Ian: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada’s small businesses. I’m your host, Ian Portsmouth, the Editor of PROFIT Magazine. And we’ve developed this podcast in cooperation with BMO Bank of Montreal.
How do you start a business successfully and then turn it into a successful business? Well, few people are more qualified to answer that question than the entrepreneurs of the PROFIT HOT 50. Now on its ninth year, the PROFIT HOT 50 ranking of Canada’s emerging growth companies identifies the fastest growing young businesses in the country and explores the methods they’ve employed to build their award-winning enterprises. The Business Coach is dedicating two episodes to the PROFIT HOT 50. In the second episode, we’ll learn the success strategies of two of the top ranked firms but first we’ll find out from two HOT 50 entrepreneurs why and how they launched their own companies.
The first of those entrepreneurs is Neil Spivack, the founder and CEO of Toronto-based Direct Sales Force. Over the past two years, annual revenues at Direct Sales Force have grown from $947,000 to more than $4 million giving it two-year revenue growth of 324% and 27th place on this year’s PROFIT HOT 50. We are also joined by Alex Haditaghy, founder and CEO of MortgageBrokers.com, based in Concord Ontario, the company enjoyed 2,007 sales of more than $10 million U.S. up from just $250,000 in 2005. That gives MortgageBrokers.com a two-year growth rate of 3,993% and the number one spot on this year’s 2008 PROFIT HOT 50.
Gentlemen, welcome to the Business Coach.
Alex: Thanks Ian, it’s a pleasure to be on this show.
Neil: Thank you Ian.
Ian: Alex, congratulations. What’s it like to be number one?
Alex: It is a great feeling, there are lots of quality companies that add a chance to look and do, study on them, you know. It is a privilege to be part of this great list.
Ian: That’s great. Now Alex, in 10 seconds or less if possible, tell us a bit about what your business MortageBrokers.com does?
Alex: Sure. MortgageBrokers.com is Canada’s first and only publicly-traded mortgage brokerage firm. Our business model is very simple, we are a consolidation player in the mortgage market offering exit strategy and retention and centralized services to mortgage brokers across Canada. Our goal is to provide these brokers with creative strategies, retention of their top brokers and alternative revenue sources.
Ian: And why did you get into business for yourself?
Alex: You know, I had an opportunity to work for a great company for quite a short period of time and realized what was going on in the mortgage industry and I thought that it could be done different. I had a chance one night watching on TV the WestJet commercial, I love the business model of shared ownership and how it would be a great idea to start a company that addresses those issues in the industry.
Ian: And did you come from a Real Estate background?
Alex: No actually, my background, in university, I got my degree in chemistry, and my background is in Information Technology and how the mortgage brokerage started was luck I guess and I am very glad I did that and it’s been a few years since I started doing that.
Ian: Now, Neil, congratulations to you as well.
Neil: Thank you.
Ian: Why don’t you tell us a bit about what Direct Sales Force does?
Neil: Ian, no problem. Direct Sales Force is a face-to-face marketing company, we set up kiosks inside of key retail locations that include airports, shopping centers, tradeshows, in-store and special events across Canada. What we do is we hire, train and manage our own sales force to represent our clients’ products and brands and interests.
Ian: So Neil, why did you go into business for yourself and start Direct Sales Force?
Neil: Well, I went into business for myself, I always wanted to be an entrepreneur, it was something that I always look upon doing when I was growing up. I’ve always read a lot of books on leadership and various entrepreneurship books. One of the first books I read was “Good to Great” and it kind of gave a really strong vision towards, you know, starting and being an entrepreneur.
Ian: And what is your business and/or educational background?
Neil: I gained a marketing diploma from Seneca College. Also completed the two-year CAP program that is run through the Institute of Canadian Advertising and I am currently going into the second year of a Master in Business Program that is run specifically for entrepreneurs through MIT in Boston.
Ian: And Neil, let’s move on to the question of what made you pick the industry that you are in? Why did you think that there was an opportunity to provide these kinds of services to businesses?
Neil: Well my first job out of college was in advertising with Leo Burnett, I worked inside their media department. While I was at Leo Burnett, I saw clients paying a lot of money towards television, radio and print advertising without really getting a direct return on their investment. They don’t really, you know, see exactly how many people are buying their products versus how much dollars they are spending on the commercials. So it’s got me towards thinking, you know, towards a business that can provide a service to these clients. I could provide them a true return on their investments. You know, sales quickly came into my mind as I have always succeeded in sales in the past and knew that companies always needed assistance in growing their sales channels.
Ian: Alex, we know that the housing market has been booming over the past few years. But still how did you choose the industry that you got into, a mortgage brokerage? And also what made you decide that there was a big opportunity in consolidating independent mortgage brokers.
