BUSINESS/ECONOMY

Running their own show

PATRICIA CHISHOLM September 12 1988
BUSINESS/ECONOMY

Running their own show

PATRICIA CHISHOLM September 12 1988

Running their own show

BUSINESS

ECONOMY

When mining entrepreneur Angus MacIsaac’s Las Vegas uncle went to Nova Scotia for a holiday last summer, MacIsaac, 46, was too busy to take time off. As a result, he took his uncle along to NovaGold Resources Inc., part-owner of a small, Halifax-based gold-exploration firm. That is how he learned about the deal of a lifetime. Maclsaac’s uncle told him about a friend, an elderly miner in gold-rich Nevada, who was so distrustful of the large mining companies surrounding his valuable property that he refused to deal with them. Sensing an opportunity, Maclsaac flew out the next morning and, within hours of arriving in the Nevada mountains, had struck a deal for the muchcoveted property.

Maclsaac, who credits the closing of the Nevada deal to his small company’s ability to make a quick decision, is among a growing number of Canadian businessmen and women who are discovering the personal and financial re-

wards of running their own operations. Since the recession of the early 1980s, Canada has increasingly become a country of adventurous entrepreneurs. Unable or unwilling to be part of large corporate bureaucracies, more and more people are determined to own and run their own businesses. Despite the risks, the intrepid new proprietors are expanding everywhere, from natural resources, manufacturing, construction, real estate, retail trade and—especially—into service industries such as consulting and tourism.

At the same time, women are becoming a dramatic new force in small business. Between 1981 and 1986, the number of women in business for themselves increased by 20.5 per cent. By 1986, they made up almost 24 per cent of the 877,500 small enterprises in Canada, usually defined as businesses with fewer than 50 employees and less than $2 million in annual revenues. Although the enterprises are small, their risks are high: federal government statistics report that 7,659 small busi-

nesses went bankrupt last year.

Women, however, are also proving to be adept at keeping new businesses afloat. According to a recent studyconducted by Ontario’s ministry of industry, trade and technology—young women are twice as likely as young men to survive their first year in business. Said Catherine Swift, chief economist for the Canadian Federation of Independent Business: “Women are more likely to do their homework and to refrain from taking $50,000 salaries out of the business in the early years than are men.”

Obtaining start-up financing can be particularly difficult for women. Graphics and art supply entrepreneur Ann Jones of Halifax said that operating her now 10-year-old business with little cash was “very difficult.” Added Jones: “About two years into the business, I finally did convince a bank to lend me $3,000.”

Many new entrepreneurs rely heavily on the experience they have acquired as employees to carry them

over the hurdles of start-ups, including sluggish revenues, a meagre client base and suspicious lenders. Knowing their business, many say, is their most important asset. When John Doull, 32, started his small, secondhand bookstore in Halifax last summer, he was unemployed and without money or experience in running a business. He said that it was experience gained as a clerk in another bookstore that has kept him alive. “I would have been a complete idiot without that knowledge,” Doull said.

Simple necessity is often the driving force that compels new proprietors to risk their time and money—often their life savings—on what is no more than an idea. The specific impetus may be a layoff, a much-needed second income or, in the case of women, the demands of a young family. For Montreal interior designer Leslie Grauer,

28, it was the prospect of having children that convinced her to leap into the high-risk business world. After her daughter was born last summer, Grauer says that working for herself, at home, allowed her to continue her profession and raise her family. Said Grauer: “It gives me a great deal of flexibility. I think that’s why lots of women start their own business.”

Age can also be a barrier to employment. Former engineer Georges Karanfil, 65, filled the void of his retirement by opening a dry-cleaning and alterations business in Montreal. He has relied on relatives with knowledge of the business for help and says that he enjoys his new venture more than engineering. Said Karanfil:

“I just want to stay active. I don’t want to be rich. I just want enough money to live easily.”

A stunning 97.5 per cent of all commercial enterprises in Canada are small businesses.

They account for 30.3 per cent of all jobs and about 30 per cent of the gross national product.

Despite their popularity—there was a seven-

per-cent increase in the number of Canadians who became self-employed in the first half of this year, compared with the same period in 1987—small businesses are highly vulnerable to slowdowns in the economy, including rising interest rates and changes in

business volume. Said Warren Hale, partner with public accounting and consulting firm Peat Marwick: “If there is a recession, businesses that are undercapitalized are going to be the first to feel the effects.”

Money problems are part of the reason that William and Nancy Tai of Winnipeg plan to scale down their SV2-

year-old business this year. The company, which produces a high-protein extract of soybeans called tofu, barely broke even last year with revenues of $100,000. Nancy Tai blames poor consumer awareness and improper storage of the product, which spoils easily, by the supermarkets. “I was naïve,” she said. “I thought merely because I had a very good product it would be an obvious success.”

But the most appealing entrepreneurs are those with a profound personal commitment to their product or service. And they are often the most successful. Four years ago, Winnipegbased Jonathan Breen, now 35, put his walking cane onto the top of his car and inadvertently left it there as he drove away. By the time he discovered his mistake, the cane was gone. Disabled by polio, and I needing a cane, Breen I decided to make his own Q when he could not find a ¿ replacement that suited him. The aluminum and plastic cane he designed is easier to use than traditional canes because the centre of gravity is directly over the cane shaft. First marketed in 1985, it is now sold across Canada, and in parts of the United States, Japan and Saudi Arabia. Breen, who has worked in a sporting goods store, has also designed a fishing rod holder. He says that he is continually thinking of new products he wants to develop. Said Breen: “It is the only thing I would want to do. I have done selling before and I found that I eventually lost interest in the product. You make a pretty poor salesman when that happens.”

Breen’s continuing fascination with his own product is a characteristic shared by many of the most successful small businessmen and women. The thrill of turning what is only an idea, or a potential commercial opportunity, into a thriving business operation involves big risks and often the sacrifice of abandoning the relative security of working for a large firm. But the endless appeal of “calling the shots,” as Breen terms it, is likely to mean that small businesses will continue to be the fastest-growing sector of the Canadian business community.

-PATRICIA CHISHOLM with DOUG SMITH in Winnipeg, GUY GROLEAU in Montreal and VALERIE MANSOUR in Halifax

DOUG SMITH

GUY GROLEAU

VALERIE MANSOUR