Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

April 26, 2008

Blogs in Plain Canadian English

Are you the owner of a business? Was your company founded a few generations ago by your grandfather? If you are a family business, you may be in danger of living in the past glories and history of the company rather than moving into the future. To get yourself up to date, I suggest you blog. Too intimidating? You don’t type? You can’t write? No worries – seriously. Here is a visual cartoon – no hard bits- on how to blog. Commoncraft found out that people like to watch other people draw. It does break through to the busy brain. They have drawn a quick story board of how blogs work. This website is also useful for giving you ideas on how to get across your company products and services in an unforgetable way. Seth Godin also has an uplifting blog which has taught me a great deal about how to get a higher ranking on Google. His blog appears near the top when you just Google Blog so I guess he knows his stuff.

April 25, 2008

Joseph and the amazing technicalities

The Economist has an interesting article where it has done a complete about face on the need for bank regulation after Bear Sterns was unable to cover its losses through high risk banking. The suggestion is to step up regulation and to get the Anglo Saxon world away from trading and back to simple business. They sum it up well:
Despite this, countercyclical regulations would not be popular with the bankers.
Over a full cycle, such rules would probably require banks to have more capital
than under the existing system (and given the rescue of Bear Stearns, the rules
would need to apply to investment as well as commercial banks). Because money
tied up in capital earns lower returns, that would mean lower profits.

Many people feel that the bankers get fat and then want a bale out - what about the middle class folk? Banks are going to have do a great deal of public relations about this paradox which makes them seem greedy. But it is hard to feel much sympathy for bankers who rake in fortunes during the boom and require taxpayers to help them out in the bust (or make central banks jump through hoops for them, as the Bank of England has done this week—see article). An efficient financial sector is vital for a modern economy but trading securities has arguably achieved too much importance in the Anglo-Saxon world. Winston Churchill once said that he would rather see finance less proud and industry more content. That is not a bad motto for those devising a new set of banking regulations. Agreed about getting these mononolithic sized banks to have to cover themselves more and certainly they could afford it. There is one issue though. We are now in a global economy and Dubai is open for business to attract the financial trading away from London, NY, HK, stock exchanges, etc. Do keep that in mind when adding regulations. If the focus of a country and its people should be more on the meat and potatoes of running a good business that can compete in the global world, then capitalism, mercantilism, entrepreneuralism and the creation of small business should be given a better position in the education system and the publically owned media such as the BBC or CBC which, at times, appears to group all business under the same evil, greedy capitalist category. More venture capital TV shows like Dragons Den!

April 22, 2008

Deals That You Have Blown

If you are trying to raise capital but getting turned down, read this list of passed deals by the USA's oldest venture capital company. They passed on Cisco, eBay and even visited the house where the Google guys were using the garage to start up their search engine. A friend who owned the house had been telling them about these smart students and all the VC s could say was, "how can we get out of this house without passing the garage?" Read more in MacLean's magazine.
Bessemer Venture Partners is perhaps the nation's oldest venture capital firm, carrying on an unbroken practice of venture capital investing that stretches back to 1911. One thing for sure - they have a good sense of humour as they list their passes on companies which are now the top ten pics of any investor. These VCs say, "if only we had invested in any of these companies. We would not be working today." I don't know - sounds as if they would because it is evident that they love helping growing companies get capital and move forward with their dreams - much like Loewen & Partners.

