Monday, September 14, 2015

How do you find financing for a non-tech company?

My Post column today looks at the importance of entrepreneurial clusters, and how you build them. Creating a critical mass of entrepreneurs, industry experience and expertise, along with mentoring/advising and investing communities, is considered a key component of modern industrial strategy. 

As I like to say, borrowing liberally from Hillary Clinton, it takes a community to build a startup.

A reader, however, was somewhat annoyed that the story focused on the needs to technology clusters. I suppose that's because Waterloo region is Canada's best example of an entrepreneurial cluster - but there are good reasons for that.

So here is the writer's question, and my response:

Enjoyed your story on entrepreneurial clusters in the Post today... You know, it’s funny because whenever I read about financing for entrepreneurial companies, you’d think there was only one kind of business in the world – tech!
I always wonder how other kinds of companies attract attention and $$ ?  Fashion, food, sports, etc.

My response: 
You ask a good question. Silicon Valley has spent 20 years putting together protocols and structures around investing in tech startups. I don't think the sports, food or fashion industries have done the same.

But that's the point of creating clusters. We're building a wine cluster in Niagara, a mining cluster in Sudbury, fashion and design in Montreal - hopefully these communities will include smart and willing investors/mentors. A cluster is a community where each node complements the others. 

Of course, the point of tech is it is highly scalable - one big win in 10 will make up for all the losers. It would be hard to find another industry that offers that kind of risk mitigation. 

Having said that, I think a private company's best bet for capital is angel investors. Experienced entrepreneurs, some retired, some not, who enjoy investing in startups as a hobby, almost a sport. These guys are not usually members of the formal "angel" networks that have sprung up over the past decade - you have to hunt them down one by one. But they are usually known to each other, and to local lawyers, accountants and bankers, so you can often track them down just by having a solid business network. 

And the advantage is that these angels usually invest in industries they already know, so they bring a lot of wisdom, experience and contacts to the table, as well as their cash.

So it's not an easy path, but doable. It's the way capitalism is supposed to work. 


Monday, August 24, 2015

In Love with Love: Ashley Madison and the Politics of Cheating

Canadian dating website Ashley Madison is still in the news for its infamous data hack - and the continuing fallout. (Now police blame two suicides on the unauthorized publication of members' identities.) 

The hackers apparently targeted Ashley Madison because they're opposed to its casual encouragement of extra-marital affairs. This has been going on a long time - I remember when the Toronto Transit Commission refused to rent ad space on the side of buses for a promotion like "Life is short, have an affair."

So I did a big Twitter dump today collecting cool tweets about Ashley Madison from its CEOs and some commentators. Here's that Twitter essay in all its 140-character glory:

"Life is Short": 20 thought-provoking tweets about Ashley Madison and its wakeup call to the world. 

Early on, Ashley Madison focused its advertising on Friday and Saturdays. Later it learned the best day for seeking adultery is: Monday!

Reporters often asked Ashley Madison founder Noel Biderman how he’d like it if his wife had an affair. His response:

"I would be devastated, but I wouldn't blame a website or an inanimate object." (Biderman says the media only ran the first 4 words)

Inc’s 2009 interview with Ashley Madison CEO Noel Biderman:

Watch Ashley Madison CEO Noel Biderman exploit the fault lines of The Lang O’Leary Exchange.!prettyPhoto[Gallery]/2/

Ashley Madison’s Biderman: “The infidelity economy is bigger than the single-marketplace economy.”
Ashley Madison’s Biderman: “I would say Ashley Madison has saved millions of marriages through its services.”
Ashley Madison’s Biderman: “Infidelity is universal. It happens the same way in Tokyo as it does in Toronto and Talahasee.”

Kevin O’Leary’s response to hearing Ashley Madison’s business model: “This is a really monetizable, measurable business.”

Amanda Lang to Ashley Madison’s Noel Biderman: “Wouldn't you rather make the same amount of money doing something that wasn’t gross?”
O’Leary reply: “What do you mean, gross? What are you talking about?” Ashley Madison’s Biderman: “I didn’t invent infidelity.”
Lang to Biderman: “Your tagline is, ‘Life is short. Have an affair.’ That’s kinda gross.”
O’Leary: “Amanda’s in La-La Land again.”

