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/

http://www.moneymagnetbook.ca/