What is happening to entrepreneurial businesses

My partner and I own a successful e-commerce website. We started it in the late 1990's by ourselves and now we have five employees. Our growth came from personal resources, as well as credit card lines. Each year we saw sales increases of at least 10-20%. However, in late 2008/early 2009, we started seeing our sales slipping. As a result (and watching our competitors) we lowered our on-line prices to continue to drive sales. As of today, our prices are 40% below where they were in 2008. However, we have the same number of customers - we just work a heck of a lot harder!

On the negative side, we saw all of our credit card lines cut, so we can no longer use them. Bank financing is completely out as we have no business assets so to speak (our business is online - not manufacturing). We have cut costs by moving to a cheaper office location, letting one employee go and demanding lower prices from our own suppliers (mostly successful). As a result of our cost cutting, our bottom line has only slipped 10%. We feel very fortunate in this regard.

As to what would help our small business grow and hire people again - simple; more sales! We do NOT need to borrow more money as we already owe enough and our capacity is only at 50%. So what would we borrow money for? More production? We don't have the sales.

So QE actions by the Fed have no effect on us. Interest rates could go to zero and it still would not matter. What we are NOT seeing are credit card rates going down - now THAT might help us somewhat. Regardless, it seems that the economists in charge are playing from the old handbook of everyone borrowing money to spend money. Needless to say, it's not working - but you already knew that. Thanks again and keep telling the truth.

Danny
Austin, Texas

Will Canadian Firms Size-Up Enough?

In the past year, many company owners have contacted me to sell their companies. They do not have anything near the value they expect. Why is there such a gap in expectations?
First and biggest reason for the gap is if your company is under $20M in revenues, this greatly reduces your universe of potential buyers. This smaller size also means you get an immediate steep discount on your end sale valuation. Investors with the money are seeking companies with operating revenues over $20M, and if you are under that amount, your asking price drops off the cliff.
Canadian companies are small and conservative. Many are family owned and do not wish to risk growing organically or by acquisition. I do not blame them, but they must see the game has changed. Right now, we are global. It means you have to think global and that means get bigger than $20M. I have had this conversation with many family business owners and it is not necessary. If they got in private equity partners at 30% ownership, they would get money out for their family and get on with growth. Their second sale would be worth far more.

Exempt Market Dealers Have Business Trigger

Canadian securities legislation creates two categories of securities that may be sold: 

(i) prospectus securities; and 

(ii) securities issued under prospectus exemption. 

Securities issued under the prospectus exemptions, otherwise known as non-reporting issuers, are typically considered to form the "exempt market". 

Under NI 31-103, a new dealer registration category is introduced in all jurisdictions across Canada to regulate the sale of securities in the exempt market - the exempt market dealer (EMD).

A critical change under NI 31-103 is the introduction of the "business trigger" for dealer registration. Prior to September 28, 2010, the requirement to be registered as a dealer is triggered by a person engaging in a "trade" of securities. With the new rules introduced in 31-103, the "trade trigger" is replaced with a "business trigger", so the dealer registration requirement will only apply to those whose trading in securities amounts to carrying on the business of trading in securities. Companion Policy 31-103CP provides guidance on what acts are deemed to be sufficient to trip the "business trigger".

NI 31-103 introduces consistent rules concerning proficiency, conduct, capital and compliance requirements and makes it clear that EMDs are subject to the same know-your-client ("KYC") and suitability requirements as other dealer categories.

Quick Facts about the EMD

The Exempt Market Dealer - known as EMD - category replaces the LMD category, making the EMD registration category uniform across the country.
Did You Know?
o Existing LMDs automatically become EMDs on September 28, 2009. You don’t have to apply.
o EMDs have capital and proficiency requirements. LMDs had none.
o Not all LMDs will require registration as EMDs under NI 31-103. It’s up to you to make the determination.
o The EMD registration requirement will apply differently in certain parts of the country.
These and other important changes in the regulation of the exempt market under NI 31-103 are discussed below in this issue.


Visit the Exempt Market Dealers association for more information: http://www.emdacanada.com/

3 Hottest Technologies for Investors

Those Harvard Business Review articles telling you how innovation works in big corporates are yesterday's news. Companies like Google, IBM, Oracle and Cisco have massive war chests to buy innovation, not grow it in their own company.
The good news is that Canada is chock full of innovators in technology doing great companies that are being bought by the large corporates for big bucks.
So see if you have one of the 3 specialties to attract investors.
3 Investor Target Technologies
1. You have Real Time Data. for example, a customer goes to a bank to withdraw cash at the ATM but is low in funds. The software checks out his business, his mortgage, his past record and decides to up hs credit for $2,000 as he has a great track record. That's real time data working to make more money.
2. Data Ownership. Thomson Reuter has rights to their data and they are deep and industry specific with their data.
3. Span or Connect the Enterprise. Risk management and compliance are the hottest words out there. One way to reduce risk is to make sure it applies across the entire company. So any technology that can reach across the entire enterprise, end to end is appealing.
Any of the above 3 will get investors itching to invest in your technology company.

Jacoline Loewen, expert in Private Equity, author of Money Magnet: Attract Investors to Your Business.