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This is the third installment of the SAM Summit Series—a season-long pilot program aimed at developing future industry leaders. The program creates an ongoing mentor/mentee dialogue between industry heavy hitters and a group of up-and-coming resort staffers. Monthly conference calls each cover an important management topic, with a pair of advisers sharing their experiences for an hour with the group of 10 participants.

In this call, Blue Mountain, Pa., president Barb Green and Telluride Resort CEO Bill Jensen share great stories and give sound advice on a topic they are both experts in—finance and revenue.

As always, many thanks to MountainGuard for supporting the program; to our facilitator, Paul Thallner of High Peaks Group; and to Dr. Natalie Ooi of Colorado State University’s graduate Ski Area Management Program for providing follow-up exercises and feedback to the participants.

Here is the transcription of the call in its entirety:

Paul Thallner: I wanted to start by giving Barb and Bill an opportunity to share a story from a time early on in their career, a moment when finance and financial literacy was really becoming a core part of your role and became super important in your trajectory.

Barb Green: It really became real for me when I was at this dotcom company [years ago]—it had soared and it was now crashing. A couple of us got together to talk about what we could do to resurrect the company, and my task was to put the budget together. I had to know enough about the numbers to go ahead and say whether this was real or not. When you stand up in front of capital markets or hedge funds and present your budget, it has to be all tied up and nice and neat. You have to have all the answers to all the questions.

I never realized in all the accounting and the spreadsheets that it would bring me to a point where we could get capital from that company. We tried to get the capital to keep it alive for another 9-12 months. It was very real because if we didn’t succeed everyone was going to lose their jobs. None of us wanted to do that, so we all had to work together across all the different facets of finance, internet, and operations. It was so educational and so outside of my normal financial box, so I think that was probably the time that I realized I could do a lot more than I was doing in the past.

Paul: Wow. So, tell me a little more about the key lessons you have taken away from that experience and how have you applied them?

Barb: A key lesson was that it wasn’t just me putting this budget together, it was me going to people and asking, “Do you think this is right?” I had to get the buy-in along the way as I was putting this whole big financial model together of the five different divisions we had. I think that’s key in whatever you’re doing in the financial arena, get buy-in from the different players: marketing, accounting, operations, you have to get the general management buy-in. If you don’t have all of these people behind you, the likelihood is that you won’t succeed.

Paul: Absolutely. In the creation of a budget, you are setting out a spending plan for all these key people who will then be held accountable for staying within those parameters. So, their buy-in is pretty critical.

Barb: Not only is it critical, but they have to feel as though they’ve shaped their part of it, otherwise you’re going to have trouble getting them to follow it. I think that was the lesson that I learned in that process. I was the gremlin doing all the back-end work, but it was tons of conversation and over-communication in order to get it done.

Paul: Bill, how about you? Do you have a story to share about a moment in your career when finance and financial literacy really became core to your role?

Bill Jensen: Well, I think that probably like a lot of you on the phone, I started in the industry at 21 and as I started to move into those supervisory and assistance manager positions you start to get exposed to budgets. In my 20s I was on the operations side of the business and spent a considerable amount of time building a budget. What I’ve learned is that it’s simple just to lay it out and assume there are going to be no surprises, no ups and downs in a season. I think as I became better at budgeting I realized that there are always going to be aberrations, particularly in the business we work in where you can’t control the weather.

The budget is important in running a business, but it’s basically a plan. There are times you are going to have to deviate from the plan. But I think what I’ve realized is the importance of revenue. When you’re on the operational side you’re really just looking at expenses, but you need to understand how revenue comes into play. How revenue influences a budget.

When I started in the industry in the ‘70s, I actually worked for companies that didn’t even do budgets because we were growing at 20 to 30 percent a year. Every year the cash was coming in so fast you couldn’t count it. It was just the way you played the game.

Barb: That’s the way it was with IT in the dotcom era.

Bill: Same thing, you’re right. So, what I think I’ve learned—and this is something that I think is important for everybody—is that sooner or later you really need to learn the revenue side of the business. My own career success has really been driven by putting myself in situations where, as a leader or as an organization, we can really drive revenue.