Ashley Madison CEO: “There’s not much difference between Ashley Madison and Most of their users are single, some are married…”
“…Most of ours are married, some are single. It’s just the marketing positioning we create.”

Biderman: “Ashley Madison’s presence is not such a bad thing. If we weren’t here, singles dating sites would be overrun with married people”

O’Leary’s final question to Ashley Madison CEO: “Why don't you have more competition?” Biderman: “It’s difficult to  market infidelity.”

On his personal website, Ashley Madison founder Noel Biderman call himself the “Successful Entrepreneur People Love to Hate.”

Wikipedia says Ashley Madison has 39 million users. 90-95% are male. Says Wikipedia: “This is not revealed to prospective users.”

Sunday, August 09, 2015

What's the difference between a startup and a business?

On, I site I visit fairly infrequently, someone asked the difference between a business and a "startup." 

Once upon a time, most people would have said, a startup is a young business, just as a baby or infant is a young person.

But things have changed in recent years, and we're all getting smarter about the unique role and needs of a startup. So here is the answer I submitted:

Friday, July 31, 2015

Catching up with Rick's NatPost columns

Writing a twice-weekly column makes it harder to blog regularly. So please accept this blogpost as an invitation to check out some of my articles in the National Post over the past month.

If any one of them doesn't teach you something new about how to conduct business in the 21st century, we'll give you back your investment. Contact me for a free 10-minute coaching call.

Offer good till Aug. 31, 2015. Available in English only. Offer not available where prohibited.

Productivity and Innovation:
How transforming the bleak company lunchroom can help retain employees

Ask better questions, tell better stories to sell more
How Pizza Nova sets itself apart in a crowded market
Get closer to your customers with these ideas on how to build a successful client-focused business

Technology and personal productivity: 
Ten online business resources every entrepreneur should know 

Why innovation is the most fun you can have in business

I was delighted to book a special keynote on innovation this week with an Ontario community. Details will follow shortly.

Innovation is one of the toughest challenges for businesses today. It's an essential survival skill for most businesses , but it's also a process/frame of mind that is hard to integrate into businesses that have traditionally succeeded doing just one or two things really, really well.

Here's the blurb for my presentation on Doable Innovation to help you commit to making growth and product development part of your business's DNA.

In today’s fast-changing markets, innovation is becoming an increasingly essential tactic for survival and success. But most organizations have trouble harnessing the potential of innovation.  Businesses are generally created to fill a need and then replicate successful processes again and again – so it’s no wonder they don't understand where and how to inject regular, sustained jolts of innovation into their operations.

That’s why Rick Spence has created a simple new framework to help businesses master the challenges of innovation and new product development. A business writer and speaker who has studied Canadian entrepreneurship and innovation for 25 years, Rick thinks innovation can be part of every company’s DNA. Innovation isn’t a revolution – it’s about tweaking what you already do in order to do more of it, for more people. Innovation is based on two things we should all be doing more of: listening to customers, and giving our staffs the confidence to ask each other, “What else can we do for our customers?”

In this interactive and highly entertaining keynote, you will learn:
·       Why innovation is the key business process of the 21st century;
·       Stories and case studies from successful Ontario companies that have embraced simple, sustained innovation, including manufacturers, retailers, professional service companies and solo entrepreneurs;
·       Why you and your team members are more creative than you think;
·       Seven easy steps for taking innovation out of your backrooms and into the marketplace.

“People often think innovation is harder than it is,” says Rick. “It’s actually the most fun you can have in business. It will engage and re-energize your employees, and draw you closer to your customers. It’s win-win-win.”

Rick Spence is an entrepreneur, writer and speaker specializing in entrepreneurship and growth. He is the former editor and publisher of PROFIT magazine, and now a twice-weekly columnist for the National Post. He is the author of Secret of Success from Canada’s Fastest-Growing Companies. Rick has taught entrepreneurship at Ryerson University and sits on the board of directors of a multinational software company. Follow him on Twitter at @RickSpence.