Alex: As a business company, when we launched our business three years ago, we thought that every cycle has the downturns and upwards and what usually goes down usually goes up and whatever is up usually goes down. And we thought that Real Estate market and mortgage market in Canada and U.S. will slow down in the next two to three years and you’ll see independent mortgage brokers looking for a company that can provide them with lean operation services that could reduce their overhead and provide them with exit strategy and provide them with stability. We are fortunate that our prediction was correct and that our success, I should say, is reflective of our business plan that, you know, we’re growing in a slow market. And we feel that market like this is great for business because independent mortgage brokers need services such as ours.
Ian: Now, how much planning went into launching your business? I guess there are two opposing camps out there in the business world, a lot of them say that you should just go with your gut and don’t worry too much about market research and tear up your business plan. And then there is a school of thought out there that says you have to plan extensively to launch a business, really study the market and certainly have some sort of guide. Where do you fall into that spectrum?
Alex: Actually, that’s an interesting question. One of my advantages that I have, I have a strong management team that supports me. Personally, I am one of those characters that believes in “go with your gut feeling and you know, if you have any experience, go for it”. I do have a management team that believes in the business model and that believes in planning everything extremely carefully and they are coming from the banking side and the business side. And for MortgageBrokers.com, we end up going with six months of planning, planning and researching. We wanted to make sure that every aspect of our business plan was sound. And we continue doing that. We review our business plan every 30 days, where we are, where we are going. We realize that a business plan changes all the time, our business plan, you know, is extremely important for us.
Ian: Neil, I will pose the same question to you. You know you had your experience at Leo Burnett, did you do additional market research before launching Direct Sales Force?
Neil: Not much planning went into the business, it’s a sales business, you know so really I had to get out there and sell. I put a long list of potential clients and potential products that I felt as a company, we would be able to represent face-to-face to people and really just started, you know, getting on the phone and contacting clients and putting the face-to-face marketing concept into motion.
Ian: And what is the toughest hurdle that you’ve had to overcome Neil in launching Direct Sales Force?
Neil: I mean there are lots of things, you know, when you are starting a new business and when you are growing, you know, very rapidly. I would have to say, one of the things that I did was I expanded very quickly into different cities, one of the few things I would have done differently was my first expansion outside of Toronto took place in Montreal. And as I did that, I quickly learned that Quebec is a much different market than the rest of Canada. I guess what I would have done differently is expanding in other markets outside of Quebec prior to entering the Quebec market. That being said, after a lot of hard work, Quebec is now one of our — it is actually our second largest market outside of Toronto. So it’s been a lot of work but we’ve finally got it to where it needs to be.
Ian: And Alex I know what we report in the current issue of PROFIT Magazine that one of the big challenges you had actually involved Real Estate at one point in time. You had fifteen people working out of your home when you could not find an appropriate office space. But have there been any other big challenges that you’ve had to overcome?
Alex: Absolutely. When you start a business, there are a lot of daily and weekly challenges that you face but I think that is part of the fun and exciting part of being involved in the start up. When I look back, I actually cherish all those moments because those experiences allow us to enjoy moments like this.
Ian: Now, a question for both of you. A lot of people out there aspire to run their own businesses and a lot of them probably don’t have a good understanding of how much time, sweat, toil, sacrifice is going to require to get their businesses off the ground. So I’ll start with you Neil. How much time and other types of sacrifice have you put into the launch of Direct Sales Force?
Neil: An enormous amount. I mean, during the start-up process, I worked really around the clock, around eighty-five hours per week including week-ends. I really personally don’t look at it as sacrificing. I mean, my family and the people closes to me supported my idea and my decision to start the business really 100%. I mean, specifically, the only really sacrifice that I took was loosing sleep.
Ian: But that can be tough. Alex, what have you had to give up in order to get MortgageBrokers.com off the ground?
Alex: Neil said that very well and that is you know, I don’t look at it as a sacrifice but you know, I had to put a lot of hours, eighty, ninety hours a week and you know, working Saturdays and Sundays. It does affect you in some personal relationships you know, but I was really lucky that my family, my mother, my brother and my sister and you know, my co-workers really supported me and my colleagues supported me Ian. You know the growth of the company really motivates you and you want to work harder even and I put more hours and you know, I am fortunate when it comes to that.
Ian: Well, it’s all worth it if it does pay off. Gentlemen, Alex and Neil, thanks for joining the Business Coach.
Alex: Thank you.
Neil: Thank you.
Ian: Alex Haditaghy is the founder and CEO of MortgageBrokers.com based in Concord Ontario. MortgageBrokers.com is the top ranked firm on the 2008 PROFIT HOT 50 ranking of Canada’s emerging growth companies. Neil Spivack is founder and CEO of Toronto-based Direct Sales Force which ranks 27th on the 2008 HOT 50.
Well, that’s it for the first of two episodes we’re dedicating to this year’s PROFIT HOT 50. In our next episode, we’ll explore the tactics and strategies that these companies have used to achieve such rapid growth.
As always, you will find the Business Coach archives at BMO.com, profitguide.com and iTunes. And if you have any comments or suggestions about the podcast, please send them directly to me at firstname.lastname@example.org.
Until next time, I am Ian Portsmouth, the Editor at PROFIT Magazine wishing you continued success.