Confused by the Credit Crunch?

Having a hard time understanding collateralized debt obligations? Those financial instruments that got us into this financial mess are confusing many investors.
Marketplace Senior Editor Paddy Hirsch gives a superb lesson on how this credit crisis started and may give you a sense of when it may end.
Check it out:
http://www.youtube.com/watch?v=eb_R1-PqRrw

Someone to Watch Over You

I listened to a speech while lunching at Bay Street's secret handshake club last week where the guest speaker was Tom Hockin.
He told us not to tell anyone else, but since the finance industry was in such a crisis, now was the time to stop the madness of 13 separate regulatory bodies and merge into one.
Mr Hockin had travelled across Canada, putting together legislation that everyone - except Quebec - agreed to support.
Appears that The National Post got the story a few days later:
Canadian businesses would no longer have to file securities filings with 13
different provincial and territorial regulators, as they have for decades, and
brings to an end a much-criticized regulatory system described as "convoluted",
"unwieldy" and "Byzantine".
Instead, stock and bond-issuing institutions
would have to file prospectuses and other regulatory documents with only two
regulators -- a national body and its Quebec counterpart.

I'm Quiet and Thoughtful - Really!

Let’s talk about the real stars of Dragons’ Den – the brave entrepreneurs pitching their stories.
Did you know you can find past Dragons’ Den some of these people blogging on the CBC website, commenting on the deals and the Dragons?
It’s all very impressive.
In another reality show, The Bachelor, the girls who compete to win the heart of the single male return for one episode to confront the poor fellow.
Unlike The Bachelor, Dragons’ Den does not dedicate a show to the entrepreneurs returning to roast the Dragons - Arlene, Brett, Kevin, Jim and Robert.
To give the CBC credit, it lets fans know how the entrepreneurs and their businesses progressed and gives past winners, like Trent Kitsch of SAXX, their own blog too. But here’s the thing: participants can get in their two cents about their deal by blogging on the Forum just like TomChalker of dataSentinel who helpfully answered other bloggers’ questions. If you are expecting mildly depressed, dejected entrepreneurs who harbour ill will, forget that.
There are the budding armchair venture capitalists, like Dannolin and Pinebox, rating the merits of each business or venting about their own Den experience. Reading the past contestants and their often provocative takes on current pitches is fascinating because these guys know their stuff. It’s as if they’ve been through the miracle of entering the Dragons’ Den as innocents and emerging as venture capitalists (with tougher comments than Jim or Arlene would ever utter.)
The leader of the blogger pack is Ralfcis – he of the “sharpened keyboard” – was an engineer at Nortel. With his quirky wit and prolific writing, Rolfcis could make a career change from engineer drop-out to ad copy writer. Ralfcis describes his experience on a previous season of Dragons’ Den and as I read, it all came flooding back. Rolfcis was expecting a display table where he could spread out his samples. Instead, he had to stand up and pull out each item from the bag. Needless to say, things did not go well.
Rolfcis blogs about the good natured reaction to the pitch by Dragon Laurence Lewin, who sadly has just lost his battle with cancer.
Allison of Ariel Angels blogged all the way from Dubai to recommend a book called What Makes Things Stick. At first I was dubious and thought she just wanted to make Kevin O’Leary stick to the wall. In fact, the book’s inspired by Malcom Gladwell’s best seller book, Tipping Point and is a must read for anyone selling a product.
Maybe the bloggers could run a book list?
My happy browsing came to an abrupt halt when I read the name of a blogger called Darryl Koster. Hang on a mo. Isn’t he the pleasant CEO of Buster Rhino, that delicious sauce signed on with Brett Wilson and Robert Herjavec?
In the CBC Forum, Darryl Koster, the CEO, reveals to us that he turned down Brett and Robert’s deal. When I read that I went oooh nooo!
Where was the spoiler alert, Darryl?
I know there’s that six month delay from filming to the airing of the show but think about it, if you found out before season end of The Bachelor that the final girl has split and is living cheerfully with someone else, wouldn’t that be a huge let down? Darryl does make up for it by giving great website and technology advice to other presenters which may mean I have to vote him the season winner. Darryl, can you check out my website and give me some feedback?
There are many financiers who build their careers from the engineering profession and one of those people is the Big Kahuna blogger, Dragon W. Brett Wilson. How great is that to have a Dragon cruise around the Forum and drop in to blog?
Brett does not do much chit chat on the TV show except when he revves at warp drive to do a deal. Fasten your seat belts, ladies and gentlemen. The bloggers do appreciate how Brett shows up on the chat forums explaining why he made decisions and answering issues raised. He also says that he is not as the CBC portrays him – quiet and thoughtful.
Are you kidding, Brett?
That’s like describing Clint Eastwood as quiet and thoughtful. You are in the entertainment industry for a reason; it’s not because of your bookish ways. But don’t worry, your secret’s safe with us.
The bloggers do spend a great deal of time debating whether the show is better or worse with Kevin’s dramatics. One blogger calls Kevin a troll hiding under the bridge waiting to trap entrepreneurs which is a gross insult and unfair to trolls worldwide. Yet, I do believe Kevin really does the fairest exchange on Dragons’ Den as he teaches while he makes his decisions. After going through the hour meeting with Kevin, not one entrepreneur could possibly say, “I do not know why he did not invest with me, why my business needs to be changed, how my revenues might not reach the amount I expect or what I need to do.”
Not one Angel investor out in the real world would give anywhere near that much information for an entrepreneur to take away. In fact, investors say, “I like your plan but could you give us a call in a year?” That translates into au revoir. Most entrepreneurs would prefer to get more feedback than that.
I notice many bloggers have picked up Kevin’s key phrases too – the sign of a great teacher:
Let me use my time machine, slash, crystal ball and visit the future to imagine how the business revenues go.
Here comes Kevin and his bus.
How do we make moneeeeeeey.
Brett on the other hand chooses to share his investment strategies after the fact on the blogs. Either way, I think this sharing of knowledge is a fair swap between presenters and Dragons.
There is the trade theory that when people show each other their goods, it creates more perceived value, even though money may not have exchanged hands. The Dragons’ Den has entrepreneurs show their businesses and Dragons give their analysis and, sometimes, cash. Maybe this does create good will.
Several bloggers, like sslondon, liked the Dragons giving away cash in cheap loans because they had sympathy for someone’s situation. Brett Wilson and Robert Herjovec have done this so far and the Forums fans eat it up. I hate to rain on the parade, but if venture capitalists and Angels practiced this style of investing, they would be bankrupt within the year. Most businesses have their investing rules and deal structures. Doing venture capital and then veering abruptly to the left to give a loan or two means way too much complication for your average VC to manage.
Firms tend to do their philanthropy separately and for good reason. Maybe a philanthropy option should be built into the Dragons’ Den rules as a life line to be given once during the season, but Kevin O’Leary is right: feeling for a business owner is generally not the way the prickly world of investing works.
Kevin is teaching entrepreneurs how to fish; actually, he’s teaching how to spear gun and he doesn’t just hand over the darn fish.
For all you past contestant bloggers – here’s an idea for you:
What about a road show? You could call it, Lessons Learnt in Dragons’ Den. (Ralfcis, I’m sure you could come up with a catchier title). Maybe the sponsors like Profit magazine or EDC would be interested in supporting an event? Perhaps the School Boards may like you speaking to their high school students taking business classes. There are many entrepreneurs out in Canuckland who would benefit from hearing more from your side. I know I did.
Just a thought.


