AOC today : Alberta Opportunity Company

6 Pages·1991·2.9 MB·English

by  Alberta Opportunity Company

MARCH 1993
Coming Back From the Brink of
Disaster Not Without its Lessons
“I was going through hell, but I a lways said to myself, it’s not over ’til it’s over’. ”
Fierce determination enabled Thomas Goszczynski to drag himself out from under and
pull out all stops to save his successful Calgary-based business from failing.
His 10-year-old company ran into serious trouble when he expanded it t o keep up with
growing demand. Almost too late, he realized that bigger is not necessarily better... .
tver since it b egan operations in 1983, GT After a y ear, Goszczynski realized
Auto Body & P aint European Specialists attracted he could no longer afford to function
an immediate following. Customers and insurance that way and took action to scale down
appraisers alike were impressed with its superior operations. His decision was a c ostly
workmanship, waiting as long as six months for one, with excess equipment sold at
repairs. bargain basement prices and a l ease
maintained on unused rental space.
“All those years I r eally, really stressed the
highest possible quahty on the cars I w as fixing. It “I was still p aying huge overhead. It
started to p ay off and I s tarted to g et more and more Thomas Goszczynski: Depending more on himself.
was a t errible situation — 1 a lmost failed.” he says
Despite his track record and commitment to
business,” says Goszczynski.
He enhanced his operations in 1985 by purchas- turn things around, Goszczynski had little luck in depend more on myself, and not to overestimate
ing more sophisticated equipment and relocating to finding financing to improve his cash flow.
the things people can do for you.”
larger premises. Activity became so brisk that by Refusing to g ive up, he approached Alberta Once a d efinite “no”, the idea of expanding
1988, Goszczynski doubled his staff and leased an Opportunity Company and obtained the funds he again now holds some appeal for Goszczynski —
extra work bay 1 1/2 blocks from his shop to be needed. he’d just tackle it d ifferently by ensuring he had
used specifically for body and framework. “Thank God I d id it b ecause without AOC, I qualified staff in p lace, first.
“Theoretically, everything was great, but we don’t think I’d have been able to survive.” “Right now, though. I’ve still g ot room to
quickly realized that with a s taff of 14 or 15 it w as These days, Goszczynski is c oncentrating on
improve things where I’m at. Let’s improve and
reducing his debt load and using his p ast
difficult to control quality,” he notes. get the maximum out of what we’ve got now,” he
“Even though the business was there, the cost experience to more effectively mn his business. says, all the wiser from his near bmsh with failure.
of maintaining the quality of the repairs was “When I e xpanded I t hought having volume “We always have to keep in mind that a j ob is
enormous. We had to redo many jobs before I
would generate profit but I’ve learned that’s not not done until it’s really done. We have to keep it
could release them — t he cost was major. That necessarily so. The most important thing is
in p roper perspective. Don’t quit and don’t get too
was the start of our problems. I c ould have allowed efficiency. I l earned that the hard way.
depressed, but don’t get too optimistic and
the quality to decline, and save money but I “It’s absolutely necessary in business to count
oveijoyed with success because things don’t
couldn’t do that.” and depend on other people but I’ve learned to always turn out the way we expect them to.”
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Printing Company Blot Out Red Ink
^Afhen Ed and Victoria Rosenke left for worked. We cleaned house and got rid of
a H awaiian vacation in mid-February it the dead wood,” he says.
signified more than an opportunity for some “I think one of the weaknesses of any
well-deserved rest and relaxation. system that goes down usually stems
It also meant their Edmonton-based from the management of the company
printing business was back on track after an because they end up not having an
intense two-year crusade to improve its active role in all areas of the day-to-day
bottom line. operations of the business.
“We never had a d ownturn in sales,’’ “Unfortunately, we had key people
explains Victoria.
in key areas who weren’t doing their
“It’s just that we had such huge write- jobs... controls weren’t being
offs.”
Spiralling industry costs, coupled with follBoyw e de.n”s uring every employee and
fierce competition in piece of machinery was
accountable and cutting
the ’80s caught up to improve the business’s bottom
back on frills, they were line was not without its rewards.
