By Andrew Patterson
Turning your passion for recreational sport into a business sounds like an appealing enough idea, particularly if you happen to be someone who enjoys nothing more than spending your weekends engaged in multi-sport.
With low barriers to entry, a growing interest in health and fitness and seemingly unlimited demand for events, creating a lifestyle business is an appealing option for many people.
However, the reality of making such a business pay is often an area where many of those attempting such a venture often trip up.
Aaron Carter, founder of Total Sport www.totalsport.co.nz is one such exception.
Deciding to follow his passion for outdoor recreation in 2000, he has successfully built a business around a core following of loyal recreational enthusiasts (the term customer doesn’t seem to fit particularly well) and developing a reputation for events that are professionally managed and run to a high standard.
After completing his commerce degree in the late 90s it wasn’t long before an opportunity presented itself that Carter say allowed him to literally combine business with pleasure.
“As a kid I was very into sport - more traditional sports though. I had grown up playing rugby, cricket and soccer but was also very much into the outdoors.
“Coming from a boarding school background we did everything we could to get outside and play sport with our mates. It was very much a culture that was very much ingrained in us. I admit that being outdoors was definitely something I liked more than perhaps applying myself to my studies.
“I managed to stretch a commerce degree out over nearly a decade with a few overseas trips in-between but I came back and got this one job working in an event management role at Sport Auckland, which is part of the Regional Sports Trust network.
“That was really my apprenticeship. I learned how to put events on, learned a little bit about the sports industry, recreation that kind of thing, and then just felt this pull to do something for myself.”
A lucky break
It didn’t take long for the idea of self-employment to kick in and, as if on cue, an opportunity presented itself that was too good to resist
“I remember quite vividly walking into my boss’s office at the time with a proposal. These sports trusts always run on the smell of an oily rag and I knew they were looking to save costs. They had a number of events which they liked and probably a number that they were quite happy to get rid of and I was responsible for running that whole portfolio.
“I said to my boss: hey, why don't you make my position redundant and I'll get out of your hair, you can save a few dollars but give me a contract to take away three of your big events, which I knew they wanted to keep.
“We did a deal and at the time it felt like a real win-win. I thought I had absolutely cracked it and walked away with a contract that was worth $25,000, or something close to that amount, but it was enough to get me started.”
Coming into a small inheritance from his grandfather at the time also helped though Carter freely admits that at this point he had done little in the way of planning for his new venture.
“I tried a few different things including events like Have A Go Day, which was all about showing kids a whole myriad of different sports and combining it with a bike event. There were a couple of other events that I took with me - none of them exist these days - but it gave me the opportunity to get myself into that space and we meandered around for a couple of years.”
Realising that he had to start being more strategic about the future direction of the business, Carter says he quickly realised that he needed to change tack.
“A lot of the first part of the business was based around me being quite selfish and making the business work towards servicing the life that I wanted to live. I'd been a reasonable cricketer and when I started the business, all of a sudden I had lost my weekends. To be honest, I hadn't really given that a whole lot of thought.
“So my cricket career was probably the first major casualty. Then I started running around on trails a little bit and riding mountain bikes and thought maybe there’s something here? This is the sort of thing people are really going to want to do on weekends.
“It was then that I started to position Total Sport as potentially a business that might head down that track of providing sport and recreation-based participation events. But once again, I still hadn't really sat down and gone right, this is absolutely what I want to do. That happened maybe four or five years later.
With plenty of conversations with accountants and parents along the way questioning the validity of the business model Carter admits now that at the time the whole business lacked direction.
“If we had our time over again and wanted to be financially viable quickly, you certainly wouldn't go down the path we did. Our model was basically lots of people paying not much money. It was a great lifestyle business and everyone thought it was very cool. The problem was it just didn't really have the rigour behind it financially.
Further complicating the whole model was the fact the business sat right in the middle of the most challenging quadrant – the one labelled low margin / high risk. The failure of any one event or a series of events could easily have taken the business under.
Learning from the past
Carer admits the whole exercise would make a good case study for how not to start a business. These days, things look very different.
“Since those early days, when it was really just me doing my own thing, we're now at a point where we've got a board and directors and shareholders, we employ six staff full time and we've really tightened up the whole business.
“The participation-based recreational sport space is growing all the time and if you look at what's happening in Europe and the United States and many other places it’s really expanding rapidly.
“Trail running is enormous and we were fortunate that was a product we decided we really wanted to own in NZ. It’s a good example of the type of event we can run these days. Effectively we hung around long enough that people thought: Total Sport must know something - they're still here.
“We’ve got to the point where we’ve become very clear about what our brand stands for and that’s lifestyle. It's very much a service-oriented brand where we're dealing with peoples' leisure time. That's something we take really seriously because the people that take part in our events - the 35-50 age demographic - are generally earning pretty good money. Many of them are in corporate roles. They're not cash-poor they're actually time-poor, so they want something that's slick but doesn't have to be super flashy.
“Often these people don't get a lot of leisure time so, when you get them they've got to have a good time. What’s important is that when you send them away, after an event, you have to make sure that they're going to come back again. Retention is important.”
