year 2012.
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Lookahead
Challenges and resolutions for small businesses in 2012
Globe and Mail Update
Published
Last updated
Small businesses across the country reveal the biggest challenges facing their companies and industries, and their top resolutions for the year ahead
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Robert Meggy, president and CEO, Great Little Box Co. Ltd.
Business: Manufactures custom and stock corrugated boxes, displays, folding cartons, labels and protective packaging
Based in: Richmond, B.C.
Year founded: 1981
Number of employees: 230
Annual revenues: $40-million
Website: http://www.greatlittlebox.com/1) Biggest challenge your company faces in 2012: The economic uncertainty facing our customers, combined with the strong Canadian dollar. A significant amount of what we do is exported, primarily to the United States, so a strong dollar doesn’t help.
2) Biggest challenge your industry faces in 2012: Continued erosion. We are manufacturers and deal primarily with manufacturers. Offshore manufacturing and the Canadian dollar have had a huge effect. When the dollar was 55 cents several years ago, things were wonderful, but when it started going up, it affected our customer base and the entire industry very heavily.
3) Top resolution for your company in 2012: Growth. Our strategy has been to diversify. We’re going on a fairly heavy acquisition mode again. We’ve bought seven companies in the last few years and want to acquire at least two packaging companies in B.C. or Washington state over the next year.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? An 8. We’re finishing our largest growth year in over five years. We’ve just expanded our sales force and upgraded our equipment. It’s been a very good yearand we expect things to grow well, despite the worry about the economy.
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R. Wayne Guy, founder and principal, Guy Architects Ltd.
Business: Architectural design, engineering and consulting
Based in: Yellowknife, NWT
Year founded: 1990
Number of employees: 8
Annual revenues: $1-million
Website: http://www.guyarchitects.com/1) Biggest challenge your company faces in 2012: When it comes to public-sector work, our challenge is that it takes a lot of time, effort and energy to secure the work, with more proposal-writing and business-development costs. We’re finding that the territorial governments are going more toward southern providers, so there’s a lot more competition coming from south of 60. Essentially, that takes the local dollars and ships them south. That’s the biggest challenge. Plus the cost of doing business in the north is more expensive than say Edmonton, Winnipeg, Ottawa or Montreal, who are the key competitors for the work north of 60.
2) Biggest challenge your industry faces in 2012: Recruitment. We have quite a large rate of growth in the north right now. Usually there’s an area of recession that we can tap into but the whole of Canada seems to be doing fairly well. So the challenge is attracting and getting the talent to come north for firms like ours. Unless someone wants a challenge specifically in the north – and there are lots of great challenges up here – it’s difficult to recruit. We’re currently looking for more people, especially architectural technologists for our Iqaluit office and a couple of people for our Yellowknife office as well.
3) Top resolution for your company in 2012: We’d like to grow our market in Nunavut and get the level of revenues on the Nunavut side to exceed our Yellowknife operations. That’s what we plan to do in 2012. The resource sector is really taking off in Nunavut. With that, people are moving to the territories, so there are requirements for housing and infrastructure growth as well as the industrial development of the new mine sites that are proposed.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? An 8 for optimism. I think the federal government’s commitment to the north is beginning to come through in terms of the sovereignty issues. The infrastructure growth that we’re seeing, especially up on the Arctic coast,is encouraging with the new Canadian High Arctic Research Station that’s proposed. There’s also a major piece of infrastructure going into Iqaluit for the new airport. 2012 is going to be a great year for the north and for our business.
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Ed McNally, founder and president, Big Rock Brewery Inc.
Business: Beer
Based in: Calgary
Year founded: 1985
Number of employees: 120
Annual revenues: $50-million
Website: http://www.bigrockbeer.com/1) Biggest challenge your company faces in 2012: We have so many. There’s a lot of competition plus new competitors coming in. Everyone faces the same market share competition as well as price competition. Then, governments are always changing the rules. There’s a lot of red tape. We only have one customer – the Alberta Liquor Control Board that resells and distributes our beer. Every province has a similar setup. We have difficulties in places like Ontario, where the big brewers own most of the retail stores, so that we don’t get any frontage in the beer stores. We’d like to bring Alberta beer to the Quebec market because they’re big beer drinkers, but Quebec won’t allow us to ship beer into their province. If we could afford to build a brewery and produce it in Quebec, they’d be happy. Otherwise, they don’t allow it in at all.
