3 eaciaeeat i aera x ee ee EE . Putting money into the hands of small business To gat a business loan, you usually nesd tangible assets. That's just the way its always been. But that's the ane thing that many small businesses don't have in today's new economy. "Many of our best businesses are being held back because lenders think of collateral as bricks and mortar, rather than ideas, potential and intellectual property,” says Miche! Ré, the Business Development Bank of Canada's (BDC) Senior Vice-President of Emerging Markets. “Those of us in financial insti- tutions need to rethink what an asset is, and to challenge our own preconcep- tions of what property is.” According to BDC, Canada’s most pramising companies who are thriving in the new economy, are growing rap- idly and need financing just as quickly as they invest heavily in R&D. “They need capital early on, and they need it continuously,” Ré says. “But that - money is hard te obtain, since compa- nies in the new economy often lack the tangible assets required to raise or secure capital. For these companies the most valuable assets aren't always on the shop floors. Their real value is in their ideas, their brain power.” So what's the answer? For BDC it has meant introducing specialized products such as quasi-equity financing to help high growth, innovative, export companies convert their intellectual and intangible assets into concrete financing. While a traditional loan is based on asset values, accounts receivable and debt-to-equity ratios, a quasi-equity loan is based on earnings and cash flow. In this case, the lender is paid from cash flew and the only security is the lender's belief that the business will meet its performance targets. British Columbia-based Software Consulting, a company whose software lets companies exchange information electronically, is a case in point. The company needed money to finance its expansion to international markets. Its principal assets were intangible, like its track recard, its management team and the potential of its product. In return for the quasi-equity loan, Software Consulting was willing to let a lender earn a higher rate of return for the risk, and was willing to pay a combi- nation of interest payments and royal- ties an sales. “As with venture capital, quasi-equity ~ financing allows small businesses to use the company's intangible assets to raise funds. At the following round of negotiations, businesses are then able to attract venture capitalists with a much higher value of their shares,” Ré says. : Although venture capital is another — way to raise money, it's a scarce com- modity for the very early stage compa- nies, says Mario Clement, Partner and Director of the Technology Group for Ernst & Young. “If you haven't advanced your prod- uct beyond the proven stage with a solid marketing plan, it’s hard to con- vince a bank to back you or to attract venture capital,” he notes. “Start-up companies depend on what we call angels — friends, family or investors who have already made their money in previous ventures — to fund their initial R&D efforts. But at some point, they need more financing to take the next step.” : This is where BDC can make a major difference as a complementary lender to conventional banks. In many ways, BDC acts as a finan- cial bridge, complementing and topping-up what you can borrow from a chartered bank and what you can raise in venture capital. In fact, their backing often allows you to secure additional financing, Clement says. We have to recognize that some of our most promising businesses won't have substantial revenue over the shorter term, and therefore, need flexi- ble repayment terms. And we have to recognize that many new econamy pio- neers want to build the value of their businesses before securing venture capital,” Ré says. To meet this new need, banking institutions need to be as flexible and as innovative as the com- panies we support,” Ré concludes. The Terrace Standard, Wednesday, October 28, 1998 - Al] Meeting The Needs Of Customers GANI DELEON of Northwestern Specialty Foods and Gifts joves it when peo- ple go on vacation to far off lands. Thal’s bacause they came back hoping to cock for themselves the foods they enjoyed using spices and taste sensations they've naver encountered before. “Thay ask do | have it or can | get it. We do learn a lot,” said Deleon of meeting the requests from customers entering his store. He and wife Alpha began Northwestern Specialty Foods and Gifts 10 yaars ago after . moving here from Kitwanga. They didn't want “to leave the northwest and Icoked for an opportunity that would keep them up here. ; At first tha Deleons concentrated on foods and spices, but branched into gifts a year after opening. The challenge is to keep meeting the needs of customers and, in doing so, the business has established a langthy list of suppliers from all over North America. Northwestern Specialty Foods & Gifts 4621 Lazelle Avenue, Terrace + 638-0300 