Green Light for Organics Part I

Topping the Pizza

Matthew Von Teichman's wife was expecting, and in a move to introduce a more healthy lifestyle she decided to buy an organic pizza for their supper. They were both largely unimpressed. But this spurred Mr. Teichman, the experienced entrepreneur, onto a new venture to offer people a good range of more than palatable organic food products. Life Choices Natural Foods, which now has expanded across Canada and the U.S., was born.

Now sporting nine product lines that are certified organic, featuring breaded chicken, mac and cheese and the newest one, multigrain perogies; their first product offer was indeed pizza.

Von Teichman notes the organic industry's explosive sales growth rate of 20% recently, compared to that of most non-organic products that only goes up by 1 or 2% per year. This can be attributed to consumers' greater awareness of health-related issues as well as improved access to research on organic science via the internet. Von Teichman sees the interest as being due to people's demand for nutritious foods and their demanding to avoid dangerous substances like chemical residues. The main selling points of organic products, including food, health-care products and vitamins are that they are generally not genetically modified and they don't contain antibiotics, herbicides, hormones, insecticides or pesticides.

Is Organic Truly Better?

Apparently, there is no definitive proof of organic food being more nutritious or healthier than its non-organic counterpart. According to Professor Rena Mendelson of Ryerson University who is also chair of the Canadian Council on Food and Nutrition, a variety of farming conditions makes it difficult to pinpoint the nutritional levels or their sources. But she feels that there is a difference in terms of the impact each type of food has on the environment. A reduction in pesticides would make all farming more organic and put those foods ahead of nonorganic produce in that regard.


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Canadian economy not to be outdone – Part II

At the G8 summit, both the U.S. President and British Prime Minister, among others called for additional economic stimuli on a global scale, despite the US$2 trillion already expended as they feel it has yet to push demand high enough. On the contrary, Canadian PM Stephen Harper urged other leaders to focus on ensuring proper delivery of those stimuli already promised. "That's been our focus in Canada and I would encourage the same priority elsewhere," he told the press.

Canada's stimulus package consists of $46 billion over 2 years, poised for creating more jobs and igniting consumer demand. The amount is expected to increase to almost $80 billion once the provincial and territorial aspects kick in. PM Harper claims 80% of the planned federal funds have already been committed. In addition, Bank of Canada cut its key lending rate from 4.5% in December 2007 to its present level of .25%

Analysts see the present Canadian stimulus package taking effect in the next few months and see no need for any new stimulus monies. There is always a lag from the announcement of the stimulus package until effects are seen from it, must like that of lowering interest rates, according to Craig Wright, chief economist at Royal Bank of Canada. "Staying the course is probably the prudent path right now," he says.

Stefane Marion, chief economist at National Bank Financial, agrees that we must wait for the money to start working in the economy. Canada's financial system in general is in better shape than those of most other G8 countries and did not have the same real estate collapse that they did. He also sees production rising this year as indicated by purchasing managers and other key factors.

Furthermore, the IMF advises countries to continue to support their economies in some way until the recovery takes hold (predicted next year); while they should also plan to reduce deficits in their budgets caused by spending to combat the recession.
Canada, along with the IMF in general also agreed to make emergency capital available for borrowing, for countries that may need it soon.

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Canadian economy not to be outdone – Part I

The International Monetary Fund, which released a report at the same time as the G8 summit convened, believes Canada is capable of the most improvement in her economy for 2009 and 2010 compared to almost all industrialized nations. Though some leaders at last week's G8 summit are pushing for more stimulus money, other economic experts don't think they will be necessary in Canada.

Despite expectations of a slight shrinking for the world's economy this year (1.4%), IMF has a positive outlook for the end of the recession in 2010, calling for 2.5% global economic growth next year, up more than .5% from their predictions last April.

Other industrialized countries' economies are expected to decrease by 3.8% this year, in comparison to Canada, only expected to drop by 2.3%. Only .8% growth is predicted for the US for 2010, half that of Canada's forecasted gain of 1.6%, which is only second in line to Japan's 1.7%. India and China, top consumers of Canadian raw materials are seen as leading in growth for 2010, set to increase by 6.5% and 8.5%.

