Last Thursday evening I took part in a seminar we hosted at the Centre called “Use Online Content Conversation and Persuasion to Build Your Business”. The presenter Kenton Larsen was enthusiastic engaged the audience and was very knowledgeable about all kinds of social media platforms ...Read More +
Friday, August 26, 2011
A story that caught my eye on one of my preferred RSS feed sites, McKinsey Quarterly, tells of recently conducted research into how Internet search has benefitted the global economy. This seemed to me a bit like trying to quantify the effect of sunshine on marriage proposals.
Measuring the Value of Search outlines the comprehensive computation of how billions of mouse clicks turn into economic value. But where do you even start to figure this out? McKinsey gave it the old college try and came up with some brilliant techniques to measure the immeasurable.
First, they estimated the overall value of Internet in 2009 at $780 billion based on the assumption that each search was worth about 50 cents.
They then figured that 69% ($540 billion) flowed directly to global GDP in the form of e-commerce and higher productivity. The remaining 31% is not captured in GDP numbers but is seen as benefits to people in the form of finding lower prices and the convenience of quick access to needed information. They estimated the value of these benefits to be about $20 per month for European and American consumers and up to $5 per month in countries with lower disposable incomes.
The research determined that the value of searches in 2009 translated to 2% of retail revenues in developed nations, reflected either in direct sales or online marketing that actually resulted in getting people to the bricks and mortar store.
Previous studies only measured the overall commercial value of Internet search. McKinsey points to the economic benefits of increased knowledge and informed decision making. Pretty amazing stuff, really. By the way, $780 billion is equivalent to the GDP of the Netherlands. And that was two years ago.
Tuesday, August 23, 2011
After years of wishing, we finally took the plunge and brought on board not one but two (and a half) summer students this year. By accessing two different student employment programs we were able to cover some of the costs of extra hands and brains needed to carry out our summer projects.
One of our students, Jiajia Xu came to us from the Asper Cooperative Education Program. Jiajia is from China and her work was very challenging for someone whose first language is not English. We tasked her with a literature review that required her to identify and create abstracts for hundreds of articles pertinent to a program that is in the developmental stage. We are all extremely impressed with how Jiajia swung herself up the steep learning curve and provided us with high quality summations and a brilliant methodology for organizing the data she collected. Some support for Jiajia’s wages came to us through the Manitoba Career Focus Program.
Gabrielle Morrill came to us a couple of years ago as a 16 year-old volunteer who was just looking for some workplace experience. With her parents’ permission, we put Gabby to work on an environmental scan which she tackled like a pro. The Canada Summer Jobs program allowed us to have Gabby back this summer on her break from the University of Guelph where she is a business student. She assiduously applied herself to updating our Women’s Business Directory, no mean task. Gabby sent hundreds of e-mails and made countless phone calls to women-owned businesses, asking, begging, cajoling and ultimately winning, correct and current information from our province’s women-owned enterprises. Gabby also delivered some top notch specialized research for a unique course offering that will be on our agenda this year.
In early summer, we were approached by a former Board member who knew of a young woman majoring in economics and finance at the University of Western Ontario. She was looking for purely voluntary work experience that would keep her busy about 10 hours a week. This time, we were fortunate to meet Lauren Barker, a bright, organized, mature and very pleasant young woman who has been a great help to all of us as an extra pair of hands for some complex tasks.
These smart, willing, and energetic young women completely belie the picture of our Manitoba teens as want-it-all-have-it-all princesses slouching indolently through their summer holidays. And just as they have learned lots from working with us about teamwork, workplace culture, appropriate business language, work organization and documentation, so have we learned from them about diverse perspectives.
No word of a lie, I’m completely confident that we are in good hands with the next generation and can only hope that in years to come we will be as fortunate in our choices as we have been in the summer of 2011.
Friday, August 19, 2011
After we posted the Business Buyer Beware blog earlier this week, Colleen, one of our business advisors who had just returned from holidays, brought to my attention a couple of other caveats she thought should be mentioned.
My last blog caused a good bit of discussion around our staff meeting table with everyone contributing a sad story of lost savings, dishonest dealings or ‘finagled’ numbers. Our business advisors are very knowledgeable and capable professionals. One thing they can’t do is turn back the clock and prevent some questionable decisions that have caused such grief to somewhat naïve but well-intentioned business buyers.
That is not to say that there aren’t good honest business people with the intention of selling stable enterprises with good earning potential. Just that it always pays to do the homework to ensure that’s who you are dealing with and that’s the outcome you will achieve.
Some of Colleen’s suggestions:
· If you are taking over a lease or taking on a new one in rental premises, it’s worth paying a lawyer to check over the agreement. Pay special attention to: who covers the cost of maintenance/replacement of electrical, plumbing and HVAC components? How old are these elements and when were they last replaced? What is the average lifespan of each component?
