4 Steps to pilot a product - part art and part science

Remember the first iPod had that spinning wheel to tip and turn? It was an incredible feature which grabbed an entirely new group of customers and if you have been reading the book on Steve Jobs, you will know he delayed the launch in order to build in this feature. So how can you bring the focus and excitement to your new products? Andrew Brown has researched a powerful article in Financial Post and here is what I liked:

Products with tremendous potential are launched too early or designed in ways that don’t capture the imagination of would-be customers.  The consequences can be severe: losing credibility with customers and exposing important points of distinction to competitors. Furthermore, such “failures” reduce the appetite to experiment and lead to adopting cumbersome processes that squash the ability to innovate rapidly.

To overcome these pitfalls, successful product innovators pilot their products. Just as with any business  process, piloting a product is part art and part science. Here are four piloting practices that consistently generate insights that lead to profitable products:

Limit the scope of the pilot. Keep the scope of the pilot focused. Leaders from every department bring their wish list of features and functionalities that they want included. The result is a product whose benefit to the end-user is buried or lost.  According to Chris Perretta, the CIO of State Street, which provides financial solutions to sophisticated institutional investors, “given the complexity of our clients’ needs, when we do pilot a product, we have laser-like focus on prioritizing features. At the same time,  we discuss with clients what is planned for future versions of our products so that they have a clear sense of immediate and upcoming features.”

Ensure quality. When customers participate in any pilot project, respect their time and candid insights by creating a positive experience.  According to Michael Wexler, VP at Radialpoint, “customers assume the reliability and quality of your pilot product reflects what your company is capable of delivering” The Montreal-based company, which provides remote technical support is constantly honing its sophisticated software. Nevertheless, according to Wexler, “When we pilot products, we only pilot those features that function at 100%.”

Choose hardcore users. One of the critical benefits of piloting products is to help companies identify faulty assumptions about current and prospective customers. 

To find out the rest, READ HERE 

Shareholders jumpy? Think Private Equity

If you are like many business owners and management teams, you may reach a crossroads where taking on capital makes sense. Business owners and management teams chose private equity to address either a business or personal objective.

When early shareholders want to diversify

Many people think about private equity solely in terms of company financing, yet it can also enhance entrepreneurs' personal financial security. That's because founders and early shareholders often hold much of their personal wealth in the company. As a result, they are wealthy on paper but don't necessarily have a diversified personal balance sheet or ready cash for large, personal expenditures. An infusion of private equity can allow founders, owners and early investors to take some of the rewards off the table, while reducing their investment risk through diversification.

Providing liquidity for early shareholders can also help entrepreneurs meet related business objectives. For example, back in 1998, the management of Keystone RV Company, a manufacturer of recreation vehicles, were concerned that they were  majority owned by a group of individual investors. The investors had provided cash at the company's start-up, but many of them wanted to exit their investment in Keystone and realize profits. At the same time, Keystone's CEO was looking for a way to provide ownership incentives to his team of key executives.

A private equity investment allowed Keystone to cash out early investors, while also establishing ownership stakes for the management team. By making managers shareholders and rewarding them for maximizing the company's value, Keystone was able to accelerate its growth rapidly after the investment. Keystone grew to become one of the leading companies in its industry and in 2001, the company was acquired by Thor Industries for more than $150 million.

The only competitive advantage is to have better people who understand the business better

*There is no 'winning strategy' that will boost your earnings. The only competitive advantage you can get is to have better people who understand the business better and who seek the future with a passion.*
 source: The power of strategy by J.Loewen


A client quoted this from one of my books. I thought it was spot on and then realized it was my book being quoted. Thank you to my client!

When to Consider Private Equity

The decision to take on private equity is a difficult decision for most business owners. Why bother with the effort and risk?
There are a variety of reasons but in my career working with business owners, I have found it generally comes down to these four reasons to look at private equity partners:
1) The founders' increased need to shore up their personal financial security, 
2) To finance further growth, or  
3) To help prepare a company for a future IPO within 3 years 
4) To prepare for partial or full sale within the next 5 years.

Becoming a Millionaire requires out-thinking the majority of people

At my finance club, I was startled to learn from one of the top fund managers of Canda that it is a small percentage of Canadians who play the stock market with over $500,000 of investment money.  To have one million of net worth is still rare. Here is a fun article from Yahoo finance on how to be a millionaire:

There's no real practical reason to ask "who wants to be a millionaire?" because the only people who won't put their hand up are religious types who've taken vows of poverty and those who are already multi-millionaires. Unfortunately, there's a big gulf between those who want it and those who do the things to make it happen. 
 Based on recent statistics on U.S. household income, millionaire-dom is not something that's going to happen for most people, even with the dubious benefits of inflation.   
A household earning the median level of income (approximately 50K) and saving an impressive 20% of that would need almost 100 years to save $1 million (excluding taxes and investment gains). It's pretty clear, then, that a would-be millionaire has to think outside the boundaries of "median" experience.