For me, if we walk through my career steps, I went to work for [PistenBully] and when it was early into their launch for the North American market and we were about a $2 million revenue company. Seven or eight years later when I left, we were a $30 million revenue company. I went to Sunday River and we had 250,000 skier visits, three seasons later we were at 500,000. So, we really saw that revenue growth of 20 to 30 percent per year. I went to Northstar [California], same scenario: 250,000 to 500,000 skier visits in three years. What I’ve learned from those experiences is revenue is really the key to success.

Someone told me a long time ago, “You can save your way to solvency, but if you want prosperity, you really need to focus on the revenue line in your business.” We all enter the business creating budgets to manage the expense side, and that’s a critical skill set that you need to have to be successful for the long term. Somewhere you have to be exposed to the revenue side, though. You want to play a part in driving revenue in your business.

Barb: I agree with Bill wholeheartedly. The key to success is to really look at the revenue side and how you grow it. And then after you’ve grown it a year or two, how do you make it the most profitable it can be. You’ve got to let it grow. It’s like I’m a gardener—you have to plant the seed and let it grow up and see how sturdy it is going to be and whether it’s going to make it. If it makes it, whether it’s a ropes course or a new lift, if it’s thriving then maybe you don’t need as much capital investment this year.

At Blue Mountain, we started an aerial course, downhill mountain biking, a wedding business, a brand-new restaurant—we keep on adding new revenue streams every single year. Part of the reason we do that is so that we can keep full-time staff, which impacts the quality of the guest experience. The goal, as we keep on doing that, is to become more profitable. There are so many fixed costs in the basic infrastructure of the resort, so the more revenue streams you can bring in to cover those costs, the better off you’re going to be.

It is the key to having quality guest experiences, growing revenues or having consistent revenue in bad weather years. Having consistent staff is going to create that culture you want, like at corporations such as Hyatt and Disney. It’s very difficult to have culture when you only have people there, in my case, three months out of the year.

Paul: Bill, would you like to fill in with some examples of your own?

Bill: I agree with Barb. I would start first with taking a look at revenue. I’m not talking about increasing the price of a hamburger or fries $.50 or a dollar to raise revenue. It’s looking at the business, and I would encourage all of you to look at your existing businesses and ask, “Are we doing everything possible to maximize revenue?”

As Barb said, it’s about the experience and making sure that the experience is good. I can point to this year in the west, we’ve had a pretty prolonged period of low snowfall, and I think even today only 40 percent of our trail network is open at Telluride. It’s interesting; I have five restaurants that have generated more revenue this year than they have last year on 50,000 less skier visits. What’s the story there?

Barb: Well, they just want to have a good time, that’s what it is!

Bill: Barb’s got it. They are skiing, they’re buying a lift ticket, but after five or six runs they’re willing to spend a little longer at a lunch and have that experience.

We started a new business—well, we bought an existing business. It’s a private locker club that people pay $2,000 per year to have a private locker for their ski storage. We upped the service, we put concierges in there, we put coffee in there in the morning, and when you come in in the evening you get a glass of wine or a beer. There’s no charge for that, it’s part of the membership. We have 100 lockers, so if you said the business model is 100 lockers for $2,000 each, that’s $200,000 of revenue.

So, this is our first year, and we wanted to set the bar high for an experience and we rented half the lockers, $100,000. OK, so I am a businessman, I’ve got four employees who work in there seasonally for four to five months. The $100,000 covers the labor and the electricity. I’m not 100 percent certain if it’s going to cover the property taxes, but I don’t care. The manager that was running the business came to me and asked, “Well, should we let day users in?” And I said no, because we’ve established a model that this is a high-end seasonal rental. I’ll bet you dinner that not next year, but the year after, it’ll be sold out. And that’s a bit to Barb’s point, it’s a work in progress.

Barb: Well, you have to set the tone, I think. You set the tone for what you want it to be. You want it to be a high-end locker.

Bill: Right, so we have to be patient. By three years, I am 100 percent confident it will work and drive revenue. What we keep coming back to here, and my mantra is: it’s all about the experience. My view is when the experience is top notch, people are not afraid to spend more money within your existing business structure. As Barb said, you just need to figure out where they want to spend money and create the opportunity for them to do that.

