In the spring of 1998, a group of Upper Canada Brewing alumni went on a reunion canoe trip in Six Foot Bay. There, in the heart of the scenic Kawartha Lakes district of central Ontario, the lads engaged in the usual beer drinking, canoe wrecking and time-honoured boasting. But as they sat around a campfire one night reminiscing about a time and place they all missed–their halcyon days at Upper Canada, which had been bought out earlier that year by Sleeman Breweries–three of the young men vowed to start a company of their own. Not only would they make a beer they could be passionate about, they would create a workplace they could be equally passionate about. Unlike most late-night chatter, however, Cam Heaps, Greg Taylor and Greg Cromwell turned their dream into a reality, a Toronto brewery called Steam Whistle Brewing that makes but a single beer, albeit one that has become pretty popular in Ontario and, more recently, in Alberta and British Columbia.
The campfire tale is oft-repeated by the guys at Steam Whistle to highlight the company's entrepreneurial spirit and grassroots start. But what the story doesn't tell you is that there was a four-month gap between their eureka moment and the actual start of Three Fired Guys Brewery Inc.–the business that would eventually become Steam Whistle. And it was 18 months before the brewery sold its first beer. There's barely a mention of writing a business plan, getting friends and family onboard as investors, or visiting the bank. Nor is there anything about buying the necessary equipment or the long search to find a suitable home. Those mundane details clutter the big idea–but they're also what keep Steam Whistle alive today, seven years later.
It's easy to say entrepreneurs should tap their passions for the best chance of profits. After all, there's an old saying about selling what you know. But Steam Whistle's success is as much about managing growth and expectations as it is about passion. Some great ideas simply don't sell, and some terrible ideas (think Pet R ocks) do, because of great timing and marketing. Many new business owners stick to bad ideas or fail to properly assess the market for a good idea. Roughly half of all new companies fail to survive the first three years, according to a 2000 Statistics Canada study, and only one in five survives a decade. On average, a company will last about six years, while the median lifespan is somewhere in the neighbourhood of three years. Sobering numbers. But even scarier is the fact that one out of six small-business owners–the very people you'd expect to have figured it out–would take a pass if they had the chance to do it again.
Despite those figures, CIBC World Markets expects 150,000 Canadians to start their own enterprises before the end of 2007, adding to the 2.5 million small businesses already out there. According to a 2005 poll by Leger Marketing, more than 40% of Canadians think entrepreneurship is the most rewarding career option. Many are willing to risk their life savings–and money from their families, friends and maybe even a bank–to take direct control of their careers. In return, they can expect to work harder and earn less than they would as corporate peons. Sure, a few will strike it rich. But often, opening your own business is about lifestyle choices. Sometimes it's to pursue a lifelong dream of working in a particular field. Sometimes it's passion for a product, or, for the guys behind Steam Whistle, the love of a particular working environment. Either way, it's a tough slog–although one that can be a lot easier with a little preparation, determination and courage.
In Steam Whistle's case, the co-founders had the benefit of working at Upper Canada Brewing, founded by Cam Heaps's father, Frank, in 1985. Greg Taylor, in fact, continued to work at Sleeman for another seven months after Upper Canada was sold, before striking out with his two partners. “We saw what went wrong at Upper Canada. That gave us the confidence to say we could do this ourselves,” says Taylor. “It's not complicated. You make simple practical decisions, A or B, and you make the decision.”
The key is to have a solid business plan in place so that there's some guidance and comfort level about the direction your company should take. It doesn't have to be 100 pages long and prepared by an MBA, but it should point out what the market opportunity is and how you are going to entice customers, on service and on price. What's the compelling reason people will come to you and not an established business? Your plan should also provide a reasonable sales forecast and expenses estimate. “The common rule of thumb is once you've done that, cut your sales in half and double your expenses,” says Kevin Dane, vice-president and Toronto area manager with the Business Development Bank of Canada. “If it still makes sense, then maybe it's worth looking at.”
Randall Craig, a Toronto management consultant and author of the 2004 book Leaving the Mother Ship, says committing your plan to paper reduces the likelihood that you're forgetting something. As well, it gives you something to show others (including your family and business network) and helps you set financial goals that can then be tracked. “If things are going off-track, you will know about them earlier,” says Craig. And chances are, things will go off-track. The key is to be realistic, Dane advises. “An entrepreneur by nature is a very optimistic person,” he says. “But you have to know when to temper your enthusiasm and find a way to back up your gut feeling with some statistics.”
Having relevant information at the ready will impress banks and franchisers, who also want to see upfront capital. Remember: a financial institution isn't going to lend a business 100% of what it needs to start up and stay afloat. After all, banks aren't generally in the business of being shareholders. Many complain the banks aren't particularly interested in funding startups at all, which is perhaps one reason why 74% of Canadian respondents to a small-business survey conducted for Sage Software in 2005 reported their enterprise was self-financed, compared with 67% North America-wide.
