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ARTICLE SERIES
Experts share secrets for managing a profitable, fast-growing business
All entrepreneurs face challenges in their business. But not all realize that information and communications technology offers affordable tools for better managing everything from inventory control and operations to accounting, human resources, communications and customer relationships.
Chris O’Donohue didn’t want to be like those other landscapers, driving around eyeballing sites and coming up with job estimates that might—or might not —make his company any money.
It wasn’t as big an issue when he started Great Canadian Landscaping back in 2000 with a single pickup truck and a few small contracts. However, when a contract is for a $200,000 backyard makeover, finding out that you’ve mistakenly underbid an estimate can cost you thousands of dollars.
“At first, I didn’t realize that technology could provide the solution,” says O’Donohue, who has built Great Canadian into a bustling year-round business in North Vancouver, B.C., with 30 employees and eight trucks running in the high season. “It has taken the guesswork out of estimating and made our operations more efficient and productive.”
All entrepreneurs face challenges in their business. But not all realize that information and communications technology (ICT) provides a range of user-friendly tools for better managing everything from inventory control and operations to accounting, human resources, communications and customer relationships.
Hunches can now be replaced with accurate information delivered in real time, equipping managers to make better decisions and improve their company’s performance.
Entrepreneurs understand the need to invest strategically. A 2010 survey by the Business Development Bank of Canada (BDC) found that most business owners plan to invest in new equipment, including ICT, as a way to improve productivity and remain competitive.
“ICT brings efficiency and speed to an organization,” says Jean-René Halde, President and CEO of BDC. “It provides tools to better manage and analyze information about your clients, your finances and your operation. For most, highly functional websites have also become a critical sales channel.”
For Great Canadian, it was a bottom-line decision. Its estimating software takes into account overhead costs, the price of goods and other hidden expenses, ensuring that every job is profitable.
The company purchased a second software package to improve productivity and better manage its crews. Instead of clocking in at the office, O’Donohue’s crews are now clocked in at the work site by their foreman, who is equipped with a smart phone. They are also clocked in and out at lunchtime. Savings on unproductive time and overtime are huge.
“We were paying people for a lot of travel time that wasn’t necessary,” he says. “This software will save us about $130,000 annually in salaries. As an investment, it was a no-brainer.”
Great Canadian also uses GPS capabilities on each truck and smart phone to track crews in real time. If a customer calls to ask whether a job has been done, O’Donohue can tell him or her the exact minute that workers arrived at or left the site.
Despite the benefits, too many entrepreneurs put off ICT investments, fearing ICT is too complicated, too expensive or not what they need. Cost is usually the biggest deterrent until entrepreneurs realize that most solutions are now software driven and affordable for even the smallest companies. Some are even free.
“ICT and Internet-based solutions can be scaled for any size of company,” says Todd Madgett, Director, Small Business, for Cisco Canada. “With the advantages of new network and cloud-based services, and hosted and managed services, the cost of equipment that small entrepreneurs need to invest in is limited.”
Many entrepreneurs also worry about making a bad investment. Halde says companies can reduce this risk by first clearly defining their needs, and then taking the time to thoroughly investigate and evaluate the different ICT options.
“Talk to more than one vendor and other companies that have done this before. It also may be worthwhile to invest in some professional advice,” he says. “And be careful about buying the latest gadget. Cutting-edge technology usually is not for companies with limited resources.”
O’Donohue acknowledges it takes time and money to set up and implement ICT solutions, but says it’s not as expensive or complicated as entrepreneurs fear, and the returns can be significant.
“You will usually recoup this investment in a year or two. Even before then, you’ll see how it is reducing costs and making your operations more efficient,” he says. “It’s been a big factor in our company’s growth.”
Real world innovation for real world businesses
There’s lots of talk about the need to make Canadian businesses more innovative. But how do you make it happen when you’re a time-pressed entrepreneur? Here is some down-to-earth advice on practical steps companies can take to boost revenues, increase productivity and reduce costs.
Jeremy Gutsche knew there had to be a better way. The upstart Toronto publisher launched Trendhunter.com in 2008 but couldn’t afford high-priced journalists to write articles and manage a global network of contributors.
The solution Gutsche came up with was the Trend Hunter Academy. Student interns exchange their labour for the opportunity to learn about marketing, journalism and social media at what has become the world’s No. 1 trend-spotting website. After four months, they receive a $1,500 stipend and a certificate in digital journalism and social media to add to their new job-winning skills. Some even get full-time jobs at the company.