Start a Business
There are certainly people who can become millionaires by working for other people, but this is not an especially good route to choose. The trouble with trying to become a millionaire by working for other people is that there are always other people siphoning off the value of whatever you produce. Say you're a hotshot salesman – although you're going to get your cut, a lot of the value you create is going to get split among a broader pool of workers, managers and the owner(s) of the business.

Start your own business, though, and you get to decide how to divide that pie. Better still, your ownership stake can become more and more valuable over time as that business becomes larger and larger. While a good employee may get raises and promotions as his or her employer grows, they'll never see the same benefits (including the tax-free appreciation in the value of the ownership interest) as the owners.

Use Other People's Money
One of the remarkably consistent features of stories about people who go from relatively no wealth to major wealth is the role of other people's money in making it happen. Sometimes it's start-up capital from a generous relative, or maybe it's a small business loan or venture capital.

Borrowed money can be a major force multiplier. Behind virtually every real estate empire is borrowed money and the use of leverage in investing (whether through buying stocks on margin, buying options or buying futures) can rapidly magnify a skillful investor's success. Of course, this cuts both ways – just as borrowed money can create a large business (or portfolio) quickly, just one mistake in an over-leveraged enterprise can bring the whole thing crashing down.

It comes down, then, to risk tolerance. Those who really want to build large wealth (and do so quickly) through business or investment will have to do so in part with other people's money.

Cultivate a Valued Skill
Wages respond to supply and demand just like everything else, so it is very important to cultivate a skill that is not only in demand, but scarce enough to be valuable. Architecture and law, for instance, are both specialized skills, but not necessarily rare enough to make their practitioners wealthy unless they are at the high end of their profession.

Sports is an obvious example, but most people know in their teens whether they have the rare physical gifts (and perhaps the even rarer mental discipline and dedication) to open the doors to a professional sports career, and it's not really a door that can be opened in college or later. Medicine and engineering, though, are both open to college-aged people who have the requisite abilities and the willingness to put in the effort. The services of these professionals is not only almost always in demand, but the supply is small enough that professionals here can fairly expect to become millionaires on the basis of their labors.

This is also true for unconventional skills as well. Pursuing a career as a writer, actor or professional gambler is a virtual guarantee of poverty for most people. For those who actually have the skills necessary to succeed, though, it can be their best chance of building real wealth.

Out-Think or Out-Hustle
Lazy and self-made millionaire just don't go together. Hearkening back to that supply-demand equation, anything that's relatively easy, convenient and accessible is going to have ample supply and relatively low payouts. Since most people don't actually want to work that hard, though, there are real wealth-creation opportunities out there for those willing to think and/or work just a little harder than average.

One option for building exceptional wealth is to out-think the majority of people out there. While endeavors like writing, investing and inventing all involve a tremendous amount of effort and dedication, there is at least some aspect of out-thinking to them all. Steve Jobs of Apple , Herb Kelleher of Southwest a nd Alfred Mann of MannKind all clearly worked hard to achieve success, but a lot of that success was predicated on seeing things that others didn't see and figuring out how to do them even better.

Out-hustling is an undervalued aspect of wealth creation. Success in business is often about the hustle – the willingness to make one more call or work an extra hour later. The field of "hustle" is wide, rich and fertile. You can make good money visiting estate sales and reselling undervalued items, just as you can make good money from a variety of multi-level marketing programs. The question is whether you want to spend the hours it takes to drive the process forward.

Rental real estate is a good example. It is actually not all that difficult to find rental properties, buy them and rent them out. Do this well and it's fairly easy to earn an annual return of 8-15%. The problem is that there are a myriad of small annoyances that go with it – hassles in haggling over the purchase price, hassles in getting mortgages, hassles in getting tenants, hassles in dealing with tenants and so on. Some people just don't want to be bothered with this, but those who don't mind the annoyances can reap the rewards.

The Bottom Line
Having $1 million or more in net worth is still uncommon enough to be special and significant, and it doesn't often come as a byproduct of luck or chance. Hard work is a virtual requisite, but so too is a willingness to take on some risk (such as starting a business or using leverage) or cultivate a rare gift (like writing or inventing). Although simple living and sound investing will help anyone build more wealth, a special level of success requires a special person who is willing to do more and risk more than most people. 

Cash was one of the last things that his company was looking for from private equity

Selling a company used to be the only choice for a business owner. Unfortunately. this myopic view still lingers on even though there are many more options for those founders wanting to get some money for their hard work. Companies may consider taking on a private equity even if they don't need the money, simply as a way of making the transition from a private to a public company. 
Other companies, like Bermingham Construction, had a balance sheet ill suited for the public market because it was lumpy due to large contracts. The public market just would not bear the irregular cash infusions. Their option was not the public markets but to take on private equity partners.
A private equity partner can generally help companies in a number of ways, including:

• Upgrading the board of directors with seasoned industry professionals
• Forcing a strategy process and financial reporting on a more frequent basis
• Recruiting senior management, if necessary
• Implementing more sophisticated systems and financial controls
• Introducing entrepreneurs to investment bankers or potential buyers in preparation for an eventual IPO or sale

The Facebook story is well known to the point of exhaustion but it worthwhile to note how quickly Zuckerman got involved with private equity. Not just any private equity either - the best.

