The second instalment of nzherald's Business Summer series about resilient SMEs.
KEY POINTS:
Fifteen years ago David Francis swapped his suit, tie and a career in chemical engineering for hiking boots, casual gear and the New Zealand sightseeing business he set up with his American wife, Kim.
It may sound like an enviable switch to a more relaxed lifestyle, but running Black Sheep Touring Company was no walk in the park, a view Mr Francis held before venturing into tourism and one reason why it has survived in an industry where he has often seen companies shut up shop almost as quickly as they open.
"It panned out to our expectations," Mr Francis said.
"It's tremendously hard work and it does take time and money."
Like many small start-ups, Mr and Mrs Francis in the early days ran every aspect of the Black Sheep business from managing the accounts to conducting tours and everything in between.
But despite the long hours and hands-on routine, the Francis duo doesn't regret making the "leap of faith" all those years ago because the ups far outweighed the downs.
"It's been a great ride."
"It's been a laboratory of understanding people and it has given me a heightened appreciation of New Zealand as a country. I realised just how amazing it is" here.
Mr Francis' personal highlight over the years has been watching his guests lift in confidence during the course.
"They come away enthused and you can see people grow."
The Nelson-based operator of 9 to 22 day tours for groups of up to 12 people has come a long way since the early days when the Auckland-based bedroom of Mr Francis' brother doubled as Black Sheep's head office.
Tourists that sign up from Black Sheep's key American, English and Australian markets has grown more than fivefold since its inception to 100 a year, and annual turnover is now north of $1 million.
Mr Francis and his wife - who also held a corporate level job before forming Black Sheep - came up with the idea of the business while living in Michigan, where they rubbed shoulders with many +35 year olds who were keen to visit New Zealand.
Believing New Zealand's tourism sector didn't cater specifically to the maturer groups, Mr and Mr Francis packed their bags and returned home in 1993, jumped in their old silver Hyundai and began driving around the country for months forging the ideal sightseeing route for their clients who these days include prominent business and entertainment figures.
Mr Francis said the name 'Black Sheep' was perfect for the company because it resonated with their move away from their corporate comfort zone careers for a sector they had little experience in. It also reflected the type of groups their business targeted.
A "huge" challenge for Black Sheep has been the volatile exchange rate over recent years as it makes it difficult for the company to manage pricing, according to Mr Francis.
The high New Zealand dollar against the currency of the US, its biggest market, is also creating a headache for the business that relies on the
"expensive" exercise of marketing and word of mouth to lift its profile. The New Zealand dollar touched a record 81 US cents last year and has averaged above 73 cents in the past 12 months. About 60 per cent of Black Sheep's customers are from the US.
"Actual profitability is compounded by the high dollar and some of the growth from the US market wasn't there."
According to Statistics New Zealand, the number of visitors from the US fell 3.5 per cent from a year earlier.
Sheer survival in the tourism industry is an ongoing challenge for Black Sheep as is labour, though the company has been lucky in retaining good guides to conduct the tours while he takes care of steering the business end.
Mr Francis is adamant that the key to a business's longevity in the tourism industry is to understand the people coming to your market.
"It's a really fundamental thing."
"Otherwise it's difficult to design a trip to fit their needs."
Asked whether he found it easy running a business in New Zealand, Mr Francis replied that it had less red tape than other countries.
"New Zealand is more simple and reasonably transparent when we need to get things done,"
In certain parts of Australia and the US there is tremendous compliance."