“That’s an example of a creative solution,” says Gutsche, an innovation guru and recession-era success. “Our student interns publish nearly 1,000 articles, get a couple of million views for their portfolio and learn cool social media techniques. It keeps our editorial costs down and helps our organization stay young, vibrant and innovative.”
Bolstering small business innovation has become a top priority for governments and business groups across Canada. Report after report has concluded that Canadian companies can boost their revenues, increase productivity and reduce costs by improving their offerings and the way they do business.
The innovation challenges are well known. What is needed now is action, says Jean-René Halde, President and CEO of the Business Development Bank of Canada (BDC).
“No matter what business you’re in, or how small your company, innovation needs to be a key part of your business strategy and something you think about on a daily basis,” Halde says. “What innovation is happening within my sector? Is there a new market I can tap? Can I improve the quality of my management information? What are my competitors doing that is new and different?”
Innovation doesn’t have to mean inventing new high-tech products, Halde adds. Most innovations are incremental: improved products, streamlined business processes, a more advanced piece of equipment or a new marketing approach.
A recent BDC survey found that three-quarters of Canadian entrepreneurs say innovation is a priority for their firms. However, less than 10% have developed and implemented a formal innovation strategy. While intentions are high, action remains low.
Gutsche’s Toronto-based company offers a global response to that challenge. Boasting 35 million monthly views, Trendhunter.com has become the go-to site for innovative ideas in business, technology, pop culture and fashion. Detailed data are packaged into reports used by large corporations such as Pepsi, Microsoft and Google to kick-start innovation.
“Our level of automation makes it possible to produce 10 times more data than our closest competitor, and with just one editor to manage the content,” says Gutsche, whose meteoric five-year rise has earned him plenty of accolades, including a BDC 2011 Young Entrepreneur Award.
All business owners will acknowledge they could always do something better in their business, but where to start? Halde recommends a “3D” approach: decide to make innovation your competitive edge, discover what your customers need and then do it.
“Innovation will not happen by accident,” he says. “It takes human resources and capital. But the risk of doing nothing will be much higher, because you can be sure your competition isn’t standing still.”
Prof. Becky Reuber, an expert on entrepreneurs and innovation at the Rotman School of Management, says this requires a customer focus from everyone—no matter what their job.
“Discovering your clients’ needs requires systems, whether formal or informal,” she says. “Your employees interact with customers daily. How are you bringing that knowledge back into the company so that everyone can benefit from it?”
Innovation also requires leadership, Reuber adds. Business owners need to be champions for doing things better in their company.
An advisory board can help entrepreneurs provide that leadership by challenging them to think of new initiatives and how best to execute them, Halde says.
Companies should also consider putting aside a special reserve to finance new ideas, suggests Gutsche. In the 1990s, the BBC had no hit shows and was losing viewers. It decided to create a dedicated pool to fund its riskier ideas. The first big winner? The Office, which failed the normal screening process yet went on to become one of the BBC’s biggest hits.
“Another reason we created Trend Hunter Academy,” says Gutsche, “was to ensure this constant supply of new people with new ideas. At the end of the day, that culture of innovation can become your company’s most powerful competitive asset.”
An online strategy to build your dream business
For many businesses, an online presence is as important as a telephone—perhaps even more so, since it showcases the company 24/7 around the world. Yet only 40% of Canadian businesses have their own website. Does your online strategy generate new customers and provide competitive service to existing ones?
When Pierre Martell started his home building business in 2006, he believed he could stand out from the competition if he could persuade customers he would deliver on time and on budget.
But how to do it? The answer was an online strategy that combined a sophisticated website with the adept use of social media.
The customers of Martell Home Builders can follow the construction of their home day by day on the custom-built site. At the same time, they—along with prospective customers—can interact with the Moncton-based company via social media and take advantage of online information on home construction and ownership.
The results have been dramatic. In a few short years, Martell has built a booming business that owes as much to his savvy use of the Internet as it does to hard work and craftsmanship on construction sites.
“We started using the Web and social media because we had no marketing budget,” Martell says. “It turns out they’re incredible low-cost tools that enable us to be accessible and transparent and to build our credibility as thought-leaders in our industry.”
Today, an online strategy is critical to the success of most small and medium-sized businesses, especially when it comes to finding and serving customers. It all starts with an attractive, user-friendly website. However, too many businesses have a static, poorly designed site—or no site at all.