· Verify that the numbers you are being shown are real. Ask to see a random sample of daily till tapes for various months so you can see how the totals were achieved. This will also assist you in confirming the incoming cash flow and business cycle which is useful in preparing financial projections.
· Get a complete listing of all assets that you will be purchasing along with the estimated fair market value and the age of the assets. If you are dealing with specialized equipment, it’s worth getting a competent technician to check that everything is in good working order.
· Will the current owner stay on for a period of training and introduction to existing clients? This can be a benefit where there are long-term owner/client relationships.
· If you are purchasing inventory, the day before the sale of the business, do a physical count of all that you are purchasing. You should also develop an aging report to ascertain the potential for those items to be sold at full price or the requirement for discounted pricing.
· Are there policies and procedures documented for all of the business systems, including human resources, technology, operations management, and customer relations management?
· Spend some time observing the daily operations and traffic flow of the business. Take a random sample and do some extrapolation to justify the financial documentation you have received.
· Take stock of how much time it will take you to get rolling if there are new systems to put in place, corporatel structures to develop, signing documentation, legal issues, new signage, new supplier relationships and credit applications.
We could probably go on for days on this subject, but hopefully this will provide you with some food for thought when you are considering this major and all-important expenditure.
Wednesday, August 17, 2011
Have you always wanted to be your own boss but are afraid of the risk of starting a new venture from scratch?
Many people in that situation think that buying an existing business will mitigate the risk of a start up. Please believe us when we say that there are a great many risks and caveats to consider when purchasing a business.
While it is not always so, we have had many people come through our doors who have made business purchase decisions without considering all of the important factors. The result is loss of hard-won savings, time, anguish and lost opportunity.
The Canada/Manitoba Business Service Centre has some good information available on evaluating and purchasing a business. Based on some of the heartbreaking mistakes we’ve seen, here are additional thoughts you may want to consider and red flags to watch for if you are considering taking on an existing enterprise:
· The current owner doesn’t want to share any of the financial data until you show that you are serious (i.e. put down a deposit);
· The financial statements you received are internally generated (i.e. they are accounting program print outs rather than accountant-prepared statements);
· The current owner only provided the current year’s statements without any history to show whether sales or profits have declined significantly;
· The seller tells you that the business actually does much better than the statements show but ‘that is just for tax purposes’;
· ‘Good Will’ is the largest asset on the balance sheet;
· You haven’t researched whether there will be major construction, road closures, water-main repair, etc. in the vicinity of your proposed place of business;
· You haven’t checked to see whether a major competitor is planning to open nearby;
· You haven’t talked to existing customers to assess whether there will be a change in relationship once the current owner departs;
· You haven’t checked to see if a near-by business with a strong draw is closing down, thereby affecting traffic to your establishment;
· If the business is in rented premises, what is the relationship with the landlord? How easy will it be to renegotiate the lease? Is the building owner thinking of selling the building? Is he/she cooperative when it comes to repairs and replacement of major equipment?
Believe it or not, we have heard stories about every single one of those points from clients who come to talk to us after they’ve made a major deposit or bought the business.
We recommend that you always talk to a professional accountant and a lawyer before making such a major purchase decision. And by all means, if you are a woman or a 50% woman-owned partnership, come to see us at the Women’s Enterprise Centre.
We’ve seen it all!
Friday, August 12, 2011
We were devastated by Kelly Hughes announcement that he was closing Aqua Books/EAT! Bistro, one of our favourite restaurants and browsing spots. We had the Centre Holiday party there in December and it’s a regular place for lunch meetings and friend gab fests, always followed by a rewarding wander through the stacks of great used books at terrific prices.
There are some good lessons to be learned from Kelly’s decision to close his enterprise. In today’s Free Press article about the downtown bookstore Kelly says, “People spend a lot of time now on their smartphones and accessing the Internet from anywhere in the world. That’s great, but it’s changed people’s habits and people don’t have the time like they used to to read.”
Kelly’s noting the effect of the move to electronic books is indicative of the need to recognize industry and market trends that should shape business decision making, whether it’s to move, expand, diversify, grow or move on. In fact, Aqua Books has made some valiant efforts in diversification, having become known not only for the restaurant and bookstore, but also as a centre of cultural and literary arts residencies.
Kenny Rogers had it right. You have to “know when to hold ‘em and know when to fold ‘em…” What’s true in poker, in this case, is true in business as well. A planned exit strategy, done with integrity and minimal harm to customers and clients, suppliers and staff, is always a class act that maintains a good reputation until the next time the entrepreneur has a good idea that fills a market need.
We’ll miss you Kelly and Candace. Good luck and our best wishes.