April 20, 2008

Your First Advisory Board Meeting - Food Matters

You know what you hope to gain from having an Advisory Board and now the first meeting looms. What contributions will your Advisory Board members make? How will they inspire you to take your business in new directions, earning more revenue? That depends on how you set the tone at your first meeting. You want to encourage your Advisory Board members to relax and contribute.
One Hot Topic: Your first meeting, therefore, like all your Advisory Board meetings, needs to be planned around a question or problem. You might find it easiest to state the problem as a goal. For instance, "We want to increase our sales by 25% this next quarter. How might we do this?" Or you might state the topic for discussion more generally: "Should we try to break into the export market?" or "Theft has been increasing. What can we do to cut down on theft at our stores?"
Professional Package: Once you've got the topic, put together a package with information that your Advisory Board members will need. You could include a business plan and any other documents such as charts, graphs and fact sheets illustrating the background of the discussion topic. If possible, you should send a copy of these documents to all Advisory Board members two weeks in advance, along with a copy of the agenda.
Time Limit: Notice that each agenda item should be timed; building a time schedule into your meeting and sticking to it ensures that your meeting doesn't get bogged down and stimulates on-topic discussion.
Take Minutes: You will also want to make some arrangements for recording the minutes of the meeting. Don't try to do this yourself; you need to be able to participate fully, and listening and contributing well is a full-time job. If you don't have someone who can attend and serve as a secretary, ask permission of your Advisory Board members to tape the meeting.
It's All About the Food: Here's the most important part - the food! Do organize tasty snacks as people bond over food - an odd comment but one you know to be true. Don't do order in pizza or soggy sandwiches. Head over to Pusitarri's or even Loblaw's where you can purchase pre-made snack food which is delicious and fresh. Plenty of web sites like the passionate gourmet can give you ideas of unique and interesting platters of finger foods.
Keep it Simple: Above all, don't fret about your presentation. You are there to share your vision and hopes for your company and seek advice, not to impress anyone with multimedia presentation effects. Your long-range goal is to establish a working relationship of trust with your Advisory Board members, so focus instead on ensuring that your Advisory Board members walk away feeling that they've been heard and that they've contributed to the management of your company - and looking forward to the next meeting of the Board.
My upcoming book, Money Magnet, has a chapter on how to get going once you get capital from Venture Capital or private equity but you will be having many more board meetings and now is the time to get started.

April 18, 2008

Need a Bit of Humour?

Jim Sinclair’s Commentary: It is a little crazy in terms of Einstein’s definition of madness to believe that those who caused all this will pilot us out of it.

Family Business Needs to Manage their Capital Better

I ran an article on my CEO Newsletter which goes out to owner managed businesses and family businesses with the lead story headline:
Why 90% of Businesses in the USA are Still "All in the Family"

I got back many repsones asking about this number and whether Canada has that many owner managed companies. I tried contacting Family Business research centres and CAFE to get figures but Canada also comes in pretty high at about 75% of business owned by a family. I got an interesting reply from a finance expert in South Africa who said:
Because the returns are generally too low to cover a true imputed cost of capital (currently some 9% (3.5% risk free rate plus 5.5% equity risk premium) for an ungeared company) - markets would not stomach such underperformance....

So, do family businesses understand EVA or cost of capital? Is this why they benefit so much by partnering with the private equity teams who bring their market expertise to their business? My book, Money Magnet, will cover these points for owners and founders. Tom Deans, author of Every Family's Business, says that family businesses need to run their companies as if they did not belong to the family. This could also be a factor in why family businesses are not as efficient as they could be. Money Magnet will cover this controversial topic.

April 14, 2008

Canadian Finance Book Reviews and Web sites

Dig into this pile of book reviews and web sites reviewing the Canadian capitalist money scene.
Every Family's Business by Tom Deans is an entertaining, useful read if you own, have partial ownership or wish to have ownership in a family business.
The Digerati Life has a great article on how to make 10 ordinary things last longer.
Consumerism Commentary has a detailed article on 10 steps to break the credit card habit. Lazy Man and Money gives his thoughts on the middle class.
Quest for Four Pillars questions hedge funds - are we missing out?
Generation X Finance does a book review on Rich by Thirty.
Money Magnet is teaching family business owners how to find investors and get them to value their business at a high level.

April 13, 2008

For Private Equity, Is It Bleak?

