A decade ago Tony Lourakis launched his tech start-up as a 20-year-old student with virtually no money, relying on sheer hard work and the help of those close to him.
That was in 1998.
In 2003, just five years on, Lourakis’ company – Complete Innovations Inc. – was named the ninth fastest-growing company in Canada by Profit magazine.
Its business is logistics – specifically, selling software to transportation companies that helps them track vehicles and packages in transit around the world.
Today Complete Innovations has around 30 employees, and is doing brisk business.
But things weren’t always so good.
Time was when Lourakis, who is president and CEO of Richmond Hill, Ont.-based Complete Innovations, had only himself and a couple close friends to rely on.
“The nice thing about being a computer science guy and coming up with an idea for a software company is you can do some of the work without spending any money,” he says. “We invested sweat capital in the venture. We were driven by adrenaline.”
Start-ups today can certainly learn a lesson or two from Lourakis. The most important one is that “sweat” and “adrenaline” – plenty of both – are absolutely needed for business success in these difficult times.
With both the Bank of Montreal and the Bank of Nova Scotia predicting Canada will slip into recession mode over the next two quarters, times are bleak.
Three key pre-requisites for business survival and success are:
- A strong support structure (entrepreneurs will need to rely more on the people close to them);
- A rock-solid business plan;
- Attaining capital and credit
Meeting the last requirement can be difficult in today’s tough economic times, many industry experts say.
“The market is changing and access to capital has changed significantly,” says Arlene Dickinson, founder and CEO of Venture Communications Ltd. a Canadian independent marketing firm, with offices in Calgary, Edmonton, Toronto and Ottawa.
“But I believe the right idea can still find funding,” she says.
Dickinson is a panelist on CBC show The Dragons’ Den. The program features start-up companies making a pitch to several potential investors, Dickinson included, to get some funding for their entrepreneurial endeavours.
“There are a lot of great ideas that need to be funded differently – by friends and family [not dragons],” she says. “If I were starting a business, I’d begin with the people around me to find some money.”
Lourakis, for instance, relied on friends to provide the human – as opposed to monetary – capital he needed to start a business. After he started selling his product in 2000, it caught on instantly and his company was profitable because there were few expenses to cover.
His business partner was a fellow student. Another friend with some graphic design skills created the Web site and a couple of marketing brochures.
As his business grew, Lourakis found he was hiring on old college classmates to handle tech support and product installation tasks. Finally in 2002, his business broke the $1 million annual revenue mark and he hired a friend who was studying to become a chartered accountant to do the books.
“We decided we’d rather bootstrap this thing and use the resources we have, and own it at the end of the day,” he says.
But some start-ups need more than bootstraps to get a business rolling.
Money can still be found in an economy headed towards recession, Dickinson says. Private investors may be looking to get their money out of public markets and into small companies they feel have a good business plan.
Such investors would add some discipline to a startup business, she says. “They’re going to analyze your numbers in a different way than your family and friends would.”
Dickinson says getting credit from banks is going to be hard. Attaining it means presenting a business plan that doesn’t look risky and outlining the details about what you plan to do with the money.
“It puts the onus back on the entrepreneur [to demonstrate] why they need the credit.”
Companies need more than ever to focus in on what makes them profitable, says Dickinson. Having a well-honed business plan that zeroes in on how the product or service offered is different from others in the market is more essential than ever.
And in creating such a plan, doing research on the Web may help you come up with some good templates for creating a business plan, says Dan Golberg, vice-president of small business at Telus Corp.
“I’ve used a number of them from the bank Web sites [and] have also seen several from educational institutions that are very good.”
Great resources can also be obtained by joining up with local business groups or associations. For instance, Telus has recently teamed up with the Toronto Board of Trade to offer a hotel-like work space available to be used by members.
“It serves as an office away from the office for a lot of small businesses,” Goldberg says. “It helps a small business appear like a much larger business.”
Members can use the desk space to plug-in their own laptops and access the Internet, or make use of one of the computers available. There are also meeting rooms that can be booked out that provide video-conferencing capabilities.
Some simple technologies can produce great results for a small business. Lourakis knows this from experience. His company relied on the Internet for both its product as well as marketing.
Complete Innovations offers a tracking application at a price smaller businesses can afford.
“We knew we found a great, untapped opportunity,” he says. “We came up with a product that was easy to use and easy to implement. Prior to that, most companies were using Cousin Bob’s DOS-based program.”
For the young entrepreneur, the most essential requirement is a good idea. That’s still all it takes to find business success, Dickinson says. But if your idea stinks, banks and investors are bound to avoid you like the plague.
The investor sees plenty of bad ideas presented on Dragons’ Den. Her current strategy is to focus her portfolio around goods and services that have a place despite the market situation.
“I’m looking hard at companies that provide real value versus the those that are more in the premium luxury goods category,” she says. “I also want to make sure I’m getting some recurring revenue every year.”
Don’t lose heart, the “Dragon” advises. A good business plan will make its way eventually.