Barb: I just have one other thought to add to that. We’re looking into skeet shooting. I’m not a fan of guns, but if I find someone who really wants to run that operation and comes knocking on my door and has passion for it, it’s probably going to be a success because he or she wants it to succeed. I think that’s what it takes, a manager who wants to own it. The more you own or are interested or have visions for the future for your particular operations, the more you’ll succeed. You have to look to the future.

Paul: That’s actually really interesting. What I think I am hearing is that in order to get to the point where you can leverage your financial acumen, you have to be creative and think of new ways to open the taps and bring in new revenue. Whether it’s wedding business, skeet shooting, lockers, those kinds of creative solutions are the ones that can provide you with an opportunity to do things like manage a P&L and distinguish yourself within an organization. On that note, how do you keep the creative ideas flowing as a leader in a business? How do you keep them coming to you or how do you generate them yourself?

Barb: I do it by listening to the guests and employees. I am constantly trying to gather information from those sources—some through guest research, but some through just walking around and having conversations with people.

I also look at the market. I am very heavily involved in the local organizations: chamber, vacation bureaus, state government. It gives you a perspective of what’s coming in the future or why people might not be coming to your resort, enabling you to ask the question, “What can I do to change that?” It doesn’t matter if you’re in finance or marketing, it gets back to communication and listening to people and finding out what they want.

Bill: I think I would add that as organizations get built, the core skill set is really around expense management. It’s a critical skill that we all have to develop as we’re moving up the career ladder.

But I’ve found that there are not going to be 50 people in your organization that have great ideas for businesses. You’d be fortunate to have three or four, and candidly for the people on the phone, that is the point of differentiation. As you move up in your career, you have to develop the skills that are going to help drive revenue. If you are perceived as an exceptional or even a competent manager on the expense side, great. You’ve checked that box. But the future of your career is about growing the business, and having the business thrive.

I was talking this weekend to a guy who has a private ski club and I used the phrase “save your way to solvency,” and he said that mentality saves your way out of business. So, I am a really big believer that revenue is not only the key to business success, but also the key to your own success. How can you contribute to your organization, not just as a great manager, but also as someone who is creative and comes up with new ideas to drive revenue? Maybe the first idea is only going to drive $5,000 or $10,000 in revenue, but eventually you want to come up with ideas that drive $100,000 or even $300,000 in revenue.

Barb: I’ll add one thing to Bill’s comment there. The one thing that I really hate to hear is, “We can’t do that.” There’s always a way, especially with [driving] revenue. Sure, you tend to get nervous because it’s something new that you haven’t done before, but the operations folks, because they are so good at what they do, always deliver.

Bill: My corollary to Barb’s comment of “We can’t do that” is “It’s not in my budget.”

Barb: Oh, I hate that one! That one is the worst.

Bill: All of you listening on the phone make a note: never ever tell your boss that it’s not in your budget.

Paul: I was really fascinated by Barb’s gardening metaphor. So, I’d like to talk about some of the mature trees. Some of these projects that, as they grow, to stay viable you have to think about profitability. Revenue is great, but if you’re spending as much as you’re taking in, you’re just busy. So, if each of you could talk a little bit about the tough decisions you’ve had to make along the way when it comes to favorite programs, marquee programs, or other lines of business that needed to be adjusted because of profitability, how do you go about making those decisions?

Barb: We’re a day trip resort, so we don’t have the long stays. And we had a model before I got here where we went from 1,200 employees to 20 every April. It is hard for me every year to go ahead and lay off all those people. We’ve increased our year-round staff to 85 to 90, but I really do not enjoy that part of this business and it’s the one I keep on fighting to go ahead and find some of those longer-term opportunities for people. I hope I answered the question.

Paul: Yeah, you have to look at your operation and sometimes there isn’t space or opportunity for that person to stay on for the full year and that’s a decision you have to make and a challenging part of the role.

Barb: It really is. And for people who have grown up in the industry, most industries aren’t like that. You have the 40- to 50-hour week, 365 days of the year opportunity, and it’s a very challenging business that you on the phone have chosen. So, when [I’m able to] give those year-round opportunities I really feel like I’ve succeeded.

