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Small businesses Vs Big Banks Small business owners sustain the largest portion of our economy and associated

job pool. However, statistics always paint a very bleak picture for those entrepreneurs willing to go out on a limb and start their own company. One in ten small businesses fail either within the first year or before the fifth year, usually due to lack of cash flow. Of those companies that stay in operation, only one will last longer than ten years. Failure is not necessarily due to insufficient capital, but as a result of sheer exhaustion. A business owner will put their heart and soul into their enterprise, unable to see beyond the workload and stress. You can appreciate why potential small business owners have a hard time with the banks when they apply for loans to get started. Some industries are, of course, statistically more risky than others. On top of all the challenges associated with starting a small business, there is also the believability factor. How can an entrepreneur convince the bank that they have a good idea? Admittedly, there are always going to be bad ideas out there as well, but when a good idea is truly ready to be put into operation, how does anyone ever get the assistance they need, especially without some kind of academic qualifications in business? It seems virtually impossible. It astounds me that any new business venture can ever get established, especially those that require significant initial investment. The bank expects to see a full business plan, complete with a five year projection, personal financial history and educational background. Once they have all this, the believability factor kicks in again. Do the people sitting in the banks, stamping applications with either accept or reject, really have the multi-industry expertise required to make life-changing decisions on someone elses behalf? My own opinion is that they certainly dont. Yes, the bank personnel probably have some sort of MBA, degree, bachelors and so on, but thats only half the education that needs to be taken into account. What experience do these people, who are often fresh out of university, actually have? Do they have any experience in putting everything they own on the line and starting a business? Would they ever even consider such a career path? Lets be honest, its pretty unlikely. It takes a special breed of person to take on those kinds of risks. It can be very scary, which is why, as Richard Kiyosaki points out, there are different quadrants within the workforce. Each quadrant is valuable, depending on personal goals and preferences. However, I believe that the biggest hurdle for an entrepreneur requiring financial assistance to get started is mindset. The individual at the bank is an employee with an employee mindset. The entrepreneur has a completely different mindset, focused on self-

employment or owning a business. It goes without saying that these two ways of thinking are polar opposites. No wonder getting a start-up loan is so difficult. There are other sources for financing, of course. Sometimes if your business plan is good enough, AFSC will lend a hand, although the interest is usually 3-4% higher than that offered by a bank. Theres also the Business Development Center, who are usually okay for smaller loans of around $25,000 or less in a familiar industry or for a straightforward buy and sell your products environment. You can usually forget it though if youre involved in anything hi-tech. The BDC do offer training seminars, which Im sure are basic, yet informative, sessions. However, these cost a fair amount of money and time and BDC wont lend you any money unless you take their courses. I calculated that for a $25,000 loan, based on the rate at the time plus the course fees, this would work out to approximately 20-23% interest. Thats more expensive than most credit cards charge these days. I realize that there are brokers who can also offer loans, but again, these are usually at a premium interest rate. When I started my company, it was a very long and frustrating process. I was in my early thirties and only had six years experience in my industry, one that was dominated by men. Even today, Im not aware of any other sole female owner of a full inspection company, such as mine. My education was almost completely unrelated to the industry I aspired to join. Although I was debt-free, with a perfect credit rating, I didnt have a business background, just common sense, something that seems increasingly hard to find in todays business world. My industry requires specialized licenses to authorize the use of radiation, specifically industrial radiography. It took three months just to get the procedures manual, even in the simplest form, along with the Atomic Energy Control Board (AECB), now the Canadian Nuclear Safety Commission (CNSC), application completed and approved from Ottawa. Only my closest friends didnt think I was crazy for even trying. Just imagine what the banks thought when I approached them? With the knowledge that I had, I put together the best business plan I could. Luckily, Id kept all my records from my time in the industry, which made it really easy to estimate the busy and slower seasons. I contacted every single banking institution in Calgary and the surrounding area, as well as the AFSC and the Business Development Center. I made appointments with them all, proudly presented my business plan and hoped for a miracle. I even checked out some of the government subsidy programs, but they werent applicable. I needed $125,000 for my startup, just to put one, fully equipped x-ray unit on the road, for which the license fee alone was $3,500. Not surprisingly, some banks didnt even get back to me. I usually had to call more than once to get the bad news. I was informed that I had no business experience and that my business plan was simply not believable.

It was obvious that no one was going to give my idea a chance. I decided that I had no other choice but to take a more, shall we say creative, approach. At the time I had five credit cards, each of which was used for a different purpose and all were fully paid off. I called each of the card companies, giving them a variety of reasons for wanting a credit limit increase. I decided to do this all in an hour, since I didnt want any of them to get too suspicious. My credit was perfect, so they all increased my limits without question. I should point out that these credit cards belonged to the very same institutions that had rejected my requests for a business loan. Once my newly established credit limits were in place, I purchased a truck and all the equipment required to start the company with my credit cards. Yes, thats right, with my credit cards, totaling around $122,000. When I tell this story, people are usually shocked or even horrified, but theres more to this tale always have a plan B.