Theatre of the Absurd

Recently I spoke to a young, upwardly mobile, American private equity associate out of Chicago at the latest ACG Conference in Toronto.  I asked, as I did many, how low EBITDA multiples had dropped in the U.S., and this particular investment professional said something absurd...  "Actually, we recently lost out on a deal because we valued the company too low at a 16x multiple, the final valuation was 20x apparently".  

Where had this guy come from, El Dorado?  The more common language trudging through the marble halls of private equity firms is far more vehement at its core as the tide of credit slips through their hands. Many in the portfolio management industry are using words like "capitulation" to describe the current market apoplexy.  Private equity fund managers are not exactly having that much fun, but they are now being forced to reinforce their dykes against the fallout flood of melting consumer confidence, recessionary hyperbole, and teetering financial institutional giants.

The G20 meeting held by the world's undisputed champion of empty pledges, George W. Bush, was held in Washington on November 14, and looked like a charming get-together for the President and 20 of his closest friends, its effectiveness is yet to be seen, but certainly the opportunity to establish a sense of global solidarity was lost amidst the vagueness of the summit's conclusions. And today, before a podium and in front of a dilapidated-looking Henry Paulson, George Bush announced yet another emergency and absolutely necessary bailout package for another of the United States' beleaguered financial institutions, though Congress dismissed the auto industry the week prior.  

It seems things have reached a point of absurdity, the now mighty Democrats (though so did a few Republicans) triumphantly lambasted the auto industry executives about the dysfunctional nature of their business models last week, but petitioned the very same industry not a month earlier by calling for protectionist measures (also laying the ground work for higher operating costs and material costs) when they were fighting for their own jobs.

In 1961, Martin Esslen coined the term Theatre of the Absurd to describe a type of tragicomedy, in which rationality is usually corrupted to disenchant the audience and cultivate a sense of unreality...nowadays it seems life does imitate art.  Though a 20x multiple is absurd to most in the private equity industry, these days, absurdity may actually lend itself to credibility.  