Another case study that reached the media was told by David Kalt, CEO of optionsXpress. David says cash was one of the last things that his company was looking for from a private equity partner. OptionsXpress, an online broker based in Chicago, Ill., specializes in the fast-growing market for online options trading for retail investors. The company expanded rapidly over the first three years of its existence, reaching 70,000 accounts and $50 million in revenue by the end of 2003. "Because we were very capital-efficient and profitable, we didn't need an outside investment to grow the business," said Kalt, "Instead, we viewed a private equity relationship as a way to navigate very rapid expansion and prepare for an IPO."

What helped get optionsXpress to the IPO stage? A $90 million equicty investment provided liquidity to early shareholders, allowing the firm time to fully consider its IPO strategy. Additionally, its equity partner helped them understand the process and introduced the optionXpress executives to key players in public markets. It helped the company build a top-notch board and recruit an experienced CFO who upgraded the company's financial systems and reporting to public market standards, further assisting the company in its IPO path. In January 2005, optionsXpress (Nasdaq: OXPS) completed a successful public offering.

There's no set timetable for seeking out private equity. Some companies operate perfectly successfully on their own for decades; others like Facebook, seek an infusion of capital earlier in their life cycle. Regardless of the exact timing, most successful entrepreneurs and management teams do eventually reach a stage where exponential growth is possible, and where they want to reap the financial rewards associated with the company they've built. When your company comes to this crossroads, you, like many other successful entrepreneurs, may wish to consider taking on a private equity partner.

Canada doesn’t have an innovation gap, but a commercialization gap

Davos gave Stephen Harper the opportunity to discuss the issues about how to allocate capital (tax payer money) to strengthen Canada for all of our futures. Quite the job and we can see how hard it is for government experts to be Venture Capitalists (Solyndra is one boondoggle costing the US tax payers a crazy half a billion dollars. If only Canada had a government fund that size) or even more staid private equity investors up at the RIM size of business.
It ain't easy. Business grows and then declines. Canada and America have their 100 year old companies that have survived, along with ones that the government has helped during struggling times. The problems come if the government takes over the business, just look to the UK in the 70s as their well meaning government meddling destroyed many a British pearl - Rover, Rolls Royce, etc.
Barry McKenna has a great article in the Globe and Mail about being a top politician and debating how to boost business growth in the country. Barry's opening sentence is a beauty:

Stephen Harper’s Davos manifesto is the Throne Speech he never delivered at home.

Better late than never. Best to know what’s coming. It’s now clear that innovation – or more precisely, the dearth of it – has rocketed to the top of the Harper government’s agenda. The Prime Minister is not happy about the return the country is getting on the roughly $7-billion a year Ottawa pours into research and development. “We believe that Canada’s less than optimal results for those investments is a significant problem for our country,” Mr. Harper said last week at the World Economic Forum in Davos, Switzerland.

He vowed to act “soon” on the recommendations of an October task force report chaired by Tom Jenkins, chairman of software maker Open Text Corp. The report’s central finding is that Canadian companies are investing less in R&D than they did nearly a decade ago, falling worryingly behind foreign rivals in spite of one of the most generous tax regimes in the world.

Mr. Jenkins’ main prescription – revamping the $3.5-billion-a-year Scientific Research and Experimental Development program – is now apparently also Mr. Harper’s plan. And the next budget, likely coming in late February, will no doubt signal big changes.

Mr. Jenkins argues the SR&ED tax credit should be simpler and less generous, diverting the savings to more focused funding of business innovation. Among suggested changes: limit the credit to labour costs and reduce the generous refundable credits available for smaller Canadian-owned companies.

Nearly 25,000 companies across Canada use the tax break, from the majors to tiny startups, covering virtually every industry in the country. But a recent Globe and Mail investigation found widespread abuse, including bogus claims and oversized consultant fees paid from credits.

And a report by federal Taxpayers’ Ombudsman Paul Dubé to be released as early as this week is expected to expose a litany of complaints from users about how the Canada Revenue Agency runs the program, including confusing and inconsistent decisions.

Mr. Jenkins would put innovation spending under the control of one federal minister and one agency, shifting the balance from tax breaks to direct funding, putting more money into “late-stage” venture capital and better use of government purchase to spur home-grown innovation.

These are sensible suggestions.

In spite of all the money Ottawa spends, there are large and significant breaks in the financing chain needed to take great ideas from the lab to factory floors, and global markets. Shrinking the $7-billion envelope, including the SR&ED, won’t produce more of what Mr. Harper wants. It could produce less. And if the money is going to be diverted from SR&ED, to where? Should some industries or companies be favoured? The Harper government isn’t saying yet.

