SUP Baddeck, a Closed Chapter Re-Opened

It was Fall and Colin had just settled into his new apartment in Toronto. After exchanging the rights to SUP Baddeck to a man named James, Colin assumed his time with the business was done.

A few years later, the unfortunate news surfaced: James had died. His wife was unsure what to do with SUP Baddeck and after some consideration decided to give the operations rights and ownership back to Colin.

"Jeez, this business is like a boomerang" Colin thought as he hurled the business away just for it to come back. He remembers the nightmare experiences he had delivering paddleboards across Cape Breton and how, a number of times, he almost caused multiple car accidents by not tying his boards down enough. If SUP Baddeck were going to come back, some changes would need to be made.

That Gut Feeling: The Pros & Cons of SUP Baddeck

SUP Baddeck was a love/hate company for Colin. Thinking back to his experience, he identified the following pros and cons:

Pros

Easy business model

The customer segment is already know (healthcare professionals)

The business had positive brand reputation

It was a job that allowed Colin to stay healthy and active

The sunsets in Baddeck were great and Colin would often take the equipment out in the evenings for moonlight paddles with fellow tourism providers in Baddeck

Cons

There were a lot of cancellations due to unpredictable weather

Due to unique wind patterns that make Cape Breton a desired destination for sailing, many customers blew away, requiring rescue

Delivering boards was a painful task

After agreeing on a price and delivering boards, some customers would try to barter again in person after Colin already made the drive to their house with their order

Colin lives in Glace Bay and it would take 1.5 hours to drive to Baddeck, Twice a day

The season only runs from July 1 to September 30 which means there's only a short amount of time to make money

The Products & Services of SUP Baddeck

SUP Baddeck had multiple revenue streams. Please reference the table below for a summary of those items and their percentage of revenue.

Product/Service Item Number of Units Sold in Previous Season / Revenue Stream Amount / Percentage of Revenue

Kayak Rentals ($25/hour) 417 / $10,425 / 24.25%

Kayak Lesson & Tour ($50/person) 70 / $3500 / 8.14%

Paddleboard Rentals ($25/hour) 550 / $13,750 / 32.00%

Paddleboard Lesson & Tour ($50/person) 66 / $3,300 / 7.68%

Buying Kayaks / Paddleboards ($1500/package) 8 / $12,000 / 27.92%

Total $42,975 100%

Company Finances & the State of Operations

Looking into the business's finances, operations seemed to have been pretty staggered. Weekends exploded with revenue growth while weekdays earned little-to-no revenue. Furthermore, some weekends had $0 revenue come in. Why was this? Thinking back to his previous time operating SUP Baddeck, Colin recalled how many of his customers were working Monday to Friday and were unable to journey to Baddeck during the day. As for those no-revenue weekends, it turns out James left a few comments, "it's raining cats and dogs!"; so weather was the likely explanation why those weekends were quiet. The business required about $17,000 to operate for a season. It's fleet consisted of 10 kayaks and 7 paddleboards. From what was available in the bank accounts, $1,200 was the excess cash that could be used for investment. If Colin were going to make changes to the business,, he would need to invest in the business himself. Checking his accounts, Colin could invest $20,000 into SUP Baddeck. If he wanted to move more aggressively on development, his friend offered to invest an additional $20,000.

Legal Considerations

SUP Baddeck was insured through the Personal Insurance Group in Sydney Nova Scotia. The insurance would cover SUP Baddeck in the event someone died, up to $1,000,000 dollars.

Furthermore, a policy option was available to Colin through his affiliation with Paddle Canada as a registered instructor. Under this policy, Colin was covered up to $2,000,000 in the event someone died IF the business and person were operating under acceptable conditions which Paddle Canada depicts as being 22km/hr winds.

If Colin were to take a group out in winds greater than 22km/hr, he would not be covered by the Paddle Canada insurance policy.

In an analysis of weather data spanning a 5-year period, the average percentage of days SUP Baddeck would need to seize operations due to weather was 18.55%. To be clear, this means that out of the total amount of days SUP Baddeck would be open for business in a season, 18.55% would be cancellation days to which the business could not operate or provide lessons, tours, or rentals.

A Deal-Sweetener if Moving Operations to Sydney

Some local authorities heard SUP Baddeck was reassessing operations. In interest to develop the Sydney Waterfront, the Port of Sydney reached out to Colin with a deal.

If expanding operations to Sydney as either (1) a rebrand (moving the business and renaming it to SUP Sydney), or (2) a sister company of SUP Baddeck (managing 2 locations), the Port of Sydney would offer Colin 1 year rent-free for waterfront property with an access point to allow customers to enter the water.

The location came equipped with a shed for storage and a booth to complete paperwork and waivers for customers. There were also public washrooms guests could use if needing to change their clothes. In addition, the Port of Sydney would aid in the promotion of SUP Sydney, helping kickstart its launch in Sydney.

Furthermore, the Port of Sydney offered to give the rights to a former summer festival called Rock the Dock to SUP Baddeck, which was an outdoor weekly concert for citizens of Sydney. Many residents of Sydney recall the days of Rock the Dock commenting "Rock the Dock was a great way to end the week. They had a wet and dry area where they could serve liquor and the bands were awesome!".

SUP Baddeck could become the organizing group of Rock the Dock bringing it back to life in the community.

The Port of Sydney's only caveat on the deal was that they wanted to sell their merchandise with the Port of Sydney logo. SUP Sydney, the possible branch, was welcome to sell its own merchandise but the Port of Sydney wanted to stock their products amongst SUP Sydney's.

The Big Questions of Re-Starting SUP Baddeck

Take a look at the questions below and provide your analysis and answer. Use whatever tools or methods of analysis you see fit (SWOT, PESTLE, Breakeven Analysis, etc.).

1. What options do you feel exist for this business scenario?

Should Colin close shop? Use the $20,000 for a different opportunity? Or should he expand out to Sydney, changing SUP Baddeck into SUP Sydney? If none of these, what options do you think exist?

2. If there was 1 big factor affecting the entire validity of this business model, what is it?

SUP Baddeck entails risks that most other businesses don't need to worry about. What are these unique risks for this industry and why would they cause such a large impact to revenue and operations?

3. Can SUP Baddeck Replace a Salary?

After closing SUP Baddeck, Colin moved into a career focused on marketing and business development. Working with numerous startups, he developed an understanding of the nature of new businesses and the growth challenges they would experience. Colin was employed at an information security company fulfilling the role of Marketing Manager. In addition, Colin operated a consulting firm offering technical marketing services to software companies. In a slow year, Colin would earn an annual salary of $70,000. In a busy year, Colin would earn an annual salary of $100,000. With SUP Baddeck possibly coming back into the picture, would it make sense for Colin to quit his job or consultancy in order to operate a paddleboard business?

4. What would the business model look like if hiring employees to run the business?

What if Colin were just the owner and hired a manager and staff to run the business for him? That seems like a possibility but given the cashflow of the business, might not be a viable solution.

5. Perhaps a hint, but Rock the Dock was stated as being a previously popular outdoor summer festival (before it ceased operations). Why might have Rock the Dock closed down all those years ago? What risks might exist within it?

If Rock the Dock was so popular and people enjoyed it, why did it go away? We don't have much data on Rock the Dock, but think about event management and what sort of factors might impact that space; speculating with what you think could have happened.

6. Is all of this worth the effort?

There are a lot of factors at play here. Would all of this be worthwhile in the end? Why or why not?