Entrepreneur learns to survive (and thrive) one tiny sculpture at a time
‘Stopping a big train and turning it when you lose funding is very difficult’
Denise Deveau – August 2, 2017 – 7:51 AM EDT – Last Updated – August 2, 2017 – 3:07 PM EDT
For a while everything was going swimmingly for Steve Cory, president and founder of Objex Unlimited Inc. in Toronto. When he started his 3D printing company in 2011, he was on the cusp of a burgeoning market.
“I’ll never forget the feeling I got when I read an article on 3D printing saying the market will explode,” he says. “I realized if I wanted to make it happen, I would have to jump into it.”
He got off to a roaring start, buying two printing machines, expanding into prototyping, and then designing and selling his own 3D scanning systems. Cory sold one of his scanners to a U.S. customer, who happened to be looking for a place to invest.
Once flush with ample funding, expansion accelerated. “Marv had some serious vision. He gave me money, direction, ideas and encouragement. Some ideas were insane, some right on the money,” Cory says.
One idea that came out of the partnership was Selftraits, a service in which people can have their image scanned and get a miniature, 3D, detailed replica of themselves. “The only argument I had with my business partner was he wanted to do five-inch models rather than large art objects. I didn’t. But we did it and it’s been a huge hit,” Cory says. The figurines gained particular notoriety with the recent GoDaddy Itty Bitty Ballers ad campaign with the Toronto Raptors.
Things took a sudden turn when his partner became ill and passed away this January. The impact of that loss was devastating both emotionally and professionally, Cory says. “The financial side was nice of course. But he was also my mentor and my friend. He gave me confidence and the vision to scale that I never would have had.”
Cory realized that significant changes had to be made in order to keep the business going. “Stopping a big train and turning it when you lose funding is very difficult,” he says.
He streamlined his multiple efforts into four divisions, laid off some staff and cut the hours of others. “That enabled us to refocus and become stronger. We’re now much tighter and sales are significantly higher with fewer people.”
Those efforts alone cut overhead costs by more than half. But an equally important issue was paying creditors. Cory worked diligently contacting his investors and suppliers. “Some vendors have been so nice and willing to help us. If people believe in your idea, and you are direct and honest about your situation, they will support you.”
It’s virtually impossible to predict a sudden interruption in cash flow, but a business owner may be able to turn things around by applying patience, diplomacy and common sense, says Dan Kelly, president and CEO of the Canadian Federation of Independent Business in Toronto.
“If you are in a position that have to scale back, you need to look at some of your fixed expenses first, such as your lease. Subletting some space to another business is good way to inject a bit of cash flow.”
Kelly also suggests renegotiating contracts with providers, such as telecommunications and internet services. “These can be fairly easily renegotiated. It won’t inject giant amounts, but will certainly lower your outflow.”
One expense you shouldn’t touch is marketing spend, he notes. “One of the first things companies look to cut is any kind of marketing spend. But that’s generally one of the last places you should look.”
When a partner or funding source exits, other options to inject cash could include taking on another partner or selling part of the business to employees, he adds. “There are some really neat employee/staff ownership arrangements that are popping up.”
When dealing with lenders, honesty is always the best policy, says Russell French, assistant vicepresident, business restructuring, for BDC in Toronto. “Banks don’t like surprises. The key thing is to communicate with your lenders and other stakeholders and set realistic expectations. Be up front about where your business is and what you are going to do.”
If the situation requires a restructuring, French strongly recommends bringing in third-party expertise that can objectively look at the business and recommend changes. “Banks won’t provide that service because they have a lending relationship.”
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Communications also need to be timely. “You may not have an answer when you approach your bank, but if you say you have a problem, are working through it and have some thoughts on your timeframes and expectations, you may be able to change the terms of your loan or get some interest-rate relief. It’s much better for financial institutions to work with customers to help them through a difficult time.”
The worst thing a business owner can do is not respond to the change and keep doing what they’re doing, French notes. “Don’t expect any results from taking that approach.”