Part of the problem is a chronic misallocation of capital – too much going to some sectors, such as housing, and not enough to the country’s innovators. Canadian business leaders say high risk loans and venture capital for startups and entrepreneurs is severely lacking in Canada, and that impairs companies’ commitment to innovation, according to a report being released Monday by the Conference Board of Canada. “There is an urgent need to identify solutions to the weakness in Canada’s capital markets for innovation,” concludes the report, From Perception to Performance.

The Canadian Advanced Technology Alliance, which speaks for the high tech industry, has been making the case to Ottawa that Canada doesn’t have an innovation gap, but a commercialization gap. “Too often our businesses are not effectively growing their firms into international successes. Too often, the full rewards of our innovators are leveraged offshore,” CATA senior vice-president Russ Roberts lamented in a recent update to members.

The biotech industry, meanwhile, is pushing the idea of flow-through shares – now used by resource companies – to help companies reach the stage of commercialization when they have high capital needs but few revenues.

The same model has helped turn Canadian resource companies into global leaders by encouraging startups to go public and tap investors willing to take big risks in return for tax breaks, argued Rick Sutin, a partner and corporate finance specialist at Norton Rose in Toronto. So why not technology-focused companies? (Flow-through shares allow companies to transfer tax deductions to investors, who can then use them to lower their personal or corporate tax.) The idea might not cost taxpayers anything, Mr. Sutin said. There’s a limited pool of non risk-averse investors, and they would simply shift from mining and oil to tech.

Canadians have a lot to say about how to steer more capital to innovation.

Odd, then, that Mr. Harper would choose the Swiss Alps to launch such a crucial debate.

The best private equity funds are skeptics

"People will generally accept facts as truth only if the facts agree with what they already believe." 

Andy Rooney said these wise words and with his long history in the media, he would know.
Mistakes happen in private equity when the buy side--the fund managers-- fall in love with what they want to see.  Good funds want to critically assess the financial numbers long before meeting the personalities in order to make logical decisions. Once the fund meets the owners, their decision is 50% made. Now to see if they can get along as partners for the next few years.
Before you approach a private equity fund, ask, "Do the numbers fit with what you are selling as your business story?"
If not, get an exempt market dealer to help you develop your case and financial story. If you have revenues, debt is not the issue, you will be of interest to some investor.

Andrew Bell's big question on BNN The Pitch

Do you notice on the BNN hit TV show, The Pitch, Andrew Bell often asks the private equity panel this question: “How do you decide which entrepreneur gets the thumbs up?”

Andrew is asking for the secret recipe that gets one owner the investment but another seemingly good business owner gets rejected. Invariably, the private equity experts will say it is the people.

What is it about the people?

Well, they have to be passionate.

Yet many passionate people do not attract financing. What is the issue?

It really does come down to how open the person is to critical probing about their business. Do they answer questions directly or fudge? Do they listen to ideas by the private equity experts or do they dismiss, or even worse, ignore concerns?

When private equity says they invest primarily in the people, they mean they invest in people willing to move over and share the steering wheel.

Should I hire a broker or investment banker to help me sell my company?

An important question for an owner wanting to sell their business is, "Should I hire a broker or investment banker to help me sell my company?

The answer to this question is “maybe.”

The fees charged by intermediaries are significant. However, there are scenarios when qualified intermediaries can add significant value far in excess of their fees.

For example, if your company has performed well for the past two to three years, you want to sell most or all of it, there are a large number of potential buyers and you have no idea who the right buyer will be, a sale process run by an intermediary potentially can generate a much higher value. Another scenario is where the intermediary has particular expertise and experience in your industry, and there is “story” required as part of your sale presentation. If there is significant risk to your business if the word leaks that you are selling, you are likely better off working with a smaller exempt market dealer than a transactional lawyer.

If you want to save on lawyers’ fees, a good exempt market dealer will make sure the bulk of the work is done before calling in expensive lawyers.

There are many scenarios where an intermediary will not add value. For example, if you know the one or two likely best buyers, then you should be able to maximize value with the assistance of an experienced transactional lawyer (which you need regardless).

Private Equity likes to use intermediaries, exempt market dealers, when selling their own portfolio companies.

Often it’s a good idea to seek the advice of your accountant when making this decision. If you decide that you need an intermediary, please do not base your decision on the firm name. Be sure that the individuals that will be representing your company (often not the senior partner that comes in for the dog and pony show) have the talent, experience, time and drive to get your deal done. 

Speak to the local ExemptMarket Dealer Association in your geographic area.

Jacoline Loewen is a Director of Loewen & Partners Inc., an Exempt Market Dealer, specializing in finance for owner operators and family businesses, specifically acquisitions, restructurings, sales, successions, strategy and private equity financing.

Jacoline began her career with Granduc Mines, Northern BC, and then Deloitte in their strategy unit. She developed a strategic planning model and published it in a book called "The Power of Strategy”. She also wrote "Business e-Volution" and “Money Magnet: How to Attract Investors to Your Business” (Wiley), which has been used by Ivey as a text book.

