This is the first of a series featuring small, innovative, fast-growth companies that are thriving across Canada.

In these volatile economic times, small and medium sized enterprises (SMEs) are confronted with difficult decisions. First and foremost is the challenge of balancing operating costs while intelligently growing their business. This becomes even more pronounced when examining innovative, fast-growth companies with evolving business

needs. Beyond payroll, the most significant recurring expenses for SMEs is typically rent, equipment and inventory, so making affordable real estate decisions can literally make or break a business.

Few can appreciate the complexities of the B2B commercial real estate world more than veteran Toronto broker, Jonathan Brown, from Flagstone Commercial Realty, who has been helping businesses small and large for the past 18 years.

“In terms of leasing space, I hear some clients with the attitude that, ‘I’m going to need it eventually, so why not rent more space now’. What happens is that they end up paying for space and never using it. That added burden and expense on an ongoing basis is the last thing a small business needs, because they need that money to grow. Generally, for smaller companies I recommend leasing shorter term, to stay flexible and squeeze into their space until they really do need more,” says Brown.

A great example of this real estate adaptation is R&P Prints Canada co-owned by Aaron Rosenthal and his partner Nati Philosophe. R&P is a wildly successful screen printing and embroidery manufacturer that creates custom designs and logos on just about anything, from jackets, hoodies and t-shirts, to hats, bags, pants, or sports apparel.

The company now operates from an 8,000-square-foot facility in Toronto as their business continues to expand to serve clients across Toronto Montreal, Vancouver, Ottawa Calgary and beyond. In terms of volume, they printed four million garments last year and expect to reach the six million print plateau in 2017 based on increasing demand as word has quickly spread.

Like many legendary success stories, R&P started with a bold idea, a lot of sweat equity and a true entrepreneurial spirit. What began in 2007 in their parent’s basement, led to renting a single bedroom in someone’s house month to month in 2009, then evolved to a 1,200-square-foot facility in 2010, then a 2,500-square- foot facility in 2012.

As R&P Prints has grown, they have continuously upgraded their equipment and techniques over the years requiring far more real estate. They can now print up to 12,000 clothing items a day, if necessary to deliver orders on very short notice.

With 12 full-time employees, five part-time employees and a graphic designer they are taking on bigger projects by the day, and take pride in the fact that all their work is done locally, not overseas.

How have they done it? Rosenthal says, “As a company we differentiate ourselves by offering greater value and quality. That means no setup charges, free shipping in Canada, fast turnaround times and unmatched quality. We are also one of the very few companies that can produce large volumes of full-colour printing (up to 13 colours) on just about any garment.”

When businesses are expanding rapidly, the temptation is to sign short term leases, but one should also factor in price. Commercial landlords often prefer longer- term leases, averaging 3-5 years, but they will offer attractive inducements to commit longer. When negotiating through a broker, businesses should know that many landlords will offer free renovations, two months of free rent, or favourable rates for the first year to gently support their tenants to grow and succeed.

Commercial landlords know that most small, new companies struggle for the first 12-18 months while they gain traction and hopefully build momentum. The sad reality, revealed in a recent Industry Canada study is that 30 per cent of small businesses won’t survive longer than two years, and only half make it to five.

Another real estate option for more established businesses is to consider purchasing rather than leasing space, and then renting out a portion of the unused space to a tenant to off- set some of their costs. When the business needs grow, then simply reclaim the required space.

Ultimately for companies like R&P Prints, the secret to overcoming challenges is a relentless work ethic and the willingness to innovate and think differently to outsmart the bigger established players in their industries. They are the disruptors, always looking for new ways to offer greater value to their customers.