We are all richer with Free Trade

"Do you know how to make a sandwich?" asked Mr. Lajeaneusse, an economics teacher at UCC high school.
Sure, I thought - two slices of bread, ham, cheese and maybe a piece of tomato.
"What would be the price of that sandwich?"
Well, depending on where you are buying all the parts making up that sandwich, but probably several dollars.
Mr Lajeaneusse then asked, "Now, what about a pencil. Can you make a pencil?"
Errr...nope.
"So why is the cost of a pencil so much lower than that of a sandwich?"
Adam Smith explained this concept of specialization back a few centuries when he used the example of the cost to an individual to make a pin. There are economic clubs trying to do just that but Mr Lajeanesse makes the point just as well.
The tasty sandwich example illustrates why specialization of skills pays off in bringing down the time and price for making something. He also showed how trade is of benefit to us all. Instead of our neighbours, today we trade around the world and there is talk about trade barriers going up again.
Here's a video clip of Milton Friedman Mr.Lajeanesse shared, explaining why free trade is a great thing for the world. I particularly like it when Milton Freidman talks about world peace. Now if only we could get beauty queens to discuss how world peace and free trade work together!
http://www.youtube.com/watch?v=d6vjrzUplWU&feature=email

Stand out in this economy

What makes one conference centre company’s service so much better than the others?
The human element.
But when most venues say they train their staff, what can make the crucial difference?
Ricky Bhang of The National Club says, “My pet peeve is when someone says no.” Ricky trains the staff at this exclusive Bay Street club to never let the word “No” be heard by a client. If a club member makes a request that the staff member believes to be impossible, they are trained to start the conversation with, “Let me find out and get right back to you.”
As Ricky says, “If you are paying and someone says no, that is going to reduce the experience. Even if it’s just a little, it’s still not the best.” This week, listen to how you speak to clients. How about a week where we all take a little training from Ricky Bhang and say, “Yes.”

Do You Want to Be Rich?

J.B. Loewen's Blog for Dragons' Den:





This week, Paul of Moyer Farms found himself in the foul Dragon's pit, blinking at the lights and trying to pretend with all his heart that this was where he wanted to be.
How Paul actually saw his situation was that his industry - agriculture - was in the dumps, his back was up against the wall. He needed cash to support all the orders flowing in for his added-value product of candied apples or he was in serious trouble.
As a business owner, before you decide to enter the Dragons' Den, do us all a favour and answer: "Do you want to be rich or do you want to control your business?"
You will thus spare the feelings of those sensitive viewers who think Kevin O'Leary is running a college frat house hazing ritual designed to humiliate. In fact, Kevin is sniffing out who really wants a Dragon as a true partner and who is there just for the cash.
I go over this issue in Money Magnet as it is critical.
The reason to be clear about your decision - get rich or keep control - is because it does determine what type of money you seek. If, like Paul, you want to keep the reins of the family business, then debt is fine. If you want to take your business up several notches and increase the cash flow, partner with a Dragon, but get ready to move over to let them share the reins.
Many family businesses have discovered that taking on a finance partner and sharing decision making does not mean their Granny gets turfed out of the family farm, a concern I sense was niggling Paul's family.
The JM Smucker Company, for example, has fifth generation family members still running the business, but hold a less than 8% share of the company. Did I mention that Smucker's is now the sixth largest US food company worth more than even Kevin O'Leary? Their steep growth did not start until they took on outside finance partners.
You may have noticed another trend.
The Dragons do tend to want more than 30% ownership. Jim Treliving asked Paul for 50% and could have settled at 40%. Imagine one year into the future, as the apple business progresses. Jim wants a say in how his money gets spent and his plans do not jibe with Paul and his family, the majority shareholders. If Jim only has 30% ownership of Paul's apple business, he may find his ideas voted down by Paul's grandma and young daughter who also share the 70% ownership.
That sucks.
But that is what happens and the Dragons have been there, done that and not doing it again.
As an owner, do understand that the higher the ownership that you dare to share, the more heavy lifting the Dragons will do for your company. Frankly, I would rather have 30% of a $10M company than 100% of a $1M company.
Maybe Paul got spooked by W. Brett Wilson's growl, "I want to own this town...errr...this business," or the first words out of Arlene's mouth, "I want to marry you!" For an initial conversation, these can be extraordinarily unsettling statements but again, if you are showing your business to the Dragons, get ready for fast, immediate action.
Foreplay is optional.
So if you just want a cash loan and not the skillful partnership, skip the Dragons' Den and go straight to EDC. Do not pass GO.
At the end of the discussion with Paul, the irresistible Robert Herjavec seemed to get confused and think he was in another type of reality TV show, nothing to do with venture capital. He threw Paul a life line of a cheap loan against inventory and tipped over Jim Treliving's applecart (sorry... really tried to resist cheap "apple" word play.) Even Robert's joke buddy, Kevin, sniffled, "You have offended the rules of capitalism."
Robert gave Paul the gift of cash because he knows the hard, painful struggle of owning a business. It struck me that Robert's kindness just delayed the inevitable. Agriculture is one of Canada's many industries coming to terms with the global marketplace. Those family businesses who embrace the big changes required will be the ones who thrive. Problem is that rarely do the ideas for this seismic change come from within the company. Paul is better than most farmers, but who does he have to help him make big decisions?
Here he had a chance to partner with a food mogul. There are many sharks out there claiming to take owners to new markets but Big Jim's pedigree shows that he is in a class of his own. Jim's not a shark, he's a whale!
Compare Paul asking Jim for marketing advice from his grandmother? Who do you think will help his company prosper more? What would Paul pay for an advisor with Jim's experience? A lot more cash than the cost of 50% of his current business. I can only shake my head for Paul. What a loss.
For the other big deal of the show, Essentia, we got to observe Brett up close, in his natural habitat, investing the way he does best, like a blackjack poker game. As usual, he holds back and waits for Kevin to run his course, Robert to stop, Jim and Arlene to give their points of view and then - wham - he slaps down his hand with a full house. Instead of alerting the other Dragons to his interest (unlike the loquacious Kevin O'Leary), he plays it cool. Since the other Dragons were already out, they did not have the opportunity to bid up his offer.
Did you see that one coming?
Mattress manufacturing can be a solid business. With its competitive advantage of patented safe and hypoallergenic materials, Essentia could find a proprietary spot in the industry. Brett recognized a winner and is sure to help Jack, founder of Essentia, well on the road to becoming rich. That's riches worth sharing with a Dragon.
Jacoline Loewen raises capital for companies and is the author of Money Magnet: How to Attract Investors to your Business.