She is a Director on the Board of the Exempt Market Dealers Association (EMDA) responsible for brand and communications. She is on the advisory board of DCL International, Bilingo China and Flint Business Acceleration. She has been a Director for other Boards such as the Strategic Leadership Forum.

She is a regular panellist on BNN: The Pitch, a contributor to the Globe & Mail and National Post, serves as a judge for the UBC and the Richard Ivey School of Business’ Business Plan Competitions and is a guest lecturer at Ivey and Rotman Universities. Jacoline holds an arts degree in Industrial Relations from McGill University and a MBA from the University of the Witwatersrand.  Her MBA thesis was selected by Cambridge University and published by Cambridge’s Engineering faculty. 

Capital gains key component to Romney’s tax strategy

Different types of taxes seem too difficult for Americans to understand. With our sales tax HST, Canadians may understand the distinctions.

I do find it interesting which media sources like to just give the percentage and no elaboration on whether it is income tax or capital gains tax. The charity donations are also worth comment.

Here is a Palm Beach article on the topic.

Capital gains key component to Romney’s tax strategy

Tony Clement - Canada's best years are ahead of us

The best years are ahead of Canada. These positive words were part of Tony Clement's speech yesterday at The Empire Club, Toronto, just yesterday.
Clement has applied government resources towards helping business in a consistent and positive manner; this is noted and appreciated. Here is an excerpt from his speech well worth the read.:

Speech by Tony Clement, President of the Treasury Board of Canada, to the Empire Club of Canada

Thursday, January 26, 2012

Toronto, Ontario

A leading American historian and senior advisor to former U.S. secretary of state Condoleezza Rice has finally admitted the truth—Canada won the War of 1812.^[1]

The year after that struggle came to a close, another Canadian hero was born—the great architect and visionary of the Canadian state, Sir John A. MacDonald.

"We are a great country," he said, "and we shall become one of the greatest in the universe if we preserve it; we shall sink into insignificance and adversity if we suffer it to be broken."^[2]

Sir John A. saw clearly the road ahead. And he formed this country with the values of the Empire in mind—freedom, peace, justice and the equality of people.

Over the years, those values have asserted themselves in Canadians in times of crisis.

We see them in our sacrifices at Vimy, Ypres and Paschendale, in Normandy, Korea and Afghanistan.

And we see them in our compassion and aid for the victims of earthquakes, tsunamis and disasters in foreign lands.

Canada has come a long way in 200 years. We have grown and evolved into the one of the most successful countries in the world.

When British Prime Minister David Cameron visited Canada last September, he acknowledged Canada’s leadership at the start of this new century.

In a speech to Parliament, he suggested Canada had everything it needed to succeed, and passed the torch.

He noted our leadership in two areas vital to success in the 21st century—innovation and education.

"From Blackberry to Canadarm," he said, "yours is a home of innovation and technology."

He also congratulated Canada on its diversity, saying the way we had “integrated people from many different backgrounds into a mature democracy is a model from which we can all learn.”

And the British Prime Minister is not the only one who believes in Canada these days.

Our economic leadership during the global economic crisis of 2008 has been recognized around the world.

Last year, both the International Monetary Fund (IMF) and Organisation for EconomicCo-operation and Development (OECD) forecasted we would have among the strongest economic growth in the G-7 in 2011, and again this year.

And for the fourth year in a row, the World Economic Forum rated the Canada’s banking system as the world’s soundest.

In addition, three credit rating agencies—Moody’s, Fitch and Standard & Poor’s—have reaffirmed their top investment-grade ratings for Canada.

And Forbes magazine recently ranked Canada the world’s best place to do business.^[3]

By any standard, Canada has weathered global economic crisis and ongoing financial uncertainty well, particularly when compared to most other developed nations.

Since introducing Canada’s Economic Action Plan in response to the economic downturn of 2008, we have recovered more than all of the output and all of the jobs lost during the recession.

And almost 600,000 more Canadians are working today than when the recession ended, resulting in the strongest rate of employment growth during the recovery by far amongG-7 countries.

And real GDP is now significantly above pre-recession levels—the best performance in theG-7, according to the IMF and OECD.

But our country is not out of the woods yet.

As we emerge from the worst recession since the Great Depression, we know Canadian families are worried about their jobs and their financial security.

While we understand that the government’s role is to create the conditions in which Canadians will thrive, we also believe that it is the ingenuity, the aspirations and the determination of Canadians that will be the driving force behind economic growth and jobs.

So, in the time I have remaining, I would like to tell you about the things we are doing to help make that happen.

I’ll mention just three.

The first is reducing the deficit and balancing the budget over the medium term.

The second is freeing businesses to grow by cutting red tape that can stifle productivity.

And the third is creating opportunity through our move to Open Government.

REDUCING THE DEFICIT

Throughout our history, Canadians and their government have learned valuable lessons from economic crises.

