Why Banks Turn Down Loans

As companies gear up to take advantage of the recovery (see my column in Monday’s Financial Post for more on that), many will be looking to their banks for additional financing.

Want to know why banks turn down loan applications? Legendary Canadian entrepreneur Frank O’Dea, founder of The Second Cup, wrote about this recently on his website. While the article was apparently written for members of CAFE (Canadian Association of Family Enterprise), you should read it, too.

According to O’Dea’s discussions with bankers across Canada, here are the five main reasons that banks deny commercial financings:

1. The clients were unprepared.

2. The clients were knocking on the wrong door (e.g., seeking financing that should be sourced from venture capital firms)

3. Too much reliance on SBLs (government-funded loan guarantees)

4. No Back-up plan. Are you ready for a rainy day?

5. The project's business cases are weak.

O’Dea goes on to cite one more reason, which he says was never voiced, but clearly implied. Sometimes individual bankers just don’t like a deal. He says one banker equated it to publishing: several publishers may reject a manuscript before one accepts it and makes it a bestseller.

Now read the full story: http://www.frankodea.com/5reasons/

Social Media, SEO and U

If you're marketing or selling anything today, you need to understand the two S's: Social media, and SEO (search engine optimization).

If you're struggling with these tools, two experts from out west are coming East to help you out.

Stuart Crawford and David West of Calgary-based Ulistic Internet Consultants are holding a workshop on June 9 in Mississauga Ont. (exact location to be announced).

You can go just for the morning to learn all about social media for business with Crawford (whose writings I have been following for years), or you can stay for the whole day and also learn from West how to "Take Care of Your Own SEO."

These new tools are changing business, and you owe it to yourself (and your customers and staff) to learn how to make them work for you.

For more details, visit https://ulistic.com/socialmediaseocourses/socialmedia-training-mississauga.php

Best Entrepreneurial Quotes, Week 16

"The underdog in many products... can pick and choose where it wants to hit the giant. The giant, by contrast, must defend itself everywhere."
George H. Lesch, former president, Colgate-Palmolive (1960-1971)

Many entrepreneurs are used to thinking of themselves as guerrillas - interesting to see how vulnerable some companies feel they are to such tactics. Would you behave any differently if you realized how slow and unresponsive your competition might really be?

(Lensch himself seems to have been quite the innovator. Under his leadership, Colgate-Palmolive developed such new products as Cold Power laundry detergent, Palmolive dishwashing liquid, and Ultra Brite toothpaste. In 1963, it also introduced a new food wrap called Baggies. In 1967, Colgate's sales topped $1 billion for the first time.)

Advisory Boards: "Just another adventure for me"

Some stories have happy endings. This one has a happy beginning.

A few weeks ago, I met over dinner with two people who are launching a very promising service business. I was one of several people whom they met up with for startup advice and industry insights, so I congratulated them on being so creative and professional about seeking advice.

My counsel was simple. Define your target market, prepare a business plan that will focus your activities – and form an advisory board of mentors, professionals and industry experts.

As you may know from my past work, I believe that starting an advisory board is probably the most powerful single thing you can do to ensure the success of your business. What could be better than surrounding yourself with experienced people who care about your business and are willing to lend their expertise, open up their Rolodexes and warn you of speedbumps you might not expect?

In the research I have done, however, many entrepreneurs who recognized the importance of advisory boards said they didn't have one because they didn't know how to form one. Who should be on it, how do you find them, what do you pay them? So many unanswered questions…

But my two new friends didn't fret about those things – they just went ahead and did it. They asked a number of people they had known – people they knew through work or previous jobs, people they had met in service organizations, and even just friends of friends. Just starting out, they don't have any money to pay their advisors, so they just said so straight up.

They did some strategizing about the specific expertise the board needed: industry experience; a legal expert; a techie. But in the end they simply sought out smart people who would ask good questions and offer great advice.

