Casey Clark sees a bit of that San Francisco start-up mindset in Vancouver: the idea that some entrepreneurs might be too preoccupied with raising capital before learning to run a business.
It’s not meant to be a dig.
Clark, who hails from the U.S. Midwest, said the city’s main strength really rests in its small-business community of bootstrappers that want to build something more than “just having lifestyle business.”
“Right now in Vancouver, in our opinion what we’re seeing in the market is that it’s booming,” said the CEO of Chicago-based Cultivate Advisors, a consultancy firm focused on businesses with annual revenue of $200,000 to $10 million.
It launched its first international office in Vancouver in June, boosting its initial staff to 11 employees from two, as it offers guidance to small and mid-sized businesses (SMBs) looking to grow without giving up equity.
Cultivate charges monthly subscription fees of between $1,200 and $1,800 for those services.
It’s the growth potential on the West Coast that drove Cultivate to Vancouver, according to Clark.
B.C. has been leading Canada in growth in its number of small businesses since 2014, according to the province’s Small Business Profile 2018.
From 2014 to 2017 the number of small businesses has grown 7.7 per cent – more than double the national average of 3.2% growth.
The report concluded B.C. small businesses accounted for 35 per cent of the province’s gross domestic product in 2017, employing 1.1 million compared with the 937,500 employed by larger firms.
While employment is split roughly 50-50 between large firms and SMBs, 98% of companies in B.C. (493,100) in 2017 were small businesses with fewer than 50 employees.
“We’re a bit more weighted towards B.C. than the population of B.C. would suggest,” said Merchant Growth CEO David Gens, whose Vancouver-based alternative lending firm specializes in offering loans and lines of credit over the internet to SMBs.
Gens said that because of its population size, Ontario still accounts for the most clients, but B.C. continues to punch above its weight.
Like Cultivate, Merchant Growth offers an alternative to SMBs looking to grow without giving up equity in a company.
But Gens cautioned that businesses must consider whether they are growing for the sake of growth or whether economic fundamentals are guiding their decision-making.
“Regardless of economic environment, the decision to grow or not to grow is a risk-reward calculation that you have to make as a business owner,” he said.
“If you’re in a business that is exposed to the economic cycle, you have to be that much more careful to that risk-reward calculation of whether to grow and how fast.”
Gens added that most of the businesses Merchant Growth lends to – such as automotive repair or consumer staples available at retailers – generally aren’t sensitive to economic downturns.
But he said credit might be harder to come by during a downturn, which could pause growth plans for some businesses.
“Skilled entrepreneurs are able to ride those waves, the highs and the lows,” said Clark, adding Cultivate Advisors has been discussing internally its own strategy for approaching and assisting clients in the event of a downturn.
“I don’t think people fully understand when a market can drive the revenue versus the skill of an entrepreneur. And there is a difference.”