Session 1: Introduction
First, I want to apologize to our online participants for the delay in getting the session streaming. You didn’t miss anything that you can’t find in the Participant’s Handbook.
What a wonderful way to kick off the 7th cycle of the Chinook Entrepreneur Challenge! We had great turnout and heard from an enthusiastic, knowledgeable, passionate speaker.
Entrepreneur Bruce Thurston of Management Resource Services took the podium and energized the crew with stories about other entrepreneurs in the region and his own experiences, while relating everything into a context that participants can benefit from.
CASH IS KING!
That was the first thing we learned. He explained that entrepreneurs work lots of hours and must always know where the money is coming from.
Bruce shared some examples of evaluating an opportunity. For example, a 50-year old man wants to start a drywalling company. He has bad knees and bad hearing – perhaps this isn’t the opportunity for him.
However, he reminded us of two local women who saw an episode of Oprah about lingerie as a business. They saw that the model worked in other markets and soon they were on their way.
He recommended you do the homework. Isn’t it remarkable that a new business will spend thousands on equipment and getting their business started, but won’t buy a $22 book that gives in-depth information about a particular industry.
There are lots of reasons to become an entrepreneur, but among the more popular is because people don’t want to work for their employer. If you have a bad employer and choose to leave, 98% of the time, you’re better off....but be careful 70-80% of businesses fail within the first five years.
To put things in perspective of the local market, think of Lethbridge/Medicine Hat as a big Bow Island or Hanna, not a little Calgary. It’s all about the way you look at a community.
Ideas are all over, you can take a model that works somewhere else and use it – why not use something that’s already working and improve it!! Think of grain bins. Someone saw cone-bottomed bins as a real opportunity. An idea brought from Europe to Manitoba.
“STEAL FROM THE BEST, they’re what is known as pioneers, sometimes pioneers die young,” he said.
Again, Bruce mentioned that cash is king and you need to always be watching cash flow. A lot of suppliers may not give you credit. He warned about using a charge card to by supplies – do you really want to be charged 26% interest!! That’s the kind of hole that is VERY difficult to get out of and rarely calculated into expenses. For example, roofing suppliers get burned so often, they don’t provide credit.
Be cautious also of regulations and contracts. Another entrepreneur he consulted signed a no-contest agreement outlining that she couldn’t work in the same field. She took the local self-employement course and found another idea that was untouched. Will this work in southern Alberta? Bruce asked her how much money she wanted to make and what her expenses were. After all the math was done, she’d need to sell 9000 units. Is the market large enough for what she was offering? It would be a struggle but she was very optimistic and worked hard. This individual was the type of person with natural sales ability and she grew her business based on a few services.
Bruce pointed out that you need a strong management team. That doesn’t have to mean a bunch of people, it can be just yourself even but what are you going to do?
Look at Spitz for example. They started when bank loans were 22% interest. Tom, the owner, knew he good keep farming or he could go bigger. He operated the farm and business, while his wife managed the books. Their skills complimented eachother which has attributed to their success.
You need to understand what the customer wants. If you’re a marketing company hired to promote a company, invest in that company. Understand what their day-to-day is all about, their struggles, their triumphs. Find them, google them, observe, visually go out and see the facilities.
You can’t just say “we’re going to be better that the competition”. Better is in the eye of the customer. What is it the customer wants??
Alberta has the good fortune to possess the three F’s of opportunity: fuel, food and fertilizer.
Many international business people will tell you that if Canada didn’t have the resources they wouldn’t be doing business.
Thinking of a restaurant? Did you know that restaurants only have a 4-6% profit before tax?? There are gains in the industry but they come after 30 years of hard work! Can’t be sleeping in, gotta have self-discipline!
We have freedom in Canada, opportunity – look at the recent turmoil in Egypt!
You just need to find out if people really want it. Then, how much are they willing to pay?
Bruce also advised that you must know the governments restrictions – check bylaws, because they change!
Use honey in your relationships, don’t use vinegars. You have rights, but it’s all about your approach.
Use honey, slows down the wheels.
Take Round Street Cafe for example. The owner was a teacher, helps disadvantaged and disabled.Now, all the schools use her.
At first, she would spend hours prepping muffins then sell them for $.50, fresh at 7am. Why not charge$1.50, Tim Horton’s down the road does!
Her business is succesfull today because she’s stuck to core values, bought local products, makes money on baking and coffee, knows where your cash is.
What are you going to make money on? Show that in your business plan!
Can you make a course correction? As an employer, you have all the risk.
What are the risks? Don’t use that word, there are only opportunities!
Reflect in the mirror, don’t point fingers, when you point one, three pointing back
Key to success is being able to sell your service/product in 30 seconds, our world is too fast, deliver your business in a soundbite, listener needs to understand what you’re selling.
Other things he pointed out were:
- watch barriers for entry. To be a roofer, you don’t need a lot of capital, especially a big shiny truck. All of that is for show!
- Also, monitor saturation, does your town need another pizza shop?
- Do you have enough insurance?
- Don’t forget to get paid, do not be afraid to ask for cash.
- Understand cashflow if you’re not getting paid for 90 days
- Profits are for three things: pay down debt, buy equipment, pay shareholder(s)
- Be brutally honest, use someone who’s always questioned you, test the process, ask potential customers what they will PAY.
- What is market value? Don’t undercut, recognize the product and what you get paid for
- Get excited about the idea.
Then we started talking about research.
Research Primary “looking into things”, don’t get hung up on research – talk to people, do some interviews, do some observations.
Secondary is more formal
Contact your local Community Futures about the Small Business Solver, it’s only $20 and an excellent, customized resource!!
Find out who drives decisions? Spending decisions? (Bruce said that in his house, it’s his daughters! lol)
A lot of people come from calgary and try something that worked there, will it work there?
Use demographics to determine lifestayles factors and customers needs. What can you do to solve their problem?
HERE IS A VERY USEFUL LINK!!
Estimate operating costs and understand them. Appeal to those who can’t provide their own service.
Look at chocolate. Sales skyrocketted when economy went down, people will spend on small pleasure. Plus a local chocolatier offers samples – makes all the difference!
Starbucks knows their demographics – mothers between certain hours. They monitor their sales and make their profit is in the expansion of milk!
What are you going to make your money on?
What’ the margin? Sales minus costs?
What can you sell it for, but is it enough?
Consider your implementation plan – if you’re in retail, don’t miss Christmas!
You can borrow from your family but they only love you so much. An area entrepreneur had fast growth but sank owing half million to family. Tore the family apart!
You’re the last one to get paid in the process, cash goes to expenses.
A business plan is like a roadmap!
Get that executive summary just right, otherwise you become part of a pile in a corner.
Then we had a few questions:
Demographics – what would you look for? Sources?
Participants have eight weeks of training to build and another month after, the more information you can collect and include the better and stronger your plan. Don’t use just one article that tells you what you want to hear.
Check out other landscapers, go to shows, what are you going to do when its’ winter? What’s your network? Residential or commercial? There are estimate sheets out there.
Who will buy? People, lifestyle patterns.
There are differences between landscaping and cutting lawns, how do you fit in the market?
Does service or product determine business plan style?
Product is tangible that someone buys and take away, services are something you provide.
Being an entrepreneur, you learn about other business
VERY IMPORTANT!! Don’t bad mouth other businesses - NEVER!!!
Try “they provide this, what I do is this...”
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