2) Biggest challenge your industry faces in 2012: Some provinces have been talking about reducing the amount of alcohol in beer because they’re concerned about drinking and driving. Some people get very sensitive about having weaker beer. It’s not a positive thing for the industry.
3) Top resolution for your company in 2012: We want to maintain our quality and grow the volume a little bit. There’s a great interest in new craft beers. We have a big standard brewery but also do small brews to produce very specialized beers, like our Scottish Style Heavy Ale. People want variety. We’ve had pretty good markets in the U.S., and also are hoping to expand our market there.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? We’re feeling very optimistic because we’re having so much success with our superior beers. People are crawling across the desert to buy our beers. It’s great.
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Kerry Heid, president, Magna Electric Corp.
Business: Electrical consulting, manufacturing, contracting and field services
Based in: Saskatoon
Year founded: 1980
Number of employees: 316
Annual revenues: $61-million
Website: http://www.magnaelectric.com/1) Biggest challenge your company faces in 2012: We’re rolling out a new strategic plan to transform our organization from a service organization to more of a projects organization in the coming year. Recruiting also continues to be a fairly big challenge because we’re looking for skilled workers all the time, especially in engineering. It’s highly competitive so we put a really aggressive benefits package together for all our employees.
2) Biggest challenge your industry faces in 2012: We’re in the electrical power systems industry and, from an industry perspective, there is a ton of infrastructure that needs to be upgraded, replaced or built new. In Western Canada – Saskatchewan, Alberta and even Manitoba to a certain extent – a lot of electrical power system upgrading needs to be done by the utilities, and that’s a big challenge. When you have new mines and new investment coming into our areas, and one of the reasons they can’t invest is because they can’t get the power delivered, that’s a big problem.
3) Top resolution for your company in 2012: The big resolution for us next year is to take on some larger turnkey projects, where we control the project from start to finish. Right now, we do a lot of smaller service jobs and cover a wide range of services on a project, but moving forward, I’d like to take all of those services and bundle them into handling a project from beginning to end. We’d also like to take on more significant projects than what we're doing right now.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? An 8 or even a 9. Our company has just been named the Saskatchewan Business of the Year at the local provincial Chamber of Commerce. The province is doing very well right now so the future looks really bright for us. There’s been a total attitude change here. Saskatchewan used to be the place to be from, but now it’s the place to be. Over the past five years, the province has become a lot more business-friendly and that’s opened up new opportunities and brought in new investment. It’s been really successful for everyone who stuck it out here.
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Lawrence Porhownik, co-founder and president, Perfect Pierogies Ltd.
Business: Food processing
Based in: Garson, Man.
Year founded: 2006
Number of employees: 10
Annual revenues: $400,000
Website: http://www.perfectpierogies.com/1) Biggest challenge your company faces in 2012: To get our retail product widely distributed in more outlets and stores. We already have quite a large food-service business for restaurants and hotels but we also pack our products for retail. Our pierogies are more expensive, so part of the challenge is convincing people that they’re worth the higher price. Once people taste them, we don’t have any trouble, but it’s a problem to get listed with wholesalers, because they only look at the bottom line. But we’re doing reasonably well. It helps that I have 40 years in the grocery business.
2) Biggest challenge your industry faces in 2012: The biggest challenge is increasing costs all the time. Energy costs are a big part of that. We run a delivery truck and it drinks $100 worth of diesel every week. Labour costs are a problem, too. You can start your workers at minimum wage but if they’re any good and you want to keep them, you have to bump them up. In the food industry, the margins are very small. You don’t really make any money until you crank up the volume. The higher the output, the lower the cost.
3) Top resolution for your company in 2012: To try to take over the top-quality part of the retail market so our main goal is to get distribution with a major wholesaler. We’d eventually like to be ISO- [International Organization for Standardization] certified, so we could ship anywhere in the world, but that’s an expensive goal. It’s probably two years down the road.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? An 8. I’m quite optimistic. Manitoba’s economy is steady and pierogies have always been a big staple in the diet of most Manitobans. We’re getting rave reviews on the product. Even with a broad mixture of cultures, everybody enjoys eating them. The sales will come but it is a slow process.
