By Katharine Sandiford -- You might not be surprised to hear there’s a government program to help Yukon businesses expand that’s considered wildly successful. You might be surprised to also hear that it’s struggling to survive.
Bob Baxter pours a small glass of birch beer from a keg and hands it to a man who’s just completed a tour of his small brewery. The beer, made with local birch syrup, is sweet and earthy, and unlike any other. Baxter, president of the Whitehorse-based Yukon Brewing Company, has continually added new beers to his roster, redesigned labels and expanded his distribution network in an effort to grow the company over its 12 years in operation. But beer, he says, can only take a business so far.
“Beer is not a good export product,” he says. “It’s low value, it doesn’t travel well, it doesn’t like heat, it can’t be frozen, it doesn’t age well – it gets worse the day you put it in the bottle.” Exporting small batches from the Yukon across Canada would be an expensive headache. That’s why he recently turned to spirits. “A pallet of spirits might be worth 10-times a pallet of beer. It’s the same cost to ship, it doesn’t freeze and it doesn’t mind age. It’s the ideal export product.” Although Baxter knew that opening a distillery was the direction he wanted to go, getting there was a daunting task. If only he could call around, talk to other distilleries, liquor distributors and experts that could share some advice with him. Which is exactly what he did, with a little help.
Enter Olivier Pellegrin and the five-year-old Yukon Business Development Project. Pellegrin is the only full-time employee of the program and from all accounts is nothing short of a genie in a bottle. Funded jointly by Indian and Northern Affairs Canada, the National Research Council, the Yukon government, the Yukon Technology and Innovation Centre and the Whitehorse Chamber of Commerce, you might at first think this is another heavy-handed, bureaucracy-laden, marginally effective government program. Even its name and acronym, YDBP, are clumsy. But take a closer look and you’ll find a program so unique, affordable, and phenomenally effective you’d wonder why it’s the first of it’s kind in Canada, and likely the world.
Baxter joined the program two years ago. Pellegrin did an assessment of the company’s objectives, goals, problems and prospects, and set up a series of advice sessions, called Business Advisory Board meetings. He brought a retired Seagram’s distillery executive, a Bahamian rum exporter and a Colorado-based distillery operator to the Yukon to work with Baxter. Pellegrin then wrote a lively synthesis report, full of recommendations and pithy advice. The help, says Baxter, got him off on the right foot to invest in equipment and strategic planning.
A year later, Pellegrin assembled another crew of experts. This time, they met in High River, Alberta, to visit the comparably-sized Highwood Distillery. From that session, they drew up a business plan Baxter could never have come up with on his own. “Little gems were just flying around the room, a hundred thousand little things, and to me these make the difference between success and failure,” Baxter says. “You can always get those big, broad-brush kinds of advice, but talking to people who have been in the business, and figuring out what their mistakes were so you don’t make them, is tremendous.” This summer, six months after he launches his first line of whiskies, he’ll host his third and final BAB session to address post-product launch issues. Although he’s still a ways off from seeing any profit, Baxter’s convinced the help he’s received from YDBP will ensure success for his new line. “If I had to reimburse them for the money they spent to bring these people together for us, I’d write a cheque in a heartbeat.”
Businesses pay nothing for the help, the BAB experts get a free trip and are paid consulting fees, the program costs relatively little, and the results are nothing short of astounding. On average, companies that have graduated from the program have seen 380 per cent growth in sales, 275 per cent growth in employment, and have invested $195,125 back into their companies. In five years, the program has spent $780,500 and has coached more than 20 local companies. Why, then, does the program have to battle for funding every year?
Launched five years ago, the YDBP was the brainchild of Pellegrin, who had come to the Yukon for the world-class mountaineering, equipped with a master’s in Engineering, an MBA, and decades of experience running his own companies in Quebec and elsewhere. Helped by the Whitehorse Chamber of Commerce, Pellegrin organized a steering committee of funding partners that would help choose participating businesses and assist in the direction of the program. For the most part – contrary to the typical government business development initiative – Pellegrin and his clients run the program free of rules and restrictions.
It’s hard to find a company that’s been a part of YDBP that doesn’t have great things to say about the program – although some had rough beginnings. Bev Gray, CEO of Aroma Borealis Herb Shop, was one of the first four companies to join and, by following her BAB session recommendations, has catapulted her local herbal products into the national market. Her wares can be found in 63 stores across Canada and beyond. According to Pellegrin, there were times Gray was on the brink of tears, overwhelmed by the amount of money and time required of her and her business-partner husband to see the recommendations through. But it paid off. In a letter of thanks to Pellegrin and the consultants, she wrote, “Sometimes in small business you can feel overwhelmed and find it difficult to move forward because there are always other priorities and obstacles, but the BAB has pushed us in a positive direction and helped us define our goals with clarity.”