t IF DIVERSIFYING a business is the key to the 1990s, Neid Enterprises is a prime example. From manufacturing and custom fabrica- tion and from the manufacture of its popular line of boats, the company has now expanded into rentals of snowmachines, _ ATVs, boats and motors, says Manager Greg Delaronde. “And we’ve now grown to 15,000 square feet of sales and service," he says of the company founded 25 years ago and which now employs 10 people. “We're mov- ing into high performance with boats and even snowmobiles,” Neid Enterprises has also established itself as a regional provider of services, covering a radius of ‘up to 500 miles, adds Delaronde. New last year to Neid Enterprises was a custom frame straightener for snowmachines, similar to the kind of equipment found in autobody shops. And new this year is the Jonsered line of power saws, brush cutters and the like. NEID ENTERPRISES LTD. Recreational Sales and Services 4921 Keith Ave., Terrace, 8.0. Ph: 635-3478 Fax: 635-5050 15,000 sq.ft Of Sales & Service Tie ee ee ee ph A ee Ebony’s Not So Hidden Treasures! The adult-only shop celebrates its second birthday next month and, as is the case with a lot of Terrace businesses, is becoming rapidly known in the region. In fact,.says Trish Gardner, who owns the store along with husband, "Ron, Ebony's is making an ‘impression as far east as Prince George, in the far north and across the continent. “A lady who did mail order with us from Yellowknife came to visit us this year and that was a big pleasure,” says Trish. “We're even sending catalogues to Nova Scotia and to Montreal.” She's predicting more of a growth in out-of-town business now that the business is on the World Wide Web. “The sky's.the limit,” notes Trish of sales potential fram a constantly changing inventory of items for personal use and for ~ EBONY's HIDDEN TREASURES 3237 Kalum St., Terrace ¢ 638-1070 ..8Low Option. Fees Royal Bank of Canada Let one of our Business Banking Specialists show you the benefits of “Small Business Operating Line of Credit” * Access through numerous channels (Electronic, Phone, ABM) * Convenient, 24 hours a day, 7 days a week access * Easy application process. i Left to right: Marg Hamhuis, Cameron Schulz, Rick Morrison, Leaugh Musclow, Linda Genereaux, Dave Wilson, Tracey Bjorgaard = ROYAL BANK 4640 Lokelse Avenue. Website: www.royalbank.com Ph: 635-8000 LE EE 8 Oe ke ee OR, ee GROWING AN INNOVATIVE BUSINESS? ASK Us ABOUT OUR UNCONVENTIONAL FINANCING. If your growthh-oriented innovative small busness needs customized and flexible loans, ask us about our unconventional financing. We may just have what you are looking for. Contact Paul Williams, eo ee oe ee EE RE AE OE OB Branch Manager 3233 Emerson St., Terrace, B.C. Phone: 250-615-5312 Fax: 250-615-5320 Toll Free: 1-800-663-5035 w(Peteaaricas hha sau thaws eT f] Th Business Development Bank of Canada WE'RE A DIFFERENT KING OF BANK > Here's a full-service centre for decorating a Biss new home or remodelling your existing home. | 3 Whatever your needs - from vinyl and lami- nate flooring and carpet, to lighting and mir- rors, custom window treatments and ceramic tile - Your Decor can provide the porducts and services you need. You'll find top quality brand-name products, a wide selection of colours and styles, and services for any budget. Most important, you'll find friendly, professional advice, “All the staff are well-trained and versatile," says manager Janice Paulitschke. “We can coordinate everything for a home, whether it’s for renovation or building,” she explains. “And we're up to date on tha latest trends, styles and colcurs”. We also offer free estimates, and have a financing plan available. For bath large and small projects, Your Decor also provides a network of professional installars for carpeting, vinyl, hardwoods, ceramic tiles, window coverings and laminates. Personalized Service G | Ld Your Decor 3202 Munroe St. at Hwy 16 W., Terrace 635-2976 » 1-800-665-1657 Twilight Spas - The Best Way To Relax! THREE YEARS ago Ron Gowe saw the opportunity for a business specializing in hot, swirling water and began Twilight Spas and Pump Supply. And that opportunity has paid off with a thriving business for customers who want to enjoy the recreational aspects and therapeutic value of hot tubs and whirl pools. . “I'd say 60 per cent of aur business is on the therapeutic and and 40 per cent an recreation,” says Ron. “There are a lot of athletic peopte wha want a hot tub after a hard day of skiing or snowmobiling but there are a lot of people, such as truck drivers and laggers who need some relax time after work.” Ron can either provide all that's needed in terms of aquipment, service and subcontractors or simply address the specific requirements of customers. The company also has a lina of water softeners and a full selection of pool tables, billiard accessories and game room supplias. TWILIGHT SPAS & PUMP SUPPLY Phone 638-0947 « 4704 Keith Ave., Terrace » Fax 638-0948