In the end, they asked seven people to join their board. Of course, they were nervous. What was possibly in it for the advisors? I suspect you could have knocked these entrepreneurs over with a feather when all seven agreed. In fact, one apparently said, “What took you so long to ask?”

Actually, I think they only asked six people. When the seventh found out they were putting together an advisory board, he said, “Why didn't you include me?” So they did.

Clearly, there are many people of great goodwill who enjoy the idea of helping startups. Partly it’s giving back; some may crave the intellectual exercise. I thought one of my new board colleagues put it best whether she explained, “It’s another adventure for me.”

We just had our first meeting. There was tremendous buzz around the business plan, the revenue model, marketing tactics, branding, and so much more. The entrepreneurs couldn't believe what great advice they were getting. Their business probably leaped ahead six months in one evening.

So what’s stopping you from building your advisory board? Owner-operators are standing by...

Best Entrepreneurial Quotes, Week 15

"Forget injuries, never forget kindnesses."

Confucius, Chinese philosopher, 551 BC – 479 BC

Just finished a Post column on an Ottawa entrepreneur who’s just had a big breakthrough in China, so I was in a Confucian state of mind.

Confucius was a scholar born into a warrior family in 551 BC (or BCE), in what is now the coastal province of Shandong. Founded on virtue, morality, justice and peace, his philosophy became a tenet of Chinese and other Asian governments governments that lasted until the 1800s. He emphasized self-development and self-mastery, and favored judgment over rules – making him an honorary entrepreneur, in my eyes.

To give you an idea of how cool Chinese culture is, the rulers of China have honored Confucius’s descendants for 2,000 years, naming them marquis or duke right up until 1935. According to Wikipedia, Confucius's family, the Kongs, has the longest recorded pedigree in the world. The father-to-son family tree is now in its 83rd generation.

Eight more Confucian quotes worth pondering by 21st-century business people:

"Be not ashamed of mistakes and thus make them crimes."
"Everything has its beauty, but not everyone sees it."
"Hold faithfulness and sincerity as first principles.”

"To be able under all circumstances to practice five things constitutes perfect virtue; these five things are gravity, generosity of soul, sincerity, earnestness and kindness."
"Never impose on others what you would not choose for yourself."
"To know your faults and be able to change is the greatest virtue."

"He who speaks without modesty will find it difficult to make his words good."
"Before you embark on a journey of revenge, dig two graves."

AdWords: the ultimate in target marketing?

As reported on Gawker.com and elsewhere, the Internet economy pays dividends to those who find innovative ways to exploit today's newest communication tools.

Last year, Alec Brownstein was a copywriter toiling at a big ad agency and yearning for a new start. To find a better job, he made a list of the Madison Avenue creative directors he would most like to work with.

Then he advertised to them - personally - using Google Ad Words, the pay-per-click ads that pop up only when someone is using a search engine (in this case, Google) to look for links with a specific keyword.

Knowing that many people like to Google themselves, he bid for the rights to have his help-wanted ad pop up anytime someone searched for those five executives' names. Since no one else was bidding on those names, his cost was just 15 cents per click. (If no one clicks on your ad, you don't pay a cent.)

So whenever one of the creative directors Brownstein targeted Googled himself, his ad popped up: "Hey, [creative director's name]: Goooogling [sic] yourself is a lot of fun. Hiring me is fun, too." Clicking on the ad took his targets to Brownstein's website at alecbrownstein.com.

"Everybody Googles themselves," Brownstein explained. "Even if they don't admit it. I wanted to invade that secret, egotistical moment when [the creative directors] were most vulnerable."

It worked: Four of his five targets called him, and two offered him a job. Today Brownstein works for Young & Rubicam, one of the top agencies in New York.

His "campaign" has also won awards for self-promotion at two major advertising awards shows.

The total cost of his campaign: $6.

Ask yourself this: Who are you trying to reach, and what can you offer them when they're Googling themselves?

