Six panelists provided insight and candid comments about their businesses during two panel discussions that were highlights of the Duncan Cowichan Chamber of Commerce’s Small Business BIG DAY held last week.
Two sessions, one focussing on start-up and early growth of a business, the second dealing with maturity and exit strategy were well-attended. Audience members appreciated the information shared by the panelists who included Alana Elliott of Libre Naturals, Chris Manley of Resthouse Sleep Solutions, Aly Tomlin from Riot Brewing Co. in Chemainus, Caroll Taiji of Taiji Brand Group, Peter Richmond of 49th Parallel Grocery and Grant McKinnon of Pacific Homes.
Kenneth Chiu and Mike Smith of Scotiabank also participated on the panels, providing expert information from a financial institution’s perspective.
Elliott says her business relied on “the bank of mom and dad” in its early days and wasn’t prepared to seek outside investment when the need arose.
“It never crossed my mind and we never set our company up properly,” Elliott says of her realization that the share structure wasn’t adequate to accommodate outside investors.
For Manley, obtaining good advice early on was essential to his company’s success.
“The best thing we ever did was have a business coach,” Manley said. “Finding the right lawyer, the right accountant, was huge for us.”
Tomlin, who acknowledged Riot Brewing is just now emerging from a near-death experience, outlined the challenges she and her partner had in attracting capital to finance the start-up brewery.
“It took us seven years and it requires a lot of capital,” she said. “It’s hard to get people to believe in you.”
Originally planning to locate in Vancouver, Tomlin and her partner decided Chemainus would be a better option, although there were issues with a smaller labour pool and a housing shortage.
“Chemainus is a really rad community and we moved there because we wanted to be a part of the community. But hands down, finding money was the biggest issue.”
When a cash crunch hit about a year ago, Tomlin says the thought of closing was terrifying.
“When we were going to close, besides losing everyone’s money, the thought of leaving the community was hard,” she says, reflecting on the “seven months of insolvency” Riot endured.
Managing growth was a challenge for all three businesses, the panelists agreed.
As well as the need for capital, Elliott says start-ups also face challenges with staffing, forcing the owners to work long hours.
“I read articles glorifying the entrepreneurs that got four hours sleep,” she said. “That’s not something I want to aspire to.”
For Riot Brewing, the rapid growth tapped into their capital very quickly.
“We had uncontrolled growth and huge success,” Tomlin says. “We had no problem selling the beer, but we were not prepared for growth.”
Panelists Taiji, Richmond and McKinnon have seen their businesses through the maturation process and shared their views on how to sustain success and ultimately sell the business and retire.
For McKinnon, the process of selling Cobble Hill-based Pacific Homes to All-Fab Group of Winnipeg was fresh having taken place recently.
“It’s gut wrenching. You wake up wondering if you’re doing the right thing,” McKinnon acknowledged.
The process took more than a year and McKinnon says when a business gets to a certain size, it’s very difficult to do a smooth succession. In his case, as a second generation owner of Pacific Homes, he had siblings who were also involved in the business, including one who died a few years ago, prompting a cash call to settle the estate.
And McKinnon had conditions that had to be met before he would agree to sell.
“I wasn’t going to sell to an American buyer, although I could have sold for more money to a U.S. buyer,” he said.
He says he just wouldn’t want to see the long-established company founded by his father, Ken McKinnon in 1959, moved out of Cobble Hill and the loss of 100 well-paying jobs.
“It was important that the buyer match our culture,” he added.
Taiji says after spending “30 years honing our craft” she can’t imagine never having a connection to the business.
Richmond has assumed the role of president of a business started by his father after joining the company in 1997. 49th Parallel Grocery has been in business for more than four decades and employs 275 people at its five and soon to be six locations.
“I’m not thinking about exiting but we have people knocking on our doors from time to time,” Richmond said.
“But I keep an eye on changes, particularly in technology because everything affects the value of our business.”