Today, Canadians understand the necessity of reducing the deficit and returning to fiscal balance in the medium term, finding savings within government spending, and taking targeted actions when necessary to support the recovery.

This is our balanced approach that will boost our efforts to achieve a sustainable and prosperous recovery, and preserve our Canadian economic advantage now and in the future.

Canadians understand this. And in last May’s federal election, we received a strong mandate to eliminate the deficit, keep taxes low and continue creating jobs for Canadians.

In the Budget that followed, we announced our plan to return to a balanced budget while keeping taxes low.

Building on previous efforts to reduce government spending, we launched our deficit-reduction initiative.

This review is about more than finding savings. It is about modernizing government.

It’s about retooling for the future—and providing the right programs and services at the right cost to support Canadians’ success in the years ahead.

FREEING BUSINESS TO SUCCEED

But as a country, we need to come at the challenge of creating economic growth and jobs in Canada from several different angles.

That’s why, in addition to getting our fiscal house in order, we are making sure the people, businesses and communities in Canada have the tools they need to succeed.

That brings me to our second key initiative—cutting government red tape to free businesses to grow.

We believe red tape impedes economic productivity by taking up precious time and resources, and curbs the entrepreneurial spirit.

Cutting red tape helps business focus on what they do best: sustain the economic recovery by creating jobs and generating wealth.

It also spurs innovation by leaving a clear regulatory picture for entrepreneurs, and a marketplace that is easier to understand.

Prime Minister Harper set out to realize all these benefits when he set up the Red Tape Reduction Commission last winter.

This Commission issued its final report earlier this month.

And as a sign of our commitment, we are taking action to implement a “One-for-One” Rule to control administrative burden on business.

This work is just one example of how we are helping businesses grow and invest for the future.

OPEN GOVERNMENT

The third initiative I’d like to mention is Open Government.

Open Government allows Canadians to not only learn about, and participate in government, but also to create new products using government data and information.

Last spring we launched this initiative through three main streams.

Open Data, which is about offering Canadians Government data in a more useful format to reuse in innovative ways.

Open Information, which is about proactively releasing information, including information on government activities, to Canadians on an ongoing basis.

And Open Dialogue, which is about giving Canadians a stronger say in Government policies and priorities, and using Web 2.0 technologies to expand citizen engagement with government.

By tapping into the ideas and talents of our citizens, we can be more responsive to meeting their needs.

In fact, earlier this winter, we held an Open Government on-line consultation, and Canadians gave us some great suggestions.

We also held the first-ever, Government of Canada tweet chat to generate discussion about Open Government.

Open Government can also strengthen transparency and accountability in government, and a strong democracy is essential to a nation’s economic success. I’m a true believer in this.

CONCLUSION

Let me conclude my remarks today with one final observation about our need for economic growth and jobs in these challenging times.

Over the years, Canadians have learned that chronic deficits are a mortgage on our future. Chronic deficits create higher taxes, less opportunity and less freedom for our children and our grandchildren.

Ultimately, they squander the opportunities that have been given us.

That’s why we must stick with our low-tax plan for jobs and growth—a plan that has worked and served Canadians well.

I believe Canadians can overcome any challenge. We always have—as long as we never waste our treasure or lose faith in ourselves.

As Winston Churchill said when he addressed our Parliament during the bleakest days of the Second World War, “we have not journeyed all this way across the mountains, across the Prairies, across the centuries, because we're made of sugar candy.”

Freedom, hard work and sacrifice have got us where we are today, and leadership, fiscal prudence and helping Canadians achieve their dreams will take care of tomorrow.

It’s not always easy, but as history shows, it is doable.

And the benefits for us and for future generations will be immeasurable.

Thank you.

Angry Birds Attack the Leadership of RIM

RIM is getting whacked for its leadership reshuffle. The market remains unimpressed.
Running even a profitable business is no guarantee that last year's performance will be repeated. Customers need to be convinced again. Retailers need to be encouraged. employees need to be motivated. Alliances need to be maintained.
Margaret Wente writes harshly about the RIM leadership and gives a scathing indictment to the two billionaires. She probably has a point and someone should have been telling these two to focus on their business and check out apps.

Back in 2007, Mike Lazaridis and Jim Balsillie were like gods. Everyone agreed the Research in Motion CEOs were the two smartest guys in Canada, and possibly the entire world. Anyone who was a someone owned a BlackBerry. A BlackBerry meant you were a player. Even Barack Obama had one! But even if you didn’t, you cheered for RIM because finally we could forget the hideous national embarrassment of Nortel and hold our heads up in the world. Thanks to them, our whole country was a player!

When Roman emperors paraded through the streets in triumph, they used to hire a slave to whisper in their ear, “Remember, you are just a man.” Maybe Mike and Jim should’ve tried that.

When Steve Jobs unveiled the first iPhone in 2007, Mike Lazaridis trashed it. He told his employees nobody wanted to have a personal computer on their phone. Back then, RIM commanded nearly half the U.S. smartphone market. Today, it has more like 10 per cent. Not only do people like to have computers on their phones, they also like to waste millions of hours playing Angry Birds. Who knew?