22-year-old Don-Rite
Printing in 1991, able to whittle down “When you come to work and
leaving its owners overhead, but still somebody has an idea of how to make
with little choice but JoM h ave to recognize needed financing to
money for your company, although they’re
to take action.
how important everybody help improve their
“We took a c lose
company’s overall
look at the financial iSy b ut you also have to picture. Their efforts to
statement that year keep sight of t he fact that strengthen their
and decided business still left them
the company is the most Insolvent But Via
something had to be unable to obtain bank
important thing. . . financing.
done,” says Ed. “Normal lending
That “something”
involved a t horough institutions simply look Gerald W. O’Brien, LLB, C.A.
Kurt P. Bonokoski, C.A.
review of the
at your statements once Price Waterhouse - C algary
company’s
performance over the a y ear. They don’t look
at your day-to-day ^A^en businesses fail, it’s usually not
past four years, followed by dozens of tough operations or the value of your equipment,” without warning. The primary reason for most
decisions related to all aspects of the business. failures is that management is unable to detect
says Ed.
Along with pulling in the reins on receivables, Since the turnaround was initiated, he says danger signals that often mean the beginning o
the owners also scrutinized the role of each the end.
Don-Rite’s operations are as different as
and every employee and recognized “night and day.” If weaknesses are recognized soon enough
downsizing was essential. “We’ve got full controls in each and every and acted upon immediately, it’s possible to
Altogether, six out of 22 employees left area now. We’ve got control of our financial revitalize your business and turn things around
Don-Rite over the next four months. Ed situation which certainly helps us concentrate
admits their’ s was a h arsh stance to adopt, but on other things such as more market areas. Otapkeen a yl oounrg , e yheasr d n loowo k — a t by eofuorr e b uisti’sn e tsoso laantde —
points out there were no other alternatives. We’re doing much, much better.” factors that may have a r ole in its p erformance
“The wound was open. It was quite Despite troublesome decisions that had to
Actions taken today may prevent tomorrow’s
obvious a b and-aid solution would not have be made, Victoria stresses the campaign to downfall.
Listen to Market, AOC
Back on track: Ed
and Victoria Rosenke Board Member Advises
“You have to
not obliged to, it j ust ^^itting in Ron Bell’s 34th-floor be listening to the
downtown Edmonton office, you can’t help
says the last three years but feel far removed from the ups and downs market, you have
have been worth the of small business. to sense where
strWughgillee, ” s hseh e i ss ays. boarBdu t m ewmhbene r i t ac nodm e Vsi c ed o wPrne s itdoe n itt, t ohfe AOC things are going down,” he says.
“If you’re sitting in y our office everyday
appreciative of employee Marketing and Development for Maclab
you can probably miss what’s really going on.
contributions, she
Enterprises has experienced his
emphasizes the key to a share of p rivate enterprise
successful business turbulence just like any other 1 o u need vision and you ha
turnaround is objectivity. entrepreneur. theproj
communicate that to everyone involvi
“You have to recognize As the key figure responsible
how important everybody is, for marketing some 5,500
but you also have to keep apartment suites scattered from
sight of the fact that the Eort McMurray to Victoria, Bell
company is the most constantly faces the challenge of coping with
You’ve got to talk to your managers and your
important thing. You have to fluctuating demands and changing conditions.
make painful decisions, but it’s short-term pain He’s accustomed to taking stock of These days, high vacancy rates for rental
for long-term gain. For us, it h ad to happen.” circumstances and acting quickly to put things chouusstionmge r sh.a”v e had an impact at the property
back on track. management and development company
e — T urning Your Business Around ■■4 ■ k
Danger Signals c
Answer Action c
External factors such as high interest rates, >3 a
legislative changes and market fluctuations are 1. Solvent and viable. Reorganization, sale of unproductive assets a
generally beyond your control, but will affect your 2. and non-profi table businesses. t
business. Internal signals such as under-capital- Solvent but not viable. Sale of business or statutory liquidation. r
ization, a h istory of losses, lack of current financial Insolvent and not viable. Receivership or bankruptcy. n
information and poor management can also mean 43.. 1
trouble, but they are within your power to change. Insolvent but viable. Reorganization, sale of unproductive assets and non-profitable
businesses, and debt restructuring.