Even though they feel that emergence from the recession will be on the slow side, "Financial conditions have improved more than expected, owing mainly to public intervention, and recent data suggest that the rate of decline in economic activity is moderating," the IMF commented.

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Small Business Outlook- The Worst Is Behind US

There was a time when small and medium sized enterprises (SMEs) had a problem with staffing, today it is with customers. Where are the customers? With sales down, SMEs are coming up with creative ways to draw in customers from bundling items for specials of the day, to discounting individual items. Even with the creativity, SMEs are hoping to make a profit.

The state of the economy has SMEs concerned about the year ahead. Consumer spending has weakened. A recent article in the Canadian Business magazine sites a recent poll on the SMEs business outlook for the near future. The poll conducted by the Canadian Federation of Independent Business (CFIB) listed the Business Barometer index for Alberta as 53.2 for May, meaning SMEs in Alberta were slightly more optimistic than pessimistic about the near future. The outlook for the future varied in other provinces with Newfoundland and Labrador having one of the highest Business Barometers at 64.4, Quebec (52.2), and Ontario at 59.9.

The SMEs in Quebec and Ontario are highly dependent upon manufacturing and US trade. British Columbia has been affected by the housing market in the US and the lumber sectors. Optimism amongst SMEs is well below the historical average, however Ted Mallet, the CFIB’s chief economist believes the worst times could be behind business owners, but there is uncertainty when the recovery will begin and how long it will take.

The recovery should likely start in 2012, if not earlier, for Newfoundland and Labrador with the announcement from the government that the Hebron offshore oil project is moving forth. Although operation will be several years down the road (2016- 2018) this announcement has provided a glimmer of hope for SMEs. The project is estimated to create 3500 jobs and to generate approximately$20 billion in royalties over 20 - 25 years. This is obviously good news for businesses in Newfoundland and Labrador, hopefully there will be a similar turn for the rest of the country.

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Profit from Businesses Likely to Grow in Hard Times

Even as demand for exports decreases and consumers spend less in this recession, there are several industries in the U.S. and Canada that are looking to be thriving.

Five sectors that did well in previous recessions, according to economics professor Jack Carr of University of Toronto are food and beverages, health and well-being, telecommunications, business consulting and business-process outsourcing. This time they are expected to do well again.

Cheap Food

Campbell's Soup's sales have done well in other difficult economic times as people look to save on comfort foods. And in 2008 McDonald's saw an increase in their sales figures at a time when other companies saw decreases. Their sales grew 8.2% in October 2008 from October 2007, and by 6.9% the previous year.

Companies that produce food would do well to sell more in the way of basic staple foods to supermarket chains and attempt selling to lower-end family establishments. During the recession, most people are less interested in experimental cooking or luxury-type foods, says marketing professor Alan Middleton at York University.

Health Food and Fitness

“Right now, I’d be looking to invest in anything that helps people have healthier, happier lifestyles,” says Arlene Dickinson, CEO of Calgary-based marketing agency Venture Communications and a resident investor on CBC-TV’s reality show Dragons’ Den. Though people might not be able to currently afford expensive gym memberships, they may have more time to focus on exercise and purchase less expensive equipment and workout clothes to use at home as well as healthy, inexpensive foods.

Must Stay Wired (and Wireless)

Solutions Research Group, based in Toronto, has determined that Canadians will not be willing to give up their cellphones or net access and will be the among the last things to go when cutting down on non-essentials in their personal budgets. The BlackBerry Bold and Apple iPhone look like they will continue to be top sellers, as well as their respective accessories.

IT and Consulting Support

Like we said in a previous post (See “Bank on Opportunities from Big Firms”), as big corporations cut nonessential staff they may look to outsource certain needs like IT support and other types of consulting. Firms that specialize in Web conferencing and other communications alternatives to travel are also poised to succeed in this economy. These and other types of business-service providers would do well to push their services as being available at a decent rate for temporary solutions to corporations that need them.