Thursday, July 09, 2015

Shimon Peres: “Our dreams that seemed so big at the time now seem small.”

I attended an inspiring presentation in Toronto today by Shimon Peres, former prime minister and former president of Israel. A Nobel Peace Prize winner for his role in the Oslo Accord, burying the hatchet (at the time) with Yasser Arafat and the Palestinians, Peres started out as a political hawk in Israel and came to realize that peace and security could be reached only through trust and compromise.

Interviewed on stage at the Fairmont Royal York by Al Jazeera America anchor David Shuster, Peres offered his thoughts on current developments in the Middle East, his legacy, the role of the U.S., and the future of peace.

·    On the current negotiations with Iran: “I believe for the sake of our children, all of us, Iran should not become a nuclear power."

       ·    Concerning the U.S. role in the bombing of ISIL forces in Syria and Iraq, Peres was asked whether the United States should take more aggressive military action. “They spent a lot of money in Afghanistan, and it cost a lot of lives. The results are not so brilliant.” He suggested it would be better if the well-funded Arab League took on the fight against ISIS, on behalf of the United Nations.

     ·    On the source of the ongoing conflict in the Middle East: “The reason for terrorism is poverty, ignorance, and historic mistakes.  The Western powers carved up the Middle East for their own convenience.  They didn’t pay attention to the local people, so they constituted nations that were not coherent … Once the empires lost control, those countries went back to what they were in the beginning. They didn’t find a unifying role.”
       ·    On the future of political division in the Middle East: “I think the older generation is a lost generation. But millions of young Arabs feel differently. Forty million of them have cell phones. We have to help them. It is a new age, and they will be the future.”

    ·    Regarding the Palestinian/ Israel standoff: “We need two states, Palestine and Israel, living in peace, respect and cooperation.” As a model he pointed to Canada, which has survived its own language and culture divide for more than 100 years.

  “All of us want to recognize a Palestinian State.  It will be better for all of us.  It’s in our interest to find a solution.. And it may happen earlier than many people think.”

       ·    When asked what he sees as his legacy, or how he would like to be remembered, Peres said this: “The past is past. I’m not interested in it anymore. I devote all my attention to what will happen tomorrow.”

Peres now supports those who strive toward a better world: “I think we should all fall in love with dreams rather than memories.” 

He volunteered that he now recognizes a mistake he made years ago: “Our dreams that seemed so big at the time now seem small.”

(If you're pressed for time, go to the 17-minute mark).

Monday, June 08, 2015

Advice to a Young Entrepreneur

Today I received a note from a young BC entrepreneur (let's call him Peter) with a problem. He's about to start a service business, and had an angel ready to provide funding in return for 50% of the equity in the business.
But he began to get cold feet, thinking that might be a lot of future growth he's giving up for the price of a fancy car. He asked my advice. Here's what I said:

"Thanks for your note, Peter. I think you are right to be concerned. 

"My best advice would be to contact Futurpreneur at once. This is a national not-for-profit organization that supports young entrepreneurs (and some not so young) with loans, and referrals to BDC for more loans (if appropriate). It also connects you with a local mentor to provide stable, objective feedback and advice.

"You're stuck in the no-man's-land for startup funding. It'll be hard to raise the kind of money you're talking about for a non-tech startup. However, keep in mind that a loan, although you will need to start paying it off immediately, allows you to keep all your equity for now. If you truly believe in your business, you should see that equity as more important and much more valuable, long-term, than the interest payments you'll be making. 

"(And if you don't truly believe that, you shouldn't be taking investors' money in the first place.)

"Bootstrap startups are tough. But they let you keep more of your hard-earned sweat equity, and avoid potential shareholder disputes.

"If you need more or other funds, canvass family and friends for capital (no-interest loans are best). Show them  a business plan that explains what you are going to do, how you're going to do it, and why you think customers will buy from you. Make sure potential lenders/investors know the risk (i.e., they could lose it all). Then work twice as hard not to let anybody down.

"Hope this helps. Let me know how things turn out."


Monday, May 04, 2015

Fear irrelevance, not failure

Here's a great quote I had to share with you from the May issue of Wired.

