Changing course mid-stream helps three Canadian firms survive and thrive

Studies tell us 70 per cent of new businesses fail after two to five years in operation.

Reasons for failure are wide and varied – from external or internal business conditions to lack of financing, from disputes to personal calamities, to an unsustainable business model.

While a lot has been said and written about how to deal with such issues, research indicates companies that make it through tough times have one thing in common – the ability to sense when things aren’t working, and change direction before its too late.

Sometimes the direction change is quite significant, as in the case of HealthPricer Interactive Ltd.

Today, Vancouver-based HealthPricer is a free comparison shopping site that seeks to help people find the best healthcare products from online merchants. The idea is to help consumers save time and money when shopping for healthcare products online.

However, this wasn’t the company’s business model when it started operations.

At the turn of the twenty-first century the company began business as a maker of health supplements, attempting to capitalize on the demand for these products, which was pretty high at the time.

After all, people were interested in such products, and the new company was ahead of the pack with its exclusive offering.

But the new firm soon learned that a well-formulated business plan alone doesn’t a profitable business make.

ROI levels weren’t great and CEO Michael Brown soon realized he had two choices – either to close shop or to use the company’s extensive knowledge of the health supplement industry to forge a new business direction for his company.

He chose the latter option.

Brown recognized that when it came to healthcare shopping people were willing – even eager – to shop online, but there were few sites that offered fair comparisons between competing brands.

“There seemed to be a lot of merchants but no easy way for shoppers to browse or compare prices and products,” Brown said. “If we are only selling one supplement brand, we’re not meeting their needs.”

Fortunately, this time around, HealthPricer didn’t have to start from scratch. It had gained invaluable expertise on the subject of healthcare shopping, and a well-known online brand and Web site.

By harnessing these, the company was able to salvage its business and increase revenues, providing a new and not-easily-accessible service to customers.

A key lesson Brown and his team learned from this entire experience is how vital it is for business managers to be open to the prospect of change.

For the HealthPricer chief, new businesses can “morph from caterpillars into butterflies” by understanding how to enhance value for stakeholders.

But he said companies must not neglect to do the necessary research before transforming their business.  If CEOs want to be first to tackle a niche market, they have to be sure the new endeavour is worth the risk and investment, he said.

In HealthPricer’s case, even after doing all the required research, business transformation wasn’t easy.

The company’s transition to a new model required a 60 per cent change in manpower, a move from a warehouse to an office, and a 12-month period of flux and uneasiness.

But Brown said such transition pains are inevitable, and should not deter companies from making significant changes to their business plan, when these are necessary.

“It’s not swallowing your pride, it’s just getting smarter.”

In some instances, the focal point of a major business change is: technology.

Such was the case with Colligo Networks Inc., another Vancouver-based firm that makes desktop collaboration software.

When it opened shop in the year 2000, Colligo’s first product –
Colligo Workgroup Edition – was a peer-to-peer collaboration application that enabled teams of mobile information workers, such as auditors, to share and synchronize data using WiFi-enabled laptops.

Recently the company sharply shifted focus from P2P collaboration software to a new product family that provides rich client interfaces for Microsoft SharePoint, a collaborative portal application.

The company changed out of necessity, according to Colligo CEO Barry Jinks, CEO.  “We really needed to pull down our costs to survive without additional capital.”

Colligo wasn’t entirely sure what kind of demand there would be for its new software– but again, the company built on its extensive learnings in the area of collaboration, and the need for Web applications that can be used offline.

Its new software uses SharePoint and moves data storage and synchronization functions from the server to the desktop, allowing users to access files offline.

Jinks says since the shift, business has grown more than 100 per cent each year. More than 10,000 individual companies have downloaded their program, which is significant given Colligo’s low-budget marketing strategy.

He says timing also made a huge difference, as Colligo entered the world of e-mail and desktop collaboration before the competition.

“We knew we would have to get in early,” Jinks said. “If we were getting into the business now, it would probably take five to 10 times more capital, because the market is so developed.”

And sensitivity to timing also contributed to the success of Contec Innovations Inc. headquartered in Port Coquitlam, B.C.

Today Contec’s BUZmob Mobile Media Network enables the rapid publishing of sought after “live” news, sports, entertainment and finance content from thousands of sources including licensed, syndicated and user-generated content (blogs and social networks), regional and local publications in a variety of languages.

However, the firm originally started off offering a mobile service delivery system, dubbed Hornet.

Despite having a good product and a great business plan, the company lacked the resources to compete for customer revenue, said president and CEO Don Lay.

Lay said the wake up call came when Contec used up all of the its manpower and resources to bid on a multi-million dollar contract abroad – and lost the deal! It discovered the competition was much larger and better funded.

“It was a big company game and we needed to partner or do something on our own,” Lay said.

So Contec created a new technology that delivers news, sports, entertainment and finance content from an established news provider, such as Associated Press, to a cellular provider that sends the information to its mobile customers.

“We carved a niche that’s focused, competitive and uses strong technology,” Lay said.

He said Contec is forging new partnerships with communications providers, helping the latter by playing middleman at a time when cellular applications are booming.

Lays suggests there’s a lesson to be learned from Contec’s shifting gears midstream and adopting a new business plan – before competitors move in.

Being first to the table is a key pre-requisite for being successful and profitable in the tech world, the CEO said.

He said CEOs also need to ensure they save enough capital from their first business to really pursue their second. They need to ensure that investors are on side and want to make sure key stakeholders are on side.

“It’s a big complex industry and there are no experts on what to do next,” Lay said, “we are not a big success yet, but happy with it and we are seeing it start to mobilize.”

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Jim Love, Chief Content Officer, IT World Canada

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