Sustainability of the Business

The business has successfully weathered some tough times. Some of the factors that have contributed to this sustainability include the firm's solid reputation, the stability of the territorial government departmental customers, and the flexibility available to a small business.
Their reputation has seen them through the tough times according to Earl. "We have a good name that has been around for nineteen years. When times are tough, people will have their broken items repaired rather than throw them away. We've always given them good service."
When the marketplace is slow, the government's level of demand is fairly constant. This acts as a safety buffer. Earl notes, "A lot of our business is dependent on the government. They basically run the same budget every year with a slight increase. This does give us some stability when the market fluctuates."
Finally, flexibility in making changes in order to survive has seen them through slow times. When they had to consolidate their debts, they let staff go and they were able to rely on the stability of their wives' salaries to meet family budgets while they took cuts in their salaries.

They have diversified into services that the community needs in order to bring in customers. Earl states, "I think we are well established and many people depend on us. We provide an essential service to the community. People keep on coming no matter what, and the loyal customers are the main reason we are still here."

Environmental Friendliness

The environmental movement and the recession are encouraging people to reuse or repair goods rather than continue to consume new products. The repair shop provides the service to local people who are interested in maintaining their old equipment.
Earl and Alex try to keep the area around the store as clean as possible in order to attract customers. They take their garbage to the dump and are going to try recycling some of the waste products from the repair shop. It is very expensive to recycle used oil and there is only a small demand for it in Fort Smith. Previously, Alex disposed of this oil in a dugout on their property but it seeps into the soil. He has decided to store the oil in drums and give it to anyone who wants it for their driveways or highways. Alex is quite concerned about the proposed pulp mills in northern Alberta.

"It wouldn't help us at all. It just sends their pollution this way. I'm not for it."

Future Development

Alex and Earl would like to build the business up and then sell out in the next couple of years. If they cannot sell in the near future, then they would build up revenues and hire a manager so that they could get away more often. Both partners feel that the business must have several more years of stable earnings before they can hope to sell it. Alex comments, "I'm due for a change and I want to take my wife out of the North. I'm starting to find the winters are too damn long. If we did sell, I would go work for somebody else. It would be tough but there would be fewer headaches."
Earl would stay in the North if they sold the business. "I have been up here all my life and I enjoy it. Once we sell I'd take a break and just work for wages. I would do something that's not too hard and just enjoy life for a while. If we couldn't sell, then I could see us hiring a manager and a mechanic in the back. We would get away more and let them run it. However, we need a stable industry to come in so that the population will grow and then our business will grow otherwise I don't see us getting any bigger.

Advice to New Business

Alex and Earl have learned a number of lessons from their own experience. Before purchasing an existing business, the entrepreneur should consider working for the owner in order to learn the business and avoid surprises. Government programs should be checked for applicability. It may make sense to have the past owners stay on to help with the transition after the purchase of the business. Bookkeeping skills are crucial in the success of the new business. In starting a new business, the entrepreneur should closely examine the market in the community. Once the business is opened, then inventory control should remain a priority.
Earl and Alex purchased a business in which they had a total of fourteen years' experience between them. As a result, there were few surprises, except when they did not keep close watch on their inventory. Their experience with the government has been very positive and they would recommend that a new business apply to relevant funding programs.
The major expense in their type of operation is the investment in inventory and buildings.

 Earl estimates that their buildings and inventory are valued at $500,000. Alex adds, "You may get stuck with units that you took in on trade and you have to pay your suppliers every thirty days for the new units." If the business person in contemplating a similar but untried business then Earl would suggest their type of operation would do well where the community numbers 2,500 to 3,000 people. Alex adds, "It depends a lot on the people and how they pay their bills. Many northern communities have a problem with that. I've known a few places where a person tries to start a small engine shop. It's almost a necessity because many people depend on snowmobiles, bikes, or outboard motors for their boats, which need servicing, but the customers don't know how to pay."
Earl notes, "If I started a new business somewhere else I would check with other businesses and see what the people are like. I would want to know who pays their bills and who doesn't pay, and then I would have a strict cash-and-carry policy."
Alex adds, "You have to make sure the market is there and is stable enough to support your business. You have to be prepared for hard work and to just keep plugging away. You have to be willing to work long hours without holidays and you might succeed." The question of whether or not the new business should be a partnership is answered by Alex in the negative. He explains, "If I was to start again, I don't think I would have a partner. Although Earl and I have a great partnership, if I could do it on my own I would have a very small business. It would be just big enough to survive and when I wanted to leave, I would close the doors and go. It's tough with a partner because you've got to split profits and the losses fifty-fifty. It is hard when times are slow to pay two salaries."
The partners get a lot of personal satisfaction from their business. Earl notes, "I like to see the business coming along through rough times and that we have been able to survive. Business has turned around and we are starting to make money again. It is satisfying."

Summary and Conclusions

Earl Jacobson and Alex Gauthier have continued a tradition of excellent after-sales service of their products, a policy established by Lou Gauthier when he started Lou's Small Engines nineteen years ago. Earl and Alex have survived tough economic times and shifts in demand through their excellent reputation, improved inventory controls, and streamlined operations.
It is a strong partnership that has seen them through the past nine years. They both had experience in different aspects of the business, and these added up to a near-complete package of skills. They were able to purchase the business with assistance from the Territorial Government and the bank. Their relationship with the government is good; government agencies are solid customers and have helped them to consolidate their debts.

Their relationship with the local bank has not been as positive. They respect each other and treat each other in a businesslike manner. Earl and Alex try to communicate regularly about problems before the problems get out of hand. They know where the other person stands and share similar work ethics and standards.
Neither partner takes their customers for granted. Customer service and satisfaction is their main goal, a policy that any new staff would have to follow. They are in tune with the needs of their customers, and this understanding is reflected in their purchase of inventory. They have diversified from skidoos and dirt bikes to camping, hunting, and team sports equipment, as well as gardening accessories. They offer Sears catalogue sales and courier and car rental services to the community. This strategy of diversification brings new customers into the store, increases their profile, and acts as a buffer if sales in their more established product line decrease.

Their ability to cut back on staff and personal salaries when economic times have been poor has helped them survive. The steady income that their wives earn in their government jobs has eased the financial burden at home. The relatively stable demand from their government customers has lessened the impact of changes in the demand of their other customers. Earl and Alex take pride in maintaining a neat workplace for the aesthetic value to their customers and the benefit to their environment. Recycling of waste products from the repair shop is going to play a greater role in the future.
After nineteen years in the business, Alex and Earl are looking forward to a change. After several more years of good earnings, they plan to sell the business and move on to other projects. If the store is not sold then they would like to hire staff which allow them to take more time off and enjoy life.