Apr. 10, 2017 "Prioritize profit over purpose at the start of a new business": Today I found this article by Harvey Schachter in the Globe and Mail:
When starting a business, profit, rather than some grand purpose, must be the goal from the outset, serial entrepreneur and investor Ed McLaughlin argues.
He’s neither mercenary nor cold-hearted. He knows the odds: Most new businesses fail.
To counter that, you must focus intently on profit from Day 1 – actually, from even before then. If you do well, then you can build an even stronger business and some day give back to your community.
Author of The Purpose is Profit, he faced those odds in the 1990s recession, when he came across a memo left accidentally at the copier of the giant real estate firm he was working for.
It contained three scenarios for the future, two of which specifically excluded him. In fact, he wasn’t turfed, but he decided to take his fate in his own hands and start a firm that would handle real estate matters as an outsourcer for large companies.
With two kids under the age of five and a modest amount of money for starting up, failure was not an option. “I needed to make a profit. It was not start up and see if it would work,” he says, in an interview. “I had one nest egg, not three. It was survival.”
He has a chart in his office, a continuum, with user growth at one end and profit at the other end. Some businesses, unicorns as they are known, can have exponential growth in users and profits as well. But they’re rare. Usually, you must focus on one or the other. For most entrepreneurs, that means sustainable profits with modest growth.
Devise a plan to generate revenue
His 10 Commandments of Start-Up Profits – published as a manifesto on the ChangeThis website – warns not to start up until you know how you will generate revenue; understand how much it will cost to run your business; identify how you’re going to make a profit; have preorders to validate your business model and liftoff plans; and have lined up the financing to cover operations until you break even, which typically will take 18 months.
That sounds elementary. But it’s also uncommon. He’s not asking for perfect projections. Some of the calculations will be back of the envelope. While revenue can be difficult, expenses should be clearer to calculate. You need to be honest and cautious.
Find your user base
It’s vital that you line up customers even before launch, proving the product or service has appeal. In his case, two of his existing clients agreed to stick with him when he left to start his own company. “There’s no point in jumping off the cliff and then see if the parachute works. It’s better to test. Find out if somebody will pay for what you’re offering,” he says in the interview.
Minimize expenses
As well as calculating costs, you want to minimize them. That can start at conception. He kept employees’ salaries low, at the level they needed to subsist, but compensated by giving them a share of the profits. “They cashed in, big time, later,” he says. He recommends looking, as he did, for an office sublet, one that will come due in about 18 months.
Usually, you can negotiate a good discount for such vacant space and if the business is struggling, you are not locked in for a long period. He also paid his rental costs up front, from his nest egg, but that meant his expenses for the next period were kept low.
Usually, you can negotiate a good discount for such vacant space and if the business is struggling, you are not locked in for a long period. He also paid his rental costs up front, from his nest egg, but that meant his expenses for the next period were kept low.
Watch those expenses like a hawk. Your ability to build a profitable business is directly proportional to your ability to take charge of the money. He was chief financial officer for the first three years as well as chief executive officer and reviewed the numbers every night to ensure he wasn’t getting ahead of himself in expenditures. His staff knew he was watching their spending – a good message to send them.
Create incentive for staff
Another commandment is to create a profit-based reward structure. In his firm, almost everyone was part of that sharing, but he stresses with sales staff in particular that you want it based on profit not revenue, so they aren’t sacrificing the bottom line to gain orders. And if you can, create profit centres to scale your business up: When you establish new product lines or new geographical centres of operation, make each one responsible for generating a profit.
In every case, his advice is directed at one central point. The fixation should be on profit – profit as soon as possible – from the moment you start thinking about going into business. Don’t be seduced by other dreams.
http://www.theglobeandmail.com/report-on-business/careers/management/prioritize-profit-over-purpose-at-the-start-of-a-new-business/article34636678/
Apr. 26, 2017 "Refugees find footing as business owners": Today I found this article by Cailynn Klingbeil in the Globe and Mail:
Apr. 26, 2017 "Refugees find footing as business owners": Today I found this article by Cailynn Klingbeil in the Globe and Mail:
Becoming an entrepreneur in a new country poses particular challenges, but many newcomers to Canada are seeing success
Mohammad Alftih fled his war-torn hometown of Aleppo with his wife and four children, living in Lebanon before coming to Canada under private sponsorship. Eleven months after the Alftihs arrived in Peterborough, Ont., they opened a new restaurant downtown.
Mr. Alftih brings his experience operating two businesses in Syria to his new role as general manager of Oasis Mediterranean Grill. His wife, Randa, cooks Syrian dishes, and the couple has hired four employees.
“Canadian people, they came and came and came,” Mr. Alftih says, describing the opening of his new business in December, 2016. “They encouraged me and supported me. For that reason, I did well.”
Across Canada, Syrian newcomers-turned-business owners are finding their footing. Some entrepreneurs, such as Mr. Alftih, have opened storefront businesses, while others continue to build them out of their basements or local markets.