In fact, a 2007 Statistics Canada study found that only 40% of Canadian businesses had their own website. “This is still quite low in an era when an increasing number of customers rely on sourcing and purchasing a wide variety of goods and services from the Web,” says Michel Bergeron, Vice President, Corporate Relations, at the Business Development Bank of Canada (BDC).
“A website is a storefront that’s open to customers around the world 24/7,” Bergeron says. “Depending on your business, you have to decide what you want your website to do. Maybe you want to provide more information about your offering, generate sales leads or simply sell online.
“Whatever you decide, your site should be well planned, well designed and frequently updated, so your potential customers can find your company and quickly understand your value proposition.”
At Martell Home Builders, a major part of the online experience is a password-protected area where not only clients but also skilled tradespeople, suppliers and other participants can find information on the progress of a home’s “99-day construction countdown.” Photos are updated weekly and clients can even have a webcam installed on site to watch their house go up in real time.
Having everyone on the same page eliminates miscommunication, delays and cost overruns. Martell estimates cost savings of 30% over traditional project management techniques and says that without the technology his company could only build about five homes a year. This year, it’s on track to build 65 on time and on budget. In more than 200 builds to date, the company has never missed a closing date and, according to Martell, has never gone over budget.
At the same time, Martell, 30, has done a good job on website basics, such as prominently displaying contact information on each page. And he makes extensive use of more advanced marketing techniques, such as blogs, YouTube videos, Twitter and Facebook feeds, and online advertising.
In social media, Martell’s use of Twitter has proven particularly successful in connecting him with homebuyers and generating sales leads. Before social media, the company would invest an average of nine hours to convert a prospect into a customer. Now, it can take as little as 40 minutes.
“Social media has allowed people to get to know us and trust us before we physically meet them,” says Martell, who has some 13,000 Twitter followers. “Now when people call, they already know us and what house they want to see.”
Digital media expert Soniya Monga says more companies need to view social media as business tools that can strengthen customer relations, attract new prospects and build a company’s brand.
“There’s a lot of misconception that Twitter and other social media are a one-way type of broadcast mechanism, rather than a business tool that allows you to connect one-on-one with like-minded people,” says Monga, who works with LinkedIn’s marketing solutions team.
At Martell, the website and social media have worked together to support the branding strategy goals of the company.
“Our whole business strategy is all about being transparent and caring—me as a person, our team, our company—and delivering that experience each and every time,” says Martell, winner of a 2011 BDC Young Entrepreneur Award.
“The Internet allows us to get that message out and reinforce it in a cost-effective way.”
Client satisfaction and better business results start with motivated employees
With the economy picking up steam, a key focus for entrepreneurs will be on building a winning team that’s committed to the business for the long run. Here’s a primer on how a high-performance, engaged workforce can lead to more satisfied clients and better business results.
When the recession hit in 2007, Jason Parks faced a choice: lay off employees or invest in his people. The owner of Profab Welding put his employees first. Workers not only kept their jobs but also learned new skills that allowed the company to expand into new specialty areas.
“A lot of people worked really hard to help me build this company, so the least I could do was fight for them when business dropped off,” says Parks, who now has a workforce of 120. “It turned out to be one of the best decisions I’ve made, because it diversified the company’s business lines and it diversified our people.”
A strengthening Canadian economy is expected to increase demand for skilled labour over the coming year, particularly in the resource-rich western provinces. A proven way to attract and retain skilled workers is to give them meaningful responsibilities, new learning opportunities and stimulating challenges, says Mary Karamanos, Senior Vice President, Human Resources, at the Business Development Bank of Canada (BDC).
Annual surveys by BDC have consistently found a strong correlation between employee engagement, client satisfaction and business results.
“What keeps most employees engaged is a fundamental purpose and meaning in their work,” says Karamanos. “They need to feel they are part of a team and that their contributions are helping the company. Having greater responsibilities and more opportunities to grow in their career is how many employees define success today.”
The result is a motivated, high-performance workforce committed to building an efficient, profitable and competitive company. The alternative, warns Karamanos, is high employee turnover and productivity losses.
A well-run business where employees thrive is also a powerful recruitment tool. Younger workers have different expectations than their parents, who tended to be more conservative and placed more emphasis on the value of their pay and benefits package.
“Generation Ys aren’t willing to put up with jobs they don’t find fulfilling,” says Karamanos. “They are more self-confident and increasingly sophisticated in how they define their success criteria and choose a good employer.”
Experts insist that inspired leadership is more effective than traditional command-and-control management in building an engaged workforce. It begins with effectively communicating your corporate vision and team mission.
