As a young boy in Montreal, David Newman opened his very first savings account at the Royal Bank of Canada (RBC) branch in the Van Horne Shopping Centre. By standing on his tiptoes and stretching his arm as high as he could, Newman was just able to hand the teller his first dollar.
It was the start of a long and productive relationship with RBC that would end up with Newman achieving phenomenal success, in his 50s, as a franchise owner.
“The truth is that RBC has, in many ways, played a big part in helping me pursue and achieve many of my personal and professional goals,” Newman says, reflecting on the past four decades, during which he married, relocated to Richmond, British Columbia, and raised two children.
“When I bought my first home I had my mortgage with RBC; then, when I made the decision to move clear across the country in 1992, RBC helped me do it seamlessly,” says the 57-year-old. “And, when it came time for me to open my own business – or, at least, start considering the possibility of venturing out on my own, turning to RBC for advice was natural.”
An entrepreneur at heart, Newman got his first taste of self-employment after obtaining his Bachelor of Commerce from McGill University. With his parents, he ran a sewing and fabric shop. Later he shifted to the corporate world, managing a chain of Quebec-based department stores. Then Newman joined Rogers Video in Richmond as vice-president of Sales and Operations. Throughout, he found a natural instinct persisting: “to think independently and do things the way I thought they should be done, rather than what head office told me to do.”
In 2006, at the “ripe old age of 52,” Newman came to a fork in his career road. “I felt I’d worked too much and too long for other people, when what I really wanted was to do my own thing.”
Newman weighed his options. “I had three choices. I could buy an existing business with all of its alligators in the closet, and then try to deal with them. I could open my own business from scratch, which comes with its share of risks. Or, I could get into a franchise, where someone else has done the research and analysis to determine if there’s a market for whatever product or service you’re selling.
“I went with number three.”
He could have chosen the food-industry-franchise route, as many entrepreneurs do. But Newman was more interested in a business-to-business operation that would let him put his sales and marketing experience to good use. So, in 2007, he became the proud owner of a new Signarama franchise on Richmond’s No. 6 Road. In franchises worldwide, Signarama provides an array of indoor and outdoor signage options, including custom-made banners and posters, digital graphics and logos, vehicle graphics, building wraps, hand-crafted storefront signs, and more.
He’d found out about Signarama at a franchise show at the Vancouver Convention Centre. After looking at the company’s business model, and visiting its headquarters in West Palm Beach, Florida, he had a good feeling about Signarama – the feeling of a right fit. “They have a good support system in place, and a family atmosphere, which is the type of environment I like. Plus, I knew I’d be able to work in Richmond, close to my home.”
To make the deal happen, however, Newman needed money. At the time, Signarama required an all-in working capital of about $220,000 for start-up. While Newman had the marketing and sales experience, and Signarama the smoothly working system, he knew he would need a robust team of advisors to help him with the financial roadmap. And RBC – with its integrated approach to small-business advice – was able to supply just that.
“At RBC we have a dedicated small-business team that helps entrepreneurs succeed,” says Sonya Reginato, sales manager, Small Business, South Vancouver/Richmond region.
“We know that starting and growing a business is an extremely complex endeavour. Our goal is to provide the resources – and be the financial advice team – on behalf of our small-business clients,” says Reginato, who leads a team of senior account managers for business and personal banking.
“We believe in an integrated approach to supporting small business. We assign a dedicated relationship manager to each small-business client. And these relationship managers have the entire RBC suite of solutions and experts at their fingertips to help their clients. At RBC, our senior account managers ensure that the integration of clients’ business and personal banking is maximized.”
Signarama, which had contacts at RBC, connected Newman with experts there to secure a federal-government-guaranteed loan of $140,000.
“I needed the loan to purchase the franchise,” Newman says. “I couldn’t afford all of the financing on my own.”
He explains that, although this type of loan can sometimes “cost a little bit more, you’re not on the hook for the whole thing, and that’s something that made sense to me.”
RBC Senior Account Manager, Business/Personal, Margaret Berkyto says the government-guaranteed loan Newman obtained is ideal for small businesses in the start-up phase. “The government guarantees it for a certain percentage. For clients like David who are just getting started, and don’t have a business financial track record, it’s a very attractive option.”
The Canada Small Business Financing Program (CSBFP) requires only a maximum 25-percent personal guarantee from the borrower. The government of Canada guarantees the remainder. That’s significantly less than a personal guarantee on a standard loan.