After I accumulated the debt and had everything I needed, I contacted each of these credit card companies, thanking them for giving me the increases. I then informed them that, unfortunately, I would have to carry the debt for a year or possibly two. Consequently, if they didnt lower the interest significantly, I would be unable to pay them back. Incredibly, all but one company happily agreed to lower my interest to between 2.9% and 5.5%. The only one unwilling to help out insisted on a rate of 12.9%, so I paid that debt first then destroyed their card. I have to admit that those interest rates were pretty good, considering a line of credit was set at 6.5%. I also called some of those institutions that had declined to even call me back and acknowledge the work that had gone into my business plan. I informed them that they had unintentionally helped me anyway, since if I were to go bankrupt, it would ultimately be their institution that paid for the credit card debt I was forced to use. It was a good feeling, Ill admit, although I did feel a little dishonest about it all. Immediately after all the equipment was in place, I went to ATB Financial to open a bank account. I figured I might as well speak with the business manager there as well. I actually hadnt considered ATB when I was looking for assistance. I only approached the larger

banks, believing that if they wouldnt help me, no one would. I explained my situation to ATB and they were quite sympathetic. Once they knew the whole story, they offered me a $15,000 operating line of credit. I couldnt believe it. It was the nicest gesture anyone could have offered, especially after all the frustration Id experienced when dealing with the other banks. I didnt actually use the funds from the ATB for the first year or so, until things became so busy, when I had to purchase more equipment. This whole process had begun in July 2002. I had the truck working by October and was convinced I was finished by December. Although I had an excellent reputation in the industry, I was a small company with only one unit and everyone knew that it was one thing to work within a system, but quite another to know how to be the system. There are numerous regulatory agencies that monitor our work and safety. If any of those agencies locate a deficiency, it can potentially hold up an entire client project. In addition, there was the common delay in waiting for payment. The idea of working now and getting paid 60 days later was very different to receiving a regular paycheque. As I sat there feeling sorry for myself on December 31, I remembered that every year, my best friend and I would go to bingo on New Years Eve at Golden Wings. At the time, I was completely broke and convinced that Id failed miserably because I simply couldnt secure work fast enough to keep up with all the bills. So, I thought, what the heck. Bingo had music, great food and lots of fun games to distract me. One particular game at the end of the evening is called Satellite Bingo, which is province-wide, so the potential winnings are considerable. That night, the prize on offer was $25,000 and I won it. I had to share the prize with someone in Edmonton, but still, I won! I couldnt believe it, $25,000 as a reward for sulking at a bingo hall. I picked up the cheque the next day and deposited it into my account, still not quite believing that it was real. It was a lot of money to me back then, the difference between bankruptcy and the multi-million dollar company I own today. Was it fate? To be honest, I still dont know what to think, but I remain eternally grateful. That money got me through the next few months and the rest is history. Following the big boom in 2006, Id made enough money for a down payment to help me purchase a commercial property in Calgary. At the time, ATB was unable to finance such a large venture, so I approached my personal banking institution. I honestly thought Id encounter the same obstacles as before. Fortunately, I dealt with someone who understood my company, where I was, and where I wanted to go. I was able to secure a loan without any problems whatsoever. I still maintained my ATB account for smaller transactions, and of course, as a plan B, since I wasnt sure what to expect from the business department of the new bank I was now dealing with.

Everything proceeded relatively smoothly until early 2009, when my company finally began to feel the effects of the recession. Many companies had been affected a year earlier, but in the oil industry, projects are often being built twelve months in advance, so that work sustained us through the first year. When things eventually slowed down, I had to lay people off and reevaluate. My overhead remained much the same, so once again I had to creative. I knew we only had to survive for a year then things would be back to normal. A key employee also left the company without honouring his fiduciary obligations to compete fairly. He cost us hundreds of thousands of dollars and there was nothing I could do about it, since I was working on the trust system, rather than the legal system. It was another valuable learning experience. Remember to document everything. Where moneys involved, the nicest person in the world can become ruthless, no doubt about it. We used this down turn as an opportunity to restructure the company, implement better systems and tighten our purse strings. It was during this time that we discovered how important of a customer we were to the current banking institution we were dealing with. Even though we never missed a beat in our re-payments or had any issues, our lender was having its own problems and made an internal decision to up our interest rates on both our operational line of credit and our commercial property loan. The apparent reason for this was a poor return on their mutual funds! That sent me knocking back on ATBs door. In the end, ATB not only offered a full percentage base lower on everything, they extended the operational line of credit two fold without my asking. Again, I was amazed at the consistency of how well ATB was able to treat its clients regardless of the recession. Though a huge undertaking, all my personal and business accounts were switched and I have been operating smoothly and happily ever since. Great job to ATB. I would recommend them to anyone.