Yves Potvin on rapid growth

Yves Potvin

When Yves Potvin started making vegetarian sausages in his Vancouver home in 1985, he didn't picture the sprawling factory he would need to build to accommodate insatiable demand for his vegetarian alternatives. Four years later, he's at it again at Gardein, which manufactures an ingredient that pumps up the protein values in vegetarian products. Here, he offers his insight into what it takes for an entrepreneur to move from small-time producer to big-league manufacturer.

You also have the opportunity to pose your own question to Mr. Potvin. Click here to leave your question. Come back later in the week for Mr. Potvin's answers to select questions.

How difficult is it for an entrepreneur to get started in large-scale manufacturing?

Like the people at Mill Street, I had a previous life. In mine, I was a chef. Scaling up to manufacture large amount is such a challenge, you don't know what you don't know and you have to modify your recipes for all of the different machines. And then the machines break down. One of my first key orders at Yves Veggie Cuisine was for 36 cases, and I ended up throwing 19 in the garbage. I said to myself "If you keep doing this you are not going to stay in business very long." And it's the same in the beer business, or any other. It's not just about having money to expand, you need to scale up and if it all comes together you succeed. But there are tremendous challenges, even if it does get easier. The analogy I like is that when my wife delivers the second baby, she looks at me in my eyes and says 'I forgot how painful this is.' That's why people pay big money to buy companies that have reached a certain stage. The startup is gone, you have management and the machinery is rolling.

Do entrepreneurs think enough about manufacturing when they are starting their businesses?

Everyone has the dream of being their own boss, but very few are willing to go through the pain of starting new manufacturing. You always are thinking about sales and customers. It's customer, customer, customer when you start a business and you figure you can think of this manufacturing business some later time. But you very quickly realize manufacturing is actually your biggest problem. One of my first sales, I told him at the time it would be two days for deliveries. Then, I had a machine breakdown. And when you are small, you are the sales and marketing guy too, and guess you fixes the machinery? This is where I learned how to swear, learning how mechanics work.

What was the worst situation you found yourself in?

Take the last example. This guy, he just gave it to me. He killed me, he said 'If you can't deliver in two days then forget it, we won't pick your f-ing product if we can't get your f-in product on f-in time.' I had never, never, never been talked to like that in my life. It was a humbling experience, and I have to tell you I almost told him some of those same things. But you have to take it, because it's the beginning of your business and you are not in the driver seat. Eventually, we delivered and they became a good customer.

Does it get easier once things are up and running?

In the first year we did almost a quarter million dollars in sales. The year after that, $600,000. Then a million, then two. Once you get the gist of it, and you get better equipment and hire the proper people to take care of it you start moving away from horror story situations.

What advice would you give entrepreneurs?

One of the best pieces of advice is that you must pay now so you do not have to pay later. Believe me I understand  you are short of cash, you have no line of credit so you go a little cheaper, you go see the guy who can get you the cheaper stuff. But most of the time when you cut corners, you will pay later. You'll pay bigger than if you had paid in the beginning. It's like a house renovation  by the time most people have finished they could have bought a brand new house. I bought some cheap machinery when I started, and production increased so quickly that it quickly became obsolete. I should have bought the right machine, instead I bought an older machine and when I was done nobody would buy it from me.

Should business owners scale up a facility in anticipation of sales, or wait until they can't produce enough products with their current equipment?

You need a purchase order if you are going to produce. We launched a private label this year with a Western company, and my sales guy kept telling me the PO was coming, it's coming, it's coming. The production guy tried to do half of the order ahead of time, because the sales guy said it was guaranteed. Well, guess what? Nothing is guaranteed until you have a PO that will be honoured. Producing ahead of time is very, very, very, very risky.

If you lack capacity, you need to turn away business. How do you handle that?

It's very challenging to say no. I like to give the bad news first, you are better telling them that you don't have enough packing or this or that. Ever sales person likes a big order, they will accept that order because it's tied to their bonuses and things like that. But if you accept it, and you don't produce it you become persona non-grata. Not being able to produce is worse than not producing at all. You want more business, but if you physically can't produce enough then you need to say no. That's the biggest challenge when you increase sales very rapidly and don't have a system in place.