Your Brand in Raising Capital

If you want to raise capital, so much of success is by serendipity and pure energy. I was reminded of this by a student in Professor Rob Angel's Strategic Market Planning class held at Schulich. I was there to give a presentation and Darryl Silva asked me if I would like a cup of coffee.
Immediately, he stood out and I remembered his face.
Later, Darryl sent me a PowerPoint by Sequoia Capital presenting their take on the market and impact to entrepreneurs. Great way to make Brand You stand out and when PollStream is out looking for capital, if they have Darryl Silva helping – they will get their cash.

Deflated ACG Conference

Why would the ACG Conference invite an expert from the UN to speak about genocide in Africa?
Tough lunch time audience too.
ACG stands for Association for Corporate Growth and is really a networking event for the people who supply the money to companies wanting to grow. These are the private equity types, myself included.
During the speech by Stephen Lewis, Professor in Global Health, I was walking around the booths, collecting business cards and dispensing my marketing materials. Over the loud speaker, Stephen Lewis described in detail how in Africa it is normal for 8 year olds to be raped and far worst descriptions of the treatment of females.
The money men from New York visibly cringed.
Interesting message but wrong audience. At a time when the conference was half the usual number of people, surely we all needed an upbeat pro-capitalism message?

Take Your Design to Market

I get dazzled by the creations of entrepreneurs and here’s an example of crazy ideas that make it to the consumer market: Monsters.
I have Colin.
Colin likes to play computer games and fret about his future.
Sounds like my younger son, except he does not worry about anything except to ask when can he get a Hoodie with pictures of his industrial Metal rock band all over it. (Horrors!)
I brought Colin home and my son loved him. At first, he wanted to punch Colin - what is it with teenage males and rough play? Anyway, today Colin is off to school with my son and will be spending time in the media lab. So I guess I may have lost Colin…
Check out Monsters at Monster Factory.


Dress for Success

Questions at speeches about your book are always interesting. At the TBDC presentation, I was asked by John Renfrew, “How do you find money for your business?” John told me he is working on a medical product and wants to attract investment dollars.
MaRS Discovery Centre is the first place to start for a new entrepreneur like John. They hold conferences and networking events with a cost of $25. Investors hang out at these events and if you collect business cards and do follow up coffee meetings, you will find out who has money for your medical product.
But looking at John, I could see he would not be taken seriously by anyone unless he got a serious makeover.
The good news is that it is quite a simple thing to achieve. The secret weapon is a navy blue blazer. Team that up with a white shirt and your credibility goes up 100%. Human beings are funny beasts and we do make judgements about people by how they look. I still have my favourite 20 year old, blue blazer which has travelled around the world with me and whenever I wear it, it lends a whole level of gravitas to me and pays off in many ways.

Business Plans are Hell

A crowd of curious entrepreneurs is always a pleasure to meet and last night, I was greeted by a group of enthusiasts when I visited the Toronto Business Development Centre. For anyone who is thinking about a start-up, this is a great place for you to start.
TBDC have business plan mentors.
Heaven!
These TBDC mentors will poke, prod and push you to get your business plan done.
Writing a business plan is hell. Doing the financial plan is worse. Most entrepreneurs love their product but the numbers and big thinking are like having to eat your vegetables. To have an outsider help you along the path to getting your plan “investor ready” is the winning way to raising capital. I have added TBDC to one of my favourite links on the side of this blog so you can find it anytime you visit.
Another key to moving your business out of your brain and basement into the real world that I discuss in my book Money Magnet, is to interact with other like minded business people and the people connected to TBDC are inspiring. They set up networking events which will prod you along. The journey of business can be lonely and getting around other people also struggling is a good motivational boost.
Try one of TBDC's networking events for yourself and get going with that business plan (and those pesky financials).