What is the current bleak business landscape and downward fall of the markets doing to business? It does seem that the bottom of the market is being reached as the Times of London reported that Blackstone and CVC have put in a joint proposal to acquire 29.9 per cent of Mitchells & Butlers, the UK pub group whose shares have slide down after a property deal went sour.
Leveraged buyouts have been put aside with the growth of the credit crunch as financing has ground to a halt while banks are forced to work through a backlog of committed but unsyndicated loans.
However, buyout groups are carrying billions of dollars of funds and need to put their money to work, despite the lack of debt funding. Apollo, TPG and Blackstone also signed on to buy $12B of discounted leveraged loans from Citigroup, or 24% of the bank's $43 billion backlog of unsyndicated loans. This has probably set the price for other banks to begin to reduce their backlog. As the Time of London reports, "It calls the bottom globally, although it's a terrible deal for Citi. By calling the bottom, they create the bottom and if it works they unblock the system and the market starts to recover.”Blackstone, KKR and Carlyle have recently all closed new distressed debt funds and in Europe both Permira and CVC Capital have small debt businesses that are also starting to invest in underperforming leveraged loans.
In the meantime, private equity funds, including Apollo, Oaktree, Och-Ziff and Silverpoint are also digging through the market for attractive deals.
Here is Canada, with the closing of Jefferson and other funds, there is concern about private equity deals. This type of financial partnership is not the same as banking. It is high risk money.

April 11, 2008

Private Equity Flooded with Money

I got a phone call from a fund manager today. I was a bit surprised to get his attention as he normally only deals in public market companies but he tells me he has a new private equity fund and he needs to invest. This is good news for those family owned businesses or owner managed companies because it means they are more and more attactive to this unique type of capital. I wrote about private equity in my new book, Money Magnet which will help owners understand how to attrat and work with private equity.
With the big companies taking a hammering on the stock market, there is a diversion of money happening. The new direction seems to be private equity. I've had phone calls from companies setting up private equity funds as they have heard this is where the high returns lie.
In the USA, Private equity funds closed on a whopping $44.3 billion across 68 funds. While not nearly as huge, the venture capital markets also brought in new money beyond 2007’s totals by $1 billion to $4.9 billion. The data is based on information compiled by Private Equity Analyst, which is part of Dow Jones.
What's going on?
"The thinking in the USA is that if you are in private equity or venture capital, you are not tied up in the credit crunch," says John Loewen, Loewen & Partners, Toronto.

April 9, 2008

Venture Capital Country

You are entering Venture Capital country when you run a business with some revenue but still need to get a large sum of money to build a plant for that new client. The VCs (Venture Capitalists) are like the pioneers. They would take the big risks and maybe get to develop a ranch and farm, bring up a family and create a booming town serving farms and the stage coach passing through to the big city. Too often though, as Dennis Tobin said to me (he's a venture capitalist lawyer), the pioneer gets the arrows in the back.
It used to be thought that the first business in would get the big rewards but it is becoming clear that the people who come in after the pioneer actually get more reward. The moral of the story is try to be a settler, coming in after the pioneers have staked out the territory. But if you are an entrepreneur, I know you enjoy the thrill of the adventure so never mind – carry on - and watch out for those arrows.

April 5, 2008

Dragons' Den Wants You

It's the third exciting season of CBC-TV’s Dragons’ Den and they are looking to audition contestants for the show. It is not quite American Idol but if you have a business idea or business needing money, it is well worth entering. Get used to the Dragons' fiery breath because they are actually very generous in saying what they think. Once you've licked your wounds, you will realize you just got the best advice and it was for free. Maybe you will get the money or even win $50, 000 like Trent Kitsch of SAXX who was assisted by Loewen & Partners.

In Ontario:
April 12th at The Accelerator Centre London, ON

Money Magnet: Attracting Investors to Your Business

Time to pop the champagne - I finished the final editing of my book Money Magnet with the great editorial team at Wiley. Since this is my third book, I am asked why I choose to go with an old technology publishing house rather than post as an e-book or do it myself with a vanity press.
Well, because Wiley is firmly planted in the 21st century and knows its place is no longer the gate keeper of authors clamoring to get their work out to their adoring public. What they are doing is helping experienced writers like myself learn the new technology cyber ropes. They are building my book website and have done a superb job of editing my book with not one, not two by three editors who have cut my ramblings to a sporty, fast read.
The bigger job I have is fitting Money Magnet to my company, Loewen & Partners as the client base for our company are business owners with companies making more than $10M revenues and Money Magnet is definitely a broader readership. Any advice?

April 4, 2008

Would You Think Agriculture Was the Next Bubble?