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Nonprofits: A Growth Sector in Canada: Part II

Database Management, Consultants, Staffing and Branding

Despite large operating budgets, the bigger Canadian charities don't invest so much into IT such as economical database or web-based CRM programs that they could use to help with volunteer management, according to Artez Interactive CEO Philip King. Though mom-and-pop businesses are being employed by a few charities, “Few sophisticated, modern businesses have turned their attention to the charitable sector,” he says.

According to CharityVillage.com, the top 1% of nonprofits in Canada that have large budgets and earn about 59% of all revenue have too many consultants as it is. And 42% of Canadian charities operate with $30,000 or less. Charity consultant Alex Gill points to mid-sized charities as having potential because they are looking for efficient ways to improve their operations.

One area these groups may be willing to invest in is consultants and staff for projects in areas such as finance, fundraising and HR; if there are quality professionals available for less money. These may be easier to find in the current economy.

Another area is branding. Even though some ad agencies will work pro-bono for nonprofits, some charities are willing to invest in paying an agency that specializes in their sector and can work within a limited budget to develop the organization's identity.

However, King cautions that it takes awhile to build up a trusting work relationship with many charities and those groups are not so free with spending money. On the other hand, “For smart, patient people, it’s a good business — and a rewarding business,” he says.


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Nonprofits: A Growth Sector in Canada: Part I

Digitizing, IT Solutions

Though we might not think of nonprofits being on the up and up, they actually are now. Statistics Canada claims that in 2007 the total for charitable donations has gone up by 33% in five years to $8.6 billion. Despite the recession, the factors that drive donations, such as the richest sector getting richer and the population's aging, continue to go in the same direction. Those at the top income levels can still afford to increase their giving and do so. The top Canadian donors are now in their 60s and the amount of people in that age range are expected to expand by 50% between 2006 and 2016. The general population is only predicted to increase by 8% over the same period.

However, most of the donations arrive in the old fashioned ways. Artez Interactive, a company specializing in online fundraising and technology estimates that only 3% of US$500 billion in donations were made online. “There are huge opportunities in helping charities move to digital systems,” says Artez CEO Philip King.

Another issue that came to the fore following the 2004 tsunami was that despite a large amount of donations, how can the funds be distributed quickly to those in need? British companies have begun working on this type of technology but North America has not yet made inroads. This could be a great opportunity for a company that can find better ways to get money out to the relevant organizations easily and with the proper security in place.

Stay tuned for Part II in this series.

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Bank on Opportunities from Big Firms

Advice for small companies from a highly successful entrepreneur who started from scratch

Jim Estill started EMJ Data Systems 30 years ago from the trunk of his car. After several other ventures EMJ reached the $350 million figure in sales and sold it 5 years ago to his current company, SYNNEX, which has earned $2 billion in revenue.

His myriad experience with businesses of different sizes informs his opinion that big companies' reactions to the recession can open up some possibilities for your small business. Here are some of these ideas:

Find a Newly Empty Niche

When big companies want to cut down on costs, they might decide to leave a type of business with a high cost structure that they believe can't earn enough in the current economy. But if you have low overhead, that type of business could work well for your small business.

But how do you find such a niche? Find the former customers and recently unemployed staff of a company who has done this. The customers might likely need a new supplier and the staff needs jobs. Or you could go to the larger company itself and they might want to give you a good deal on the sale of their related assets because they want to quit that line of business so badly.

Provide Outsourcing

As larger companies cut down on their in-house staff, they will realize they still need essential things done so they will hire an outside company to do those same jobs (like accounting, janitorial, etc).

Sometimes when managers are asked to downsize they will cut down on other parts of the budget and continue to spend on those areas needed. Might not be such a smart idea but they do it and it's something you can profit from.

Get the Best Minds on Your Side

It is now far easier than it was to hire the most qualified people. As those top people get laid off from bigger companies they would be willing to take a cut in their usual pay as well as do part-time and/or consulting work for a smaller company like you.

Undercut Them

Now many companies will want a lower-end alternative to supply their business services that they normally would pay more for. This could get you more accounts as the bigger companies try to cut costs.