Our Chairman, Chuck Loewen, Discussed at Schulich

I was a guest speaker at Schulich School of Business last night and had to cross the Union’s picket line. It was dark, 6:30pm and I was engrossed in thought. I did vaguely notice a woman in a fuzzy sweater walk past my car but as she was not police, I did not pay her much attention.
I found out later that I was supposed to roll down my window to listen to the union’s side of the story. No wonder they made me sit there for ages!
But as I hear of Polar Capital being closed and more on Bay Street, I just wonder about this model of government workers voting themselves higher pay raises during bad times. The Union at Ford is hanging in until that old cow is dry so I guess the same for Canada.
The students made it to Bob Angel’s marketing class and I was impressed with the level of interest. Cindy asked me if marketing using a photograph of an old, white man in our brochure (our Chairman, Chuck Loewen) was a good idea. She thought it would put off people as the world is now more diverse. Maybe one day we will get beyond identity as a decision making criteria but for now it seems that it is an issue for marketing.

News - Speaking at TBDC

Networking at TBDC Wednesday November 12th
Date Posted: Wed Oct 15, 2008 6:27PM
Toronto Business Development Centre is very excited to have Jacoline Loewen, author of Money Magnet - How to Attract Investors to Your Business, as featured speaker at our November Networking event.

Money Magnet - How to Attract Investors to Your Business

Toronto Business Development Centre is very excited to have Jacoline Loewen, author of Money Magnet – How to Attract Investors to Your Business, as featured speaker at our November Networking event.

Jacoline is an experienced corporate consultant, lecturer, and writer of business strategy. She is currently a partner at Loewen & Partners where she advises owner managed companies seeking capitol - venture capitol and private equity.
Ms Loewen sits on the Advisory Board of the Women's Post and on the board of the University of Toronto, Rotman MBA IMC. She is a mentor for the Canadian Youth Business Foundation and a member of the Canadian Association of Family Enterprises, Women in Capitol Markets and The Ticker Club.
Join us Wednesday November 12th at our 1071 King Street West location as Jacoline talks about what is required to get the money you need for your venture. She will discuss strategies and how to pitch potential investors for capitol. In addition Jacoline will share business development strategies and success stories.
Don't forget to bring your business cards.
Admission is free, but requires registration. You can register online, or contact our Advisor on Call at 416-345-9437 to register by telephone.

Agenda
5:00 - 5:30 PM: Registration with light refreshments
5:30 - 5:45 PM: Welcome and introductions
5:45 - 6:15 PM: Money Magnet - How to Attract Investors to Your Business - Jacoline Loewen
6:15 - 6:30 PM: Questions and Answers
6:30 - 7:00 PM: Networking continues

Click here to download flyer.

It's a recession proof business

Post from the CBC's hit reality TV Show, Dragons' Den Blog:

“Succulent,” is not a word you think you would hear from Kevin – where’s the money – O’Leary. Of course he was describing profits, not his favourite roast beef, but there was not one, “You’re crazy” or “What a stupid idea” to be heard during the presentation by Creative Hair Solutions.
It all began when Brenda, the flight attendant, arrived in the Den with her hair extension business. At first, Kevin did look like he was measuring Brenda for her coffin but then, what a turnaround, as soon as the magic words “1000% mark up” were spoken.
After that, Kevin was lying on the ground letting Brenda tickle his tummy, purring, “I like your numbers, I like your product, I want to buy your product, I want to wear your product.”
Brenda created this positively oozing love fest because she knew her clients and her competitors, she went to market well prepared, she had proof of concept with an impressive sales track record and she could quote her financial numbers and key ratios. It was clear she was competent in business and was sane enough for an entrepreneur.
One of the investors, Dragon Robert Herojovac, allowed Brenda to use him as an extreme makeover model, going from plain millionaire to heartthrob Braveheart warrior in minutes. Lay on a kilt and axe and we could see Robert heading for the battlefield. I must admit, I felt a thrill going up my leg. Then Robert flicked back his hair and asked Arlene in his usual charming way, “This is one of the few times I actually do care what you think. What’s your opinion?”
Arlene was so overcome, she said, “I can’t even look at you, Robert.” See the affect of men with long hair on women? Imagine all those male office workers who could change their lives: during the week-they are Dilberts in their cubes, but by weekend – they morph into manly Fabios.
Kevin licked his lips as he talked about what drives the cash flow of a business and he was mesmerized by the fact that sales for Creative Hair Solutions would be driven by female vanity. Revlon sells “Hope” which has translated into billions of dollars spent on lipstick by ever hopeful women. “It’s a recession proof business,” Kevin said, glowing at the thought.
Then Jim Treliving put it in a far more eloquent and may I say, poetic way, “It’s about big boobs and big hair.”
W. Brett Wilson agreed. He shared a quaint story that in Texas, where they like everything big, a woman with large tracts of land is appealing and big hair also helps.
All the Dragons could see Brenda did not need their money to grow her business which is a big vote of confidence for her long term success. And then Kevin did the most extraordinary thing. He offered to make a phone call to change Brenda’s life.
Here you see the benefit of getting out of your comfort zone and talking to people who are not from your usual group of colleagues. By taking out your business presentation to people who scare the heck out of you, there is fresh information to gain. As the book Money Magnet will show you, they may turn you down but at the same time, they may put you in contact with someone who would invest in your business.
Kevin said, “Usually I take a slice.”
A slice?
A slice of what exactly, Kevin? That sounds alarmingly Lock, Stock and Smoking Barrels.
But it is true that rarely will you gain access to a Dragon’s Rolodex without first selling a piece of your business or paying an introduction fee. It must have been the effect of Brenda wearing her big hair or perhaps Robert looking so caveman or even Big Jim’s naughty talk, but Kevin seemed to have been rolling in catnip and was feeling particularly generous.
So Brenda, if you do get a deal as a result of Kevin’s phone call, remember to pay it back – perhaps give Kevin his own succulent hairpiece?