“Employees need to know you have both hands on the steering wheel,” says Andrée Mercier, a Principal at Hewitt Associates. “Remember, people don’t tend to quit organizations; they quit bad bosses.”
Parks admits he tried to micro-manage everything in the early days. He’s since learned that delegating gives him more time to focus on the bigger business issues and allows him to be a better manager.
“Also it has empowered our employees and shows that management has trust in their abilities,” says Parks, who insists on calling his employees co-workers.
Hewitt Associates’ Best Employers Study found that employees who feel engaged are sick 50% less often and are four times less likely to suffer from psychological distress. The study also found that financial recognition is among the shortest lived motivators.
“The psychological impact of a bonus or salary [increase] is about three months long, whereas non-financial recognition—when it’s genuine and deserved—lasts a lot longer and has a greater impact in terms of motivating people, and building their self-confidence and loyalty to you and the company,” says Mercier.
At Profab, non-financial rewards may include flexible work hours, support for an employee’s favourite charity or sports team, dinner out, or a company barbecue.
Of course, financial rewards do have their place. When business is good, Profab recognizes exceptional employees with cash bonuses or a free weekend trip to Las Vegas. Senior staffers also receive shares in the company, which they can cash out when they retire.
Profab’s employee turnover is now among the lowest in the industry—just one reason why Parks was named one of BDC’s Young Entrepreneur Award winners in 2011. He credits the company’s success to a dedicated team that’s committed to the business for the long haul.
“We emerged much stronger when the economy picked up,” says Parks, who started Profab Welding in 2003. “Now we’re booking orders into 2012, hiring more people and running operations at maximum capacity.”
Tapping international markets makes good business sense—but plan first
Entrepreneurs face a world of competition. For many, that means going international has become crucial to their company’s survival. A well-prepared and well-executed plan—and a little patience—can help your company build and sustain new international markets.
An international plan wasn’t top of mind for Stephen Hamelin when most of his company’s business was coming from North America.
But when the phone began ringing at Vortex Aquatic Structures from potential customers on other continents, Hamelin quickly realized his company needed a strategy to leverage these opportunities to build and sustain new markets.
“We had some sales from various countries but didn’t have a formal business plan or distribution channel for serving clients beyond North America,” says Hamelin, whose company is a world leader in making products for aquatic playgrounds. “Getting established in foreign markets is a slower process than many entrepreneurs realize, but if you plan and you’re patient, it pays off.”
Today’s entrepreneurs face a world of opportunity but also a world of competition. That means finding new markets is often a matter of survival. However, many entrepreneurs aren’t sure where to begin when it comes to international expansion.
“First, do an assessment of your company’s strengths and weaknesses, and then consider why you want to go into a particular market,” says Frank Pho, Vice President, Global Expansion, at the Business Development Bank of Canada (BDC). “Is it to increase your revenues, reduce your costs or replace customers lost during the recession? The answers will help you decide where to go.”
When Vortex launched in 1995, its entire market was North America. Today, a significant part of its growth is coming from Asia and Europe. But with 100 employees, Hamelin says the company has had to be careful when deciding where to focus its limited resources. A company that spreads itself too thin risks alienating customers in its domestic market.
One way to grow your business and share risk is to work with agents and distributors, but due diligence is essential. Don’t pick the first prospective partner that comes along, Pho advises.
“In Canada, you’d probably interview three or four prospects, do due diligence on each, and interview a second time before you hire them,” he says. “Be equally vigilant when meeting with potential agents overseas.”
Vortex has gone even further, developing a profile for the ideal distributor: one who can sell products based on quality, not price, and can build a market.
Another common pitfall is assuming the product you sell in Canada will be the product you sell overseas. In Vortex’s case, it made minor design modifications to meet safety standards and regulations in Europe. It also worked with local product designers to add features and aesthetics better suited to particular markets.
For other companies, the demands of regulators and customers may require even more reengineering and redesign.
“This can represent a significant cost for some companies, if they have to retool their production or open up new production lines in foreign markets,” says Jayson Myers, President and CEO of Canadian Manufacturers and Exporters. “You also have to make sure the product includes features that customers in a given market want.”
In sum, companies must strive to thoroughly research the markets they are targeting, a task that includes:
- trying to understand customer attitudes and desires;
- finding the right local partners;
- finding out about relevant laws and regulations;
- considering appropriate pricing;
- identifying potential competitors; and
- gauging other risks.
“You need a good business plan that shows how you serve your customers and make a return on your investment,” Myers says.
