it. It’s fairly controlled. It’s not just a gang of guys heading out for the back country and hoping for the best. All the guides are highly qualified to do different roles.
What’s your advice to would-be entrepreneurs?
Paula Gaul: Try to secure a very large line of credit before you quit your job because you will not get any money afterwards. We actually secured very large lines of credit before we quit our jobs. A couple of times we looked back and said, hmmm, that was handy, because you’ll have opportunities where you can grow. If you have the money, you can jump on it. If you don’t, you’re stuck. Sometimes you have to grow or you die.
Kieren Gaul: In general, it’s better if people start something they know something about. We had no idea what we were doing with cat skiing. I had contacts in the skiing world but we were fast enough learners that we didn’t go out of business. The wise thing would have been to work a few years in a cat operation that was really successful, get to know everything about it and then do it.
Paula Gaul: But then if you’re doing that, you probably won’t have the money. That’s the Catch-22.
Special to The Globe and Mail