Old is New

I owe Rogers for the news that a new (old) kind of computer is coming our way.

The ASUS EeeKeyboard PC is a full-service computer shaped like your keyboard. It packs processor, storage, connection ports and all into a small all-in-one unit with a 5-inch, 480x800-pixel capacitive touch screen (where you might expect to see a number pad).

The unit is powered by an Intel Atom N270 processor, 1 GB of RAM and a 16 GB or 32 GB solid state drive (think hard drive without moving parts).

 Writing for Rogers online UR Magazine, writer Andrew Moore-Crispin actually says this: "Think of this as a way advanced Commodore C64 with the addition of a built-in display. All the ports, all the computing power, all of the user interface is packed into this tiny 145mm x 425mm x 24.4mm AIO PC."

The Commodore 64 was iconic in its day. (I lusted after it, having only a VIC 20.)  How cool to see the spirit of 64 come back again!

The Heart of the Question

I had a great learning moment yesterday.

I was attending an annual planning meeting for a mid-sized business, and we were going through a strategic exercise to discuss, “What do our customers value?”

It seemed like a good way to review the needs of the company’s clients and prospects, and make sure we were meeting them. But there was also an expectation that it would help us discover some new unfilled needs that would point the way to new products and opportunities.

Trouble was, we were getting bogged down. People in the meeting, quite naturally, kept bringing up things that clients value that the company already does. Since this firm is already pretty client-focused, that meant we were mainly creating a list of things the company is already doing well.

How to make customers’ unmet needs stand out? I suggested we ask another question: "What do our customers take for granted?"

Suddenly, most of the things we already do for customers could be put in the “take for granted” category, and set aside. They're just table stakes. What matters are the things customers value that nobody is supplying now – because that’s where the best “adjacent opportunities” lie in wait for you.

Post column on the NB Entrepreneurs Summit

Can “Canada’s Picture Province” become “the Davos of Entrepreneurship”? That’s the subject of my column in this week's Financial Post on the events of the first annual New Brunswick Entrepreneurs Summit.

The conference featured some of the best entrepreneur speakers I've ever heard, and I will be writing about some of them again. But this column will give you a high-level feel for what went on.

Excerpt:

Recent business grad Kara Hachey spoke of her experiences creating children's recreation programs at Fredericton-based Go-Go Gymnastics. Now expanding into Saint John and Moncton, Go-Go will soon have 9,000 children enrolled in its programs. (Her biggest problem: finding and training 80 new employees.)

Hachey's top tip is to know your customer. She started Go-Go with set ideas, and resisted at first when clients asked for other services, such as evening day care. Eventually, she says, "I figured if you're going to pay the bill, I might as well make it work for you."

Hachey's other tips: Build your business around your employees' capabilities; create consistency in your communications, pricing, and policies; seek out mentors and "thank them, thank them, thank them."

You can read the full story here.
You can also read my live-blog posts at the summit by clicking here. (For best results, scroll to the bottom of your screen and then read the posts from bottom to top.)

Best Entrepreneurial Quotes, Week 14

"The best way to retain talent is to treat them well, empower them and create an environment where they love to create."

Canadian entrepreneur Miles Nadal, founder, MDC Group,

quoted in Advertising Age, May 10, 2010

In 20 years, former hockey photographer Miles Nadal has built one of North America's foremost communications empires. In today's interview in Advertising Age, Nadal explains his company's strategy, and why he's now in acquisitions mode.

"There was a great quote by Warren Buffett that says when it's raining gold, you should find a pail and not a thimble. We started [acquiring] a year ago when the world was very uncertain. There were a number of firms that were in the fastest-growing areas of marketing communications, i.e. PR, social media, interactive, data analytics and data mining and experimental. These are firms we had been following for a long period of time.

"We intentionally [held off before] because we didn't understand the value proposition of the businesses other people were acquiring. We are contrarian. When everyone was growing through acquisition, we were growing organically. ... When nobody was being acquisitive, we thought this is a wonderful time. For the most part, banks are not lending, and our access to capital is more valuable to partners today than before."

