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This topic addresses options for 'exit strategies' for Ecuador's Black Sheep Inn, specifically how the lodge owners can make a transition that is successful for all.

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Black Sheep Inn
http://www.blacksheepinn.com

[Black Sheep Inn]

Hello

We at the Black Sheep Inn ECUADOR have had an ongoing recurring management problem. As owner builder operators, we have created a highly successful ecolodge. We have reached our goals and mission statement:

Our Mission Statement & Vision - http://www.blacksheepinn.com/Ecological.htm
Black Sheep Inn aims to provide a comfortable, educational experience for guests, teaching them about the local area, local customs and Permaculture, while contributing to and improving the local community and the natural environment. Our goal is to be a leader in environmental stability and ecotourism.

The Triple Bottom Line is that the Black Sheep Inn is a profitable sustainable business that benefits the local community and educates the guests. BUT the Black Sheep Inn is NOT sustainable because we, as owner/operators, need to step back and have a personal life. We have successfully completed our dream building an Eco Destination and famous Ecolodge.

The question that we want to discuss is how to hand over the reigns to new managers, partners or new owners? We have been working on this problem for 10 years and have not found an answer. Either we cannot find people who are capable of running all aspects of the business, or if we do find them, they do not stay for longer than 6 months to a year.


We have thought of the following BRAINSTORM solutions, but we are open to advice:

1. Get out - sell

Does anyone out there have experience selling an Ecolodge? We have made a "For Sale" listing to post on EcoClub.com and we would be happy to send it around for both comments and for potential buyers. We are preparing to openly advertise the Inn "For Sale" on several Internet sites. Is there a reason to be secretive about publicizing the inn “For Sale”? We obviously do not want to scare business away and we will make sure all reservations will be honored. We have nothing to hide, our business continues to be very successful and we continue to make improvements to the property. We have not stopped any of our community projects, nor building projects.

2. Branch out - start more sideline businesses such as Llama Trekking, Mountain Bike rentals, a yoga retreat center, Internet Café etc

We have several business ideas that could be implemented in a sustainable and profitable way, but we are already spread too thin to even dare take on anything more.

3. Hire incompetent managers - and let the quality go down

We have consulted return customers and other colleagues here in Ecuador about the quality of both service and eco-standards at other lodges and found that the Black Sheep Inn is by far superior. That is not to say that the BSI is the finest hotel in Ecuador, but that our constant attention to detail makes a big difference. There are many mediocre managers and staff available. The Black Sheep Inn has been recognized as a "Top 10 Ecolodge in the World" - Outside Magazine, and won several Ecotourism Awards, so it needs Top 10 managers to run it, but can the Black Sheep Inn pay Top 10 managerial wages? Not really, we run an inexpensive Ecolodge in Ecuador and offer competitive wages. We have found that higher pay does not necessarily mean a higher quality or quantity of work, but we do understand that people need to be paid well and appreciated.

4. Hire more staff - we have added 2 more local staff in 2006 and given them expanded responsibilities

Currently the Black Sheep Inn has 10 local employees and 4 to 6 foreigners working full time and yet we are still overworked. Most of our local staff has been with us for 8 to 10 years and are extremely reliable. They are in fact our closest friends here in the community. They are like family. They know how to run the Inn, yet as in all businesses with shift changes and day workers, they need managing. We have hardly had any turn over with our local employees, but managers seem to stay on average only 6 months.

5. Offer profit sharing to competent managers - we do not know how to guarantee a longer commitment

We are willing to establish an incentive program with profit sharing, but only with people who are competent to maintain the high standards and reputation of the Black Sheep Inn, and only with people who can commit for a longer period of time.

6. Rent the facility out – let someone take the reigns and run the place however they want

This would insure that we could have a monthly income, but the business may change forever.

We have been told that there is a common pattern with Owner/Operated businesses. That often the original owners and creators do not have the skills to get the business over the hurdle to the next stage. For example: taking a 100K per year business and making it into a 900K per year business (not exactly the direction of the BSI, but it is an example), or having the ability to implement managerial changes that move towards stability and growth. How do Owner/Operators become simply Owners?

