Meet the people who say they will deliver you from recession - or die trying.
"If you're not growing, you're dying," says Mark Hanna, president of Leeza Distribution Inc. of Montreal. "If you're going sideways, you're dead," agrees Jeff Lem, president of qdata inc. in Markham, Ont. "If you think you are going to get killed, you get killed," adds Oren Nutik, president of MDS Power Inc. in Montreal.
None of the three are counting on shrinking, going sideways or getting killed - nor are many of the other 82 entrepreneurs who joined them at a conference in Ottawa last week.
The gathering of mostly Canadian business owners - hosted by the local chapter of the Entrepreneurs Organization, or EO, which has 7,000 members in 28 countries - was a window on a rarely discussed yet significant aspect of the global economy. The smaller businesses these entrepreneurs create and run account for 60 to 80 per cent of the jobs created in the United States, and companies with fewer than 50 employees represent a quarter of Canada's gross domestic product, according to government figures. When politicians go to the local chamber of commerce and extol small business as the backbone of the economy, they aren't blowing smoke.
"We should care about them because companies like that contribute a lot to innovation and job creation," said Becky Reuber, a professor of strategic management at the University of Toronto's Rotman School of Management who studies entrepreneurship and smaller businesses. "They will be very important in leading us out of the recession."
The entrepreneurs who gathered in Ottawa - and whose companies generate annual sales between $1.5-million and $45-million apiece - seem to think so. In co-operation with The Globe and Mail, the conference organizers circulated an informal survey to gauge the mood of participants after a year battling the deepest global contraction since the Second World War.
Most respondents said they believe the worst is over, and expect business to pick up in 2010. Most also said they had discovered new opportunities during the downturn. Asked whether they would start a new business today or wait, most said they would "jump in."
"It's the small and medium-sized businesses that will get us out of this," said Stephen Kearley, president of insurance broker Benson Kearley in Newmarket, Ont.
The optimism evident at the Ottawa gathering was possibly stronger than that shown by other small-business owners. The most recent confidence survey by the Canadian Federation of Independent Business, which represents 105,000 smaller and medium-sized enterprises, produced an index reading of only 58.6 in July, compared with 58.5 in June. A score greater than 50 indicates that owners who expect their performance to be stronger over the next 12 months outnumber those who predict it will be weaker.
"Despite the recent announcement from the Bank of Canada on the economy coming out of recession, SME [small and medium enterprise] confidence has not yet turned the corner," Ted Mallett, the CFIB's chief economist, wrote in the report.
While the slogan of the Ottawa conference was "Changing the World Through EO," the real mantra was voiced by Peter Thomas, founder of the Canadian unit of real estate firm Century 21, in an address that attendees couldn't stop talking about: Recessions are when money is transferred to smart people from dumb people.
The words of the former owner of a company that generated sales of $9-billion energized a group of people whose instincts are telling them they are about to receive healthy transfers from the dumb side of the ledger.
"This whole thing is fun," said Mr. Hanna, even though the recession is causing his sales to "flatten" at about $20-million after years of rapid growth. "It's a strategic game. That's the rush. There are no entrepreneurs inspired by safety."
Mr. Hanna, whose company distributes surface materials for countertops, is planning to move into floors. Mr. Nutik, who generates about $10-million in annual revenue by selling power-generating equipment, has hired a new sales manager to help bolster his presence in Latin America.
Blair Assaly, who runs a real estate company that owns 400 units in Edmonton, said he is "kicking a lot of tires" in Scottsdale, Ariz., where property values have sunk as much as 40 per cent.
Of course, the EO members who convened in Ottawa have felt financial pain. And while they are generally hopeful about their own prospects, some are less certain the broader economy is poised for recovery. "I didn't think [the recession] would last this long," Shelley Whatmore, president of Calgary-based TopFlight Asset Services, which sells refurbished cellphones, computers and other tech gear. Even though her profit is up because consumers are turning to cheaper goods, she is skeptical a rebound is imminent.
Mr. Assaly agreed. "My gut says it's not over yet. ... Until the consumer really starts believing, the recession isn't over."
Mr. Lem, whose qdata earns annual revenue of about $12-million selling software such as bar-coding gear, said he has managed to increase profit - but only through a lot of extra work. "The recession hit harder than we thought and more quickly than we anticipated," he said. He responded by pushing his sales team to try harder to sell qdata's services along with its equipment. The whip cracking is paying off: "We have slightly higher revenue, but we had to work twice as hard to earn that money."