You can read the full interview here.

Lying in business. For business?

Is lying a necessary part of an entrepreneur’s job description?

My column in this week's Financial Post questions looks at some common business lies and asks whether we can afford to do without them. Can an entrepreneur succeed without falsehoods? And do financial forecasts count as lies? What about photos of a Big Mac?

Excerpt:

In the long run, under-promising and over-delivering are your best bet. Lying forces you into a shadowy world of non-accountability -- you have to hide from those whom you've deceived.

When you develop a reputation for truth-telling, you get to live in daylight.

I've had more email response from this column than anything else I've written in several years. I look forward to reading your comments. (hint, hint)

Read the full story here. 

The 7 Deadly Sins in Business.

At last week’s NB Entrepreneurs Summit in Fredericton, I talked about why entrepreneurship is a sunrise industry, how business is changing and becoming more human, and three Must-Dos for those who want to succeed in this new decade.

I also cited The 7 Deadly Sins in Business. Here’s a summary of that list:

Deadly Sin 1. Assuming that people want your product: Many people think their idea for a new product or service, or even a business, will sell itself. It just isn’t so. If you're going to launch something new, it should be because you know the market wants and needs your services. Not because you simply love it.

Do market research. Get customer feedback. Ask tough questions. Assume you're wrong.

2. Skimping on the business plan: Before you launch a new product, you have to understand who the market is, and why. And you must know the best ways to reach these prospects. Sadly, many entrepreneurs would rather do than think. So they waste a lot of time and money selling before they really understand who they should be targeting or how to get their attention.

For each product or initiative, you need to prepare a separate marketing plan.

The good news: when you sweat the details, you usually find you have many more opportunities than you thought.

3. Losing focus: Stick to what you know, and get the basics right before you diversify or start chasing shiny new opportunities.

Sin 4: Hire people who are just like you: Fussy, numbers-oriented people tend to hire other analytical people like themselves. If you're impulsive, fast-moving, and instincts-driven, you tend to hire people like that. Either way, you miss out on the balance that all organizations need.

Sin 5. Never make a one-sided deal: You can't build a sustainable business if you're not creating value for others.

Always ask if the deal you're working on will lead to a stronger relationship – or a weaker one. Only do the deals that make your relationships stronger.

Sin 6. Trying to do everything alone: Let your employees/team members know what’s going on in your business. They may surprise you by sharing the load and suggesting great new solutions. Don't keep them in the dark, especially when times are tough.

Sin 7: Not making time for yourself and your family: Entrepreneurs often justify their long days and hard work by saying they're doing it for their family. I have news for you: they’d rather have you around more often! Do the hard thing, and get home on time for dinner tonight.

Help for Toronto-area Startups

Note from Thursday afternoon: Thanks to commenter Joel Clements for pointing out the following event has been cancelled. I will leave the post up for now and then let you know if it gets rescheduled.

To help build stronger startups, Toronto’s top business advisors will gather in Markham on May 12 for The Biz Pitch Forum.

This first-of-its-kind event will provide startup entrepreneurs with new business connections, one-on-one advice and next-steps guidance on their business ideas. There will also be matchmaking services that put entrepreneurs in touch with financial, legal, investment and government experts to support their successful growth.

The Biz Pitch Forum is designed to help both people who are just launching a new business as well as small young companies looking to grow to the next level, says Bob Glandfield, CEO of the Innovation Synergy Centre in Markham, a not-for-profit business advisory centre that is organizing the event.

“There’s no one-size-fits-all secret to business success,” says Glandfield. He says it’s important to talk to people who have ‘been there.’ “Entrepreneurs and small business owners need to identify and understand their individual strengths and weaknesses, and learn how to leverage key success factors for growth.”

Registration for The Biz Pitch Forum is $35. For more information or to register, visit http://www.iscm.ca/.