Your Clients Will Like You Green

“Top companies are creating score cards for going green and stewarding the environment,” says Ed Rucels, a specialist in packaging at a conference on fuel and transportation with Jacoline Loewen and DTA.

“Today, green awareness means winning and keeping clients is no longer just
about saving money. If you can demonstrate how you are can help be part of
reducing the carbon footprint, you will have a loyal and grateful client.”

Packaging seems to be an obvious place to start but in large companies, it is a major part of the supply chain. The package does not belong to one department and can be a complex process to change. Wal-Mart reduced packaging and achieved a $3.4B savings in the first year that they introduced the program.
Case Level Optimization
Currently, many companies are shipping a great deal of air. A few quick checks to see how to reduce carbon imprint are:

  • Know Your Fill Rate: When asked in surveys, managers will say they are shopping with a 80% fill rate, often it is more around 60%. That is a great deal of money to ship 40% with a zero value.
  • Check your Packaging: To mitigate damage, the thick corrugated box is used to save the product. You do not need a big, fat box to protect the product. Instead, you can rework your SKUs and there are experts who can help with this process.
  • Reduce Pallets in Play: There are more pallets out in the system than required which allows for easy decisions rather than a smarter approach to reducing costs. If you bring down the pallets, you can force savings.
  • Spacing on Each Pallet: There are underutilized spaces on the pallets. This is valuable real estate, with every centimetre worth money. By watching for underutilized pallet real estate, employees can look for ways to stop shipping empty air.

With these programs, you will develop a good strategy for shipping. You will ratchet up the density of shipping, reduce your damage and find savings for yourself and clients. As a result of focus on case level optimization, Ed Rucel says his clients have achieved up to 40% savings on transport, storage and handling. This adds up to a great deal of carbon reduction and a greener happier customer.
Edmund Rucels, Regional VP Supply Chain Optimizers. Edmund’s management experience during the startup and rapid growth of Northern Telecom and Sears Canada has made him the expert on delivering real time solutions for the logistics professionals wanting to drive down costs through better shipping practices.

Jacoline Loewen raises capital for growth companies with Loewen & Partners and she is the author of Money Magnet: How to Attract Investors to Your Business.
http://www.loewenpartners.com/

Lead, Follow or Get Out of the Way

“Indecision and silence is the most dangerous risk a business owner could take”, says Charles Loewen, CEO and President of a fourth generation family business. Loewen Windows is a company where seeming opposites exist in harmony; delicate beauty and a steely toughness; pride in craft tempered by an abiding humility. This family business has remained faithful to its roots, but has also grown to embrace new technologies and ideas from places as diverse as Europe, Japan, and North America.
Loewen Windows went through expansion and contraction in the Japanese market during the Ninties.
Charles Loewen, CEO of Loewen Windows is speaking at a joint Ivey Business School and Loewen & Partners CEO Roundtable event.
If you are interested in attending, here are the details:

Thursday, November 20th, 2008
10:30 am – 3:00 pm
The National Club
303 Bay Street, Toronto
Bay Street & Adelaide, Downtown Toronto

Map Location & Parking
Cost $148.00 + GST
To Register (Please note, business owners and CEOs only):
Please email: akobeleva@loewenpartners.com or call 416 961 0740 and ask for Anastassia

Have We Dodged The Bullet?

