If companies don’t develop export markets for their products, there will be brands from outside Canada that will, some small business experts say.Fred Thornhill/The Globe and Mail
The winter of 1994 was a cold one in Toronto. Marianne Bertrand had three dogs and one pair of dog boots, a gag gift that made her laugh – until the temperature dropped to minus-32. “It was really cold, so I put them on the dog.”
The lucky dog in boots ran around in the cold, while the other two made it clear they would rather be inside. The boots turned out to be a novelty that lasted barely a week. Ms. Bertrand decided to make her own, sturdier version for her trio of basset hounds.
Dog owners and pet-store owners in her neighbourhood began asking where she got them. Facing a seasonal cash crunch, she invested a few hundred dollars in materials and made $2,000 in profit over a couple of weeks.
“I stayed up until two in the morning, put all the leaves in my dining room table [to expand it], covered it with cardboard, and had the sewing machine at one end and started sewing,” she says. “I literally had them in a Ziploc bag with my phone number on it.”
Ms. Bertrand went to her first trade show in Toronto that fall. She had no company name, and her signs were all hand-drawn. The sample boots she arranged to be made by a contractor were falling apart.
“I had a glue gun, and I was gluing them together. It was pretty stressful.”
But she landed some big accounts, including retail chain Pet Valu. Over the next three years, she found a better sewing contractor (who remains her production manager today) and made major improvements to her brand. In 1997, she opened her first Muttluks factory and attended her first U.S. trade mission to Washington, for Canadian businesswomen, organized by Export Development Canada (EDC).
“I really had to raise my bar to export,” she says. “We had to have much more professional-looking booths. Now it doesn’t matter what trade show you go in; the level of sophistication is pretty high. You could get away with some stuff just being in Canada, just at the local show in those days.”
Raise her bar, she did. Toronto-based Muttluks Inc. is a multimillion-dollar pet products company that sells dog boots and dozens of other pet products throughout Canada, the United States, Japan, Britain and Australia.
The trade mission tipping point
That 1997 trade mission ended up being a turning point for the company: Muttluks received loans through EDC and other federal programs to scale up and fulfil orders from U.S. customers, which more than doubled their sales almost immediately. Most importantly, EDC insured Muttluks’ exports through its Export Guarantee program, which allowed the company to secure loans.
The company also uses EDC’s Portfolio Credit Insurance to insure its receivables and Ms. Bertrand completed EDC’s Trade Accelerator Program and the Business Development Bank of Canada (BDC) ‘s Growth Advisory Program.
Today, exports account for about 45 per cent of Muttluks’ business, mostly to the United States. The company makes eight models of dog boots, as well as dog hats, water bottles, treat bags, harnesses, leashes and more. The original Muttluks fleece-lined and all-weather boots are still made in Canada, but the other products are manufactured in China.
Muttluks is a private corporation and does not disclose annual revenues but it ranks No. 42 on the Starter Story list of the top 100 pet product manufacturing companies of 2022.
The company’s growth last year was 20-per-cent higher than anticipated, Ms. Bertrand says, and forecasts for next year are stronger.
For branded consumer goods like Muttluks, Marianne Bertrand had plenty of time to build up her brand from the grassroots level.
Exporting early helps build brand value
For niche products made in Canada, like Muttluks, export is essential to growth, says Douglas Kennedy, RBC managing director of the Centre for Global Enterprise at York University’s Schulich School of Business.
“Canada is a very small market. It is less than 2.5 per cent of the global economy,” Mr. Kennedy says. “If you’re going to grow, particularly if you have competition, you really need to start looking outside of Canada, and you need to do it fairly early in your evolution.”
If companies don’t develop export markets for their products, there will be brands from outside Canada that will, he says.
For branded consumer goods like Muttluks, there is a bit more time to build up your brand, but Mr. Kennedy notes that technology-related products are in a competitive global market from the outset.
“Your competitors are going to come from the United States; they’re going to come from Finland; they’re going to come from Israel; they’re going to come from Japan. You’re immediately vulnerable to international competition,” he says. “There’s a lot of benefit from being a first mover.”
Getting educated on exporting
Yet many small and medium-sized enterprises that could benefit from export growth don’t know how to go about it, Mr. Kennedy says.
He points to a 2017 study commissioned by Aimia Inc., a Montreal-based investment holding company, which found 90 per cent of Canadian companies that expanded globally reported the expansion was a success. Still, half of the companies considering export markets didn’t know how to tell if their company was ready, and 63 per cent were unsure of the required steps. One in four didn’t even know where to start.
“Probably a lot of SMEs considering a growth path, particularly outside of Canada, they’re sort of aware of the (export) ecosystem, but they don’t take advantage of it,” Mr. Kennedy says.
“The take-up was much, much lower than you would have thought it should have been… I think that is a major problem.”
He says that there are many trade accelerator programs, business advisory services, and other resources available from federal, provincial and municipal sources for free or at very little cost.
“For Canadian companies, I would say – with the exception of family businesses or very, very local businesses – it’s really a question of survival,” Mr. Kennedy says. “‘Do you want your business to be around 20, 30 years from now?’”