They are devastating scenarios for any business owner: a welder’s spark on a September morning ignites a fire that burns your factory to the ground by mid-afternoon; the breakdown of a marriage, which threatens the successful company co-founded by spouses, or the recurrence of breast cancer.
Setbacks like these can derail any company, but these resolute Canadian businesses rebounded: Chapman’s Ice Cream Ltd., an independent ice cream manufacturer in Markdale, Ont. and two Hamilton-based companies, MJM Media Inc., an audio and video production house, and Janac-Mastectomy Wear, a sole proprietorship that makes sports bras and the Been-A-Boob prosthesis for women after breast cancer.
Here’s how these three companies coped:
Chapman’s Ice Cream Ltd.
After fire destroyed their factory in 2009, David and Penny Chapman, who founded Chapman’s Ice Cream in 1973, rebuilt the company to become Canada’ largest independent ice cream manufacturer, reporting a 20 per cent sales increase last year alone. Son and vice president Ashley Chapman attributes the company’s swift recovery to insurance and his parents’ sound fiscal management that included not overextending lines of credit and not expanding, building or doing anything without the money in the bank.
Two decades before the fire, the company invested in business interruption insurance that would pay for anything over normal costs of doing business in different sorts of disaster – that would cover them for replacing the product or equipment as well as maintaining their labour force so any salaried employee would be covered for one year from the date of the incident and all hourly employees covered for four months. While the initial cost was high, it proved critical to rebuilding the new factory, as was their habit of having cash on hand.
One major worry at the time of the crisis was that they wouldn’t get enough money from the insurance policy quickly enough to maintain their position in the market.
“We have the most sought after real estate in the grocery store – the frozen food section – so the biggest concern throughout the entire ordeal was losing our spot in the freezer,” explains Ashley Chapman. “Our competition was in the head offices of stores days after the fire saying, ‘Look, Chapman’s can’t bounce back in any reasonable time so just drop them and take our product.’ Where we succeeded was that seven weeks after the fire, we started producing ice cream again in a temporary facility here in Markdale. As far as our competition was concerned, that was an impossibility.”
While the building still burned, David Chapman phoned all his equipment contacts, including suppliers at a trade show in Chicago, telling them that he wanted to buy pretty much all the ice cream manufacturing equipment on display, recalls Mr. Chapman. The family also acted quickly on a junk mail flyer that arrived by coincidence from the U.S. about an ice cream company that had gone out of business and was – ironically – having a fire sale.
“Our VP of operations hopped on a flight with a big bag of money and went down to the sale to buy equipment,” says Mr. Chapman. “We had lost everything in the fire and this seemed to just come out of the blue. It was like fate intended it.”
While manufacturing had all been in one place, thankfully the company had a dry warehouse about a block away with nearly $12-million worth in inventory of frozen ice cream products so they could keep on selling while they set up manufacturing in temporary facilities.
“The chances of actually recovering without anything would have been exponentially more difficult,” says Ashley Chapman. “You always have to think about the logistics of your business. Is all your manufacturing in one spot? Are your warehouses attached to the same building? You never think about things like this unless you’re thinking about disaster recovery.”