Alberta's tough economy forces businesses to look outside province

For the past 20 years, the owners of DeJong Design Associates, a custom home designer based in Calgary, have relied on word-of-mouth marketing to attract clients.

But the couple who owns the firm, Marvin and April DeJong, say that strategy is no longer working amid the biggest slowdown they have seen in their design firm's history.

Low oil prices continue to hamper Alberta's economy, contributing to rising unemployment rates, a slowing housing market and stalling business for various companies, such as the DeJongs'. In Calgary, house prices fell 3.5 per cent year-over-year in April, according to the Canadian Real Estate Association.

Meanwhile, the province is facing new challenges: Wildfires in northern Alberta destroyed thousands of buildings in Fort McMurray earlier this month, and forced the shutdown of several oil-sands operations. Economists predict Alberta's economy will contract by 1.7 per cent this year.

In Calgary, the DeJongs have seen demand dip for their company's products – custom homes designed over weekly meetings spanning months, often for clients building a new house in an established community. Monthly revenue is down 35 per cent.

The downturn has prompted the design firm to seek out opportunities in British Columbia and Ontario, provinces with stronger economies where they have previously designed homes for Calgary clients. Other Alberta small businesses in various sectors are adopting similar strategies, looking beyond their own backyard and expanding to other provinces or export markets, or opening satellite offices.

"One of the positives about our business is we can do work across Canada but still be working here, in Calgary," Ms. DeJong says. "We just have to let other places know about us."

The move to new markets comes after adopting numerous cost-cutting strategies, including shifting their seven employees to a four-day workweek, laying off an office administrator, and forgoing cleaning staff and an off-site storage space.

More recently, Mr. and Ms. DeJong placed newspaper ads in small-town B.C. papers, contacted builders outside Alberta who they've worked with before, and increased their presence on completed projects outside Alberta.

"We just finished a vacation house, for a Calgary client, in Ontario. We would have probably not done much about that from a marketing perspective before, but now we're following up with the contractor. We just ordered a site sign with our name and website," Ms. DeJong says.

The owners are hopeful such strategies will allow them to avoid laying off more staff. "We're working so hard to retain everyone, so when we come out of this, we'll be ready to go again," Mr. DeJong says.

Exploring new markets is "critically important" to companies that want to survive the downturn, says Barbara McKenzie, executive director of the Leduc Nisku Economic Development Association. The association serves a major industrial hub 20 kilometres south of Edmonton, home to the largest energy-services industrial park in the country.

"It's challenging times. We are seeing companies close, and there's significant job loss in this area," Ms. McKenzie says. "There's a huge need to get people to think about exporting, about what they can do to move their companies forward, about how they can access new markets." To that end, the association hosted a full-day event May 6 for companies looking to grow in new markets.

Other supports are available: In late February, Export Development Canada announced $750-million to provide additional financial services, including loans and guarantees, to small and medium-sized businesses in the Canadian oil and gas sector.

Mark Senn, regional vice-president, Western Canada, for Export Development Canada, says the federal Crown corporation had 140 inquiries in the six weeks following the announcement – five times more than normal activity. While he's honest with small businesses that developing an export market is difficult and expensive, he also believes it's crucial.

When Mr. Senn moved to Calgary in early 2014, he found small businesses were often reluctant to extend their reach. The economy has forced a change. "There are a number of situations where companies have said business has dried-up, they don't see revenue coming from domestic operations, so they have to look abroad," he says.

Pekarsky & Co., a seven-year-old executive search firm with offices in Calgary and Edmonton, is also seeking opportunities in new markets. After two years of working for the firm in its Calgary office, recruiter Jessica Young moved to Toronto March 1 to open a new office for the company.

"The opportunity to come out east and invest the time and resources and take the risk on was never part of the strategic plan," Ms. Young says. But the downturn and its accompanying uncertainty led Ms. Young to propose the move to the company's partners.

"We weren't able to plan our course with as much surety as we used to be able to," she says. "In an economics sense, it meant we weren't sure what revenues would look like, and in a real day-to-day sense, it was visceral, the insecurity you feel, the stress you start to feel."

Nearly three months into the move, Ms. Young says the company has already attracted new clients. "There's talent everywhere. When the Alberta market swings back up, there will be people who want to come back," she says. "This office will be a natural dovetail to what we were doing before."