Why Mission Statements can miss so badly

I want to show you quickly how to avoid writing a weak Mission Statement. Too many of them are so look-alike which is what makes them OK but not likely to attract the talent you want or give a potential client an impressive snapshot of what you company actually does.
Let's say you have a business you started at the kitchen table making bread and it has now grown into a growing concern with employees, a proper office, professional kitchen and --the big dream that makes you breathless--Lablaws as a client. You may decide your mission statement could go like this: "We aim to delight the families of Ontario with our awesome bread inspired by true Italian baking." That's not bad and your employees could get enthusiastic about it. Now here's where things go bad.

You gather your team and Board around the table to get their input on the wording. Captain Picard always made this gathering of the team look easy but it never turns out that way. Your team, who you think is better than sliced bread, turn into your eighth grade English teacher - you know, the one who nitpicked over every word you wrote. Suddenly, even the finance people have a opinion and are piping up to let you know their view:
"We should not limit ourselves to Ontario and by the way, I don't like the word delight. It seems flaky and frilly, way too girly." 

Thanks, Pierre.

"And saying 'families' may offend, what about people who live by themselves or who are divorced? That could upset them." Indeed. They could run crying from the room at reruns of the Cosby Show too, but point taken. 

As you go around the room, the babble of voices gets higher and higher.

"Why limit ourselves to Italian?" 

"It's weird but when I see the word "Awesome", I think of my kids. It's such an overused word. Isn't the main feature our freshness--we should say fresh, not awesome."

"But everyone expects freshness. It should be crusty or light--our crusty, fluffy bread."

"Hang on! Why limit ourselves to bread? We are doing rolls too. In fact, our rolls are moving up to fast selling category."

"Good point--we don't want to limit ourselves to bread. What if we move into frozen dough or pizza? We've also been toying with  flat breads. That's a very attractive business."

"Let's sum it up - what are we doing? We are providing a solution. A family eating solution."

"Hey, didn't you hear what I said about families? But solutions is exactly what we offer. Make it solutions."

Then Winnie says, "What about green? We are an environmentally aware company?"

"And we care for our employees."

"We really care."

How can you argue against hugging your employees, trying to respect the environment and having amazing values? So, there you go. It's added into the statement. There you have it: solutions for mealtimes and we care for our employees very much and also the environemnt. We are very green.

Maybe the team is happy but you know it is trying to be too many things to too many people.

Better keep your statement simple, you can put the list of values into a whole separate statement. That will help you avoid the trap here--getting so vague and fancy with the language that it just becomes meaningless. Here are 2 ways to avoid it:

1. Use concrete language. 

My favorite Mission Statement is done by Spin Master. Their vision is to be the world's most innovative, most fun children's entertainment company. There's their big, bold vision that has driven them from zero to $900 million dollars in just fifteen years. They take all the rest of the details and put it under values. Spin Master values - entrepreneural spirit, ideas (no matter where they come from), integrity (always, no fooling).
Wow. It gives you a picture of what they do and tells you why it's worth doing AND, after reading that, I want to work there.

2. Talk about the why.

Most mission statements are all statement and no mission. The whole point is to say why you're doing what you're doing. What makes you care? Look at the start of Johnson & Johson's famous credo: "Our first responsibility is to the doctors, nurses, and patients, mothers and fathers and all others who use our products and services." That is very clear about their priorities.

So you've seen why bad mission statements happen and two tips for making yours different. At our home Web site, I've put together some other resources for you to check out, if you're interested. And in the meantime, let me challenge you to do the impossible: Write a mission statement that means something. And I'll give you a hint: keep it real.

Jacoline Loewen, author Money Magnet, attract private equity to your business. Get in touch to talk about your Mission Statement.