This issue features "The Next List," mini-profiles of amazing thinkers and doers who are pushing technology and business forward.

I loved this quote from Regina Dugan, who's head of ATAP (Advanced Technology and Projects) for Google. Regina's projects include a modular snap-together smartphone, and a tablet that maps your surroundings in 3-D.

Her advice: Fear irrelevance more than failure. 

The quote: "It's more important to fail at something that matters than to succeed at something that doesn't."

This quote should be turned into a poster and hung on every entrepreneur's office wall.

"It's more important to fail at something that matters than to succeed at something that doesn't."

Tuesday, March 31, 2015

Why should the press write about your business?

I often hear from entrepreneurs who have read one of my articles in the National Post or PROFIT Magazine. I think they go "harrumph. My business is much more interesting than the business he's writing about today," and so they email me about covering their business.

Once I got a letter from someone who said, more or less, "Loved your story about the company that makes animal tracking devices. My business does the same thing. You should write about me."

I told him that the fact that i had just written about the animal-tracking business constituted a pretty safe guarantee that I wouldn't write about it again for at least seven years.

I got a similar letter from an entrepreneur today. In my reply, I told him what makes a great story for me. I thought you might like to know, too.
(His name has been omitted for obvious reasons.)

Hi -----------. Thanks for getting in touch.

When I write a story about a company, there's usually a theme or lesson on it that other entrepreneurs can learn from. Because business owners are way too busy to read just for general interest.

So I'm wondering what you think the theme might be of a story about (your business name here)? What major challenges have you had to overcome? What "secrets" of survival and success have you learned?

These are the essences of a good small business story for me.

Thanks very much.


Wednesday, March 25, 2015

Expecting More from our Leaders

We just got in a new shipment of reverse motivational posters in our "We Expect More from You" series.

Instead of exhorting employees to work harder and have better attitudes, these posters encourage bosses to set better examples. After all, leaders are supposed to create aligned organizations by example, not fiat. 

"We Expect More from You" is all about building stronger leaders. Because strong leaders build stronger, more motivated teams. 

Feel free to copy and paste your favourites. Post them on your cubicle, tack them to the bulletin board, or turn them into stickies and hand out to others. 

Building better leaders is everyone's responsibility. Don't leave it to your boss's bosses, because you know how busy they are. 

Tuesday, March 17, 2015

"We Expect More from You"

Announcing "We Expect More from You" -- a bold new series of motivational posters. 

Instead of exhorting employees to work harder and have better attitudes, these posters exhort managers to set better examples.

"We Expect More from You" is all about managers learning to become leaders. Because in the end, leaders build better and stronger teams than managers do. Everyone benefits when leaders step up.

Here are just a few of the proposed new poster designs. Feel free to copy and paste, and then post them on your cubicle. Or just outside the executive dining room.

Monday, March 02, 2015

Catching Up

If you haven't been following my Financial Post columns and blogposts, you've been missing some great stories.

Here are a few of them:

In today's column, some great tips and ideas from the day I spent with Peter Thomas, 76-year-old founder of Century 21 Real Estate, and a serial entrepreneur and dealmaker who has much to teach today's hotshots.

"Ten key things to help you succeed in business, according to real estate legend Peter Thomas"

Last week's column looked at another classic Canadian entrepreneur: the late Adam Chowaniec of Ottawa, who passed away in February a week shy of his 65th birthday. Ottawa high-tech mentor, Startup Canada founding chair, longtime CEO of Tundra Semiconductor - and a pioneer in personal computing, no less!

"Adam Chowaniec: The very real legacy of a little-known tech pioneer"

These three Canadians cracked the code on crowdfunding with the "Coolbox": 

"How a group of friends used crowdfunding to create ‘the world’s smartest toolbox’"

(Their $50,000 campaign on Indiegogo has hit $221,000 with more than  a week left to go.)

A Vancouver company dares the big league of mass marketing: A Super Bowl commercial on U.S. TV.
"Pro Draft League’s Super Bowl gamble pays off in unexpected ways"

(Click video to watch)

My Post blogposts are web-only stories I post weekly. They're usually a little less "story" and more prescriptive. And somewhat offbeat. 