The housing bubble helped us get out of the mess from the tech bubble bursting and so now begins the next bubble - alternative fuels.
Loewen & Partners was invited to listened to Mayo Schmidt, the charming and erudite CEO of Viterra which is Canada's fastest growing agricultural company - their tag line is "Leading Canadian Agriculture." Mayo is one of those mid-West men with the folksy trustworthiness but he is probably the sharpest tool in the shed. He blew me away with first of all his company's earnings and future vision, but also reminded me of how fast the world is switching away from oil. Mayo says that Brazil has converted more than half their fuel needs to sugar cane and other cellulose fuel. This land use and conversion of agriculture away from food to energy use will bring challenges as the world population is expected to keep escalating.
While I was in South Africa, I met with one of the investors from the Dubai Fund who are busy buying up land in South Africa where the property rights are still stable - no crazy Bob Magabwe types taking land.

Here's a quick list of fuel prices around the world:
Prices are quoted in US dollars per gallon for regular unleaded. March 1, 2008
Oslo, Norway $6.82
Hong Kong $6.25
Brussels, Belgium $6.16
London, UK $5.96
Rome, Italy $5.80
Tokyo, Japan $5.25
Sao Paulo, Brazil $4.42
New Delhi, India $3.71
Sidney , Australia $3.42
Johannesburg, South Africa $3.39
Mexico City $2.22
Buenos Aires , Argentina $2.09

Riyadh, Saudi Arabia $0.09
Kuwait $0.08
Caracas , Venezuela$0.12

April 1, 2008

Does writing a business plan have power?

Starting your own business makes you rich, right?

Unfortunately, that fairy tale does not always end happily. You are probably aware of the statistics on just how many companies fail before reaching their five year mark. It is just not true that owners take home the big bucks. Too often they are paying everyone else first and when it’s time to pay themselves, they find the cupboard bare.

Many entrepreneurs also discover that a mortgage, a pension plan, a medical plan or other long-term benefits provided to employees, are not available to them because of their status as “self employeed”.and also out of reach of their budget. After a couple of years of that reality, the entrepreneur stops dreaming and decides that working for “The Man” looks pretty good, particularly if it entails union wages or a government pension plan.

Business entrepreneurs are crucial for the future wealth of our country but are often given little thought (look at the last Ontario provincial election – need I say more?). Now with the alarming question of “Is this a recession?” even the news headlines have turned away from Hollywood celebrities and toward the economy” – although CNN did still make Heath Ledger’s death their top story the same night that every stock market on the globe was falling off a cliff. But what the heck, I enjoyed looking at Anderson Cooper’s blue eyes and his combination of Wall Street pinstripe suit with purple and gray striped tie!

With this incoming tsunami of trouble, our provincial governments are turning their attention to SMEs and pondering how to help them. If you buy the life-boat theory - you cannot save everyone from drowning - you need to answer the question of just who does get to climb into the life boat. Rather than encouraging any and every start up, government can focus on assisting industries with high growth potential. If you start a computer industry-based company, your chances of growing far exceed those of starting a hotel, a clothing store or a consulting company.

What is missing in the economy are those growing companies finding a financial investment of $1M to $10M. Supporting those investors ploughing money into growth companies would be a smart move. Venture capitalists and private equity funds investing amounts under $10M tend to excel in filtering out which businesses and owners are most likely to grow our Canadian economy.

As an entrepreneur, you know economic change is upon us. You no longer have time to point the finger at China, India or our government policies. Right now, you need to make decisions to get ahead of the global crowd. Scott Shane, professor of entrepreneurial studies at Case Western Reserve University and author of The Illusions of Entrepreneurship, says, “the typical entrepreneur makes decisions that lower the chances for success. Part of it is that they're in a hurry and don't have time. So to give you a good example -- a business plan. We have lots of evidence that all kinds of performance measures of startups are enhanced if you write a business plan” [www.businessweek.com, 1/7/08]. Why doesn’t the average owner write a plan? Besides being busy, owners just don’t see the benefit.