“We’ve found that many small business owners are not aware of this excellent government program available to support small business in Canada,” Berkyto says. “RBC has the capabilities and resources to help clients navigate the sometimes-daunting aspects of administering the loan. In the end, it helps start-up businesses because, under the program, the government of Canada makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.”
The money, which helped cover certain set-up costs, ensured Newman had the equipment he needed, signage, and other leasehold improvements. Once he was up and running, however, he found he needed extra funds to pay for some of the additional costs of doing business. Berkyto advised him to obtain a revolving line of credit.
“David was looking for a solution that would give him the funds he needed to make up any cash-flow differences between his inventory and receivables and his payments,” she explains, adding that small-business owners often have to pay money up front before they can bill for a job.
“The nice thing about a revolving line of credit like the one we set David up with is you can move money automatically to or from your business account. So, you borrow exactly when you need to, and pay the money back when you have surplus. It keeps costs lower, and you don’t even have to manage it. If you fall asleep at the switch and forget to make a transfer online, the money automatically goes into your account overnight.”
Elvina Chan, senior account manager, Business/Personal, recently took over Newman’s banking relationship with RBC. Chan helped Newman use the equity in his home to obtain additional credit through an increase to his RBC Homeline Plan. “We used David’s personal assets – the equity that he had in his property – to strengthen his application and go for a higher limit,” she explains. “Because of that strength, we were able to do a mortgage, which also works like a loan or a line of credit, except the cost of borrowing is cheaper.”
“The rate is a lot lower because you’re using your home as security,” says fellow RBC Senior Account Manager, Personal Banking, Joanne Leung, who worked with Newman back in 2006 to first establish his Homeline Plan. “At that time, the Homeline Plan was a pretty new solution we had available for our clients.
“For certain situations, like the one David found himself in at that stage in his life, the plan can be a flexible and valuable tool. At the time, David was exploring his options. The plan not only lowered his existing borrowing costs, but provided him the flexibility he might need for future borrowing.”
In addition, explains Leung, as you pay down your mortgage balances, your line of credit limit automatically increases. This gives you additional credit whenever you need it.
With all this sound financial advice and support from RBC, Newman’s business took off. He hired more staff and started achieving Signarama Canadian sales records. In 2009, his franchise was recognized with a business excellence award from the Richmond Chamber of Commerce.
In 2010, Newman started thinking about what he could do to leverage the Winter Olympic and Paralympic Games in Vancouver to create more business. Enter Betty MacLeod who, at the time, was vice-president of Olympic Business Development for RBC – itself a premier national sponsor of the 2010 Games.
MacLeod says, “My job was to help local business owners understand the opportunities that were out there as a result of the Olympics, and to assist them in leveraging those opportunities by connecting them with the right people within the Olympic family.”
Newman met MacLeod at an RBC workshop she was running on this topic. She recalls, “David took full advantage of the education and advice that we were offering. We brainstormed some of the ways I could help him make those connections to showcase his services.”
With MacLeod acting as his liaison, Newman drummed up some excellent business opportunities during the Games, doing signage work for several Olympic suppliers, and wrapping the Speed Skating Canada building on River Road in Richmond. He also did some signs for RBC.
Newman’s business continues to grow. These days much of his contact with his bank is through Investment Advisor Richard Rand, of RBC Dominion Securities, who Newman says “also happens to be a very good golfer.”
Rand chuckles on hearing his client’s accolade – and then offers a sports analogy for their relationship. “We’re like his financial quarterback. Dave comes to us with questions and ideas, and we go out and source the RBC professionals whom we need to bring into the mix to back him. We work as a group to help him with wealth building, estate planning, tax planning – that type of thing. That way we can give him the best premium rates possible on the banking side, and fulfill all of his financial needs.”
With his current lease expiring in August, Newman has recently concluded a deal to purchase a larger space to accommodate his expanding customer base. For that, he’s working with RBC Commercial Financial Services Account Manager Connor Yang to secure a commercial mortgage. Beyond that, Newman says his short-term business projections include “$1.5 million in revenue three years from now … and to pay myself back and to have the loans paid down.”
If his track record over the past five years serves as a sign, he’ll likely accomplish his goals.
“From $300,000 in our first year in business, to close to $1 million in revenue now, our growth has been significant,” Newman sums up. “We’re one of the top Signarama stores in Canada. I couldn’t have done it without my incredible team of employees, my wife, and RBC.”