Why saying ‘I don’t know’ could inject new life into your business

Tuesday, February 03, 2015

7 tips for building a better business network

Along with interpersonal communications pro Barbara Katz, I have just started a new business to help business people overcome their jitters about “networking” and become more effective relationship builders. Here’s a copy of a press release we just sent out to mark International Networking Day, with terrific tips for building your social capital:

7 tips for building your business network

7 tips for building a better business networkAt its core, business is about people doing business with people they trust. Which is why everyone should care about International Networking Day (Feb. 3) this year – even if, like most of us, you hate networking.

“When most people think of networking, they think of those dreadful events where people simply trade business cards with each other as they search for someone to sell to,” says Barbara Katz, an expert in interpersonal communication. 

”Networking should be about meeting people in all walks of life, anytime. Your network should be partners, advisors, referrers, as well as clients and prospects – people whom you know and can turn to whenever you need help or support.”

How do you build a network of trusted business partners? Katz is co-founder of Connectinc, a Toronto-based startup that helps business people build better business relationships. She offers seven tips for becoming a master networker:
  1. Be open to interactions at any time: “Don't wait for a ‘networking event’ to meet other people,” says Katz. “Be bolder about starting conversations anywhere you tend to meet people: on an airplane, waiting for a bus, at parties, special events and conferences. Start up a conversation, and you never know where it will take you.”
  2. Never pigeon-hole people. Don't pass up meeting people because they don't look like your idealized prospect, says Katz. The boring-looking guy in the corner guy might be an adventure traveler with a million stories; the woman with the tattoo may own her own business. “Be open to new people and new ideas,” says Katz. “They may bring a different way of looking at the world that could open new opportunities and experiences for you.”
  3. Don’t worry about opening lines: Many of us miss the chance to meet new people because we're too busy trying to think of a brilliant “opening line” that will break the ice. “The simplest opening line is “Hi there, I’m Barbara. Nice to meet you,” says Katz. “After that, most people will happily start talking.”
  4. Overcome your stress by focusing on the other person.Chances are, they’re just as nervous as you about the networking experience. Put them at ease by asking them about their interests and experiences. “Showing genuine interest in others is one of the highest compliments we can give people,” says Katz. “It’s also a great way to reduce the stress you might feel about having to carry the conversation.”
  5. Don't sell. Get to know others as people first before you talk business. “You build trust by talking about values, emotions and experiences,” says Katz. “If you bring up business too soon, people may think they're being sold something, and they’ll shut right down.”
To kindle warm, interesting conversations, Katz suggests asking fun, open-ended questions that get people talking. She recommends questions such as “What always makes you smile?” or “What’s one thing no one would ever guess just by looking at you?”
6. To build rapport, look for “common ground” statements to connect you both. Simple comments such as “My sister also went to Queen’s, she loved it,” or “I hate cheesecake too!” can spark lively conversations that quickly shift new relationships to a deeper level.
7. Look for ways to create value for other people. Maybe you can recommend a restaurant or an accountant, or volunteer to refer someone to your colleague’s business. “Always try to help people before you ask for anything from them,” says Katz. “Your goal should be to make a memorable impression on anyone you’d like to meet again.”
“A network isn’t a stack of business cards in a drawer,” concludes Katz. “It’s a group of people you care about, and who care about you. It’s a valuable asset, so you have to treat it with care and respect.”

About Connectinc
Connectinc is dedicated to improving the networking experience and building long-term, win-win business relationships. We help business people become more effective and confident in connecting with others, and teach people how to develop deeper, more lasting and more personal business relationships.
About Barbara Katz
Barbara Katz is a trained Co-Active Coach through the Coaches Training Institute in San Rafael, California, and specializes in interpersonal communications. She owns a special-events business focused on large-scale event logistics and corporate events for clients in the financial, automotive, communications, IT and retail industries.
You can contact Barbara at 416-994-2555, or
Follow us on Twitter at @Connectinc_

Thursday, January 29, 2015

Today’s Youth: A Generation Ready to be Found

These are some notes I wrote up for myself after Global News called and asked me to comment on youth unemployment (i.e., the job prospects for this year’s class of college and university graduates).

