“That's Small Business”

An Address by John F Bulloch CM
40th Anniversary of CFIB

We recognize entrepreneurs as those who make things happen. They are the people who create companies, revitalize our economy, build communities and create jobs. But most importantly, it is through entrepreneurs and entrepreneurship that societies accommodate the future.

But there is another dimension to entrepreneurship, something not well studied or well understood—it is the role of families and all the unrecorded, non-institutional relationships that make entrepreneurship and small business development work.

I have been a lifetime student of entrepreneurship and small business, as an educator, a researcher, a public policy advocate, a practitioner and as a member of a family business, working the cash register at the age of 12.

My great advantage has been, despite everything I have read and studied; all the conferences I have attended; all the students I have taught; all the international travel I have undertaken to understand entrepreneurship in different cultures; that there is nothing I have learned that was not experienced by the entrepreneurs on both the Irish and Jewish sides of my family.

As part of my personal contribution to a year of recognition for Canada’s entrepreneurs, I am going to recount some family history, and in each story detail the relevant research and what it all means for the encouragement of entrepreneurship and small business development today.

My full name is John Frederick Devon Bulloch, and is made up of the names of three great grandfathers who were entrepreneurs in the later part of the 19th century.

Alex MacGregor Devon was my father’s mother’s father and he was the product of a family business associated with shipbuilding in Scotland and Northern Ireland. He was a university graduate in chemistry and developed a boiler scale remover which his father said was badly needed to soften the calcium deposits that made cleaning boilers such a difficult and time consuming chore. Alex Devon decided to form his own company because he was not the oldest son and did not want to work for his brother.

His father helped him establish his own manufacturing firm, but before he did that he changed his name, which was actually Alex Devine. The Devine’s were a prominent family and his mother was Mary MacGregor, a descendant of Rob Roy MacGregor, the Scottish nationalist. And the British hated Rob Roy MacGregor.

The great grandfather knew that the big market for his boiler scale remover was in Britain; and, in particular, boilers associated with the British Government’s rail system and navy. So he wanted to hide his Scottish roots. Today hundreds of his descendants, including myself and my daughter, have the Devon middle name, when the name was just an Irish entrepreneur’s effort to disguise his Scottish ancestry from the Brits.

Fifty years later, A. Devon and Son had seven factories in Northern England and Northern Ireland, employed over 1000 people, manufacturing a wide range of industrial chemicals, lubricants, paints, varnishes and sheep dip.

On his death grandfather Devon left the bulk of his estate to the City of Belfast and the beautiful public library today on the Lisburn Road is his former home.

The other great grandfather on my father’s side was John Gabriel Bulloch, and his family had been in the linen trade for three generations. His father was a small manufacturer of linen shirts and collars which he sold to the Irish market. My great grandfather and his two brothers worked in the family business. The advantage Irish linen had over linen produced in Europe and elsewhere was not the Irish flax but the technological innovations developed to spin and weave flax which is not as flexible and easy to weave as cotton. This gave Irish linen a high quality that established Northern Ireland as the world centre of the linen industry.

The civil war in the United States cut off the supply of cotton and the linen industry was designated to replace cotton as a matter of public policy.

My great grandfather and his brother started their own linen manufacturing company to supply the huge demand for linen products in England. Another brother did the same thing. They found, however, that their own firms could not meet the demand, so the three brothers got together and built a huge linen warehouse and, under the name Bulloch Bros., became wholesalers and distributors for a wide range of small Irish manufacturers.

They focused on the English market where they had developed ties to the retail, hotel and hospital sectors of the economy. They were essentially keeping manufacturing jobs in Northern Ireland and preventing the export of linen cloth from Ireland to Britain.

Over a period of twenty years the three brothers became very wealthy. They did not employ any of their own sons, who numbered 13, and sold their company in their ‘50s. They put their wealth and entrepreneurial skills into building commercial real estate in Belfast, a city that by the year 1900 was bigger than Dublin because of the linen trade. By 1920, the brothers were the largest property owners in the city of Belfast. None of their children ever started their own companies.

There are huge lessons here. And a lot of what happened in these stories can be confirmed by entrepreneurship research. Firstly, the stories confirm that entrepreneurs are made and not born, and that small firms incubate other small firms. They prove again that public policy can have a huge impact on demand for goods and services and the opportunities that are available to entrepreneurs. And even though we promote the importance of becoming more international, technological and entrepreneurial to build small firms in the 21st century—it was just as important in the 19th century. But that’s small business.