Between November, 2015, and January, 2017, 40,081 Syrians arrived in Canada. Entrepreneurship can be the path of least resistance for those newcomers, says Alex LeBlanc, managing director of the New Brunswick Multicultural Council, which has overseen the province’s resettlement efforts of government-assisted refugees.
“If you come and your credentials aren’t recognized, there’s a language barrier, employers are reluctant to hire you, then starting and running your own business can be a great way to earn a living,” he says.
For Mr. Alftih, entrepreneurship is the only career path he knows. In Syria, he operated a printing factory that specialized in clothing for European markets, and before that, an export business. He didn’t see opportunities for similar businesses in a city of Peterborough’s size, so he looked to other industries.
Mr. Alftih’s partner in the restaurant is a university professor he met at his mosque. The business would not be possible without that encouragement and financial backing, Mr. Alftih says, as well as help from Safe Haven For Refugees Peterborough, a group of 15 people who privately sponsored the Alftih family.
Starting a new business in a new country poses particular challenges, as Rita Khanchat discovered. A broadcast engineer in Aleppo, Ms. Khanchat came to Calgary under private sponsorship and quickly started a catering company. But the venture stalled at the start of this year, Ms. Khanchat says, because of the expense of using a commercial kitchen. “We are looking for a new commercial kitchen, and maybe after a while, if we find a good one and have sponsors, we can start again.”
Another barrier to entrepreneurship, Mr. LeBlanc says, may exist for Syrian refugees who are receiving social assistance from the province. Some government assisted refugees have made the transition from federal support, received for their first year in Canada, to provincial income assistance, which carries different rules for allowable earnings.
“I’m aware of some situations where families or individuals started a business, but found the clawbacks were prohibitive for self-employment,” he says.
For the Alhishan family, who arrived in Fredericton as government-assisted refugees in January, 2016, selling food one day a week at the Cultural Centre’s market has led to new opportunities. For nearly a year, Fawaz Alhishan, 21, has sold food every Saturday with his two brothers and father. His mother, Suphieh, cooks for the business, named Suphieh’s Taste of Syria. The food stand has helped his family practise English, Mr. Alhishan says, and also led to a part-time job for him at the Cultural Centre.
“One day maybe we’ll have a restaurant; I hope so, but it’s a long time away,” Mr. Alhishan says.
In Calgary, Syrian refugee Mona Bassaj continues to run her yearold business, Designs by Mona, out of her basement. “It’s going well, and slowly but surely, I’m growing,” Ms. Bassaj says, speaking through a translator.
Ms. Bassaj owned and operated a small sewing factory in the suburbs of Damascus with her husband before arriving in Canada in January, 2016, privately sponsored by Ms. Bassaj’s sister. Ms. Bassaj works full time at her business. She recently connected with a fabric-store owner looking for a seamstress, which has led to sewing dresses for brides and bridesmaids. The biggest obstacle, Ms. Bassaj says, has been learning a new language. She’s taking English lessons once a week, but still relies on her sister for help communicating with clients.
In Hamilton, a creative partnership is behind a growing catering company, called Karam Kitchen. The business was co-founded by Brittani Farrington, an American who has lived in Hamilton since 2015. When the church Ms. Farrington attends offered to throw a welcome dinner for government assisted refugees, three Syrian women Ms. Farrington had befriended insisted on cooking the food.
“They saw everyone devouring the food and loving it,” Ms. Farrington says. “Those women asked me how they could sell their food in Canada, and that is what sparked the business.”
Ms. Farrington, who has previous experience in restaurant marketing, partnered with the three budding chefs and launched a Kickstarter campaign to cover Karam Kitchen’s initial operating costs. The July, 2016, campaign met its goal of $6,500 after three days, and ultimately raised $17,406. A recent Kickstarter campaign raised $25,748 for a delivery van. Today, Karam Kitchen employs five Syrian women as part-time chefs, as well as an operations director and Ms. Farrington, the administrative director. Everyone earns an hourly wage of $12.50.
While Canadians are helping Syrians launch and run businesses, some Syrians are starting philanthropic ventures of their own, aiming to help others as they have been helped.
Reham Abazid has raised nearly $4,700 since January by organizing monthly markets to sell food and crafts in Saint John. The money will go toward purchasing sewing machines for widowed refugees in Jordan, so the women have a way to support themselves and their children, Ms. Abazid says. Ms. Abazid spent 3 1⁄2 years in Jordan, after she left Daraa, Syria, with her husband, young son and 18-day-old daughter. The family arrived in Canada as government assisted refugees in January, 2016.
“I know how difficult it can get [in Jordan],” she says, speaking through a translator. “I already have so much help and am doing so much better that I can now give assistance to those who are still having difficulties.”
The 2017 Globe and Mail Small Business Summit is a one-day conference of insightful sessions, proven business growth strategies and innovative ideas from the country’s brightest business leaders. Full details at globesummits.ca.
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