I'm not one of the doomsters who lament  “a Lost Generation.” I fell for that line (and reported it) two recessions ago. I kicked about it for years because the economy cycled on and found jobs for everyone who wanted them. The same thing will happen again. Except this generation has it better, because they already live in the digital future that businesses everywhere are working so hard to understand.

My interview in the Global Toronto newsroom lasted all of two minutes, so I thought I would share the rest of my thoughts on youth job prospects here.

They’re just notes. But feel free to comment.

I truly believe that young people entering the workforce have a chance to contribute significantly, and much earlier, than any generation before them.  The main reason is that they have grown up in the social, always-connected world of Internet media and mobile devices. There’s virtually no question that this is the key environment businesses must master over the next 10 or 20 years, but few business decision makers understand this milieu as well as the 20-somethings who have grown up in it. 

This puts new job-seekers in an enviable position.  They can hit the ground running in new jobs, rather than taking six months to a year to learn the ropes – as happened when previous generations came to work in organizations more stable over time.  To benefit from this advantage, however, job seekers have to be aware of it, and figure out how they can add value to an organization.

A few other ways that the Millennials have a better shot at new jobs than previous generations:
·       They understand business better.  Kids have been playing online games that require monetary transactions (real money, gold coins, life points, etc.) since kindergarten.  They understand limited budgets, deferred gratification, and know the difference between spending and investing.
      My own kids were playing Lemonade Stand when they were 10, which allowed them to choose how much they would spend on lemons and sugar and cups, and plan for how much they would buy on cloudy days or sunny days. So business decision making is nothing new to them.

·       They understand entrepreneurship.  Many kids online have been selling their know-how how for a long time.  I have met kids who create Wordpress websites, edit copy, curate photographs, create computer games and design logos. They understand how to create value and get paid.

·       They are social.  Young people they are very sharing and supportive of each other. They have high expectations for their work, but once they get there they will be very resourceful and creative collaborators, with their peers and with their elders.

·       They know how to find information.  The key challenge in most white collar positions is accessing the right information at the right time.  These kids know all the best search engines, they’re not just limited to Google, and they’re used to demanding – and finding - the right information at their fingertips.

·       Businesses today are embracing key performance indicators, measuring output, and generating productivity metrics.  Today’s kids are used to that; they all have hundreds of apps on the phone that speak to this new culture of digitizing every activity.  They can help businesses embrace new technologies to become more efficient, especially in non-tech areas like personal and professional services, construction, hospitality and government.

Also, the unemployment numbers for young people aged 20-24 are not as bad as most people think. Their unemployment rate is about 10%, which is pretty close to the long-term trend, and a big drop from about 13% five years ago. So things aren't as bad as we sometimes hear.

(The relevant chart is the second one in. But read the full myth-busting story if you have time.)

Where are we seeing job growth? What sectors are doing well?
Resources are having a bad time of it, but they will come back. Alternative energies will also do well. Non-profits and social enterprises are enjoying a new lease on life, led by Gen Y and millennials who are using technology and internet communications to rejuvenate these sectors and find new solutions to longstanding problems.

Education, social media, ecommerce, and marketing agencies are all promising. Many businesses need more hands-on help using and customizing technology, so that’s a huge and very lucrative area. And even old-fashioned brick and mortar retail is going to offer great opportunities. Target’s demise means millions of Canadians are looking for new places to spend their money.

And anyone who knows anything about sales can write their own ticket.

When a person graduates from university how should they go about finding a job?
Know what you can do. Develop specific skills: coding, apps, content creation, computer maintenance, hacking, whatever. Target the sectors and companies where you would like to work, and approach them with passion and confidence. Tell them how you can create value for them! (Be an investment, not a liability.)

When all else fails, make your own job. Buy and sell on eBay, resell cool technology from China, make your own jewelry or design websites, write an eye-catching blog and find sponsors for it. Buy a 3d printer and make stuff to sell to friends and gift shops. Do landscaping, cooking, snowshovelling, dogwalking, video production, tutoring and child care for clients with more money than time. There are more opportunities today than ever! 

