Each week, we seek out expert advice to help a small or medium-sized business overcome a key issue.
Few entrepreneurs manage to channel all their interests into a single business idea, but Debbie Brown appears to have found a pretty close fit.
Four years ago, the Edmonton resident launched Adventure Bus Inc., a mobile gym that caters to children up to the age of 12. Ms. Brown, who has a background in gymnastics and rehabilitative therapy, purchased and retrofitted a 72-seat yellow school bus with gym equipment – from monkey bars to a rock climbing wall to a mini trampoline – and designed programs that encourage young people to embrace fitness through fun, age-appropriate activities.
"I had seen the concept in other countries, but nothing in Canada," Ms. Brown explains. "I did some research, found some examples in other places and made it my own."
Ms. Brown's enthusiasm for her work has turned her venture into a word-of-mouth success. Adventure Bus has become a recognizable fixture at birthday parties, grade schools, daycares and community events around Edmonton without her having to do much marketing, she says.
Business has grown by 45 per cent in the past year alone. "We actually get calls from all over North America because someone's posted pictures on Facebook or Twitter."
With just one bus, however, Ms. Brown says she can no longer keep up with demand and has had to start turning down bookings.
While this scenario sounds like a prime opportunity for expansion, a number of roadblocks are preventing her from purchasing a second bus.
Her most immediate challenge lies in the vehicle itself. Ms. Brown says she invested all her money in a bus that should have been sent straight to the junkyard. "It had been inspected in Ontario with a glowing report," she explains. Within an hour of driving it away the bus broke down, and she continues to sink tens of thousands of dollars into her mobile money pit each year to keep it on the road and ensure it meets safety standards. All her profits have been eaten up by the repair and maintenance of her vehicle, she says.
"I've drained my own personal finances because of this, so I can't just go out and get a line of credit," she says. And an official loan is off the table as well. Ms. Brown says a former partner in a prior business drained the company funds seven years ago and, with litigation pending, no bank will extend her any capital.
Because of this experience, she refuses to consider entering a partnership with someone who could invest his or her own capital into the company. "There's no way I would partner with someone now. It petrifies me," she says.
In the meantime, she's at a loss to come up with solutions to her expansion challenge and feels her only option is to sit on the slow but steady model of growth based on small annual profit margins.
In the meantime, she worries her business will suffer if she is unable to keep up with demand. "We need to get a new bus, period. I have all my eggs in one basket now and that's a terrifying thought."
THE CHALLENGE: Faced with high operating costs and barred from traditional financing, how can Ms. Brown raise money for a new vehicle before her momentum peters out?
THE EXPERTS WEIGH IN
Tom Thurmeier, partner with Small Business Legal Centre, Calgary
Ms. Brown could try alternative lenders. We always look at the circle closest to us: friends, family, relatives. If any of these folks have money to lend, even with securities in the form of guarantees or assurances for their own comfort, their policy and guidelines may be a lot easier than those of the major banks. It can be useful even to seek a series of microloans from that closer circle because there is the comfort of relationship there.
Another creative way is sponsorship. Debbie can wrap her bus in ads and charge for them.
She could also seek government funding. A number of gift and grant programs are available, and because of the nature of Debbie's business – children and school and play – she may be more likely to access some of them. She may even get more favourable terms for a loan if that's the route she wants to take. BDC (Business Development Bank of Canada) comes to mind in this case.
To cut her costs, Ms. Brown could work with parent volunteers instead of paid staff. Schools do it all the time. She can reduce her rates or offer a special deal for the parents who help her supervise the programs.
I think she's got to do a little outreach into the community and tap into some partners. It wouldn't be a bad idea if she spoke to people at the Rotary Club to see if they want to set up a fundraising campaign for the new bus. Through my experience with Rotary I know they get behind community causes and they might be able to assist. Also try a Women in Trades group, like Women Building Futures in Edmonton or Trades Alberta. Maybe there's a training school where women are coming in – women or moms who may have a vested interest in something good for their kids – and they can have a cool campaign of mechanically inclined women helping to retrofit the bus.
I would also do more fundraising initiatives, even speaking at churches. I would try to avoid incurring costs because I don't think she can do it. Failing that, leasing a bus instead of purchasing one outright is also an option.
I started out on my own in 2008 with one car. Today I have 10 party buses, a coach bus and four limousines with two companies. Still, every day something new pops up, so our friend in Edmonton needs to have some mechanical knowledge. I'm not a mechanic, but I've always played around with things and figured how to put things back together – something that is key when it comes to running any kind of business that involves transportation. If you don't have that, you'd better have some deep pockets because you're going to be spending a lot on stuff that you should be able to do yourself or in-house. You won't make money if you send every repair out to a mechanic's shop. They will get you every time and you will not pull ahead.
Even having a basic knowledge would help. Then she would be able to explain what's wrong with her vehicle and a shop wouldn't just tell her she needs all sorts of other repairs. She won't look like she doesn't know what she's talking about and she can make her own decisions at the right time.
THREE THINGS THE COMPANY CAN DO NOW
The kindness of strangers
Try community fundraising efforts. Consider volunteer staff to cut costs and reach out to trade schools to see if anyone wants to help retrofit a new bus for the practice.
With a little help from my friends …
If a bank loan is off the table, try a series of microloans from friends or relatives. Their security terms won't be as stringent and by optioning a number of them she won't be indebted for too much money to one source and can pay more easily over time.
Hit the books
Even a rudimentary knowledge of mechanics will help Ms. Brown better negotiate repairs that her bus requires and will ensure she's not taken for a ride at the shop.
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Interviews have been edited and condensed.