Part of our Global Entrepreneurship Week celebration Nov 13-19, 2023.
Guest post by Mike Humphrey, Japan
Skiing has been part of my life for as long as I can remember. I don’t know why my parents decided skiing would be our family sport. They were not avid skiers, and we didn’t live in a ski town. Whatever the reason, I was on skis at 3, and my love for the sport began. We would spend every weekend in the winter on the hill.
When I was 15, I became a ski instructor. Skiing is my passion. I love being out on the hill, and I love the mountains.
As I grew older, skiing was still part of my life, but it became a hobby. I went to university and got a job. I started a family, and things were going well. I would ski weekends at our small local hill, but it was slowly being relegated to an afterthought.
That all changed seven years ago when I left my corporate job. It was time for a life choice: continue with my career or make a change. With some savings in our account and dreams of powder turns, I leapt. I left my job and moved our family to a ski town in Japan.
It has been seven years since we moved to the mountains, and it has been filled with joys, challenges, and, of course, skiing. In that time, we have operated two hotels and a restaurant and weathered the storm of Covid. It has been a hell of a ride, and not without its difficulties. Despite the challenges, I would never return to working a corporate job.
Read on to discover the challenges we faced while building a business and our dream life in a small mountain town.
The Challenges of Running a Small Business in a Ski Town
1 – Seasonal Customers
The highs and lows of running a business in a seasonal destination, whether a ski town or a beach destination, are extreme. During the winter, the city’s population triples in size. In the span of 4 months, we get 400,000 tourists visiting our small village of 5,000 people.
The influx of customers is terrific for business but not always for sanity. Imagine the demand for your products skyrocketing for four months and then crashing back to almost zero as soon as the snow starts to melt.
As a business, you need to develop systems and processes to adapt to the extreme shifts in market demand.
Choosing a Business Model
There are generally two models to choose from when you decide what business to run. You can cater to tourists, or you can cater to residents. The best businesses are the ones that can manage to do both.
Catering to Travelers
With this model, you fully embrace the higher-paying tourists. You charge higher prices and focus on optimizing your returns for tourists. During the low times, you minimize your expenses and either shut the business down or drop prices and try to scrape by attracting lower-paying guests.
This is how we operated when we ran our hotel. We were very strategic with our opening dates and only worked during the peak season. During the slow times, we shut down the hotel, went into maintenance mode, and did upgrades.
This worked well when there were lots of guests, but if you have a terrible snow season or a global pandemic, for that matter, you can run through your reserves quite quickly.
Catering to Local Customers
Your goal here is consistent revenue throughout the year. You have to choose your prices to match the local market. Your customer base is smaller during the low season, but during the high season, your revenue jumps drastically.
This is the model we use to run our restaurant. We live and work in the community year-round and provide good food options at reasonable prices regardless of the season.
By establishing relationships with residents and business owners within the community, you can develop a strong clientele that will sustain you throughout the year. Those relationships help you to flourish during the high season when residents recommend your services to travelers in town.
Catering to Locals and Tourists
Matching both markets is a tricky needle to thread, and I haven’t seen many businesses do this successfully. Essentially, you must provide a service that can increase prices during peak times without alienating local customers. The closest we came to this was with the hotel, which had peak and low-time pricing. But this isn’t catering to local businesses; it’s just modifying your pricing to match traveler demand.