If some small, rose-coloured part of you imagines back to the COVID spring of 2020 and thinks, Was it really all that bad? here’s a sobering fact: in April alone, a single month of lockdown, Canada lost two million jobs, according to Statistics Canada. Between retail, service, restaurants and millions of gig-economy contracts, it seemed like a race to the bottom for the country’s customer-centric industries.
So a slew of Growth and Startup companies had no choice but to don their creative caps to strategize about how to keep their businesses afloat. Here are a few of their approaches.
Diversify product line
For Montreal-based Theatrixx Technologies (No. 307 on Growth 2020), which manufactures and distributes audiovisual equipment for the (hard-hit) events and performing arts industries, a COVID-specific technology provided an unlikely springboard for the firm’s overall product sales. On a business trip to Taiwan, Theatrixx president Jacques Tessier spotted a device, offered by a Theatrixx supplier, called the “temperature tablet.” When a person stands in front of the device, it measures their basal body temperature using a small camera-and-monitor system.
“With some modifications for the North American market,” says Tessier, “this product had a big impact on our sales. But mostly, it caught the attention of U.S. customers who were then able to sell related products.”
Compared to legions of other AV industry companies, most of whom, Tessier says, had incurred average losses of 60% to 70% revenue, Theatrixx enjoyed boosted sales of items in addition to the temperature tablet—screen-centric tools, such as large flat-screens sold to American churches (via an industry integrator), and a streamer, which facilitates international video-conferencing.
Theatrixx’s COVID case study echoes that of Scarborough, Ont.’s A.D. Hennick & Associates Inc. (No. 248 on Growth 2020), which buys excess inventory and distressed assets. Having founded the organization during the 2008 recession, CEO Alex Hennick is no stranger to ingenuity during a crisis.
A third of Hennick’s accounts are in skin care—in addition to buying other inventory from different manufacturers and selling to discount retailers like Winners and Marshalls—so when his team started getting shutdown notices from his largest clients in early March, the wheels began to turn. Leveraging Hennick’s relationships in cosmetics, A.D. Hennick & Associates quickly entered the sanitizer business. Simultaneously, Hennick had the foresight to order a casual couple million medical-grade masks, posting on LinkedIn to gauge interest levels. Within three days, the post had more than 10,000 views, with first-responders, medical professionals and organizations like the Red Cross getting first dibs.
“Though we could sell the sanitizer anywhere—because all major retailers, like Costco and Loblaws, wanted it—we felt an obligation to send it to the people who needed it the most, like front-line workers,” Hennick says. “I’ve never had a busier four months.”
Capital efficiency is king
Non-alcoholic craft-beer-maker Partake Brewing (No. 102 on Growth 2020) was in the midst of its first round of equity funding to raise US$4 million when the pandemic sent several potential investors running. Even though the Calgary company had started negotiating three months earlier, smaller funds wouldn’t risk deploying money, given the economic uncertainty with COVID. “We were lucky that our product was going into a genuine white space, where we could capture attention through word of mouth, and build sales with a low advertising spend, relative to what you typically see with early-stage consumer packaged-goods companies,” says founder and CEO Ted Fleming. “All of a sudden during COVID, capital efficiency was becoming in vogue.”
Fleming, a former Sault Ste. Marie, Ont., resident, says having a strong balance sheet and the ability to grow the business with little capital kept his lead investor interested. (Even in startup phase, Partake had turned an almost 10% net profit.)
Toronto-based venture capitalist Matthew Leibowitz, the managing general partner at Plaza Ventures, agrees that the companies attracting investors are the ones keeping an eye on capital ratios. “Being lean and mean and cash-efficient is the new norm,” he says.
Build the right team
As a hauler of mostly new vehicles (everything from cars to trucks to tractors), Moncton, N.B.-based Auction Transport Services (No. 245 on Growth 2020), owned by Denise Beaupre, had already weathered multiple strikes and a rail protest. Then, the company’s customer base of manufacturers started shutting down during the early days of COVID. That meant most of her fleet of 30 trucks, which services Atlantic Canada, Quebec and Ontario, was parked indefinitely.
Drivers offered to go on Employment Insurance initially, but no one asked to be laid off. What’s more, Beaupre says they offered to do whatever they could to help the business succeed. “It makes me think I did something right in building this team,” she says of the workforce at Auction Transport. “Because of them, we’ve been able to survive this.”
Slowly, drivers started to go back to work, and she ensured they had everything they needed for the road: from sanitizers and masks to a good supply of snacks (because eating in restaurants was a challenge). With the help of Canada Emergency Wage Subsidy, Beaupre was also able to keep her administrative and garage staff on payroll. As to sales, she says, “We were able to generate revenue during COVID-19 by focusing on inter-provincial crossing with truck drivers.”
Beaupre says the silver lining is realizing she has the right team for whatever challenges lie ahead. “Transparency is important, and my role is to be a leader and care for my staff,” she says.
Scale up e-commerce…
Trade-show cancellations are a familiar struggle for Jill Van Gyn, the founder of Fatso Peanut Butter (No. 18 on the Startup List), Victoria’s preeminent natural peanut butter brand. Van Gyn and her husband were halfway through constructing their booth at Anaheim, Calif.’s Expo West—the world’s largest natural-food trade show, featuring Kind Bar-calibre exhibitors—when the whole thing was called off, torpedoing the company’s planned U.S. expansion. “Expo really was the place to put all our chips on the table, so we needed to put our chips somewhere else.”
Sagely predicting the mass exodus out of grocery stores, Van Gyn and her chief growth officer conducted “the most intense white-boarding session,” electing to double down on Fatso’s Amazon inventory and funnel its advertising dollars accordingly. “We knew we’d always outsell any of our Whole Foods stock on Amazon, always and forever,” she said. “Given what we knew about how COVID was going to affect buying habits, we sort of retreated behind friendly lines.” For the three-person company, March was a record sales month, with sales neatly doubling from e-commerce buys alone.
. . . And reach out
Van Gyn didn’t rest on her Amazon laurels; she got proactive. “We made a list of about 50 people to email, including Justin [Gold] from Justin’s Peanut Butter, venture capitalists who had taken an interest in Fatso, founders, CEOs—anybody who could offer us advice or contacts,” she laughs. “If it was a stupid move, or people laughed at us or said we’d overstepped, we didn’t care.” According to the queen bee of peanut butter, the response was glowing: “Whatever you need.”
—With files from Rosalind Stefanac
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