Photo courtesy of Hope Belli Tinney/WSBDC
Paul Smotherman and his wife, Audrey Mills, were able to buy the North Cascades Mountain Hostel property.

Small Business Development Center helped find financing

By Hope Belli Tinney
Washington Small Business Development Center

Imagine heading up to the Methow Valley to ski, hike, bike, fish or read in the shade of a cottonwood tree for as little as $25 per night.

Welcome to North Cascades Mountain Hostel, owned by the husband and wife team of Paul Smotherman and Audrey Mills.

When the couple opened their hostel in 2013 they expected most of their guests would be backpackers/outdoor adventurers, but it turns out their low-cost, communal accommodations attract a much more diverse crowd.

“You sacrifice some privacy for a more affordable price,” Smotherman said, but he’s finding many of his guests enjoy the shared spaces. “These are our people,” said Smotherman. “I think we understand what they want and need.”

Along with solo backpackers, the hostel routinely hosts students on field trips, families on vacation, employee groups on work retreats and gig employees who can work anywhere as long as they have Wi-Fi. A growing demographic are retired Baby Boomers trying to stretch their vacation dollars.

The main lodge can accommodate 16 people in two mixed -gender bunk rooms at a cost of about $25 per night. In addition, two cabins can accommodate four people each at a cost of $70 per night, and additional cabins are being constructed.

Smotherman and Mills are both world travelers, but they conceived of the North Cascades Mountain Hostel as a way for them to put down roots in the beautiful Methow Valley. They met in 2011 when they were both contract workers providing logistical support for research expeditions. By 2013 they had opened the hostel, but they continued to do contract work to pay the bills and keep the hostel open.

Seeking ownership

In 2015 Smotherman was able to quit contract work and focus on the hostel, but he knew the long-term success of the North Cascades Mountain Hostel depended on one day owning the property.

With the ongoing help of the Washington Small Business Development Center (SBDC), Smotherman and Mills achieved that goal in early 2017.

The Washington SBDC is a network of more than two dozen business advisers who meet with small business owners to help them start, grow or transition a business. The Washington SBDC is hosted by Washington State University and receives funding from the U.S. Small Business Administration (SBA). Locally, SBCD certified business adviser Lew Blakeney’s work in Okanogan is supported by the Economic Alliance.

“Once I discovered Lew, it was just really a tremendous help,” Smotherman said. “He was able to walk us through the early steps to the point that we were able to finally buy the property.”

Smotherman first reached out to the SBDC in 2012, for help with a business plan, evaluating property for lease and all the other issues associated with starting a business. At the time, owning property wasn’t an option, but Smotherland continued meeting with Blakeney to build strong business systems and improve his bankability. By 2016 Smotherman began working with Blakeney on his loan application so that he had a solid case to present to lenders. “It was great,” Smotherman said. “We had an idea, a hunch that things would work out, but we weren’t able to pencil it out, and Lew helped us do that.”

When Smotherman and Mills got turned down by conventional banks, Blakeney worked with them to prepare a loan application for Craft3, a nonprofit community development lender with a mission to strengthen economic, ecological and family resilience in Pacific Northwest communities. Craft3 said yes, but they needed 35 percent down, and they had only planned on 20 percent. At that point, Blakeney helped them prepare for a meeting with North Central Washington Business Loan Fund for the gap funding, and they were successful there as well.

Validating the plan

Smotherman said he had no idea how much work it would take to get the hostel to this point, but he’s glad they persisted, and he’s glad they have Blakeney to help them move forward.

“For us, besides reading books and asking friends, we didn’t have anyone to validate that what we were doing made sense,” Smotherman said. Being able to talk over their business plan or look at spreadsheets with Blakeney helped bolster their enthusiasm and energy when things looked bleak.

Smotherman and Mills have spent more than 15 years providing logistical support for scientific expeditions in such far-flung areas as Antarctica, Palmyra Atoll and Papua New Guinea. Typically, Smotherman said, they get hired on six-month contracts, so they would spend six months working and then six months traveling.

Owning the North Cascades Mountain Hostel is a whole different ballgame, Smotherman said. “You can’t hang up your hat after six months,” he said. “It’s a constant work in progress.”

Even with recent weather-related challenges including wildfires and mudslides, tourism in the Methow Valley has been growing, Smotherman said, and his business is growing as well. Future plans include more cabins, a small supply store and maybe a café.

“It’s still a baby,” he said, but as the new owners of the property, they feel good about its future growth.

Hope Belli Tinney is director of communications for the Washington Small Business Development Center. For more information, visit www.wsbdc.org.