Top 2 Reasons a Family Business will survive

Family businesses are often thought of as ma and pop stores, but this is far from the facts. I remember my surprise at learning the true number of family businesses in Canada and America.
McKinsey has released the results of family business research and it is well worth a read. According to McKinsey, the two top reasons for family business being able to survive is first of all - bringing in professional management and, second, having family stay committed to the concept of family legacy. No surprise there but bringing in professional management is still such a difficult barrier to pass for too many family businesses.
Here is the McKinsey article summary:

Definition of family businesses: a family owns a significant share and can influence important decisions, particularly the election of the chairman and CEO.

As family businesses expand from their entrepreneurial beginnings, they face unique performance and governance challenges. The generations that follow the founder, for example, may insist on running the company even though they are not suited for the job. And as the number of family shareholders increases exponentially generation by generation, with few actually working in the business, the commitment to carry on as owners can’t be taken for granted. Indeed, less than 30 percent of family businesses survive into the third generation of family ownership. Those that do, however, tend to perform well over time compared with their corporate peers, according to recent McKinsey research. Their performance suggests that they have a story of interest not only to family businesses around the world, of various sizes and in various stages of development, but also to companies with other forms of ownership.

Read more.
Jacoline Loewen, author of Money Magnet, How to attract private equity to your business

Toronto Entrepreneurs will share their secrets

THE EVENT: Courage to Lead
What to Expect

Wouldn't you like to pick up the phone and ask Warren Buffet his secrets to running a business? The next best thing is getting inspired by some home grown entrepreneurs, not in Buffet's league by any means, but who are building businesses to last. Three amazing Toronto business entrepreneurs are speaking in Toronto tomorrow night downtown, and you can pick up a few ideas as well as share a glass of wine. 

• Brenda Bot, of Salad Creations Canada; 
• Jacoline Loewen, of Loewen and Partners, Private Equity; and 
• Susan Hodkinson, of Soberman LLP. 

Join these owners to discuss what it takes to run a business and what you can expect when you are your own boss. Womens Post is running Courage to Lead and its a great opportunity to meet the people behind the magazine. Tickets are only $10, and that includes wine and appetizers and a great take away tote.

Wed 24th, evening

Tickets: $10 and include wine and food and a takeaway. 

Location: McNally's Bookstore, Bay Street, Toronto, across from The Bay, between Richmond and Adelaide.

Youngest Billionaires and how they got so wealthy

Here are Forbes' top 10 youngest billionaires 

Billionnaires in North America generally are mostly self made and do not start out life as super wealthy. They strive to share with the world their creations. Below are my favourite super wealthy entrepreneurs. Let me know what you think.
Elizabeth Holmes left Stanford University at 19 with a plan to start her own company. For money, she cashed out the funds her parents had saved for tuition. Now, she counts billionaire Larry Ellison as an investor and has former secretaries of state on her board. I

think a lot of young people have incredible ideas and incredible insights, but sometimes they wait before they go give their life to something," she said. "What I did was just to start a little earlier." Holmes, through her company Theranos, has taken on the $76 billion laboratory-diagnostic industry as her target. It's an industry that was just waiting to be disrupted, since blood testing has not changed since the modern clinical lab emerged in the 1960s.
Here’s the rest of the Forbes Top 10 list:

2. Mark Zuckerberg (see picture above)
Net worth: £2.6 billion ($4 billion)
How: Internet
Age: 25
Citizenship: US
Marital status: Married

The Facebook-founder launched the social networking site from his Harvard bedroom in 2004. Facebook founder, Mark Zuckerman, is another dropout and a great example to small business owners to focus and work to get the business growth required to create great wealth. 

3. John Arnold
Net worth: £2.6 billion ($4 billion)
How: Energy trading
Age: 36
Citizenship: US
Marital status: Married
Hired by Enron and founded hedge fund Centaurus Energy in 2002 after Enron collapsed.

4. Yang Huiyan
Net worth: £2.2 billion ($3.4 billion)
How: Property
Age: 28
Citizenship: China
Marital status: Married
Her fortune is tied up in her holding in Guangdong developer Country Garden, run by her father Yeung Kwok Keung.

5. Albert von Thurn und Taxis
Net worth: £1.4 billion ($2.2 billion)
How: Inheritance
Age: 26
Citizenship: Germany
Marital status: Single
Inherited fortune on his 18th birthday and lives in family castle, Schloss Emmeram.