It was not long ago that some experts were predicting a $200 price for oil but with it down far below predictions, Dr. Warren Jestin of ScotiaCapital warned, speaking at a conference on fuel price held by DTA, “Don’t get fooled by the drop in fuel prices. It will go back up.” Have we dodged the bullet here in Canada? Although Canada is night and day to the USA with our banking system, we are still impacted. USA’s “borrow to buy” model is not in Canada and that sub prime idea proves that not all innovation is good.
“Step back and understand the fundamentals,” advised Dr. Warren Jestin, ScotiaCapital.
Warren Justin, Chief Economist of ScotiaCapital. Warren joined Scotiabank some 25 years ago and is a popular public speaker and media commentator on economic issues in Canada and abroad. His expertise both about Canadian and global economic issues is extensive and his team's research work is leading edge.
Dr Jestin believes Canadian Banks are in good shape
For the last fifteen years the USA has used the “borrow to buy” model which was most prevalent in housing. There was a record number of Americans owning their own home but the model could not be sustained. Consequently, the USA is deleveraging and with eighteen months of housing inventory to clear, this will take years.
The core message is that the growth rate of China is above 10% and even if it slows with the global problems, it will drop to 8% which is still a very attractive opportunity for investment money, compared to the USA growth rate of 1% to 3%. Inevitably, there will be a shift in where foreign investment flows and this will affect our economy.
Fuel Prices Will Return to Highs
As for fuel prices, Dr. Warren Jestin advises to treating the Canadian dollar as if it were on par with the US dollar even if it drops below, since commodity prices will rise up again. By the end of next year, expect fuel prices to also move back up as commodity prices increase again. Supply conditions for oil could be affected by OPEC and whether it decides to cut back production. Oil is being used less as companies become more productive. "Ultimately," John Loewen , CEO of Loewen & Partners, says, "China will determine the price of oil and it is on a growth trajectory."

Design Your Freight Program

















It goes without saying that the manufacturing and retail industries are slowing and this is a challenge to the status quo. A well designed freight program can add good value.

“Many companies are asking ‘What can we do well here in North America? Credit is tight and how can we make better use of the dollars we do have?’” said Dan Goodwill, a specialist in Logistics at an event with DTA and Jacoline Loewen, author of Money Magnet and a partner in raising capital. Don Goodwill advises, “A good place to start where there are opportunities for cost savings and logistics offers many hidden opportunities.”
Have a Score Card
§ On time service
§ Billing accuracy
§ Refusal rates – is your order profitable to them?
§ Claims and exceptions
Goodwill suggests that the key is to actively look for paradigm shifts. In other words - change from one way of thinking to another.

Places to Start to Look for Change

  1. Examine your inland freight costs – it’s a missed opportunity. Look at alternative logistic venders and change your requirements. Could you live with longer lead time of five days instead of two and go for a lower price? Revisit your economies of serving your own market and see where you can be flexible.
  2. Check your assumptions about the cheapest and best ways. There was a time when if comparing box cars and trucks and you were doing a bid - the truck rates were better than the car load. This has shifted.
  3. How can you leverage your freight smarter? For example, are there ways you can make life easier for your carrier? Are you asking them to arrive at four in the afternoon and then sit there waiting, charging up your fee?
  4. Look to your customers’ needs. For example, Shoppers Drug Mart has inbound freight from many vendors and wants to leverage that freight cost as it is a good opportunity to save money. Instead of 3,000 incoming vendors, it wants to go down to 1,000. How can you help your customers simplify, streamline and save money?
  5. Understand your true costs. You can benchmark fuel surcharges and figure out the rate between Calgary and Montreal.

Dan Goodwill, President Dan Goodwill & Associates. Dan was the previous President of Yellow Canada, President of Clarke Logistics, General Manager of TNT Railfast and Vice President Sales & Marketing TNT Overland Express. His broad experience makes him a knowledgeable public speaker on cost savings programs and profit generation.

Private Equity Key to Strategic Expansion

Having recently partnered with Bermingham Construction, a Hamilton-based manufacturing company and winner of the 2008 E&Y Manufacturing Entrepreneur of the Year award, C.A. Bancorp was a key component in its successful transition to global markets. Mark MacDonald, Managing Director, Private Investments, will discuss the process of working with a private equity firm for the first time. C.A. Bancorp is an alternative asset manager that specializes in small and mid-cap opportunities. C.A. Bancorp seeks to help private companies innovate by investing expertise and intensive analysis of macroeconomic themes, industry trends, and market dynamics.
Having a partner like C.A. Bancorp helped the family owned business move from stagnation to dynamic growth to markets far more dynamic than the mature North American marketplace. It takes guts to allow in partners but do you want to be rich or be in control?" asks Jacoline Loewen, author of Money Magnet and partner with Loewen & Partners.
Join the Discussion with Mark:

Thursday, November 20th, 2008
10:30 am – 3:00 pm
The National Club
303 Bay Street, Toronto
Bay Street & Adelaide, Downtown Toronto

Map Location & Parking
Cost
$148.00 + GST
To Register (Please note, business owners and CEOs only):
Please email: akobeleva@loewenpartners.com or call 416 961 0740 and ask for Anastassia

