THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, August 26, 1995 TAG: 9508260462
SECTION: BUSINESS WEEKLY PAGE: 10 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY CHRIS KIDDER, BUSINESS WEEKLY
DATELINE: NAGS HEAD LENGTH: Long : 170 lines
Wind is a two-edged sword for Nags Head retailer John Harris. His company, Kitty Hawk Kites, operator of the East Coast's first full-time hang gliding school, depends on the Outer Banks' famous breezes. ``Teaching the world to fly is our mission,'' he says.
But when storms sweep the barrier islands in the backyard of Hampton Roads, as Hurricane Felix did two weeks ago, the mission becomes a no-go.
``Sales were down anywhere from 50 to 60 percent for the week,'' Harris said. ``It was the peak week of the season and it will affect us all the way into next spring.
What a storm won't do, though, is send Kitty Hawk Kites into a fatal stall. The hang gliding school has matured into one of the leading merchants on the North Carolina coast. How it did so reflects the ability of Harris and his staff to tune into the nation's willingness to spend ever more money on sports leisure.
While Harris has built his business on the wind, he's also grounded it in results-oriented planning. This is the story of how it happened.
It's been 21 years since Harris and former partner Ralph Buxton pioneered family recreation on the Outer Banks. When they opened the hang gliding business in 1974, Kitty Hawk Kites was a long shot.
Thousands of visitors came to the Outer Banks each summer back then, but most were accustomed to entertaining themselves. Hang gliding, a year-round sport, brought new faces to the beach and brought them all year.
``As time went on hang gliding was one of the things that helped bring people here off season,'' Harris said.
Today, Kitty Hawk Kites is among the few long-running enterprises on the Outer Banks and tourism is a year-round business. Six million visitors pump $500 million each year into the Outer Banks economy. In 1994, retail sales and food and beverage taxes - two leading economic indicators - increased more than 13 percent.
For the past five years, Harris has been positioning his privately held company to serve the growing demand for recreation. He has assembled a year-round staff of two dozen key employees and broadened his activity menu.
While hang gliding is the company's unique claim to fame, Kitty Hawk Kites and its eco-tourism division, Outer Banks Outdoors, offers kayaking, windsurfing, parasailing, paragliding, bicycling, indoor sport-climbing, Rollerblading and kite flying.
The company's menu covers all age and activity levels. And it covers many facets of today's outdoor recreation market: Instruction, touring and equipment rentals account for about 30 percent of the company's business. Retail sales of recreation equipment, activewear, sports and fashion accessories and toys make up the rest.
Harris, who declines to give sales figures, said he wants to match the $10 million annual revenue posted by Nantahala Outdoor Center near Asheville, N.C.
NOC, the nation's largest river guide service, is a company he has studied and been inspired by. ``Ten million is not a lot of money in today's market,'' said Harris, comparing recreation businesses to other retail operations, ``but we're still a long way from it.''
Even so, Kitty Hawk Kites is no minor player in the recreation field. In 1995, Harris opened Outer Banks shops in Manteo and Corolla and bought a windsurfing site in Duck and a retail shop at Raleigh-Durham International Airport.
The company now operates seven retail shops and recreation sites. The payroll swells to more than 150 employees each summer.
More growth and diversification are in store. The company is ready to implement creative strategies that will double its size in the next five years, said Harris.
Kitty Hawk Kites current five-year plan, written in 1994, calls for two new retail stores and one new recreation operation to be added each year. New sites may not be limited to the Outer Banks, but ``we're primarily looking at tourist markets,'' said Harris. ``That's what we know best.''
Harris' success has not come from sticking to the tried-and-true. When he and Buxton opened their hang gliding school, the sport was in its infancy.
The partnership dissolved, but the hang gliding school went on to become the world's largest. Buxton now owns Kitty Hawk Sports, Harris' major competition in the Outer Banks recreation market.
Kitty Hawk Kites alumni run a majority of other schools now operating coast to coast. More than 180,000 people have taken hang gliding lessons at the school.