6. Fahd Hariri
Net worth: £900 million ($1.4 billion)
How: Construction, investments
Age: 29
Citizenship: Lebanon
Marital status: Single
Youngest son of assassinated Lebanese prime minister Rafiq Hariri inherited stake in his father's construction, telecom and property empire.

6.5 Aymin Hariri (Yup, another one)
Net worth: £900 million ($1.4 billion)
How: Construction, investments
Age: 31
Citizenship: Saudi Arabia
Marital status: Married
Brother of above, while other brother Saad is Prime Minister of Lebanon. Say no more...

7. Yoshikazu Tanaka
Net worth: £900 million ($1.4 billion)
How: Internet
Age: 33
Citizenship: Japan
Marital status: Na
Like Zuckerberg, Tanaka also made his fortune from a social networking site, Gree.
8. Kostyantin Zhevago
Net worth: £790 million ($1.2 billion)
How: Banking, mining
Age: 36
Citizenship: Ukraine
Marital status: Married
Has majority stake in iron ore producer Ferrexpo and Finance; Credit Bank.
9. Lee Ziaohui
Net worth: £658 million ($1 billion)
How: Manufacturing
Age: 28
Citizenship: China
Marital status: Na
Chairman of one of China's biggest private steel manufacturers Shanxi Haixin Iron & Steel Group, since father was shot in 2003.

10. Shahid Balwa
Net worth: £658 million ($1 billion)
How: Property
Age: 36
Citizenship: India
Marital status: Married
Partner in DB Realty whose projects include Turf Estate, a luxury high-rise, and the 108-storey Park Hyatt Hotel in Mumbai.

It is disconcerting to read about those who have inherited wealth due to fathers being gunned down (Lee Ziaohui, China) or assassinated (Fahd Hariri, Lebanon). As for the Lebanese brother billionaires, that's right, each one is a stand alone billionaire, is it not a bit suspicious that two Hariri brothers are billionaires while the third is Prime Minister of Lebanon. The brother who is Prime Minister took over after his Dad (who was the Prime Minister) after the assassination. America is a wonderful place which is structured to help young entrepreneurs get ahead. That is the kind of wealth to achieve.

To get the report Billionaires - Architect of Wealth and Legacy, please contact Jacoline.Loewen at ubs.com

Jacoline Loewen

Jacoline is the Director of Business Development with UBS (Canada), largest wealth manager in the world, voted Best Private Bank in 2014.

This article is for entertainment purposes only. Any financial advice must be from a registered financial advisor.

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"Delay and Pray" is new mantra of PE firms

Rather than addressing the underlying problem of too much debt, private equity firms’ refinancing of debt at their portfolio companies is simply extending the problems out to some point further in the future, say distressed investors.
“Many of these companies are able to service their debt,” said Jeffrey Aronson, managing principal at Centerbridge Partners. “They can pay the monthly Visa bill. The real question is, can they pay it back?”
Tennenbaum seemed to think the answer to that question is no, arguing that when these companies have taken on new debt, it has gone mostly to pay down existing bank debt - not to growth, or to somehow making a company’s model more defensible. And in many cases, companies have been replacing bank debt with high-yield bonds which, while maturing later, have a higher interest rate.
“More cash is going to get clawed up” to pay the interest rates on that debt, Tennenbaum said. He said the new debt is levied at an interest rate of around 10%, versus 4% on the old debt.
“I think this cycle is going to have a long tail,” Aronson said. “You haven’t really seen many of the buyouts hit the wall. At the DBR Restructuring and Turnaround Summit on Wednesday, they used a variety of colorful anecdotes for what PE firms are doing, ranging from the now common “extend and pretend” and “delay and pray” descriptions to some more creative phrases.

“The longer you kick the can down the road, the nastier the can gets,” said Michael Tennenbaum, senior managing partner of Tennenbaum Capital Partners.
“[They] kicked the can down the road, and everyone realizes that it’s the same old battered can,” said Angus Littlejohn, chairman and chief executive of Littlejohn & Co.
Read more at WSJ.

