Senior executives who leave a major corporation to start a small business face predictable challenges: no HR department to vet new hires, for example, or no IT department to remedy computer problems. Most of the time, they're on their own.
But they also have a powerful advantage over other startups - years of intensive experience that helps them recognize opportunities, and the contacts and business expertise needed to exploit those opportunities.
That edge makes for a powerful head start, but more is required. "You have to be ready to roll up your sleeves," said Glain Roberts-McCabe, founder and president of The Executive Roundtable, a leadership forum and support group.
Corporate executives starting a new business venture need to "enjoy the heavy lifting" as much as the strategic thinking, Ms. Roberts-McCabe said. "And you need to know what the financial investment is going to be in the first three years, which is a pretty typical [time frame]to get established."
Take the case of Terry Ball and Jerry Olszewski, two men who left senior executive positions for Toronto-based Innovative Composites International Inc., which develops innovative products for the construction, transportation and fire fighting industries They know all about the difficulties of leaving the corporate world for the risks of starting over.
Mr. Ball, who launched ICI in 2006 after 18 years at Magna International - including a position as chief operating officer of Magna subsidiary Decoma Exterior Trim - had to significantly boost his computer skills. And Mr. Olszewski, who held a number of senior positions in engineering and design at Chrysler LLC before becoming ICI's director of engineering, had to build product prototypes of thermoplastic panels in his garage.
Both executives had to forgo salaries while the company burned through funds in its quest to find new uses for thermoplastics developed in the automotive sector.
"I felt that if you took some of the high-powered engineering concepts [from the auto sector]and some of the very strong engineers and went after different markets … the redesign and re-engineering of housing, shipping containers and even [ballistic protection]panels for police and military vehicles, that you could provide better solutions at a better price," Mr. Ball said.
For ICI, the hard work may already be paying off.
Mr. Olszewski met at the United Nations with members of the Clinton Foundation as part of a competition for contracts to build earthquake-resistant houses for Haitians displaced by the January earthquake. "We've taken the requirements from them and built some sample panels," he said. Testing is under way and a complete prototype will be built early in 2011 at the company's plant in Sault Ste. Marie, Mich.
ICI was recently named a finalist in the housing competition, after confirming it could build more than 5,000 low-cost units annually.
For Mr. Ball, who's gone from running a 7,000-employee company to heading an organization with 11 staff members, starting over has meant finding new ways to solve old problems. Along the way he recruited other former senior Magna executives, including Fraser Wray, now the firm's executive vice-president, and Bryce Clark, its director of manufacturing.
"I made the decision that if you picked the right people with the right motivation, which surely wasn't financial, that we'd get there eventually," Mr. Ball said. "Everybody in our group I worked with for many, many years and we're all driven to be successful. The challenge was making sure we had the resources and the cash to do that."
In many ways what these former corporate executives bring to the table is typical of the results that can be achieved when years of corporate experience are married to the startup and running of a small business.
"They've got the knowledge of the market," Ms. Roberts-McCabe said. "They saw a gap, and they understand where the need is and have a good handle on the potential clients for their products."
Like most startups, cash flow remains an issue. ICI's revenue for the nine months ended June 30, 2010, was $132,581, and the net loss was $2,964,710. The company, listed as IC on the TSX Venture Exchange, has had two public offerings; the latest in November raised $4.7-million.
The biggest challenge now is the long sales cycle common in the housing market. "Certain customers - such as the government and the military - the decisions they make are not quick. We're weathering this cusp while waiting for the significant contracts," said Ilja Troitschanski, the company's chief financial officer.
Smaller orders are starting to come in, however. ICI helped with the construction of a pedestrian bridge for a transit station in Chicago. It produced panels for a Mercedes dealership in Burlington, Ont., for use in its showroom and car-washing station. And it is ramping up to produce shipping and storage containers, as well as a tonneau cover for the back of pickup trucks.
Still, with housing their major market, the Haiti contract is a key component of any long-term success.
The company has formed a consortium with Barclays Gedi Group and 3D Global Solutions (both privately held U.S. companies), whose employees will be on the ground in Haiti to make sure ICI's thermoplastic houses are correctly installed using local labour.
Mr. Ball has no doubt his company will get a portion of the $4-billion project, which is expected to be divided among six to 10 developers. "We're working hard at securing that contract," he said. "I think we have the right political connections and a good consortium that will bring that home."