And like so many stories of entrepreneurs and small business, we find them emotionally linked to their communities. Community development and small business is almost one and the same thing. It is where they and their employees live, where their children go to school.

But most importantly, we have stories of how families in small businesses help their children build their own companies. Parents not only make the process psychologically credible, but they help in developing advisor networks, financing and clientele for their children’s companies. But that’s small business.

The other great grandfather was the father of my mother’s mother and his name was Frederick Littman and he founded an upholstering business in Romania. He had a family of nine children and my grandmother was the youngest. Despite being upholsterers to the royal family, they suffered extreme persecution and discrimination. My grandmother had no schooling, wore rags around her feet instead of shoes and was always hungry.

The mother smuggled all nine of the children to England in a fishing boat with the children hidden under a tarpaulin and paying bribes to officials. The father covered for them and followed later. England welcomed Jews from Europe in the 19th century; and the family prospered, being able to operate without restrictions.

Five of the nine children emigrated to Canada and the US. The nine children had thirty children of their own and twenty-three of them started their own businesses. It was a case of, “If Clara’s husband can do it, you can do it.”

The lessons from this story are dramatic. It points to the importance of promoting free enterprise in concert with policies to promote entrepreneurship and small business if we want to build strong economies. And this is the philosophical underpinning of the CFIB.

The other lesson from this story is the cultural nature of entrepreneurship. An entrepreneurial culture can be found in families, racial groups, aboriginal societies and communities all over the world. And the distinctions that are made between businesses started and owned by men vs. those owned and started by women are very artificial. They are all psychological and emotional partnerships. But that’s small business.

My father started his own business on his 30th birthday in 1938. Six years earlier he had been told by his boss at the T. Eaton Company that if he married my mother he would not be promoted, so he vowed to strike out on his own. They did marry secretly with my mother placing her wedding ring on a string around her neck.

Father was a person that spent every evening of his life reading and studying something. He always read British and US magazines to get fresh insight on issues and he subscribed to newspapers from New York and San Francisco to see how people in his business were using their advertising dollars.

He saw Britain and Canada going to war with Nazi Germany, and when he started his company he planned a year ahead of Canada’s declaration of war to go into the business of making officers uniforms. He decided he would visit the camps on Saturdays when his downtown store would be closed. I often went with him once Canada was at war and father had launched his uniform business in earnest.

Each officer was given a $200 credit slip to buy their uniforms wherever they wished and this public policy initiative gave my father the financing that made his business possible. He would take an officer’s measurements when visiting the camp, and at the same time pick up their credit slip which he turned into the bank, and the bank got the cash from the Federal Government.

There are lessons here tied to research. Something like two-thirds of all new ventures are started for a negative reason—discrimination, unemployment to name the two most obvious. And it points to the importance of continuous learning, especially studying issues outside of your own country to get insights into the possibilities for your own business. Fortunately, the web today serves as a magical tool for business owners doing their own research. And once again the power of public policy is evident with the credit slip replacing the need for my father to secure an operating loan from the bank.

I was considered forward looking when I was leading CFIB, but in reality I was just doing what my father did, and that was to study what was going on outside of Canada. I puzzled over why Japan had such a huge retail sector; why Germany has ten times as many bakeries and breweries as the US on a per capita basis; why there are twice as many business births and closures in North America compared to Europe; why Dutch and Taiwanese small firms are so export oriented and yet the two societies are so completely different.

Well, years of study made it evident that small business communities are completely different in every nation, and this variation is a product of differences in culture, history, and public policy. It means that groups like CFIB can help fashion a unique small business community that is more international, more technological and more entrepreneurial to take Canada into the future.

I have also learned that everywhere in the developed world, small business advocacy groups are considered more important economically, socially and politically than groups representing major firms for a simple reason: small business umbrella associations are about building societies whereas large corporate organizations are about building companies. And how is that possible? Because a nation’s small business community is a mirror of the larger society.

When I was planning to create CFIB in 1971, I spent an afternoon talking to my father. I told him that the concept of building a small business voice around the Canadian Council for Fair Taxation was not viable. There was not a workable way to raise the needed revenues, and I had tried everything. The Council, of course, was the vehicle I had created to organize opposition to the Government’s White Paper on Tax Reform a year earlier.

I told him that the concept of the new CFIB was to call personally on every member once a year, to gather solid data for research and political purposes and to build stronger emotional bonds between the member and the organization. Most importantly, the plan included a voting process so the members would have a direct impact on the positions we embraced. It would mean creating a much more complex type of organization.