Bill: In running a ski business, I think the bigger challenge when you stand back and look at the whole picture is how much money, how much of your revenue, do you want to spend on the operational side of the business, and how much money do you need for the capital side of the business. So, the year that you want to do a big snowmaking expansion or add a new chairlift or buy an extra snowcat or two, as someone that’s leading a business, the checkbook still has to balance.

For a lot of ski areas, some sort of financing or loan for a chairlift or a new restaurant becomes part of the scenario. But then what happens is you have that debt or mortgage payment that you’re obligated to. How does that fit into your budgets when you’re looking at your expense structure on the operational side?

The years that we’re not doing significant capital, I tend to look at my operational expenses and allow some leeway there so we can emphasize the day-to-day experience we’re offering. Making a million-dollar expenditure for us at a resort like Telluride is not really big, but a $10 million expenditure is huge. And how do we manage that? Do we save money for 2 to 3 years to pay for that, or do we go borrow money and then cut expenses for 4 to 5 years to pay that back? Those are the big leadership management decisions that all of you are going to get to at some point in your career, and those are the biggest challenges.

When we’re not doing big capital things we can all have our little pet projects. Nobody is trying to squeeze the last few thousand out of anybody. But there are other years, to Barb’s point about culture, it feels like the resort went the other direction and there are no pet projects.

Barb: Feast or famine.

Bill: I say this with incredible respect: I have an incredible head of snowmaking, and he doesn’t understand why we would ever spend a dollar on anything but snowmaking. Leadership is that you have to see the whole picture, the whole business, and working with the people you work with. My management style is that I never make those decisions alone. It’s a lot of conversation for a lot of time with people until I really feel that there’s consensus among the senior management. Because at the end of the day, it’s not me—they’re the ones who will have to manage the culture and make sure everyone understands that the choices we’re making are the right choices for the long term.

Paul: Thank you both. This has been a great conversation and I would like to pass along a question from Brandon Swartz. He asks, “Is education a good way to gain revenue acumen? Would you recommend an MBA program or some sort of master’s program for someone looking to be a GM at an early age?” He goes on to say, “It’s easy for me to see revenue in other departments, but not necessarily easy for me to find a way to manage revenue in my own role.”

Bill: First of all: you don’t manage revenue, you drive revenue. You manage expenses and you drive revenue—write that down.

What happens in a lot of organizations is, “Well, I am going to hire someone to run marketing and it’s going to be their job to drive revenue.” And what I would say is that a large portion of marketing people are not very successful at driving revenue. They push all the right buttons, they get the snow report out, they share the message—but is that really driving revenue? Is it really taking it to a different level?

I’ve talked to a lot of business school classes. Unless you have a passion for this business and really understand the intricacies of this business, I don’t think that someone could walk out of any business school and really drive revenue in the ski industry.

My best example of this in the ski industry is Vail Resorts and the Epic Pass. What does the Epic Pass really do? It drives revenue. When you read Vail Resorts’ financial results, it’s all about the revenue that the Epic Pass drives. It drives revenue, it drives volume, it drives certainty in an off-snow year. But when they have the visitation, then they drive revenue through ski school, food and beverage, off snow activities. To me, that is the biggest example of an organization driving revenue. I put that out to you guys to think about. Perhaps that’s too lofty, because they’re literally driving hundreds of millions of dollars of revenue and you’re sitting there going, “Well, that’s not my ski area.” OK, well, then divide by 10,000 and figure out your plan.

Barb: I agree. If we just talk about the ski portion of the business, there are ideas out there in the marketplace that we haven’t tapped yet to drive revenue, and it’s not going to come from your marketing people because, in my case, half of them just learned how to ski. It’s going to come from the person who has the passion for the sport, who listens to the customers, and comes up with something new to go ahead and make more people come out.

We came up with the family and friends package this year, which is essentially a beginner package, but it doesn’t matter if you’re skiing or boarding, you get to stay together with your family and friends. Because that’s what our guests wanted to do. I’m not sure if it’s going to be successful yet. Anecdotally, guests have thought it was fantastic.