Canadian ABL lenders in the private equity indsutry are having the busiest time of their lives. Business owners still prefer to have the debt rather than give up equity and are using debt to pay off their short term debts and keep going business-as-usual rather.

Private equity motives for a business are helping at GM

“This was not a private equity investment,” Rattner, a co-founder of Quadrangle Group LLC, said at the DBR Restructuring and Turnaround Summit.That’s because the motives of the auto task force were wildly different than those of private equity investors. Instead of aiming to generate a profit, the goal was to lose as little taxpayer money as possible – and to avoid a meltdown in the Midwest.
Steven Rattner may have been hired by the government to turn around the U.S. auto industry in part for his private equity and Wall Street expertise. But the turnaround of General Motors Co. and Chrysler bore little resemblance to a typical PE investment.

“There was a systemic risk not unlike the systemic risk of Lehman Brothers,” Rattner said. The auto industry “could have brought the whole Midwest down with it.”
Given those goals, Rattner thus far is pleased with how the turnarounds have turned out. On GM, he said, the U.S. government’s investment is currently worth between $40 billion and $45 billion, versus the roughly $50 billion that it spent bailing out the company.
Still, Rattner’s private equity inclinations came out at times during the keynote address, especially when he discussed how poorly the company was run before the government intervened.
“This was one of the worst-managed companies I’ve ever seen in my life of any size,” Rattner said, adding that he’s happy with the management team that he helped to install. “I wake up every morning grateful that Ed Whitacre is there.”
Read more at WSJ.

Compared to the heyday of 2007, companies need to offer more equity for capital

“We’ve slowly been picking up speed as far as deal flow goes,” says John Gabbert, chief executive of Seattle-based Pitchbook Data Inc., a private equity research and news company. "So far this year, 20 private equity funds have raised $15 billion nationally."
Speaking at the ACG conference held in Houston, private equity experts seemed more positive than six months ago.But lenders are still holding back on their end, the panel of private equity experts said.
“It’s still very difficult to get financing,” said Peter Rosenberg, managing director of the middle market group of investment banking and capital markets at Wells Fargo Securities LLC in San Francisco. “We have not seen many stable situations and we are finding out now that the lenders are being much more detailed in performing their own scrutiny and their own due diligence.”
Compared to the heyday of 2007, companies need to offer more equity to move forward.
“As we see it, the structures tend to be requiring about 40 percent or more equity to get the deals done,” said panelist Charles Riceman, managing director of Chicago-based Golub Capital. However, Riceman also said he expects to see a further increase in deal activity in the second half of 2010.
"Canadian business owners are recognizing these shifts as their top market, America, is not the economic powerhouse of five years ago. It is painful to make the adjustment and not believe that over the mountain, an economic recovery is coming," commented Jacoline Loewen, author of Money Magnet: Attracting Investors to Your Business. "A business is a life long work of art and to suddenly see the value fall drastically is hard to accept."

America overtaken on Forbes Billionaires' List

Scratch Bill Gates off the top of the list of richest people in the world. The new bizillionaire is Carlos Slim of Mexico who makes his money from...wait for it...finance and teleco. Read more...

China is now home to 64 billionaires – the most of any country outside the US – with 27 of them reaching the $1bn mark for the first time. Newcomers include Li Shufu, who runs Chinese car manufacturer Geely - which is on the verge of buying Volvo from Ford – and Fu Guangming who runs Fuijan Sunner Group which processes chicken for Kentucky Fried Chicken in China. Anyone catering to Chinese consumers is doing very well. The 14 self-made women on the 1,011-strong list have one interesting trend: Seven are in China.