If y ou’ve identified one or more of these
danger signals, you must ask yourself the
s
following:
c
• Is y our business solvent? The final scenario, insolvent but viable, is the qualified professional. This will help detennine if a
• Is it v iable? most challenging and requires the most attention to the original conclusions regarding the troubled v
achieve maximum return to creditors and business are correct, if f ormal proceedings can be
Your answer to these questions will generally shareholders alike. At this stage, a b usiness avoided, and if a lternative strategies are available. 1
determine the required course of action. assessment must be undertaken, preferably by a Such analysis provides shareholders and
Distressed About
Your Business?
Ron Bell it’s essential to have a c lear idea of what it i s
Maybe We Can Help!
you’re trying to achieve.
“You need vision and you have to commu-
where Bell has worked for eight AOC, we know that it t akes more
nicate that t o everyone involved in the project.”
than money to ensure the success of a b usiness.
years. As well, you’ve got to be willing to pull out
“What we’re doing in this market, all stops, and take whatever action is necessary It also takes strong management.
is we’re managing better. In to transform your business. Even if y ou’ve got a f irm grip on your
everything we do, we’re just saying “You’re starting fresh. You may need new operations, sometimes a m inor change in y our
capital, you may need new systems, you may accounting or marketing can make all the
we need to do better,” explains Bell.
He admits that’s not always all it t akes to need new employees, you may need more difference in the world. It’s all a m atter of
beef up business, with more drastic measures receiving and acting on good, sound advice.
training programs. It’s like starting a w hole
sometimes the only realistic solution. new business,” he explains. If y ou’re an AOC client seeking some solid
Maclab Enterprises did just that when it business advice, we may be able to help! Our
“It’s a t ough decision to make.
implemented radical changes to successfully Consulting Services division has experts who
You have to say, ‘have I t ried
everything possible to make this convert two Edmonton apartment buildings are prepared to provide you with guidance on
work?’ If the market is not there and into hotels catering to business travellers. everything from bookkeeping, to computeriza-
there’s not one in the foreseeable “There’s no formula,” stresses Bell. tion, to i nventory management.
future, then you make changes. Then “There’s basic things you have to do, but Analyze your business. And consider any
it’s exciting . . . t here’s pain, but how you operate within that areas that could use strengthening to improve
there’s also the rewards and the thrill of outline and how fast you get there your bottom line. If y ou think you could
creating something depends on your vision, tenacity benefit from our knowledge, call our
Consulting Services division at
new.”
In embarking on a 1 - 800-662-7 1 5 3 Maybe we can help !
and drive.”
turnaround. Bell says
reditors with an independent approach to streamlining effective while ensuring employees critical to the
pinion of the company’s status O’Brien companies. These rules survival of the restructured business do not
leave.
nd helps pinpoint a c ourse of Gerald are equally applicable to
ction. The conclusions should be mutually turnaround strategies. • S tay lean.
eneficial to all p arties, and in some cases it
• B uild, don’t destroy. Implement a “ stay lean” philosophy for the
lay be decided that it i s in their best interests to future and reward employees accordingly to
Avoid cost cutting just for the sake of doing
linimize losses by winding up the business. it. Let successful operations continue to operate. prevent the business from returning to its old ways.
If r estructuring is r ecommended, the The successful development and
• U se a s calpel, not a m eat cleaver.
ssessment will provide the beginnings of a r oad implementation of a t urnaround strategy is a
lap for turning your business around. The Separate critical and profitable businesses
rewarding experience for creditors, shareholders,
and assets from unproductive ones and mould
access of this plan will require the total
management and professional advisors alike.
them into an efficient new organization.
aoperation and buy-in of creditors, shareholders
After all, it’s much more satisfying to be the
ad management. Each must recognize there • K eep the solution from becoming worse saviour and builder of dreams, lives, employment
ill be pain involved that must be shared by all. than the problem.
and capital, than being the undertaker.
Make the business lean and efficient. In
1 a b ook entitled ‘Downsizing’, R.M. Tomasko
lentifies four principles which characterize his doing so, make staff cutbacks humane and
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Call us . . .