Starting a social-media business

At a function yesterday I was approached by a young business-school grad looking for some advice about starting a social-media consulting firm. How, she asked, should she start?

My advice was fairly simple. Pick a niche. Any niche. In a city the size of Toronto, you can't set out to serve the whole city. With limited time and scarce marketing dollars, you have to focus your attention on a market segment that really needs your help, and which you are uniquely positioned to serve.

Choosing a target market helps you nail down the specific needs of that market and the best way to reach them; only then can you target your message appropriately.

So I asked her what her interests were, her industry experience, where she was from. And then I suggested she use criteria such as those to select her niche, and work on a few compelling reasons why she is the best person to serve the needs of that market. Maybe it’s the community where she grew up, maybe it’s a sector she studied in school, maybe it’s the industry that gave her her first summer job.

Once you know what your market is, I suggested, figure out an approach. What needs do these people (or businesses) have, and what tools can you provide to help them? Figure out a compelling message that highlights two things:
• Your customers’ specific needs;
• Your personal expertise and abilities.

Then start getting your message out, through whatever channels best serve your target market: direct mail, posters, website with search engine optimization, key influencers, email, video, postcards, press releases, etc. Include a compelling, time-limited offer (say, a coupon for a discount or a free consultation) that will encourage interested prospects to call NOW!!

If you are going to say you're a social media guru, you'd better prove it. You’ll need a professional-looking website, a compelling Facebook page, a series of razor-sharp videos on YouTube, and a tantalizing Twitter feed.

You need to demonstrate your proficiency and creativity. I've met web designers who had loads of excuses for having lousy websites, but I would never hire one of them.

And of course collect all the testimonials you can and pursue every referral opportunity. Once your business is underway, you will need all the positive feedback you can get- for your own confidence as well as your clients’.

Any advice to add?

Best Entrepreneurial Quotes, Week 13

"Chinese suppliers build good relationships only as long as it is in their interest to maintain them, so it helps to construct relationships that will deliver enduring mutual benefits."
Marc Heinke, President & CEO, Precidio Inc., Brampton, Ont.

In an interview for an Ontario government report on leading growth firms, Heinke summed up the challenges facing established companies as they come to grips with foreign suppliers and a global economy. (Precidiio produces and sells tableware and drinkware.)

Says Heinke: “Some of the companies that are selling us blanks are now putting websites together and sending direct transmissions to all of our customers, saying: “Why buy from the in-between person when you can buy direct from us? You’ll save a lot of money.”

The solution? Know your market well; build great relationships. Have responsive customer service so that customers know you have their back. And create innovative products and market-leading designs that set you above the knock-offs.

“We need to move away from commodity goods," says Heinke. "We’re developing high-end lines and re-establishing ourselves as the leaders in these melamine and acrylic products in North America.”

The Sum of all Fears

Here are the remaining nine of Rivers Corbetts' 13 fears of Entrepreneurs

9. Fear of No Money
Be like a squirrel, says Corbett: Stow resources away for hard times. Before you need them.

8. No one will invest in me
Maybe not, but they might just invest in a sound business idea with a solid plan.

7. The timing isn't right
“There is always an excuse not to start a business,” says Corbett. “The timing is never perfect…
You deal with it and you move on.”

6. I don't like risk.
Jobs are riskier, says Corbett, “because someone else is in control…The only person who can fire me is me.”

5. Am I ready for the ups and downs?
4. My family and friends will think I am crazy
“They don't want you to get what they can't have,” said Corbett. “They don't want you getting head in life.”

3. Can I still have time for family and for me?
Make sure you schedule it in, he says. From experience.

2. I can't sell!
Embrace it. Find people who love to sell and incent them to help you.

No. 1: Failure!!!
Don't worry about failure, he says. “The road to success is paved with fantastic failures.”