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Kevin Martin, president, Martin's Family Fruit Farm Ltd.
Business: Growers and packers of apples
Based in: Waterloo, Ont.
Year founded: 1971
Number of employees: 75
Annual revenues: About $20-million
Website: http://www.martinsapples.com/1) Biggest challenge your company faces in 2012: Managing growth. This fall, we nearly doubled our space, with a 30,000-square-foot addition to our packing facility, expanded our sorting line and added a second shift to pack apples almost around the clock this season. We need to carefully lever resources to properly guide and sustain this growth. Part of this will be creating new products to boost sales.
2) Biggest challenge your industry faces in 2012: The Ontario apple industry will be hard-pressed to keep up with increased demand. The local food movement has influenced retailers, distributors and the food-service suppliers to carry more local Ontario products, yet Ontario’s supply can’t cover it all. The number of acres in apples is about half of what it was two decades ago. The Ontario industry as a whole also hasn't kept up with the consumer's shift to newer varieties. Martin’s is better positioned than most given that we’ve invested in new plantings and plantings of more popular varieties.
3) Top resolution for your company in 2012: To expand our market share and create new market opportunities that will help re-energize the Ontario apple industry.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? About a 9. We’re optimistic that this will be a year for Ontario apples to gain some ground. There’s a solid market for our product, we have new partners on board and we’re willing to innovate. However this is still farming, and many factors are beyond our control. As a farmer, I should tone down the enthusiasm. It’s our natural tendency to complain about something.
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Claude Diwan, co-founder and president, Layette Minimome Inc.
Business: Children’s clothing design and manufacturing, maker of Deux par Deux brand
Based in: Montreal
Year founded: 1982
Number of employees: 25
Annual revenues: $10-million
Website: http://www.deuxpardeux.com/fr/1) Biggest challenge your company faces in 2012: The challenge is to outdo ourselves by offering a new product – not just what has been selling. We’re always trying to go out there and get some new novelties. We want to stay trendy but at the same time, we can’t go as far as the trends for women when it’s kids’ wear. You don’t want to cross the line. Also, Deux par Deux is 25 now. We’re dealing more and more with younger parents while we’re getting older. We have to follow them and try to understand what’s in their minds. Yet our clients are also expecting something like what we always give them, so we can’t just turn around and change our style. We still have to stay Deux par Deux. The challenge is how to bring that new twist while keeping our way of doing things.
2) Biggest challenge your industry faces in 2012: The industry is squeezed between the price going up in China and decreasing markets. There is a pressure on us to increase prices because China has really been increasing prices for the past year and a half, and on the other side, there’s a pressure to decrease prices because of the economic crisis, especially in the United States. We’re squeezed in the middle because our margin is going to get smaller. We cannot pass on the increase to the customer. I think everybody must be experiencing that you have to work with lower margins.
3) Top resolution for your company in 2012: To keep our sales at the same level and expand more into the European market. Although the economic situation isn’t great, we’re looking for a distributor in Germany and doing a [kids' clothing trade] fair in Poland. We want our snowsuits to be available in all Scandinavia. Our snowsuits have been in Russia for five years and were doing very well until lately. What we’re trying to do is expand so we’ll be there when things pick up.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? Maybe 7. We’ve been around for 25 years so this not the first crisis we’re dealing with. When there’s a bad economy, we know how much we can lose, but also how much we can recuperate. We’re strong enough that we won’t lose it all. If I was to start a business today or had a brand that wasn’t as well known as Deux par Deux, it would be harder. Having a name and established relationships really means something.
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Wadih Fares, founder, president and CEO, WM Fares Group
Business: Real estate development and management, engineering design and construction
Based in: Halifax
Year founded: 1983
Number of employees: 23
Annual revenues: $25-million
Website: http://wmfares.com1) Biggest challenge your company faces in 2012: The challenge we have here in Halifax and the Atlantic region is that our small population means there’s a shortage of professionals and skilled labour. We’ve grown quite a bit and have a lot on our plate. With the [$25-billion federal combat ship] shipbuilding contract that Nova Scotia won and the Muskrat Falls [hydroelectric] project, we’ll all be competing for the same manpower. That’s going to tighten the market for us in the construction industry and create scheduling problems, indirectly increasing the cost.