Well that was what I tried to do. When I actually got things rolling, we just couldn’t seem to hire District Managers who could make a living.

I had allowed an extra three months to hit a break-even point of $2000 a week in membership revenues. But by November 1971, I was out of cash. I went back to my father and told him that I would have to make personal calls on the members each Friday to secure $200 just to cover my own living expenses.

To my surprise he said that having to make personal sales was probably the best thing that had happened to me. He said that making the sale is the most important part of any business—something I had to master. And he reminded me that making personal calls at army camps was the way he had built his own business.

And he said if I had a bad day, to drop into the store and he would have $200 in his pocket ready for me. And over the six months that I did personal sales on Fridays, I had to call into the store three times and each time my father saw me he signaled for me to come into one of the changing rooms where he slipped me $200.

We finally figured out what we were doing wrong, and CFIB started to take off. I still was not sure that I could make a living at CFIB, so I started the Canadian Centre for Entrepreneurial Studies in partnership with the Ryerson Polytechnic Institute, now Ryerson University. For two years, I drew a salary of $9,000 a year from CFIB and another $9,000 from the Centre.

The goal of the Centre was to develop an understanding of entrepreneurship as a product of good research and to promote its application through the education system. We hoped to introduce entrepreneurship education into the curriculum of a broad range of studies at universities and colleges across Canada.

The most significant project we undertook was the world’s first entrepreneurship research conference held in Toronto in 1973. Unfortunately, I did not have an adequate budget for promotion, and it looked like the conference would not enjoy the kind of attendance needed to cover its costs.

I went to my father with my problem and he devoted one of his two-column, page two Globe and Mail ads to promoting the conference. We sold over 100 memberships from that ad and the whole project was a great success. Again my father’s help averted a disaster. But that’s small business.

I became friends with the top researchers in the world at that time and my insights into entrepreneurship and development influenced the next twenty years of my life at CFIB. Even when CFIB started to take off in 1974, and I was forced to close the Centre, CFIB continued to support entrepreneurship research at universities and colleges across Canada, and most of the entrepreneurship institutes across Canada today are all fashioned after the original Canadian Centre for Entrepreneurial Studies.

The lessons associated with this story are powerful again. It is about the power of knowledge in influencing our personal lives, the lives of our families, our companies, and our societies.

And what did we learn from the conference: Well, if you are a person who believes results come from personal initiative, you are a potential entrepreneur. And if the process of starting a new company is a credible option, then you could start a company. However, it usually takes some kind of knock on the head to get things started, something that can be positive or negative. And, that’s small business.

The entrepreneurial process is very much a ‘scar tissue’ process. Although about 80% of new ventures close by the end of the fifth year, the majority of firms started by entrepreneurs on their second attempt are successful. We might define successful entrepreneurs as ST/TSA = 1, where ST is scar tissue and TSA represents total skin area.

What is most important, however, is that we can make the process of starting a business credible to larger sectors of the population through education and as a product of promoting success stories that people can identify with.

Despite the tough times, most of my life in the family business was associated with the fun and joys that most people associate with a happy family life. My memories are of weddings, birthdays and all kinds of celebrations with Italian food spread out over the cutting tables.

When my mother was 82, and my father had been dead for over 15 years, my mother had one of her grandchildren build her a web-site so she could sell her crocheted baby blankets on line. The old entrepreneurial spirit was still alive. I asked her what she was selling the blankets for, and when she told me I said that her price would not even cover the cost of the wool. She replied, “I know I am losing money on every blanket, but I plan to make it up on volume.”

Actually, she was trying to understand the businesses her children and grandchildren had started that were associated with technologies like digital graphics, web design, computer software and online learning.

It was a long road from her mother’s life in Romania as an upholsterer—a mother whose single goal as she grew up was to have children with good shoes, full stomachs and proper schooling.

These are some of my stories, but they are the kind of stories that can be repeated by our members who live within the dynamics of family businesses and understand the emotional nature of how families help one another.

Even today, when I see a door with a sign on it in a remote part of a small community, I see much more than a prospective member of CFIB. I see a couple drinking cocoa at 3:00 in the morning worrying about how they are going to pay their bills. I see a father at the bank co-signing for a line of credit. I see grandma picking up the children so the parents can work at the shop together. I see family conferences when times are tough and family celebrations when a big order is secured. But that’s small business.

And those emotions are still part of my life today. It has been a life of great joy, great challenges, great adventures and great friendships. My love for small business, my love for CFIB and my love for my parents and the family business are all one and the same. And that’s small business.