Brazilian mining magnate Eike Batista saw a dramatic increase in his wealth over the year, up $19.5bn to $27bn, the biggest wealth gain of anyone on the list. Overall, the Forbes annual survey reflected a significant return in many billionaire’s fortunes, with the average net worth of those on the list rising from $3bn to $3.5bn, although that is perhaps not surprising as the cut-off date for the 2009 survey was February 13 2009, close to last year’s stock market lows. Aside from Messrs Slim and Gates, investment guru Warren Buffett took third place, with a fortune valued at $47bn, up $10bn from the prior year. Other notable constituents on the list include LVMH chief Bernard Arnualt, Europe’s richest man with a $27.5bn fortune. Ranked seventh, he has seen his fortune rise by $11bn in the last 12 months. Steel magnate Lakshmi Mittal saw his fortune increase $9.4bn to $28.7bn, pushing him up two spots to fifth place.

In terms of British billionaires, Sports Direct and Newcastle United owner Mike Ashley is now worth $1.5bn, while the Duke of Grosvenor and his family remain the wealthiest Britons, with a $12bn fortune, up $1bn in spite of the fall in the value of commercial property. One UK newcomer to the list is hedge fund manager Alan Howard – of Brevan Howard – with a net worth of $1.8bn, while David and Simon Reuben ($7.5bn), Sir Richard Branson ($4bn), and Joe Lewis ($3bn) all saw their fortunes increase in the last 12 months.

Read more.

Western world standards for business, such as paying a fair, living wage to employees and  paying taxes are increasingly driving good companies out of North America to offshore factories.

If you do not have a rich uncle, where else can you get seed money?

We do not all have rich uncles to hand out the seed money to coax a business through those early stages of growth. Yet, that loan or grant at the critical early stages of business can mean all the difference in survival, along with some mentorhip. So what is a young entrepreneur to do? We are very lucky in Canada to have the Canadian Youth Business Forum (CYBF) which delivers all the help of a rich uncle.

I have been involved with many business incubator type organizations and this is one of the best in the world. CYBF gives loans and grants to young entrepreneurs but they also assign a mentor, usually a seasoned executive, who can prod on the owners to do the right things and meet the right people. So much of business is about who you know and having that right mentor. CYBF has worked hard to get all the pieces in place to give fragile start ups that extra boost, and to get the wing beneath their wings. Their impressive list of companies who have gone onto Dragons' Den and won deals keeps growing and there are loads of quiter successes, as well as rapidly scaling companies.

It is thrilling to let you know that CYBF, representing Canada, received the top prize of 'Country of the Year Award' at the Global Entrepreneurship Congress in Dubai. As the official host of Global Entrepreneurship Week Canada (GEW) for 2009, CYBF was honoured to accept this award on behalf of all our partners. Thanks to all the volunteers and Board commitment, CYBF came first among 100 competing countries. To learn how CYBF promotes a culture of youth entrepreneurship within Canada and globally, please read their press release Please click on the following link to access it: http://dl.dropbox.com/u/2738308/Dubai_award_release.doc

A special hats off to Vivian Prokop, CEO of CYBF. Vivian knows the entrepreneurs well and is a role model for all of them. She has inspired and driven the growth of CYBF with her sparkle and energy.The federal government also recognized the credibility and success of CYBF by awrding a $20 million grant which CYBF then distributes to young entrepreneurs as the seed money to get them started.

To apply for CYBF, go here.

To become a mentor, go here.

Jacoline Loewen, author of Money Magnet and supporter of CYBF.

Business owners have protection from financial advisors - EMDA

If you are the owner of a company with revenues under $50 million, you may be vulnerable to financial experts charging unnecessary fees or not delivering on what they promise. How can you get recourse without expensive lawyer fees?
Now there is an answer.
Before you hire a financial advisor, do ask if they are registered with the Ontario Stock Exchange (OSC) as an exempt market dealer - EMD. Even a "one man shop" can register as an EMD, in order to demonstrate that they know how to treat the their clients correctly and follow a minimum set procedure and process. This regulation of small finance companies is to protect the business owners of Canada.
 See more about the EMDA - Exempt Market Dealers Association.
posted by Jacoline Loewen, expert in private equity for business owners, author of Money Magnet.