But don't despair. Steam Whistle's Heaps, for one, believes there is plenty of money for the right ideas that are backed by a proper business plan. “It's total bullshit that you can't start a company without your own money,” he says. “In this day and age, people are thirsty for investments that aren't your standard publicly traded company. If you have a good business plan, with financials, and financials that make sense, you can get the money.”
Not every business, though, has to have a written plan, especially if you're only going to be a party of one. Take Erin Lemon. She quit her job as a senior consultant and project leader at Metrix Group Inc., a corporate learning consultancy in Toronto, seven months ago to become a freelance corporate writer and editor of case studies, white papers and strategies. Lemon's business plan consisted of buying a computer and a filing cabinet–and finding some clients. Her decision to leave wasn't motivated by a desire to get rich quick. (She's actually scaled back her little extravagances.) Instead, it was a lifestyle choice.
Although Lemon liked working at Metrix, she was tired of being a PowerPoint monkey, spending Sunday afternoons preparing slide shows and getting crabby. She missed being able to take off when she wanted to spend time with her family, and had given up her hobbies, which included running and knitting. (Lemon recently participated in the Knitting Olympics, which culminated with 50 knitters in a bar for the closing ceremonies of the Winter Games in Turin.) As she now puts it, she no longer had any “stare off into space” time.
Seven months in, Lemon is still in the first flush of entrepreneurship, a perpetual state of infatuation and anxiety–and loving every minute of it. “So far it's been fantastic,” she says. “If I can keep making money, I'll keep doing it. When I finally left my job, I thought, 'Why didn't I do this six months ago?'”
Lemon says that running a business is actually easier than it looks. As she sees it, someone started every business–and they “can't all be geniuses.” The trick, she says, is knowing what skills you don't have and then either improving them or getting someone else to do what you are incapable of doing.
Startup owners also have to have a certain tolerance for not knowing what tomorrow might bring and be prepared to ride out temporary downswings. Before leaving the corporate world, Lemon saved enough money to live on for six months. She also found one bread-and-butter client, with a couple of leads in the hopper. Doesn't sound like much, but it was enough. “The security blanket is knowing that somebody will pay you to do something,” Lemon says. “Leaving doesn't mean you're slamming the door on all other businesses. It's not like the corporate world doesn't want to see you again.”
Lemon is fortunate that her passion for writing is also one that doesn't require a lot of money to get started–a few pens, some paper, and a bit of office equipment was all she needed. Even if she is able to diversify her talents into other areas, such as speech writing and communications, she'll still have low overheard, so she won't need a bank to keep her dream afloat.
At the moment, Lemon doesn't have any plans to take on employees. But a home business can quickly grow into much more than a one-person shop–and may require outside help to keep growing. Just ask Tanya Shaw Weeks. The founder and CEO of Unique Solutions Design Ltd., a custom body-measurement firm in Halifax, started her first clothing-design business, called XZEL Designs, in her parent's basement after graduating in 1991 from the costume studies program at Dalhousie University. Shaw Weeks knew she was going to be in business for herself as early as junior high, when she began sewing clothes for her friends and teachers. Eventually, she moved XZEL Designs into her own home, and some 15 years later, Shaw Weeks is head of a thriving little business, renamed Unique Solutions, that employs 30 people in Halifax and claims to be the world's largest custom-fit pattern company.
The turning point for Shaw Weeks came in 1994, when she tried her hand at automating the process of customizing patterns for fitted clothing–quite a challenge considering she didn't have a technology background at all. The key to success in such situations, she says, is to keep trying, and “being able to break down large, seemingly insurmountable obstacles into small stepping stones.” And that's a key difference between successful entrepreneurs and those doomed to fail.
Aside from a software program that drafts clothing patterns to fit any individual's measurements, Unique Solutions has also developed a scanning technology that accurately measures a person's body by scanning them in three dimensions in 30 seconds. Since 1999, the body scanner has been used on more than 20,000 people. Shaw Weeks also spends a great deal of time mentoring entrepreneurs by sitting on boards of organizations such as the Entrepreneur's Forum and the Centre for Entrepreneurship Education and Development, and speaking with students at local schools. Her advice? “Believe that you can do it. Don't take no for an answer, and surround yourself with as great a team as you possibly can.”
If the dire stats on startups always applied, the odds are that both Unique Solutions Design and Steam Whistle should have failed by now. But they didn't, because their founders went after what they knew was an opportunity and took the necessary risks to get there–even if they didn't realize it at the time. “Risk takers don't think they're taking risks,” says Heaps. “They don't start thinking, 'What if we fail?'” Campfire dreams can come true, after all.