It’s different than the way we’ve been driving learning the sport for years. There are ideas that we have to try within this sport to get the population to embrace the sport. It’s not going to necessarily come from marketing, it’s going to come from the people who are out there loading chairs, having conversations, to find out what will drive the next thing.

Paul: Another question from the crowd: What kind of practical suggestions would you give to our group here about gaining experience, not just in driving revenue, but managing expenses as well? Especially if their primary role is in a department that may not have a direct link to revenue.

Bill: I think you have to build credibility within your organization. The people that I have seen who are best as driving revenue in their organization are the people who built credibility. If you go to your general manager and say, “I have an idea for a business” and his or her first response is to tell you to write up a business plan, they don’t believe in you. If somebody walked into my office, the last thing I am going to say is write up a business plan because it’s a stall to get you out of my office.

Barb: Oh Bill, you’re so honest.

Bill: Well, it’s the truth. If my F&B manager walks into my office and says he wants to put a noodle machine in one of the cafeterias because noodles are hot, I am going to ask what’s the cost. Note that I did not ask what’s the ROI. I believe in that manager, I believe in the manager that’s running the restaurant. OK, go ahead and do it. Sometimes we’re a bigger player, I am not sure if you handle things the same way, Barb.

Barb: We’re certainly smaller, but I handle things the same way. The only time I get involved in a department is if there is an issue in that department. When I don’t think it’s as profitable or the revenue isn’t growing as it should. I dive deep and find out what’s going on. When you get to the level Bill and I are at, that’s what you do.

Bill: I ask a lot of questions. I expect the people I am asking the questions of to have the answers, because if I am asking questions and the answers are “I don’t know, I don’t know, I don’t know,” then I know that I don’t have the right person.

Barb: What I suggest to everyone is that you start by asking questions. You try to get the information about your particular department and how it works and why they’ve made the decisions they’ve made, whether it’s related to revenue or whether it’s related to cost. How are we growing the revenue? Are there discussions about how we grow revenue? If you can get involved in those discussions, you’ll learn about how the senior management thinks. You’ll gain perspective, and then you can argue about why your particular area needs the investment to grow the revenue. You can tell Bill and I both agree that growing revenue is the name of the game.

Paul: That’s how you survive, that’s the name of the game.

Bill: Not survive. Prosper. You can save your way to solvency, that’s survival. Prosperity is success. Do you think Vail sits around trying to save their way to solvency? No. They try to figure out how to grow revenue.

Barb: And then they have some people in the back room saying, “Did you see this cost over here?” And you’ll end up in these cycles where you are growing revenue and then controlling costs, growing revenue, controlling costs—not necessarily for the whole company, but in each department in their own cycle.

Bill: When I come to work every day, what I am thinking about is revenue. To Barb’s point, we can deal with the ups and downs and aberrations—that’s a 20-minute conversation where the problem is either fixed or we fix the problem—but the revenue thing. What I go to bed at night and wake up in the morning thinking about is how do I drive revenue.

Barb: Nothing stays the same. I know everyone thinks we’re competing against other ski areas, but what we’re really doing is competing for recreational dollars. I truly believe that. And it’s become more and more evident over the past few years. We are competing for recreational dollars. Granted, we’re in a good economy now. But when we’re in a down economy it’s going to be a lot harder to compete for those same dollars and we’re going to have to get more creative in how we compete for those same dollars.

Paul: That’s a great point. I have another question from a mentee: “One of the most important things I have learned over the years is how critical financial trackers are. Sometimes these are managed by the department and sometimes by the finance or accounting department. Do you think these are more beneficial to be managed from the department managers, and if so, why?”

Bill: I think anytime you can put quality people in place, that’s what you do. We run our business very decentralized and I have a manager at our flagship restaurant who has increased sales $3 million over 5 years. So, as he did that, what do you think happened to the bottom line? I honestly don’t look at his food costs. Let’s say his food cost is 31 percent, this is a really high-quality restaurant, should I be trying to manage his food costs down to 30.5 percent? Hell no.