The 13 Fears of Entrepreneurs

Rivers Corbett is the energetic Fredericton entrepreneur (Chefs Group) who put together the NB Entrepreneurs Summit, and hopes it will be the first of many. His goal: to create a vibrant and savvy entrepreneurial climate that will make New Brunswick the small business capital of Canada.

He gave the pre-lunch speech today on the 13 fears of Entrepreneurs – and why they aren't really that scary. “If you can deal with these fears,” he says, “you're going to be successful.”

Fear no. 13: Do we really want to do this? (Is being an entrepreneur right for you?)

It’s ok to ask that question, says Corbett. Any big change in your life will be traumatic, challenging. Entrepreneurship, he promises, is not as scary as it’s portrayed.

“The first thing I tell new entrepreneurs is to say yes to that yearning. Write a journal for 30 days. Make notes about the shift you're thinking of.”

Don't forget to visualize success: what does it look like to you?

Fear 12. Am I doing the wrong business?

Make sure you have a passion for your business, says Corbett. He knows this first-hand – he says he’s lost a lot of money over the years working on the wrong businesses. “Find out that passion,” he says. “Identify business opportunities with your heart, then let your head take over.”

11. Can I do this? Am I good enough?

The answer’s no, says Corbett – unless you can do it with a team of people.

10. Rejection

“How many people here have been rejected in your life?” he asked the crowd. Almost everyone put on their hand. “Exactly,” said Corbett. “So why are we so afraid of it?”

Steve Palmer live! at the NB Summit

A little more from Steve Palmer:

What kept him going up the long, slow grinding hike to the top of Kilimanjaro?

Knowing that he had promised 200 backers and friends to lay silver crosses at the top of the mountain representing their loved ones. Lesson: Having a higher purpose can get you through when your original commitment starts to slip.

The last the hours up the mountain, in the cold dark, were agony. One slow step at a time, move your left leg, move your right leg, do it again, step by step. Lesson: Positive self-talk can help you surpass the greatest challenges.

Nearing the top of Kilimanjaro, says Palmer, “We were two miles above the clouds.” Seeing how high he had already climbed helped inspire him to reach the top. “As an entrepreneur,” says Palmer, “it’s always good to look back and see how far you've come.”

He recommended this mantra when you feel discouraged in your business: “I'm not where I want to be, but I sure am farther along than I used to be.”

After Palmer summited, one of the guides told him he always knew Palmer would make it. “I could tell by your attitude,” he said. “The people who make it to the top of Mt Kilimanjaro are not the strongest people, but the ones with the best attitude.”

If you have a mission in life, says Harper, and you want to commit yourself to its success, tell other people. “You want to commit yourself: Tell 500 people you're going to climb Mt Kilimanjaro - that’s a mission.”

“It’s not a mission if you keep it to yourself. That’s only a wish.”

Live from the New Brunswick Entrepreneurs’ Summit

I am live-blogging the New Brunswick Entrepreneurs’ Summit at Kingswood Lodge, just outside Fredericton, NB. There’s 100 eager, (mostly) young entrepreneurs here, ready to listen to great speakers and share ideas for building stronger businesses.

The founder, Rivers Corbett of Chefs Group, got things rolling at 8.30 sharp. First speaker is Steven Palmer, an insurance executive with the Safety Group in Hartland, NB.

Three years ago Palmer climbed Kilimanjaro with a group of friends and family. It’s the hardest thing he’s ever done. He prepared for a year, through regular walking (20 miles a week) and trips to the gym. He made it- but he credits the Navy Seals training regimen with enabling him to get it done.

1. Be crystal clear on what the mission is. (“My mission was: to get to 19,310 feet.”)

2. You have to have sufficient resources to get the job done.

3. The Seals build a framework of trust and safety in the group
(“The Navy makes clear that they will always get their people back; they’ll do whatever it takes. “That creates a climate for risk-taking.”)

4. Refuse to quit. (“Persistence is the greatest attribute that an entrepreneur has.”)