New startups optimistic despite sluggish Alberta economy

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New startups optimistic despite sluggish Alberta economy

Aja Horsley was working a stable job as an agriculture researcher for a Calgary college when she decided to leave and launch a startup. Seven months ago she entered the business of selling honey, and she is now selling her product on store shelves in every province in the country. 

Horsley is one of a number of entrepreneurs spurning the downturn to start a new business, according to city data.

In fact, she credits some of her sweet success to the sluggish Calgary economy: it compelled her to try her absolute hardest. 

"It was motivation for me to do something better than maybe I wouldn't have thought twice about if the economy was better," said Horsley, who launched Drizzle Honey. 

Her honey is in 65 stores right now. Her goal is to reach 200 stores by the end of the year. The poor economic climate in the province is also why Horsley branched out. 

"I knew Calgary wasn't going to be maybe the be-all and end-all of where I could have the product, so it forced me to reach out and say 'OK, Alberta's not doing great, let's look at some other retail avenues.'"

Starting a new businesses is always risky and the success rate is low. Launching in a slow economy is all the more difficult.

'Bigger challenge'

"People are more cautious now about spending their dollars," said Ali Asghari, who holds the North American distribution rights for an organic energy drink called Pilot's Friend. "Yes, we will have a bigger challenge."

So far, Asghari is selling the drink in some specialty stores and fitness centres in Calgary, while negotiating to be carried by a national supermarket chain. 

Alberta is still recovering from the oil price crash in 2014 as energy companies cut spending and eliminated tens of thousands of jobs. Many well-known stores and restaurants in Calgary have closed during the downturn, but just as many new shops are opening.

About 7,200 businesses closed in 2016, while almost 7,400 new shops and stores opened, according to business licence data kept by the City of Calgary. The difference is that more of the new businesses are likely home-based.

Alberta's economy is expected to grow modestly this year, and that has some entrepreneurs optimistic about their future.

"While times are tough — and they certainly are — people, Calgarians, Albertans are really resilient," said Mike Wenzlawe, a partner in a new coffee company. "You're looking at the economic climate in Calgary right now — it is really starting to bounce back. There's new cafes, new restaurants, new businesses popping up almost daily, and I think Alberta will be built on the backs of entrepreneurs moving forward." 

Wenzlawe and his friend Jamie Parker fought wildfires in Alberta for several years before starting Calgary Heritage Roasting, which sells roast-to-order coffee and teaches how to roast coffee at home. The pair will open their first store this summer.

"When it came to us starting our own company," said Parker, "we already knew the risks involved and what we were potentially facing."

Calgary still needs oil prices to improve

One of the well-known people in the Calgary business scene has noticed the mood has improved in the city since oil prices hit rock-bottom.

"This is not a ghost town. The Monty Python line: 'We're not dead yet,'" said Brett Wilson, the former Dragon's Den star. "There is activity going on all over the place, so to think that we have shut it down is wrong."

While entrepreneurs are optimistic about the city's prospects, Wilson seems to be more cautious. He still sees the need for oil prices to rise and for oilpatch companies to increase spending in order for the city and province to get back on their feet.

"Until we actually start spending money and have the rigs working, have the engineers working, have the completions, the tie-ins, pipelines, the gathering system, the marketing teams — all of those things have to be engaged and active to put our economy back on track," said Wilson.

While he doesn't expect another oil boom in the province anytime soon, Wilson says energy companies will start re-investing in Alberta once their balance sheets improve.