Barb: What we do instead is ask the question, and if they have a decent answer we go, “OK, that sounds good.” You have to read the reports, read the statistics, understand the industry in order to be able to ask those questions. As you go up the ladder, it’s not about clocking in, it’s about finding out about your industry and looking to other industries for information and ideas and then you can go ahead and solve problems.

I believe we are very similar to the amusement park industry and I am constantly looking to them for food and retail ideas as they seem to have it a better dialed in than we do. There are a ton of ideas out there. The more you can bring to the table the better off you and your organization will be.

Paul: What are the top three things you would want to see in a manager or leader that distinguishes them in this area? What do you notice about those whose careers you want to cultivate and foster in this area of financial management and literacy?

Barb: I think that the main thing is to understand what your P&L is and ask questions about it. Don’t be afraid to go to your accounting department and, in a non-threatening way, ask how they get that number.

The finance department, and I’ll digress here, is constantly, “Oh that number is wrong.” And do you know why that number is wrong? Because the number is always changing. There’s decisions that are made that are making it increase or decrease, and it’s never stagnant. You should be looking at the direction of that financial number. So instead of saying, I made $500,000 this year and $525,000 last year, you should be asking how other rental departments or ski and ride schools did, or if there are industry standards and statistics you should be looking at to benchmark yourself against.

The finance department processes the bills and provides a snapshot in time of what the financial situation is. If you don’t know why that number is what it is or develop a good rapport with the finance department to find out why that number is the where it is, you’re going to end up butting heads.

Paul: From Joe: “With all the hustle and bustle of the green and white season, it’s hard to know when to plan for the next season. How far ahead of time should you be planning for next season’s budget?”

Bill: I think, depending on the cycles of your business, you need to plan your budget when your staff has the time to do thoughtful work. If the budget is something you just have to check off the list, I could probably do a budget for any department in 15 minutes, but it’s not going to be thoughtful. You can just look at the history and stick a number in there, but I really like to give people the time to think about it.

It doesn’t matter where you are in operations. What are my labor costs? What is the cycle of business? What are my peak days? Was I overstaffed during this period, understaffed during that period? What’s the cost of fuel? What’s the cost of electricity? What’s changing in our strategy?

You have to do this in a time where people are not heavily engaged in the operating side of the business. I’ve worked in different companies; the budgeting process always takes longer than the organization thinks it’s going to take. There’s always someone who is lagging while finance is trying to put all the pieces together to show to me or to Barb.

Barb: Or, more importantly, to the bank. At some point they have to show it to the financial community.

Bill: I am the last guy to get to see the budget. And then I have to sit in a room and go through it line by line with my CFO and the controller and see the differences and variations and ask a lot of questions. I think in an organization, it’s really important to set aside some time—whether it’s a week or two weeks or a month—where people really need to focus on their budget. If you’re a young manager, as you go through a year, keep one of those little pocket notebooks and just make notes about next year: I need to address this or fix this, there’s a better way of doing this.

I would also say in our business, and Barb talked about comparing yourself to others, every ski area is a little bit different. I look at the statistics that come out in the economic study as parameters of where the industry is, but I’ve worked with people that want to give the highest service, and have chocolate chip cookies, and serve wine in the rental shop, and also have the lowest price point. And I say, well, you’re not going to make as much. If you’ve got three rental shops directly at your base and they’re competing against you, well that’s another situation.

But ultimately what I look for in my managers when they’re doing the budget is they have to be fully engaged in their business. I have to be fully confident that whatever they come up with they can execute with certainty. And then if I have both of those, then in my mind there can be a little bit of latitude and I am open to wanting to change this or that. I can then look at the bottom line and if they can produce a better experience and not impact the bottom line, that can be acceptable.

On the operating side, we get into it, and when I look at a mountain operations budget and say, “Well this is interesting, we’re up $900,000, why is that?” And then I have to go in and ask a lot of questions and sometimes it’s yes and sometimes it’s no. But what I really like is when I ask the questions and I learn whoever put that budget together gave it a lot of thought.

Barb: They really need to understand the reasons why, really need to understand the relationship between revenue and cost. They’ve done the research and can articulate why they need to have the budget this way.