And you must be willing to be patient, Pho says. Assume it will take twice the time and twice the money it would in North America, with a few failures along the way, before the sales start flowing.
“I’ve seen too many companies become discouraged and give up too soon,” Pho says. “If you anticipate hurdles and prepare for them, you won’t be as likely to abandon ventures prematurely.”
Back at Vortex, Hamelin agrees. He says opening new markets starts with relationship building and realistic expectations. It’s a strategy that has worked for the company. It now has more than 4,000 installations across three continents and a worldwide distribution network.
“Attend a trade show to learn who the players are, meet with potential customers and gain some short-term experience in the market before you fully commit,” Hamelin says. “And, most importantly, don’t get too low on opportunities that fall flat, because new doors will open that lead to success.”
Simple software solutions can save your business time and money
All entrepreneurs face challenges in their business. But not all realize that information and communications technology offers affordable tools for better managing everything from inventory control and operations to accounting, human resources, communications and customer relationships.
Chris O’Donohue didn’t want to be like those other landscapers, driving around eyeballing sites and coming up with job estimates that might—or might not —make his company any money.
It wasn’t as big an issue when he started Great Canadian Landscaping back in 2000 with a single pickup truck and a few small contracts. However, when a contract is for a $200,000 backyard makeover, finding out that you’ve mistakenly underbid an estimate can cost you thousands of dollars.
“At first, I didn’t realize that technology could provide the solution,” says O’Donohue, who has built Great Canadian into a bustling year-round business in North Vancouver, B.C., with 30 employees and eight trucks running in the high season. “It has taken the guesswork out of estimating and made our operations more efficient and productive.”
All entrepreneurs face challenges in their business. But not all realize that information and communications technology (ICT) provides a range of user-friendly tools for better managing everything from inventory control and operations to accounting, human resources, communications and customer relationships.
Hunches can now be replaced with accurate information delivered in real time, equipping managers to make better decisions and improve their company’s performance.
Entrepreneurs understand the need to invest strategically. A 2010 survey by the Business Development Bank of Canada (BDC) found that most business owners plan to invest in new equipment, including ICT, as a way to improve productivity and remain competitive.
“ICT brings efficiency and speed to an organization,” says Jean-René Halde, President and CEO of BDC. “It provides tools to better manage and analyze information about your clients, your finances and your operation. For most, highly functional websites have also become a critical sales channel.”
For Great Canadian, it was a bottom-line decision. Its estimating software takes into account overhead costs, the price of goods and other hidden expenses, ensuring that every job is profitable.
The company purchased a second software package to improve productivity and better manage its crews. Instead of clocking in at the office, O’Donohue’s crews are now clocked in at the work site by their foreman, who is equipped with a smart phone. They are also clocked in and out at lunchtime. Savings on unproductive time and overtime are huge.
“We were paying people for a lot of travel time that wasn’t necessary,” he says. “This software will save us about $130,000 annually in salaries. As an investment, it was a no-brainer.”
Great Canadian also uses GPS capabilities on each truck and smart phone to track crews in real time. If a customer calls to ask whether a job has been done, O’Donohue can tell him or her the exact minute that workers arrived at or left the site.
Despite the benefits, too many entrepreneurs put off ICT investments, fearing ICT is too complicated, too expensive or not what they need. Cost is usually the biggest deterrent until entrepreneurs realize that most solutions are now software driven and affordable for even the smallest companies. Some are even free.
“ICT and Internet-based solutions can be scaled for any size of company,” says Todd Madgett, Director, Small Business, for Cisco Canada. “With the advantages of new network and cloud-based services, and hosted and managed services, the cost of equipment that small entrepreneurs need to invest in is limited.”
Many entrepreneurs also worry about making a bad investment. Halde says companies can reduce this risk by first clearly defining their needs, and then taking the time to thoroughly investigate and evaluate the different ICT options.
“Talk to more than one vendor and other companies that have done this before. It also may be worthwhile to invest in some professional advice,” he says. “And be careful about buying the latest gadget. Cutting-edge technology usually is not for companies with limited resources.”
O’Donohue acknowledges it takes time and money to set up and implement ICT solutions, but says it’s not as expensive or complicated as entrepreneurs fear, and the returns can be significant.
“You will usually recoup this investment in a year or two. Even before then, you’ll see how it is reducing costs and making your operations more efficient,” he says. “It’s been a big factor in our company’s growth.”
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Experts share secrets for managing a profitable, fast-growing business