I’ve mentioned in the past that I came across a fascinating article in the Ivey Business Journal a while ago. As I was preparing to facilitate a group of potential entrepreneurs through the steps involved in the business planning process, my eye was drawn to the catchy title: “That’ll Never Work: Six important lessons from successful entrepreneurs.”
The article was written by Dennis Fortnum, Canadian Managing Partner for KPMG Enterprise. I contacted the good folks at KPMG Enterprise and asked for permission to use a few of these terrific stories in this BLOG. Thank you very much for that approval. Let me also recommend that readers seek out and acquire a copy of the book. It brings together the success stories of 19 Canadian entrepreneurs and a few of them were highlighted in the article that I’ve mentioned.
FYI - A few additional details to assist those who are interested can be found at the end of this post.
This BLOG POST features one of several stories from the article and provides some valuable lessons that these entrepreneurs learned as they made their way towards success!
In this particular story, Dennis Fortnum illustrates how very important it is to be persistent. When it comes to attracting the capital you require for your venture, your business plan is a great resource to help make your case!
Stephen McIntosh, owner of Factory Optical/Optiks International/EyecandyOptiks, started his business in the summer of 1999 with, as he describes it, “considerable opportunity for failure.” He had a $30,000 debit balance at his bank and owed legal counsel $20,000 for having helped him complete his acquisition of some existing facilities and employees. He also owed his vendor $30,000 for the working capital left in the company and the assets he was buying.
But, during this incredibly challenging period, he managed to stick to his guns during a standoff with his new bank, making sure he negotiated the right deal.
“During the purchase I was trying to establish banking facilities in Regina by telephone from London [Ontario]. After securing the private equity funding necessary to fund the purchase of the company, we needed an operating facility to finance working capital. I was referred to a very young and inexperienced banker in Regina who pleaded our case to his adjudication group, but the result was an authorization of only half the monies I required, subject to the personal guarantees of my 17 equity investors.
This was a true deal breaker; it would have fundamentally undermined the spirit of equity investing. After all, I had gone out and pleaded, begged, and borrowed from friends and family, and it had taken 17 people to reach the $560,000 purchase price for the company, in consideration of which I provided them a 49 per cent collective interest.
As an alternative, this young banker allowed me to rewrite the credit application myself, and we were provided double the original funding requested with no personal guarantees to speak of. We were now capitalized to go forward.
McIntosh’s determination paid off and 12 years later his business has grown from one to 17 stores and from $500K to $20 million, with a plan to reach $30 million over the next couple of years.
McIntosh’s refusal to accept the bank’s initial offer and to return to secure the required financing allowed the company to execute on its business plan, ultimately becoming the successful business it is today.
In closing, let me encourage you to use your business plan as the central repository of the key information you will use in your financing proposals, strategic relationships with others, and in the ongoing management of your business.
Please feel free to add your comments and suggestions to help other in moving forward with their hopes, dreams and aspirations.
NOTES: (As mentioned earlier)
About KPMG Enterprise’s book, “That’ll Never Work” - readers will discover 19 outstanding stories from Canadian entrepreneurs. These are men and women who took their vague idea, turned it into a winning one and built a workable business structure around it. Perhaps most impressive is the fact that all 19 have also been able to do the near impossible: keep their business intact and thriving for years, or even decades.
The Article by Dennis Fortnum: The article was seen in The Ivey Business Journal and at the time, was found at: <http://www.iveybusinessjournal.com/author/dfortnum>
Strategy | March / April 2012 <http://www.iveybusinessjournal.com/the_post_issue/march-april-2012>
The book, “That’ll Never Work” and related information: At the time of preparing this post, there was a significant amount of information related to the book found at: http://www.thatllneverwork.ca/