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Brave new business.

BUSINESS

Over Ron Boyd's desk at the Royal Bank is a line drawing of a dinosaur on its back with four feet in the air. The caption reads, 'A funny thing happens when you don't adapt to change.' Boyd is the manager of the bank's Independent Business portfolio. The drawing is perhaps an apt metaphor for the economy as the financial gears catch and stutter due to the abrasive effects of high interest rates. Manitoba's bankruptcy rates have been at all-time highs. Personal and business bankruptcy applications in Manitoba between 1988 and 1989 increased by 34 per cent. Other businesses have closed their doors simply to cut losses.

Starting a new business would be a very cavalier step. But Boyd says plenty of new businesses are being launched and they are fueled by optimism. "Most small businesses are started by people who don't know the word 'no' or 'impossible'." also by people who do not know the word 'recession' since there is no shortage of applicants coming to the Royal with a business plan. "We're seeing quite strong growth in small business loans," he says. "We're not seeing any tail-off."

Despite the grim headlines, 7,000 new business initiatives were registered in Manitoba in 1989. Joan Rogers, co-ordinator of the year-old, provincial Business Start Program, has an inside view of the action.

"It's surprising how many businesses are starting despite how bad the climate is," she says. Rogers helps idea people manoeuvre the long road from inspiration to the first invoice. She is not about to lose her job because of slower demand. Rogers says, "The recession is making potential entrepreneurs stop and think a little longer about what they are doing... but if you can make a go of it in a recession, by the time we're out of it, you're golden."

Shelly Makus, a graduate of Rogers' program, says she didn't need better economic times to get moving. The 30 year-old started her own graphic design company last March after she was laid off by the Winnipeg Art Gallery.

"I didn't think I had a lot of options," she says. Now, working from a tiny room in the basement of her parents' home, she's earning 30 per cent more than her former salary.

Makus scraped together $10,000 to start up and matched those funds with a business loan. She ignored the threats of economic forecasters.

"I tried not to look at negative stuff," she says. "I was willing to go out on a limb rather than be content or take a job and complain about it the rest of my life. Failing at something isn't the end of the world."

Failure rates haunt any discussion of small business. Everyone is quick with the statistic that 80 per cent of all new enterprises fail in the first five years. But it's a fallacy.

Walter Good, professor of marketing at the University of Manitoba's Faculty of Management, says, "I don't know what the origin of that figure is, but it's become part of the folklore. It's not true." Good says the 80 per cent statistic doesn't scare enterpreneurs.

"Individuals start up businesses regardless of statistics and they always think they will be the exception."

In November, Good completed a study of new business start-ups in Manitoba. His figures show that since 1986 only 34 per cent of new businesses had closed down. Another view is that 80 per cent of the firms in the study survived.

Good's study is a character sketch of business births in Manitoba. Two-thirds of all new enterprises in the province were started in Winnipeg. Women were responsible for 32 per cent of new businesses. A surprising 70 per cent of the firms that answered the survey are residential-based. Good says this figure is higher than in other provinces and is a statistic that has piqued the interest of MTS -- which loses money when people skirt the higher business rate by using residential telephones for commercial purposes.

The study also shows the majority of new enterprises were in retailing or service and two-thirds of all small business owners had previous work experience closely related to the activities of their new firm. And they have faith in themselves because the majority of the start-up cash came from the enterpreneur's own pocket. When more money was needed, family sources were tapped before banks or credit unions.

But why do they do it? Good's study suggest the quest for a large paycheque and long holidays in the south are not the prime motivators. Most of those who answered the survey said they felt there was a real need for their product or service and what they really wanted was a sense of satisfaction.

Sandra Mazur is one of these people. The fact that the women's clothing business has been in a slump for several years didn't stop the 26-year-old University of Manitoba human ecology graduate. She had owned a women's skincare shop previously but closed it. After four months of researching her new venture, Mazur barrowed $50,000 from her family and the bank. She opened Hepburn's, an upscale fashion shop on Corydon Avenue, in March 1990.

Mazur says, "I knew I could do it. It's gut instinct and my gut said it's going to be fine."

She feels that bad times yield more flexibility. "It was the best time to open a business at the beginning of an economic slowdown -- suppliers are more lenient, more willing to work with you."

The shop stocks quality clothing and Mazur is convinced of her market: "People who have money will spend and women will always shop, always buy clothing." She brushes off questions about the recession with, "I'm eternally optimistic."

The term 'small business' has become a buzzword in the economy. More than anything small business is a flexible, enduring source of jobs, taxes and profits. In Manitoba, 80 per cent of all firms employ fewer than 50 people with a wide range of skills. Policy-makers drool over small business and dozens of support programs have been created to help them weather the early years. Governments have many definitions of what contitutes a small business, however, the underlying notion is that small enterprises are the anchor as the economic tides ebb and flow.

Boyd nails it down.

"When times are difficult and someone consciously goes into business, the planning is of better quality. There's always niches, always opportunities, even in recessionary times."

Joan Rogers has first-hand experience with small business. Her parents started their own business when she was a child.

"Enterpreneurs typically have an 'I can do it' attitude. They're go-getters," she says.

David Romanow is one of these fireballs. He is a calm, straightforward man who peppers his speech with the phrase "think about it." His company, Bioclear Technology, has a new way to treat waste water and has already chalked up eight major sales. The minimum price for a system is $80,000.

"There's a huge international market," says Romanow. "There's need and we have a solution to a problem."

Romanow, his father and two other investors dug into their own pockets for the cash to start the company. Romanow says they did not want to "jump through all the hoops" to get government financing. They're building a $1-million, 20,000-square-foot manufacturing plant in Springfield, east of Winnipeg. Talk of the recession means little to Dave Romanow. "Look at the big picture. The public is demanding that pollution be cleaned up," he says. "There's no risk if you're prepared to work hard and sacrifice a lot of time."

Another gritty entrepreneur is Dave Wiebe who bought Euro-craft of Canada, a shaky, eight-year-old office furniture manufacturer, in February last year. Since then sales have increased almost 20 per cent. The 31-year-old Wiebe borrowed the whole purchase price and says, "The recession never entered into it. A recession isn't bad for a good businessman, it's bad for a bad businessman.
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Title Annotation:new entrepreneurs
Author:Ryan, Bramwell
Publication:Manitoba Business
Date:Mar 1, 1991
Words:1321
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