Location, location, location
The success of Total Sport as a brand has come about from being very selective about the locations where its events take place.
“In the end it’s really all about the location. That’s our key point of point of difference and it's no secret that we're a location-based organisation.
“Our events are run out of some pretty amazing places that include the Central Plateau, Waihi, the Coromandel along with some really fantastic parts of greater Auckland too that a lot of people haven’t visited previously. So we tend to find the location first and then develop an event rather than the other way around.
“From our research we know that what attracts people to an event the most is getting into these really awesome locations that perhaps they wouldn't go to had there not been an event on.”
Also core to the business model is the database of customers that has built up over the years effectively creating and retaining a community of loyal supporters who recruit other outdoor enthusiasts into the fold.
“We've got a database of around 25,000 people who participate in our events. We have a really strong community and when we survey them every year we find some of them are doing on average one of our events a month.
“One thing we did learn a few years ago was that we were becoming a bit male-centric; catering to mostly guys who you would describe as rugged - guys that had done this stuff for years and years. What we weren't doing very well was talking to females and families and what we call in our industry 'newbies' or entry-level people.
“As a result we switched our whole marketing focus around to appeal to a wider market knowing that this hard core would come along anyway. They already know that we're there. We had to expand into talking to this whole different demographic that we hadn't previously catered for properly.”
“We thought if you can appeal to the mothers then you get the whole family. So things are very, very different nowadays to what they were maybe four or five years ago, to the point where we now have crèches at our events. So, mum comes along and runs; dad maybe runs with eight-year-old Johnny; and the two-year-old is with the babysitter for a few hours. It becomes a legitimate day out for the whole family.”
Focusing on the basics
Carter say he focuses a lot on getting the basics right to ensure that participants have an enjoyable day and that the whole event runs smoothly.
“Over the years we’ve learnt the formula for running successful events includes: keeping things tight, early starts, no prize giving, getting people there, getting them out – literally getting them out into the bush for a couple of hours, sending them home after having a beer and a sausage and they're off.
“But if we’re running events in places like the Central Plateau, people travelling from Auckland will make a weekend of it. Regardless of where we put an event on, 50% of people who do them are from Auckland so it’s an important market for us.
“When we run these types of weekend events we try to cater for all levels and a range of abilities. So a good example is an event that we do in Waihi where, at the absolute top end, you have a 60km ultra event for the elites through some very gnarly but beautiful bush right down to a 5km kids and 'fun run' type thing, and then two or three events in the middle.
That way you're hitting all these different markets but also understanding the way that you engage with the different groups is going to be very different. We’re always trying to design events from a perspective where they have a broad appeal for everybody but they don't lose their appeal to each of those individual categories.
The health living message does seem to be getting through which has allowed Total Sport to ride a wave to growing fitness conscious consumers who want to extend their exercise programmes beyond simply working out the gym.
“What was interesting was the fact that through those tough times, in the aftermath of the global financial crisis, we had two of our biggest years ever in terms of participant numbers; it was phenomenal. I put that down to the fact that many people were under so much pressure and stress at work that getting out on the weekends took on a whole new level of importance.”
Future growth opportunities
While the business has focused purely on the domestic market to this point Carter says he is considering the possibility of taking some of his ideas global at some point in the future.
“We're really excited about the future potential of the business. At the moment we've got a portfolio of about 20 events but that keeps changing and we’re always tweaking our line up. We actually ditched three events last year. While they were events we really liked they just weren't performing financially and so those gaps have been filled with new offerings that we feel are going to stand the test of time.
“We've also seen our numbers grow. This year we're projecting that 25,000 people in total will participate in our various events and that number has probably more than doubled in four years so our growth has been significant
“We’re also looking at developing a whole new business unit which is still about taking people to stunning locations and providing great event experiences for them, but doing it for less people paying a whole lot more. So events like recreational cycle tours for example, which are a big thing happening in Australia at the moment. That would involve a completely new demographic
But what of the copy cats? With low barriers to entry there must be plenty of plenty of competitors trying to muscle into the space?
“On any weekend in Auckland you can probably sign up for three or four events in our space. However, I believe people are increasingly becoming very discerning. We've really tried to market the Total Sport brand as well as the events themselves, because people tend to know the event that they're doing. What we hope is that they pick up one of our entry forms, recognise the brand and that gives them the confidence to take part based on our past reputation.
“While there are low barriers to entry you have to remember it’s also about getting the right permits. You need that bit of paper that is really your licence to run the event and organisations like the Department of Conservation (DOC) are pretty discerning about who they work with. We’ve invested a lot in building that reputation, which is what has got us to this point,
“In terms of going global we're working on a concept at the moment we believe is very scalable worldwide and we plan to launch it in the next couple of months.
“It's an event called the Coastal Challenge. Very unique - it's all off road, people running, walking, scrambling, swimming down the coastline. No roads at all - it's all about making the most of these fantastic places we've got. And we're talking about taking that one for starters into Australia to create a Trans-Tasman series and from there who knows - it may go further. The opportunities are really unlimited.”
|Sector:||Recreational multi-sport / Events management|
|Staff:||6 fulltime / multiple contractors|
|Growth in participation:||100% in four years|