Take Risks

There are some markets that the big companies would normally enter were we not in this recession but they are not willing to take the necessary risk to make any big or sudden changes in direction right now. You, as a smaller company can afford more risk when there is a lot less competition in new areas.

Make Deals

Since we are in a credit crunch, so to speak, many businesses are in need of cash but now you can barter for things that you would otherwise have to buy.

Now, if companies have surpluses you can take off their hands you can make a deal with them to get it cheaper or trade it for something you have that they want.

Jim Estill is CEO of SYNNEX Canada Ltd., a computer-equipment wholesaler based in Guelph, Ont. His popular CEO Blog: Time Leadership is at www.jimestill.com.


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Entrepreneurs optimistic despite recession and tight credit, BDC survey says

A recent poll conducted by the Business Development Bank of Canada found that small business owners are positive about their own future, more so than for the economy or their individual industries. Many find tight credit to be an issue for their companies though.

86% of entrepreneurs surveyed saw growth potential for their companies, but less predicted growth for their industries (75%) and only 60% saw the economy growing in the future. "Entrepreneurs see opportunities where others may see only difficulties," said Edmée Métivier, Executive Vice President of Financing and Consulting at BDC.

Tight credit the culprit

Those surveyed also found that their credit tightening was their biggest obstacle to growing their businesses (70%). The next biggest factor to blame was the recession at 65% of those polled, and fewer pointed to increased fuel costs and material (45% and 40% respectively).

Out of almost half of entrepreneurs polled who have attempted to get credit financing, 34% reported having received it and 40% said they were unsuccessful. The other 25% were still awaiting decisions. But 39% of all have dealt with tight credit as a factor.

In terms of the types of credit sought, the results showed the most wanted to operate a line of credit (70%), while 28% want term loans, 22% business credit cards and 18% commercial mortgages.

Positive for Growth

As far as general growth, 59% of entrepreneurs see the economy's stability and strength as the number one factor that would lead to it, 41% point to the value of the Canadian dollar and 41% look to a strong labour market.

The Survey

The BDC has a new panel called BDC ViewPoints, whose participants are comprised of entrepreneurs and professionals that are asked to join surveys so they can express their views on policies, products as well as services that affect commercial banking.

In this particular survey, 231 entrepreneurs participated between May 6 and May 20. Results were weighted by the size of each firm and region in order to have the results accurately represent Canadian small and medium-sized businesses.

Detailed survey results are available on BDC's website.

About BDC

BDC is Canada's business development bank. From 100 offices across the country, BDC promotes entrepreneurship by providing highly tailored financing, venture capital and consulting services to entrepreneurs.

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Leaders ask governments to ease up on smaller Canadian companies

In a poll taken by COMPAS Inc., Canadian CEOs say the government should change its regulations and tax policies on small businesses.

After the C.D. Howe Institute issued a report calling for making taxes and regulations lighter for small businesses, CEOs polled largely agreed so that small business can have room to expand.
“Government by its very nature attempts to solve all problems with regulation and complexity. In today’s regulatory climate, it certainly is difficult for small companies to survive,” said one CEO polled.

The majority of those polled agreed with simplifying the laws regarding capital gains rollovers so they could be more easily reinvested in small companies. They also supported changing employment laws like maternity and sick leave. “Small businesses are not the banks,” wrote one participant in the survey.

There was some but not universal support for the government to implement a flat corporate tax rate for all businesses. Those CEOs supporting the flat rate argued that small businesses lack the resources and staff to keep current with the regulations and cannot afford the time investment away from their main businesses as much as large companies might be able to.

There was also a difference of opinion among the CEOs polled regarding the federal small business deduction, as to whether lowering taxes on a company's first $400,000 of income discourages reinvestment as they would rather bonus out on that money. One respondent felt their business' growth was not stunted by the ceiling. “The issue is more one of the tax rate on capital gains versus the tax rate on personal income,” he replied.

All in all the respondents to the survey turned out to have a generally negative attitude toward government regulations and higher taxes. They would like governments to recognize that without the money they bring in from their businesses the governments would be crushed financially. As one respondent put it, “Governments do not create wealth. They use it up.”

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