BC Business
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The blue chips grab headlines, but it’s the small and medium-sized businesses that make B.C.’s economy buzz. Compared to the rest of the country (per capita), B.C. has the fastest-growing small business sector and the second-largest number of small businesses.
The sector provides the biggest proportion of private-sector jobs, and it makes the biggest contribution to the GDP (based on 2005 figures from BC Stats). Driving that sector are the genius, ambition and blind courage of B.C.’s entrepreneurs. BCBusiness heard the stories of a few standout small-business people whose innovations are being felt around the world. It’s nice to celebrate their success, but what we really want is to learn from their stories… Go global Rashid Ahmed doesn’t believe in starting small. From the company’s inception four years ago, the president of Vancouver-based Optima Health Solutions International knew he’d sell the company’s back treatment to customers around the world. “You’ve got to have a global plan when you have an idea like this,” says Ahmed, whose customers currently span Europe, Asia and North America. “Back-related conditions are worldwide.” Optima sells a treatment process developed by CEO Aslam Khan that uses sound waves to adjust the spine. The company licenses the use of its technology and sells support services to hospitals in Germany, China and Taiwan. It’s launching expansions into the United Arab Emirates and India, adds Ahmed, and it’s also in talks with hospitals in Malaysia and South Korea. The company broke even last year with revenues of roughly $1 million, and Ahmed expects to double that by next year. DO: Match your business plan with your product Khan has worked as a chiropractor in B.C. for 10 years and the company has performed more than 20,000 treatments in Vancouver since 2005, but the management team has always known the Canadian market was too small to support its business, Ahmed says. The team started wrestling with regulations and chasing certifications from the start, as it searched for global partners, Ahmed explains. This way, it was able to get its products past bureaucratic hurdles fast when it connected with a keen partner in another country. (The team also became expert at plowing through paperwork.) “We were doing things concurrently, and that’s the best way because part of our philosophy was to get something out there fast,” Ahmed says. DO: Chase contracts that boost your reputation To spike interest, the management team knew it had to make a big splash, so it pushed hard to get into countries that Ahmed says have rigorous medical standards, such as Taiwan and Germany. A big step was getting the product into the Peking Union Medical College, China’s foremost medical centre, he says. While difficult, this strategy gives Optima invaluable credibility with medical pros around the world, Ahmed says: “You’ve got to pick centres where validation really happens.” Once the good word gets out, all kinds of benefits follow, he adds. Investors are more generous, suppliers are more flexible and highly skilled people are attracted to the company. [pagebreak] DON’T: Give away too much too early A lesson Optima’s team learned early was that you can’t turn back the clock on those early deals, Ahmed says. “What you negotiate at your initial phase can come back to haunt you because you’re so eager to go out there and get a sale, and sometimes you give too much.” Ahmed notes that Optima won’t repeat the kinds of deals it made to get into its first big markets: Germany and Taiwan. Optima sold its European franchise rights to a single company and the Taiwanese rights to a single person, which put the expansion of its treatment out of the company’s hands in both those markets, he says. Now the company puts a lot more effort into building legal networks and supply chains in the regions it works in, which will give the management team more control over setting up franchises. DO: Build a strong network One of Optima’s biggest strengths is its network of people, Ahmed says, explaining that a strong support structure is critical to growing a company. Optima delivers many services over an online portal, and its original Web developer wasn’t up to the job, Ahmed says. The Optima team had to make the tough choice to swallow the cost, find a new developer and start again. “That nearly cost us our whole company.” To build strong partnerships, Ahmed says, you have to research the people you plan to work with, look for referrals, put in the time to get to know them and reciprocate favours. With a current staff of five, Optima depends on a vast network of suppliers, lawyers, regulatory agencies, financiers, medical leaders, IT providers and marketers. To manage this kind of network well, you have to create value for every player and be flexible, Ahmed says: “You orchestrate the network; you don’t own it.” Be the Expert Bryght hasn’t spent a dime on traditional advertising, says Kris Krug, president of the web-services company. “We don’t put ourselves in the phone book as far as I know,” he says, “unless we’re there by mistake.” And yet, Bryght, with nine employees, is set up in a Gastown penthouse, pulls in roughly $1 million in revenue and counts Warner Bros. Entertainment Inc. as one of its top clients. Krug helped found the company in 2004 and today describes it as “an online community builder.” Its products and services revolve around Drupal, a free, open-source software used to create websites where users can upload content and create networks (similar to what you can do on myspace.com and facebook.com). Using Drupal, Bryght develops software products and offers consulting services for companies that want to build their own online communities. It’s working with Warner Bros., for example, to equip its musicians’ websites with community-building tools. DO: Raise your profile Bryght’s services are in hot demand because the team is widely seen as experts in the Drupal-based online-community circuit, Krug says: “We’ve emerged as leaders in this space because we’ve contributed to it… Every single person at our company speaks at and attends conferences on a regular basis.” Every employee at Bryght is expected to maintain a blog, contribute to the worldwide development of the Drupal software and attend events related to their expertise, Krug says. What