The worse things got, the more arrogant they became. Last spring Mr. Lazaridis walked out of a BBC interview because he didn’t like the question. “You implied that we have a security problem; we don’t have a security problem,” he said. “We’ve just been singled out because we’re so successful around the world. It’s an iconic product, used by business – it’s used by leaders, it’s used by celebrities, it’s used by consumers, it’s used by teenagers – we were just singled out.”

Then there was all that money. Funny things happen to people who get stupendously rich. Instead of dreaming night and day about the next great product, they start to dream about building the most spectacular mansion in the entire country, or buying a National Hockey League team. Mr. Lazaridis’s construction project (a 24,000-square-foot “cottage” on the shores of Lake Huron) has been going on for years. Mr. Balsillie spent three years haggling for the Pittsburgh Penguins, the Nashville Predators and the Phoenix Coyotes.

Meanwhile, Mr. Jobs was dreaming up hit products that people would line up overnight to buy. As Toronto money manager Tom Caldwell said, “Once the CEO is building the maxi-yacht or the great mansion or trying to buy hockey teams, he is not paying attention to his business, in my mind.”

Mr. Jobs despised tech billionaires who acquired mansions and fancy toys. “I’m not going to let money ruin my life,” he told his biographer. He had no taste for “that nutso lavish lifestyle that so many people do when they get rich.” The trouble is that people who get rich get fat and soft. They’re not hungry any more.

Mr. Jobs knew that if you stop swimming fast enough, you die. He was a screaming perfectionist who cursed out his staff when they moved too slowly, or when some product detail wasn’t good enough. Meanwhile, last year, when RIM released the PlayBook, which was supposed to compete with Apple’s iPad, it was a miserable flop: It couldn’t do e-mail. It had no Skype, no GPS, no Angry Birds. As a New York Times tech reviewer wrote incredulously, “There’s no app for that.” It wouldn’t even fit into the breast pocket of a jacket.

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Where was RIM's Board of Directors?

RIM leadership may have got arrogant but they also gave a great deal to the Canadian entrepreneur scene. Jim Balsillie was generous enough to give me an interview in 1999 for my book, e-Volution: How to use the Internet to grow your business. He has done his strategy very well - something I see rarely done by Canadian owner/founders.
All this talk we are hearing from the USA about how "private equity destroys jobs" and "capitalism is evil" completely by passes the fact that humans create businesses and destroy businesses. The best businesses rarely go beyond a founder's life cycle and both founders of RIM are past their peak entrepreneurial risk taking days.
There is your problem.
Where were the Board Director experts to point out this fact? As I have hammered in my blog, advisers and board directors appointed by the owners will never say what needs to be said. Have them appointed by an outsider and you will have a very different result.

Lessons from the recession for business owners

When I worked at a strategist for a bank and wrote the speeches for the CEO, who was also the founder, he would confuse me with his insistence on always bringing up complacency. As a young MBA with my career before me, I could not see wasting time on such a mundane topic which seemed more of a downer and something your mother would say. 

As I look back, I realize he was wise with his observation that success brings complacency and complacency brings failure.

Lesson from the recession: Run your company during boom times as if times were lean.

We have heard many leaders bemoaning that their companies would be far more successful if they had run them during the boom period as they are running them now. Without question, success can bring complacency. However, the best leaders we know resist this tendency. Their companies’ cultures foster continuous improvement and cost-reduction regardless of great performance.

Similarly, the advice we often give entrepreneurial and family business owners is, “Run your company as if you are preparing to sell it in three years.” This means eliminating under performing employees (which can be difficult, even when done with great care and consideration, but is critical), and building cost-cutting and improvement initiatives. These efforts will grow EBITDA and result in a more successful, resilient and valuable company.

As for my old boss, his bank is still in business, having survived the derivatives madness, and has achieved its vision to be global. 

Complacency is indeed the key word to put in all your leadership speeches.

Barry McKenna on how Canada can be competitive

How to get the Canadian economy to grow is on everyone's priority list. There were 65 recommendations made by Red Wilson's panel set up to make recommendations.
My time in private equity has shown me that "Growth and innovation" is an attitude.
Canadian business owners have managed to tuck in behind the American economy and grab a good enough market share, but not build its own global winning companies.
Here is an excellent article by Barry McKenna in the Globe and Mail discussing the problem on business innovation further:

Putting Canada on a more competitive footing will likely mean diversifying trade links beyond the U.S., converting corporate profits into world-beating innovation and pursuing big infrastructure projects. It also means welcoming more foreign investment from places such as China and the Middle East and deregulating a host of stodgy pre-Internet industries, such as telecommunications, cable and transportation.Such a campaign has a long way to go – as is highlighted by the comments of foreign investors like Naguib Sawiris, the Egyptian telecommunications tycoon. It was his money, controversially, that helped fund the startup of Wind Mobile in this country. In an interview with The Globe and Mail this week, he blamed Ottawa’s telecommunications policy for making it harder for new wireless companies to establish themselves. “Anybody who asks me, I tell him look, we are the stupid investors that poured a billion dollars into Canada here and created 1,000 new jobs, please don’t do this mistake. Don’t come here,” Mr. Sawiris said. He also drew a direct link between the long-standing federal policy of limiting foreign investment and the lack of global presence of Canada’s major telcos.