Please post here and or write top us at info@blacksheepinn.com

Michelle Kirby & Andres Hammerman

Black Sheep Inn, Ecuador

!!! WINNERS !!!
1st Prize, ECOCLUB.com Ecolodge Awards 2006
& Smithsonian Magazine/Tourism Cares for Tomorrow
Sustainable Tourism Award 2005

www.blacksheepinn.com
info@blacksheepinn.com
tel. (593) 3 281-4587

PO Box 05-01-240
Chugchilan, Cotopaxi
Ecuador

[Black Sheep Inn]

Thank you to those of you who have written with advice and or examples of similar situations. We're still trying to figure out a way to make things work. It's been busier than heck up here so haven't had much time to focus on anything other than taking care of business and guests. Please keep the advice/feedback coming. Miles de Gracias!

[Black Sheep Inn]

Happy New Year!
BSI finished up 2006 as its best business year yet. More visitors than ever! Since mid December we’ve been running at close to full capacity w/ no managers. Business is great, but exhausting. We’re not 20 years old anymore! Guests leave raving about the place. Reservations continue to pour in. Nevertheless in September we put the place on the market. Selling BSI is one way to ensure we achieve the lifestyle change we seek. We’ve received several inquiries and it feels strange, but no buyers yet. Guests often say, “We heard you’re for sale” and it feels stranger yet.

We’re not sold on selling, but we know it’s one solution to our chronic management problem. In search of alternative solutions, we contacted a renowned Ecuadorian Ecotourism consultant. His idea was that he could come up with a ‘team’ of 5 rotating Ecuadorian managers, who would cycle between Ecuadorian ecolodges, one month here one month there, one month off. Although we had our doubts that it would work, we told him we’d give it a try if he came up with something. We need a solution. Upon investigating the possibilities he found out that YES, fellow Ecuadorian ecolodge owners suffered the same management problem. He calculated that the costs to make it all happen would be $1500 per month. Fellow lodge owners weren’t willing to pay more than $1000 per month to make this happen. So nothing happened. BSI is willing to pay the $1500, but in doing so would want to be assured that these managers were top notch- meaning that we would be able to graduate to the role of OWNERS of BSI.

Really, money does not seem to be the problem. We have had fantastic managers, mostly gringos, and regardless of how much more $ we offer, regardless of offers for a ‘partnership’ they leave after 6 months or a year at most. We build friendships with them, but when they leave we are at square one once again. We are the only crazy ones who stay!

We decided and have posted on our website that Black Sheep Inn will be closed for renovations in April and May of 2007. Prices will go up as of July ’07. We’ll be adding private baths, a multi-function salon/yoga room, a hot tub and many more improvements. We’re trying to move from being an eco-lodge, to an eco-resort. What do you think?

We realize that raising prices does not solve our problem. But we hope to have fewer guests, and the same income. Who knows, perhaps the style of clientele will change and require even more ‘hand holding’ thus demanding more from their hosts? This is a concern as well.

In the meantime we keep on keeping on, providing an unforgettable experience to our guests. Thanks to many colleagues for continued support and encouragement.

As always, your comments are welcome.

[Black Sheep Inn]

Prices went up at BSI as of July 2007, and the new private bathrooms (still composting toilets of course) are excellent. The bathrooms are spacious and well designed, adding square footage and light to the rooms.

BSI was closed earlier this year for 10 weeks while we added private bathrooms on more than half our rooms. (We did sneak off to Belize to get PADI certified too!) We were thrilled that when we reopened in mid June, we were busy right from the start.

Still no miracle solution to our chronic management problem. We have been working hard with two local senoritas that are employed here, increasing their responsibilities, and that is going very well. If they could speak fluent English, they could manage the place!

We still receive inquiries regarding BSI for sale, but nothing serious apart from a Canadian not for profit considering using BSI as their Ecuadorian base for student empowerment/community work. However, they were only interested in the facility, and not the name and the fame of BSI. in the meantime, we are moving full speed ahead and the Inn is better than ever.

The other thought is to become 'seasonal'; Only open for said months of the year...say, open for 7 closed for 5. Of course this would be published in the guide books and on the internet well ahead of time. (Again, still just a thought). The loss of income during the months closed would be worth the guaranteed freedom each year. The closed months would allow us time for maintenance, renovations, and a decent chunk of time to travel. After all, it was out love of travel that brought us to Chugchilan in the first place many moons ago!

Speaking of many moons ago, this month marks our 13th year living in Chugchilan!

Any thoughts or ideas welcome.........