Josée Savard, the 20-year-owner operator of Klondike Kate’s – an upper-end restaurant and cluster of 15 cozy tourist rental cabins in downtown Dawson City – has also been overwhelmed by the program, but mostly due to the wild possibilities it offered her. As a small tourism operator, there was not much more she could do with her business. It was a service, not a destination, and so promoting her business could only go so far. But the consultants suggested that if she partnered with other tourism outfits and targeted a niche French-speaking European market with a complete package, she might be on to something big.
She teamed up with the Tr’ondek Hwech’in First Nation in Dawson City who, through their cultural centre, offer aboriginal tourism programming like cultural performances and tours of the Tombstone area along the Dempster Highway. She also hooked up with Takhini Hotsprings, Kluane Bed and Breakfast, and Dalton Trail Lodge, and together they developed a promotional CD-ROM and package and have marketed themselves as a full, French-language Yukon itinerary. For Savard’s second BAB session last fall, she and some of her partners went to France to attend one of Europe’s largest tourism trade shows, where she networked directly with hundreds of potential package distributors and met with some senior French tourism experts. “There’s no way we could do what we’re doing without their help,” says Savard. “It’s just a fabulous program and should become permanent and not just a pilot project.”
As a result of other BAB recommendations, she’s also in the process of converting her cabins to be more high-end and eco-friendly. She’s switching all the bedding, mattresses and flooring to organic and all-natural fibres, and providing locally made organic soaps in the bathrooms – just one example of many changes she’s implementing that will help to market her business to her target clientele.
YDBP participants Jake Duncan and Megan Waterman, owners of Northern Garments Inc. – makers of Skookum Brand parkas -– struggled after their first BAB session. “My only reservation to businesses considering applying is to be prepared for constructive criticism,” says Duncan. “You have to be able to accept this type of help and it isn’t pleasant at times.” It was a challenge to accept the amount of cash and effort they would need to implement the recommendations, most of their capital coming from Duncan’s employment as a government consultant. “We just learned how to do [business] more efficiently and effectively,” says Duncan. “If you look at it, we have saved much more than it has ever cost us.”
In their case, it was determined that their priorities were to improve export sales and marketing, as well as production. Among other global experts, they’ve taken on a partnership with a Quebec subcontractor that has expanded their production capacity. They were also paired up with the Canadian Apparel Federation’s resident expert on European exporting, linking them into a network that has propelled their growth exponentially. Northern Garments now doubles its sales every year.
The success stories don’t end there: Icefield Tools, RAB Energy Group (makers of Northerm Windows), Takhini Hotsprings and Resort, Arctic Alpine Seed Ltd., TSCO Automation, and Sportees Active Wear have all received YDBP coaching, launching them to the next level of success.
So it’s puzzling, then, that the program has to fight tooth and nail for yearly funding. “Now we have the proof that this is the best program in the Yukon and in Canada,” says Pellegrin, in his thick Gallic accent. “And coming from Europe and knowing the European projects available, I can tell you it is the best program I have seen in my life.”
Unlike with other government programs, the entrepreneurs don’t need to fit strict parameters. “We are flexible,” says Pellegrin. “I am going to adapt to the needs of the client. No papers to fill out, no bureaucracies, nothing. It’s very easy for the entrepreneur.”
Through his partners, like Whitehorse Chamber president Rick Karp and INAC development officer Joe Bradley, Pellegrin is building widespread support for political and financial backing. In early March, at the Partnering For Success economic summit in Whitehorse, he delivered a presentation to high-level bureaucrats, urging them to see the merits of the program.
“Where we are now, we can only handle four or five businesses a year,” says Karp. “We need to grow that capacity. And so we need some commitment on the part of government agencies to get behind this.” Karp is convinced this is program is one-of-a-kind and invaluable beyond measure to business development. Knowing it’s the only thing like it he’s ever seen, he’s keen to pitch it to other jurisdictions.
Despite INAC’s annual support – last year the department contributed $155,000 – Bradley knows it’s going to take action from Ottawa to get multi-year funding. And Bradley’s been talking to colleagues in the NWT and Nunavut who would like to develop a version of the program for their jurisdictions. Pellegrin envisions training teams from other territories and provinces and, with a little extra funding for advertising and program growth, would like to take on more than just five companies a year.
Karp, who’s been operating businesses in the territory for several decades, wishes YBDP had been available for him when he started out. He sees the value of the program and knows its fragility. Pellegrin, for instance, could leave the territory and without him the program wouldn’t exist. Karp recalls a conversation with one BAB expert: “There was an expert who, at the end of the business advisory board, looked to Olivier and said, ‘You know, this is how I make my living and what usually takes me four to six months you’ve done in two days.’”