started out as a practice motivated by their personal interests has become a company strategy based on business sense. Warner Bros. approached the company after a talk Bryght employees gave at the South by Southwest music festival last year about the Internet and the future of the music industry, Krug recalls. That contact was more than a chance encounter, he stresses: “We worked pretty hard and invested a lot of time and money into: if someone says Drupal and someone says music, they’re going to say Kris or Bryght or Boris next.” DON’T: Make bad hires With every employee at Bryght expected to achieve some form of expert status, finding the right recruits has been a tough task, Krug says: “We have more things booked than people to do the work.” And it’s not surprising, considering he wants employees who can think like “geeks,” can design like artists and have the social skills to work with clients. There’s no way to meet those demands without going far afield and using a lot of different strategies, Krug says. So far, the company has brought one employee over from Belgium, started recruiting in China and worked with B.C. schools and recruiters to find young techs who can be trained up to the company’s standards. DO: Be picky with your projects When you can’t do every project that comes your way, you have to pick them strategically, Krug says. Bryght has set up some priorities for choosing projects worthy of its employees’ time: the projects have to generate recurring revenue, be lucrative or contribute something new and important to the Drupal community. Naturally, the company won’t overlook big-budget corporate jobs, Krug says, but a healthy cash flow is also important, and Bryght has learned not to overlook smaller projects that can generate regular money. One client wanted a service to let various clubs and societies create their own online communities. The contract itself wasn’t worth much, Krug says, but he was sold on the deal because Bryght could charge a hosting fee for each club that signed on. Doing projects that bring something new to the technology satisfies the pioneering urges of the developers, but it also fits with the company’s long-term goals, Krug says. It keeps the company on the forefront of technological development and adds to the shared body of knowledge, making the free Drupal code a better resource for everyone and creating a bigger market for it. [pagebreak] Manage Growth When Joyce Groote first got involved in Holey Soles Holdings Ltd. in 2004, the company was in the process of moving out of her neighbour’s garage. She bought the company at the end of the year, at which point it was selling about $60,000 worth of clunky, multi-coloured foam footwear a year. The next year, it had sales worth $600,000; the year after that, $3.5 million; the following year a whopping $11.5 million. In four years, the company has changed location, hired more staff, made the move to online retailing and gone from being a regional supplier to attributing nearly half of its business to markets outside of Canada. Along the way, the company dropped its single shoe manufacturer in Quebec and set up three factories in China to keep up with demand. With that amount of change, things are bound to go wrong. And they did, Groote is quick to admit. The process of getting the right look and quality for the shoes from the new factories and building a reliable shipping system was filled with problems, she says. But the company had made serious investments early in customer service and its staff that gave it extra stability and carried it through this turbulent time. DON’T: Cut corners on customer service When shipments were running late and shop owners couldn’t get all the shoes they wanted, they didn’t jump ship to another shoe supplier; they endured Holey Soles’ growing pains. That’s the kind of loyalty you can only earn over time, Groote says. It comes from providing great customer service, she explains, something Holey Soles has been doing by putting the brakes on its own growth. The company only took on as many clients as it could manage without sacrificing its level of service, Groote explains. It might mean passing on some tempting contracts early on, but being able to follow through on your commitments is critical. “It’s one thing to get a customer and sell them an opening order, and it’s another thing to be able to keep replenishing them through the season,” she says. DO: Create an image that will attract both customers and employees Holey Soles has built an image as a fun, progressive lifestyle company, Groote says. The branding sells shoes, but it also brings in great staff. “They automatically think it would be neat to work in a fun company,” she says. Finding great staff and keeping them motivated is critical, especially during fast growth when you need people who will pick up new responsibilities, Groote says. That’s where a strong corporate vision becomes essential. She attributes the Holey Soles vision with motivating her, her staff and her customers through the hard times, she says. “Every time we go to another level, there are slightly different hiccups that happen,” Groote says. “You have to have that commitment of the team just to say, ‘We’ll do whatever needs to happen.’ ” DO: Secure your supply When Holey Soles began, the shoes all came from a manufacturer in Quebec. But as the popularity of the foam shoes grew, more companies started competing for that supply. Prices rose and selection dropped. Seeing that the manufacturer would not be able to supply the growing company, the managers chose to set up a whole new supply source across the Pacific, Groote says. Deciding to ditch an established North American supplier to set up factories in China, where no one has ever made your product before, is a huge leap, but it was the only move they could see that would keep the company growing, Groote says. Developing contacts, choosing factories and building a production process was an expensive job that took more than a year. Groote says having a tight business plan and an excellent financial reporting routine was crucial for getting the financial support the company needed from its bank. The investment proved to be a critical step. Shortly after Holey Soles moved its production to China, the Quebec manufacturer was bought by foam-shoe-giant Crocs Inc., which cut off supply to all its competition.