#%3C Today was created to
meet your information needs. If
there’s a b usiness issue you want
to see addressed, facts you need to
know or a s tory you’d like us to Shop Talk . . . Welcome Aboard!
share, call us! We’ve got an
edition of ‘Creating the Service AOC clients Stan and Bonnie Kornicki of the
Culture’ for the best suggestion we Bread Basket bakery in Lamont recently We ’re proud to welcome the following
receive. companies to the AOC family;
updated Commercial Credit Officer Gerald
We also want to help you in Iverson on the progress of their business. A & R O ilfield Services Ltd., Consort
your entrepreneurial endeavours. Personal visits are all part of the hands-on Black Wolfi Billiards Inc., Calgary
If y ou’re looking for business approach taken by AOC to help ensure Lazy J S aloon Inc., Sundre
partners, seeking an investment individual needs are being met. Platform Systems Inc., Calgary
opportunity or trying to sell your Peak Manufacturing Ltd., Medicine Hat
own operation, call us! We’ll Phil’s Towing Service, Medicine Hat
make an effort to pass your needs Rock Creek Oilfield Maintenance Ltd., High Prairie
onto our readership. Vermilion Community TV 1992 Ltd., Vermilion
Letters ...
Contact
Debbie Hunchak, Editor I re cently received a c opy of y our AOC Today newsletter and generally found it t o be most interesting.
AOC Today
However, one article really disappointed me. This was the piece on incorporating your business, (January 1993)
Alberta Opportunity Company entitled “Thinking of B ecoming Your Own Boss? Cover Your Backside!”
1275 Weber Centre I w as frankly shocked by the attitude expressed and the lack of p rofessional and moral ethics implied. The article
5555 Calgary Trail basically told you how to stick other people with the fruits of y our failures and why it i s g ood to do so. Phrases like
Edmonton, Alberta
T6H 5P9 “bulletproof your assets”, “. . . obligations can be escaped”, and “minimize personal responsibility” reflect the
1-80046E3811 attitude that you should transfer responsibility for your bad fortune (or mistakes) to employees, suppliers, landlords,
creditors, etc. Who cares about their problems? Are they all so rich that they can absorb your costs? I d oubt it. In
AOC Today is p ublished 12 times rural Alberta these are the f riends and neighbors that have put their faith and trust in y ou. If y our attitude is to slink
annually by AOC’s Corporate off completely unharmed the minute the going gets tough, leaving the others to clean up your mess, then you betray
Marketing Division.
the pioneering spirit that built Alberta.
Balan Mathews, My disappointment with the article is compounded by the f act that it i s in a g overnment publication. Much of t he
Executive Director
financial problem facing our province is the result of p eople transferring their fiscal woes to the province, leaving
Corporate Marketing
average Albertans to pick up the pieces (and the cost). I h ope that AOC doesn ’t l end on the basis that loan
Design: Linda Blanchett applicants think of p rotecting themselves first and their business second.
Vincent Miles,
Edmonton
Editor’s note:
The intention of t he article was not to encourage illegal, immoral or unethical activities. Rather, it w as our goal
to advise entrepreneurs to p rotect their personal and family property — n ot their business assets — by incorporating
to keep the two separate.
Creditors who deal with your business are entitled to protect themselves, and usually do so. That doesn ’t m ean
that small business owners shouldn ’t d o the same for themselves and their families by all legal means.
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Jim Anderson talks about why
Alberta Opportunity Company might be able to
turn things around, when others have turned your
business financing proposal down.
No. Were not miracle workers.
“What we are, is A lberta Opportunity Company —
an alternate source off inancing
for small business.
“In other words, we provide loans
to entrepreneurs who have great ideas,
but for various reasons,
are unable to borrow from traditional institutions.
“Like banks, we too have standards.
But were also willing to take a c loser look at what you have to offer.
“If y ou’ve got what it t akes,
we’ve got f inancing that can be applied towards launching,
purchasing, or expanding a b usiness.
“So don’t let being turned down turn you off
Set y our course in our direction.
And come talk to us.
“We c^wVpart the Red Sea.
“But maybe we can help turn things around.
Jim Anderson
President & C EO
Alberta Opportunity Company
5110-49 Avenue P.O. Box 4040
Ponoka, Alberta T4J 1R5
1-800-661-3811