2) Biggest challenge your industry faces in 2012: In our industry, construction materials and products are often not available locally, so we have to wait for them to come from outside our region and hope that the shipment is okay. We’re a very small market here in Atlantic Canada, so it’s probably not profitable yet for a big manufacturer to come in and manufacture here. That’s a huge challenge, even though it’s improved a lot. We have a big building materials warehouse and stores that we didn’t have five to 10 years ago.
3) Top resolution for your company in 2012: To maintain growth and keep going. Our biggest strategy is to make sure the team is happy because a lot of companies will be competing for professionals. Maintaining the team is a huge challenge for us. I’m very fortunate to have a great team in my company, but I can’t take it for granted.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? 10. I was born optimistic. That’s why I am who I am. I’m originally from Lebanon – an entrepreneur and a risk taker. I’m happy to be here in Halifax at this good time and very optimistic about our future here in Nova Scotia. The shipbuilding contract has given us all a big boost here. There’s a lot of confidence in the air.
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Rodney Jones, founder and owner, Bookmark Inc.
Business: Independently owned bookstore
Based in: Charlottetown
Year founded: 1972
Number of employees: 12
Annual revenues: $1.5-million to $2-million
Website: http://bookmarkinc.ca/1) Biggest challenge your company faces in 2012: That the economy doesn’t fall flat on its face. The marketplace is changing. The demand for books has been affected by the Internet. I don’t think people enjoy reading in the same way that they did a couple of decades ago. We have a generation growing up who are more interested in chatting on their cellphones than reading books. We provide a good selection of books for young people but there’s a lot of competition out there for their attention.
2) Biggest challenge your industry faces in 2012: The industry has the same problem, not just in Canada but globally. Our society has changed. You can see how the industry is changing from the number of huge bookstore chains that are no longer in existence.
3) Top resolution for your company in 2012: We’ll just continue doing more of the same thing, and doing it well. I’m certainly not giving up on books. Our market may be shrinking but if the inventory is right, there’s still a market. We have very good employees who offer the kind of personal service that you can’t get in a big-box store. We’re just going to keep on doing our thing until it doesn’t make sense. Right now, it still makes sense.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? Not very. We’re already in an economic slowdown. Until our debt situation has been written off one way or another, and the world economies straighten around, I don’t see an awful lot of growth in any retail business.
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Greer Hunt, founder and president, Hunt’s Transport Ltd.
Business: Trucking
Based in: Mount Pearl, Nfld.
Year founded: 1981
Number of employees: 68
Annual revenues: $16-million
Website: http://hunts.sc104.info/1) Biggest challenge your company faces in 2012: Human resources, particularly acquiring drivers for our fleet. That’s been a problem for quite a while. The industry has to find ways of attracting the younger generation into the transport and long-haul industry. This year, we’ve had substantial growth in our company – we’ve almost doubled over the past year – and I can’t get enough drivers to meet the demand. Once the economy starts turning around, especially in the United States, we want to be ready for that turnaround.
2) Biggest challenge your industry faces in 2012: Outside of the driver issue, the biggest challenge for the next few years is that the highways can’t accommodate the volume of trucks. When I was on the 401 recently, it was bumper to bumper. In Quebec, for example, there are major problems with the infrastructure. The roads and bridges haven’t been upgraded as much as they need to be to carry the volume of traffic on them. When traffic slows down, that drives up our cost.
3) Top resolution for your company in 2012: To continue the type of growth that we’ve had. Newfoundland has been in a recession for the last 500 years, but we’ve had substantial growth in the past five years. Now the challenge is to bring back some of the Newfoundlanders who moved away. The population of Newfoundland is about 500,000 but there’s another 500,000 spread out between Ontario and Alberta. There are three flights between Fort McMurray and Newfoundland every day. Through marketing and recruiting, I’d like to bring some of them back and employ them in some really good jobs. I want to offer them the same kind of great employee compensation packages they could get elsewhere. We have a wonderful quality of life here. My goal is to bring people home.
4) On a scale of 1 to 10, how optimistic are you feeling about the year ahead? Definitely a 10 for our province. I’m positive that we’re going to see some more company growth and substantial economic growth in Newfoundland for the next five to 10 years. We’re gearing up for that, ordering new equipment. There should be a good turnaround.