If you want your business to be more than a lifestyle, write that plan. Take this weekend to break out your laptop, Google “business plan” and you will find a plethora of templates to use. Then share it. If your only employee is your dog, tell your mother. “Tell everyone,” says Tony Griffiths, one of Canada’s top investors in growing entrepreneurial companies. Tony, who invests in growing companies, recalls how years ago, while he was watching his wife play tennis, a young man sitting next to him struck up a conversation. The subject moved to business and the young man shared his business plan with such enthusiasm. Tony made the decision there and then to become an investor.

The young man had no idea that there was private equity interested in his size of business, but since he had completed a step toward a higher level of success – writing a business plan – he accidentally gained access to capital. According to Tony, the company went on to grow all the way to a public listing on the stock exchange. The young man is now much older and does own a mansion. One answer to surviving the looming economic storm is remembering the fundamentals: make sure your business plan is in great shape and perhaps you will reach the level of entrepreneurship that earns you the big money.

Six Ways to Say “Yum!”

If you want to dazzle the people at your next dinner party with your marketing knowledge, spend time with your teenagers while they plug into the computer. Book an evening at home with your children telling you what they learn from TV and the computer and you will be a big brand expert in the surprising new ways to connect with the market.
1. Traditional TV blended with Web
Notice how your daughter watches Dr Who on TV while peering at her laptop, checking out the website for in-depth, full length stories, usually through an online video ad. Hopefully, she is not also accessing your VISA card to book her trip to London’s BBC studios. Be aware of interactive social media as strong marketers are learning to use this new technology without backlash.
2. Engage Your Customer
Email allows for one-on-one conversations: for example, Rogers emails you a movie discount coupon, which you print out and then rush to the video store. At Loewen & Partners, we email our list of entrepreneurs and fund managers with personalized messages. Check out your kids’ summer camp on-line rating sites. I was intrigued by one camp with several postings saying that the counsellors were too busy making out with each other to organize activities. Bet that won’t be happening this summer!
3. Globalize Your Message
You may have noticed that the world has come to Canada, particularly Toronto, offering perhaps the biggest challenge for marketing. Technology is causing barriers to crumble and the impact will probably continue over the next twenty years. What does this mean for marketers, and for women, both in the office and at home? Americans embrace the saying, “drastic change requires drastic action” and are busy hiring non American CEOs to smash their corporate cultures and traditional marketing plans. PepsiCo, the world’s fourth largest food and beverage company, awarded their CEO position to an Indian woman, Indra Nooyi, who wears a sari to work. How’s that for a take me as I am attitude? Which brings me to my next trend (no, it’s not The Spice Girls who, incidentally, do know how to market because even Rex Murphy dedicated a column to their branding success).
4. Add Girl Power
PepsiCo asked: How could their marketing gain fresh energy and momentum? What is different, unique and special? When you put "fresh eyes" on the question, change happens, and Indra Nooyi is doing just that for PepsiCo’s revenues. Meanwhile, Pier One’s earnings are limping along, perhaps because they have no women on their Board? I know women in Oakville who’d be delighted to help out and would talk marketing plans for the price of a cup of coffee.
Marketers who support the new reality that girl power is here - and it’s not just Scary Spice being cheeky - will be ahead of the pack. I just spent my weekend holed up with high testosterone Bay Street money men judging the Ivey Business Plan competition. Once again, the $20,000 top prize went to a female-led team and as I sat with the Venture Capitalists, they recalled the previous year’s female winner saying, “What a fire cracker!” I have no doubt these fellows would hand over twenty thousand cool ones to any woman who demonstrated she could bring in a sustained revenue stream of $5M. If women want to get ahead in Canada, they need to make the decision from a very young age to live, breath, and die for business.
5. Nod at Career & Mothering
Let’s be honest, many women self-select out of the work world to be mothers. “Where are they now?” articles on MBAs show that even career-oriented women may choose to be at home with their children. The smartest woman in my MBA class is now at home with her two boys and even my sister-in-law went home within months of returning to her Morgan Stanley job after childbirth. Shrewd marketers will understand this female angst over work and babies just as Dove channelled women’s feelings over the media’s use of perfect female bodies.
6. Be Gutsy
If Indra Nooyi can call PepsiCo’s new division Yum!, think of the marketing you could do.
This blog also appears in The Women's Post.