Scaling up a small business
For Adrian Bartha and Jose LeBrun, two former employees of OPT Trust, the path to becoming small business entrepreneurs has been different from the norm.
The two — Bartha is chief executive of eCompliance.com while LeBrun is chief operating officer — reached their goal through a search fund, a funding/operating model that has been around for about four decades in the U.S. but still in its infancy in Canada.
Through High Park Capital Partners, the two raised capital from a group of external investors — and then went looking for a company, which they found in Calgary. eCompliance is in the computer software business with a goal of helping companies, largely energy, construction and utilities, meet their occupational health and safety needs.
With funds for the acquisition of eCompliance coming from the external investors, Bartha and LeBrun then set about running the company — the second element to the search fund model.
But despite the route they took, the two face the daily challenges of running a small business. Indeed the two — who have been toiling away for a couple of years — have made a number of key changes as they try and refocus the company. “Once we focused the company on our mission, being a safety company with great technology, we got rid of a lot of distractions and now we are growing at a good rate,” said Bartha. Among the changes: The business has been restructured. “We had three or four products and now we focus on one,” he added. “By focusing on one product and reinvesting in that product, including developing a mobile app, and working with our customers, allowed us to grow and capture more clients,” said Bartha.
As part of that refocus, eCompliance’s consulting business was discontinued because “it wasn’t a money-maker.”
The new managers sold the eLearning “content-authoring business” to the U.S based Health and Safety Institute to focus on what Bartha calls “building a market-leading cloud-software product supporting safety professionals.”
That sale was significant given that it constituted about half the company’s revenue. “It was a slow start out of the gate,” added Bartha, saying in his first year of ownership, the company focused on its existing range of products.
With cash from the businesses that it divested, the new management team then “doubled down” on its safety management system, the product that it wanted to push.
“We decided that the next phase of growth will be a lot more focused. We wanted to do one thing really well rather than try a few different things,” said Bartha. “We can keep adding to that product and building it out for years, because it is needed so much.”
It sought out new markets. ECompliance has entered the U.S. market, where it now has more than 30 clients. It has about 220 clients in Canada. Previously, its product was only sold in Alberta.
As for the lessons learned, Bartha spoke of the “difficulty” of scaling up a software business. He called it “a constant loop of iteration, of trying things, experimenting and then adapting at a rate that is quicker than other industries.”
But the team is doing something right: It has about 30 employees, three times what existed when they bought it, with only four of the original staff still around.