“If they were that good, why are they just in Canada here? Why don’t we have Rogers in the U.K. or Germany? Why is Vodafone everywhere? Why is France Télécom everywhere? And this national champion Rogers is only in Canada? Because only in Canada it gets pampered and it can kill its competitors.”

A push for reform

In 2008, an expert panel set up by the Harper government to examine Canada’s competitiveness recommended a major shift in Ottawa’s approach to telecom, in favour of opening it up to far more foreign investment. Three and half years later, the chairman of that panel, Red Wilson, looks back on his effort with a mixture of pride and regret. Pride because his panel’s findings are just as relevant today as they were then. But it’s tinged with disappointment because most of the 65 recommendations, including the one on foreign ownership of telecom companies, remain on the shelf even as the country’s innovation and productivity performance sputters.

Can I sell my company even if it is not profitable?

The question of the week is one asked by many of my clients:


Can I sell my company even if I have not made any profit the last couple of years?

The answer I give is a whole-hearted, "Yes!" 

You can always sell your company. The correct question though is: Will you receive a value sufficient to satisfy your personal objectives? 

Many of my clients have become used to withdrawing capital from the company and once profits erode, become nervous and think that they need to sell before profits decline further. This is where valuation and sale of your business by a professional EMD or corporate finance expert will make a significant difference. 

Although your historical EBITDA certainly is a factor, the value will depend largely on what EBITDA you can prove for the future. If, for example, you have landed large new contracts, you likely will be able to get value for most of the EBITDA that those contracts will generate over the years to come. 

I suppose the tougher question here is: Why are you selling your company now? If you have no choice, then you should prepare the best you can, potentially hire a broker  or Exempt Market Dealer to help you tell the story, and get the best value possible. 

If you don’t have to sell now and you think the future looks better, you likely will get more value if you wait. Taking on 30% sale to Private Equity would be your best option. They will fill up the tank again, revitalize your strategy and get you looking at what options you have - most often, hiring a CEO and encouraging you to do the work you love to do.

Jacoline Loewen is a Director of Loewen & Partners Inc., an Exempt Market Dealer, specializing in finance for owner operators and family businesses, specifically acquisitions, restructurings, sales, successions, strategy and private equity financing.

Jacoline began her career with Granduc Mines, Northern BC, and then Deloitte in their strategy unit. She developed a strategic planning model and published it in a book called "The Power of Strategy”. She also wrote "Business e-Volution" and “Money Magnet: How to Attract Investors to Your Business” (Wiley), which has been used by Ivey as a text book.

She is a Director on the Board of the Exempt Market Dealers Association (EMDA) responsible for brand and communications. She is on the advisory board of DCL International, Bilingo China and Flint Business Acceleration. She has been a Director for other Boards such as the Strategic Leadership Forum.

She is a regular panellist on BNN: The Pitch, a contributor to the Globe & Mail and National Post, serves as a judge for the UBC and the Richard Ivey School of Business’ Business Plan Competitions and is a guest lecturer at Ivey and Rotman Universities. Jacoline holds an arts degree in Industrial Relations from McGill University and a MBA from the University of the Witwatersrand.  Her MBA thesis was selected by Cambridge University and published by Cambridge’s Engineering faculty. 

Jacoline Loewen on 3 Rules for every Start Up - BNN The Pitch

Putting more into production of the The Pitch by pre-taping, rather than doing it live. We start today.
Up first to pitch are two start-ups that look promising for the financial returns and interesting, compelling products that they are already selling.
I will tell you their names later this week and give you a heads up on how they did with the private equity panel on BNN.
I thought I would add the 3 rules I liked the most from a great list by Mark Evens in The Globe and Mail on 10 rules for start ups. Here's Mark:

8. Understand that raising money is time-consuming and disruptive

From the outside looking in, raising venture capital looks sexy and exciting. The reality is that it involves a lot of grunt work, energy, numerous meetings and lots of patience to convince investors to commit. It also takes entrepreneurs away from running the business.

9. Recognize that once you raise money, it and your investors need to be managed

When investors decide to give startups money, they expect progress, traction and regular updates on what is happening. It’s not like they hand over the cash and then go away while the entrepreneur gets to do what he or she wants. Instead, startups need to continually manage their investors, which takes time and effort.

10. Enjoy the work because startups can be a 7/24 activity

Startups are not a 9-to-5 job that lets you go home at the end of the day without any work distractions. Startups are beasts that can be consuming so you had better enjoy the journey.