How to Take Money From a Dragon

Guest Post on Dragon’s Den by J. B. Loewen

Imagine, if you would, that you are about to pitch your business to the Dragons and are being shown toward the Den. (I presume the CBC producers use long, pointy sticks to prod entrepreneurs forward). Ahead of you lie the huge vault doors which remind you no one escapes the lair of the Dragons. There they wait in the gloom, seated up high (increasing the drama) and TV cameras glint menacingly, waiting to capture the moment you are flayed to the bones. You are tethered to a pole and the Dragons rise up shrieking and set upon you.
Well…not quite.
But reading through the blogs and Fan Forums, there are many comments from viewers who find the rough & tumble of the Dragon discussions distasteful – as if CBC has brought back Elizabethan Bear Baiting for our viewing pleasure.
Yet, gentle viewer, I believe this week’s session of Dragons’ Den awarded more to the entrepreneurs than the Dragons. First to enter the Dragons’ lair was Larry Destiny, his stage name from days as a fearsome pro-wrestler. Still carrying a glimmer of his wrestling ring stage presence, Larry rolled out his product called Attitubes – water filled weights.
As Arlene Dickinson said, “If someone had come to me with the idea of a ball in every gym, I would not have believed it.”
Larry quickly lured all the Dragons down to his pit and had them doing deep knee bends and even got Big Jim Treliving hoisting his watery weights above his head.
Now who’s being tortured here, folks?
With the Dragons suitably subdued and keen to learn more, Mr. Destiny let loose his own bit of torture, “I do not have a single sale.” Attitubes is still just an idea – patented – but a concept only. The Dragons fell into a heated discussion over whether it could be licensed or sold. Robert Herjovac informed Larry he had been drinking some wicked Kool-Aid to offer 20% of his company for $200,000 (making it an $800,000 valuation). If Larry had some sales to prove the concept, it would have been different. One by one, the Dragons backed away and Big Jim suggested Larry take charge of his own destiny. Last to speak was Arlene. She said, “$200,000 cash but for 60% of the company.”
With Larry off to call a partner, I waited for one of Kevin O’Leary’s intemperate jokes but this time it was Robert hurling words like ‘ludicrous’ and accusing Arlene of sitting too close to Kevin, picking up his evil aura, and stealing a naïve entrepreneur’s business – yet again!
Kevin, normally the hot head, calmly agreed with Robert, telling Arlene she was taking over his role of Chief Incubus of Venture Capital. She just gave them her Mona Lisa smile but W. Brett Wilson stepped into the frey and told the others to back off, “Arlene’s in and you’re not – so stop badgering her.”
I was hoping for a fight, swords drawn, maybe a fatal blow struck but no such luck because of Destiny. That’s right, Larry returned. Guess I’ll stick to Hockey Night in Canada for the gloves-off fights.
Here’s where the cruelty to Dragons begins. Larry negotiated the same cash deal but lowered the offer to 50% ownership. People, please, this is a lot of cash for just an idea. Yet when Brett stepped back into the deal, bringing his sports teams and gym to use the product, Larry was soooooo mean. No way was he changing his power play – boom, boom, boom. His brutality shocked me. Even Brett said, “When we shake, don’t crush my hand.”
Note to Larry: May I suggest a brand name switch? What about Aquatubes? It gives the water concept and Attitubes is little too close to ‘tubby’ for my liking. Oh, if you do go with my idea – how about $200,000?
This deal of Brett and Arlene’s was a bone crunching triumph for Larry Destiny. Here we get a glimpse of Venture Capital at its best. Research out of Harvard Business School says that money from outsiders is more likely to spur on success than cash from your favourite auntie or your mum. There you go – Larry Destiny and all you entrepreneurs out there, Dragons’ Den offers you a great chance to get the wealth you deserve. For all those who withstand the Dragons’ fire, enduring their scorn, you will be stronger. Otherwise, there is the long standing tradition where outside the CBC building, the heads of entrepreneurs are displayed on spikes as grisly reminders of those who spurned the advice of the Dragons.

J.B. Loewen raises capital for growth companies and is the author of Money Magnet: Attract Investors to Your Business.


Private Equity Investors are Ready to Spend

David Simpson recognized the important role that family controlled businesses play in the Canadian economy, and became founding Director of Ivey’s Business Families Centre. As an operator in a family business himself, he supports learning in this vital sector of the Canadian economy and maintains a passion to promote this lifestyle choice.

Join David as he leads the discussion. Please note that space is limited to maximize the value to attending CEOs by ensuring a highly interactive environment.
Thursday, November 20th, 2008
10:30 am – 3:00 pm
The National Club
303 Bay Street,
Toronto
Bay Street & Adelaide, Downtown Toronto

Map Location & Parking
Cost
$148.00 + GST
To Register (Please note, business owners and CEOs only):
Please email: akobeleva@loewenpartners.com or call 416 961 0740 and ask for Anastassia
Agenda
10.30 am – 12:00 pm
David Simpson, The Richard Ivey School of Business, Business Families Centre - Welcome
Charles Loewen, C.P. Loewen Enterprises Ltd.
12:00 pm - 1:30 pm Networking and hot lunch
1:30 pm – 2:30 pm
Mark MacDonald, C.A. Bancorp
2:30 pm – 3:00 pm Networking

Gold Sponsor: Loewen & Partners works with private companies to raise growth capital. Our goal is to match owners of companies with suitable investors who understand the business and can add significant value. Over the past decade there has been a significant shift in the sources of financing available to small and medium-sized companies. This is primarily a result of the rise of private equity as the best place to access capital.