Can you explain what your role is with ATB Financial?
Terra: I believe Alberta business should have the equipment required for success and my job is to do my best to provide them with the capital they need. Here in the equipment financing group for ATB, we essentially provide term loans and leases for equipment.
It’s great! I get to help everyone from small businesses to the large corporate companies secure the equipment that really can be a game changer for their business. We finance equipment in a variety of industries, new and used, from auction, private sale or dealers. I can even provide equipment financing for non-ATB Financial customers (those that have their day-to-day or other loan elsewhere, for example).
We’re really in it to help Alberta and to finance its gear.
As well, we can refinance equipment that a business already owns (similar to remortgaging your house to release the equity in it). Cash is king and this can be a great way to recapitalize your business.
I’ve been known to say: “If it has a serial number, give me a call!” I love to provide options.
We have a growing team of equipment financing professionals here at ATB. The specialty group is a relatively new offering for ATB and I enjoy supporting our vast network of branch locations with this offering and Alberta business owners directly.
How difficult is it to find capital for businesses?
Terra: Here at ATB, we write and fund debt deals every day for businesses (yes, even for the oil and gas sector). So I see first-hand that there truly is capital for business (on the debt side, anyway). How difficult it is to source, however, depends on many things. We look at things like: industry, innovation, how the business has managed the downturn, how capitalized they already are, how much debt they have, cash flow, working capital dynamics, experience of the owner or management team, length of time in business, profitability, and how future prospects look (through new contracts, forecasts, etc). There are numerous factors to consider.
Banks generally take a rear-view-mirror approach to lending and deploying capital. We look at financial history and track record – it’s what we do. This can definitely be a challenge for businesses managing through this downturn or for startups (so, yes, this presents a challenge to finding capital for these type of entities).
That being said, I see many companies that have restructured, cut costs, chased new opportunities and are managing and even thriving. We get what has happened, we like to see what the response is and a positive trend moving forward.
For those kind of companies, I believe it’s not difficult to find capital. Unfortunately, for some, such as in the oil and gas exploration and production industry (the producers), it’s difficult if you’re small or even medium-sized. Things like the Redwater legal decision, which creates additional risk for the lenders, and general industry sentiments (lack of pipelines, for example) have hampered capital raise efforts on both the debt and equity side.
I get a lot questions from startups as well these days. I love it! ATB loves them.
A lot of new entrepreneurs are taking a leap to start something new and go into business for themselves. For those companies, there are programs like the Canadian Small Business Loan program (which are government guaranteed to the banks). Those programs as well as some others (through BDC, for example), have been excellent ways to capitalize a business.
I always say that finding capital for your business is like a toddler’s puzzle, with the big pieces. It takes a bit of your own money, some friends or family (your fan base), some bank money and possibly some private lender investment. Capital is out there, but if you don’t have your ducks in a row and some professionals on your side assisting in the preparation of your financial package and material, I believe it could be challenging.
You’d be surprised how many prospective borrowers contact me every day without the info I need to make a decision. Sometime they don’t even know their ask or use of funds.
Preparation and strong communication is, I believe, a strong key for success when looking at raising debt or investment capital, for that matter.
In talking to business owners, what’s your sense of the mood regarding the economy?
Terra: It’s definitely mixed! There definitely are challenges for some and yet I hear about definite opportunities for others.
It’s easy to get pessimistic about the economy, government and other things seemingly out of our control. What drives me are the conversations about opportunity, focus, new markets, reworking, differentiation, diversity and success. I believe mindset plays a big part in success, and slow and steady growth is a key.
I have many conversations every day with both small and large business. I do hear a common theme about what feels like a lack of support from certain levels of government and sometimes what feels like the rest of Canada. I hear about downturn, I hear about a lack of market for our resources and constraints put on our energy industry and the collateral challenges this causes.
That being said, I also hear about innovation, building efficiencies, new markets, new business ventures and industries that are flourishing with the abundance of skilled labour and hardworking, creative people we have. I do hear about some really cool things and like to focus on those opportunities. The economy will get better, it always does. Some parts of it are better already.
What do you think is the key to success for entrepreneurs in navigating through tough economic times?
Terra: Grit! Absolutely. Getting up every day with your goals and plans to execute them in mind, and the focus to plug away unrelentingly at them.
But entrepreneurs absolutely can’t do this alone. They need to surround themselves with like-minded business owners and partners and develop a raving fan base that can propel and excite them. I believe having a team of the best professionals possible that can help guide and lead you is imperative. You don’t have to hire a full-time person for this. There are, for example, business coaches, accounting professionals, consultants, brokers, executive assistants available for contract or even project work. We have a talented business sector here and there’s a host of experience and expertise within reach of any budget (even free!).
Ask for help and get the help you need to be successful and overcome obstacles. I believe this is a key and common theme from the successful business owners and leaders I talk to.
Financially, I have to mention a few items that I feel are truly important to success. I’m a banker after all!
Knowing your numbers is so important in a tough economic period. Having an accurate, detailed and timely access to how your business is doing is necessary to make key decisions.
Which of your products are most profitable? Which are making you lose money? Which process is most inefficient and costing you money?
An old boss of my mine used to say, “If you’re trading four quarters for a dollar, why are you in business?” Unfortunately, some entrepreneurs don’t know if they are or not. The end of the year is not enough time to make the change required to keep you competitive and successful.
Where do you think Alberta’s economy will be in five years?
Terra: I’m cautiously optimistic that there will be slow and steady growth over the next five years with a few major hurdles for Alberta finally eroding. Green shoots of reinvention and new industry will be plentiful. The world will still require Alberta’s resources, beauty and agricultural products.
We’re going to look back at this last period as a reset for Alberta that has caused our business and workers to become harder working, efficient, nimble and hungry for renewed growth and prosperity.
I truly believe Canada will unify from sea-to-sea in support of Canadian resources and as a nation, will be proud about how we manage its production as ethical and strong environmental stewards. Imagine a made-in-Canada 5,708-km resource diet.
The Arctic and its many issues from resources to sovereignty will also take centre stage.
Trans Mountain will be finally complete and Canada will start with the construction of an even larger project. Energy East’s construction will occupy many headlines across the nation, as well, and generate significant work across Canada.
Alberta will once again be firing on all cylinders but with lessons learned.
Some may call this a pipe dream. To them I’ll say, well, we Albertans know a lot about building them. I think it’s time and I look forward to where we’ll be in five years.
Danilo Terra was interviewed by Mario Toneguzzi, Troy Media business reporter based in Calgary.