At first, Kitty Hawk Kites' success was inextricably tied to Jockey's Ridge State Park, the East Coast's largest sand dune and an exceptional hang gliding site. In recent years, Harris has shifted some of the activity to other locations, using ultra- light aircraft, boats and trucks for towing and launching.
Early on, the company complemented hang gliding with other forms of kite flying. Kites get the family outdoors and they're inexpensive, said Harris. Stunt kites have developed into a lucrative business and the company hosts one of the East Coast's major stunt competitions each October.
``John deserves a lot of credit for being far-sighted in the company's early development stage,'' said J. B. Ruffin, a computer consultant in Ahoskie, N.C., and a member of Kitty Hawk Kites board of directors.
Willingness to diversify beyond kites has been crucial to the company's success, said accountant Sandra Allen of Hutchins Allen & Co. in Nags Head, financial advisors for Kitty Hawk Kites.
``The company has been wise to expand their business to help retain market share,'' Allen said.
Harris takes a logical view of the growth.``The Outer Banks is a recreation mecca,'' he said. ``The wind, the sounds, the ocean, the sand dunes: They make everything possible.''
And with recreation tied to tourism, he adds, ``We're blessed with a growing market'' because people are more active today. Parents, he said, look for family activities outdoors and are eager to try new endeavors.
While nature and tourism have been favorable, behind-the-scenes management has been the real key to success.
When the Outer Banks Chamber of Commerce awarded its 1995 Small Business of the Year award to Kitty Hawk Kites, judges praised the company's sound financial practices, community service, and excellent employee benefits including profit-sharing and stock purchase programs for key employees.
``It's a rare thing for the owner of a small- to medium-sized retail business to be far-thinking enough to create a board of directors,'' said Ruffin.
Harris was.
In 1990, he brought together five people with different backgrounds - banking, marketing, computer technology, aviation management and small business know-how. They meet two or three times a year to help conceptualize plans and programs Harris and his staff recommend and to set priorities.
Allen, who attends each board meeting, lauds the planning effort.
``Kitty Hawk Kites past and continuing expansion would not be possible without the company's attention to planning, budgeting and monitoring the financial results of their decisions,'' she said.
Ruffin points to the company's financial management as another example of Harris' leadership.
``The company has a formal audit done every year,'' he said. ``That's an extraordinary thing for a small business. Most say it's too expensive.''
But it pays off, said Ruffin, ``if you plan to grow the business.''
Lines of credit, cash, and investments are easier to come by because the company starts out with a well-documented financial track record.
Cash is a lifeline for growing companies. Kitty Hawk Kites works closely with its accountants and Centura Bank to make the most of its resources, though Harris notes, ``We never have enough money to do all we want to do. Cash flow is always a consideration.''
That means planning is critical. So is a willingness to wait and make do.
``We've been working hard to put more employee benefits in place for several years,'' said Harris. ``It took three years to find a way to do the stock plan.''
He wanted to replace the climbing wall floor. The money wasn't there; he covered the floor with gravel.
Those kinds of decisions have made Kitty Hawk Kites financially sound and, in turn, able to weather the consequences of unpredictable storms, even Hurricane Felix.
``It doesn't get any easier, that's for sure,'' Harris said. ``Our basic strategy is to prepare for the weather and then hang on as long as we can. We minimize the down time. The people want to be here and enjoy their vacations. We want to be here for them.'' ILLUSTRATION: Color staff photos by VICKI CRONIS
Kip Tabb handles retail operations for Kitty Hawk Kites in Nags
Head. The privately-held company known for hang gliding has
expanded its activities menu through an eco-tourism division that
offers kayaking, windsurfing, parasailing, bicycling, indoor
sport-climbing, Rollerblading and kite flying.<
Color staff photos by DREW C. WILSON
Kitty Hawk Kites: Flying High.[color cover photo]
Jockey's Ridge State Park in Nags Head is one of the sites Kitty
Hawk Kites uses to teach people to hang glide.
FILE PHOTO
``Teaching the world to fly is our mission,'' says John Harris owner
of Kitty Hawk Kites.
by CNB