Friday, January 23, 2015

January guide to getting your business in shape for a new year

My Financial Post column of Jan. 12, 2015:
Success in business rarely comes from building a better mousetrap, raising a million dollars on KickStarter, or landing a great-white-whale-sized account.
True success comes from getting the little things right: working your lists, managing cash, watching the competition, and never giving up. It won’t make headline news, but mastering the basics will at least keep your business off the obituary pages.
And January is the time most people look at developing better habits. “This stuff isn’t rocket science, but starting off the year properly is a good idea,” small-business consultant Andrew Patricio says. “It’s the details that make you a good business owner.”
As founder of Toronto-based BizLaunch, Patricio held an online webinar last week in which he offered numerous tips for mastering the basics and putting your business on track for a bigger and better year.
Here are a few of his key points:
— Conduct an expense audit to start managing expenses in your business. Year-end gives you an opportunity to spend more time than usual with your accountant, so Patricio suggests conducting an expense audit to find out where you’re spending too much.“Go through your P and L with your accountant and look at every single line item — advertising, office expenses, petty cash, whatever — and try and see where you can save money. I urge you, in January, to get [suppliers] to re-quote you on a lot of the expenses you’re incurring.”
— Another timely resolution is to try to understand your financial statements this year. “It’s really not that complicated,” Patricio insists. When businesses have weak balance sheets — too much debt, not enough equity or cash — it’s usually because the owners don’t understand their financials, so they don’t know how to improve them, he says. “It’s really the detail that makes you a better business owner,” Patricio says. “When you can look at the numbers and analyze them, they help you improve your business.” Once you understand your gross profit margin, for instance, you can see how you’re doing compared to industry averages, and compared with last year.
— Start setting more precise expense budgets. When it comes to many big-ticket categories, such as advertising, “we spend as we need, when we need,” Patricio says. “You need to become more strategic. You want to make sure your employees understand the effect of expenses on your bottom line, and that they don’t waste money. The only way they’ll do that is if you set specific budgets and timelines.”
— You knew this was coming: pay attention to cash-flow forecasts. “The one thing I’ve learned in 30 years in business is that you never ever want to run out of money,” Patricio says. “Understand that as a business owner, managing cash flow is the most important thing you do.”
— He advises all entrepreneurs to develop cash-flow forecasts for the next 12 months. Not only will this keep your company off the rocks, he says, it will ensure you have cash on hand in times of liquidity shortages, such as the next recession. “Once you know you have cash available to you, you can make much clearer decisions.”
— If you realize your business may need additional financial support over the next year or two, don’t wait, says Patricio – arrange your financing now. “Look for money long before you need it. Start doing your research six to 12 months ahead of time.”
— Have a business plan – and update it regularly. Sure, you’ve heard this before. You’ve probably also heard many successful entrepreneurs brag that they’ve never written a business plan. (Business moves too fast today, yadda yadda yadda.) Patricio doesn’t buy it, and neither should you. A business plan represents a vision of a business — all its inputs and outputs — at a specific point in time. Its value comes from regularly reviewing it to ensure you know which of your initial assumptions still hold true, and which need to be revisited. “A lot of business owners don’t like this part of the business,” Patricio says. “But it can be a really simple document that you use to keep yourself on track and focused.”
— Include first-hand industry research in your business planning, Patricio adds. “Go and see other businesses similar to yours, see how they’re doing and how much they’re charging. Look for the best practices in your industry and copy them.”
— Finally, Patricio addressed a common entrepreneurial pain point: How to start selling to big business. Polish up your benefits statement, he said: “I have found that big companies will let you come and meet with them only when you offer them real value.” Noting that many big enterprises are nervous about buying from small businesses, Patricio revealed BizLaunch’s strategy: convince the prospect to give you a minor project to start, and prove yourself with that.
As for getting through the gatekeepers to talk to executives, Patricio avoids the office altogether. “We tend to meet top-company people at a conference or trade show, so we’ve never had trouble with gatekeepers.”
“Be patient,” he concluded. “Getting into these companies is not hard, but it is a lot of fun. They have got the money to spend, and they want to give you the work. As long as you’re reliable and you produce the goods, they want to do business with you.”