Coping with high gas prices
With prices at the pump hovering around historic highs, Canadian small businesses are feeling the pinch. In May, consumer gasoline prices were about 20% higher year-on-year, in some areas hitting as much as $1.50 a liter. Airline fuel surcharges have skyrocketed, hurting business and budget travelers alike.
Although prices have recovered somewhat, this will likely be a brief relief, and a long-term decline looks unlikely. Some factors driving prices higher are unpredictable and may subside, such as tensions in the Middle East. However, rising demand from developing economies are set to continue for the foreseeable future. Also, seasonal demand for fuel in the Northern Hemisphere peaks in July and August – driven by increased air conditioning use and summer travel demands – meaning that costs may not retreat any time soon.
What can you do to make the high price of gas more bearable? Here are some tips.
Get all of your deductions: Small businesses can claim a range of tax deductions for fuel and fuel-related expenses. Any costs that are directly related to your business can be deducted, including gasoline, diesel, and propane. Make sure you keep your receipts and a log of all of your business-related travel. Airfare for business trips can be claimed, as can bills from courier and taxi services. If your business uses other oil products, such as motor oil or lubricants, these too can be claimed in your 2011 tax return. Check with your tax advisor for advice on what expenses your business can claim.
Cut travel expenses: A reduction in next year’s tax bill may be welcome, but it won’t keep money in your pocket right now. Consider alternatives to travel: inquire whether your customers are willing to use video conferencing. Are you able to work from a home office or telecommute? This can cut travel costs and you will also be able to deduct home-office costs from your tax return.
Improve fuel efficiency: With a few simple steps, you can improve the fuel efficiency of your vehicle. If your business operates a fleet, these steps can help you lower costs and keep your vehicles in a smooth running condition. You can maximize your car’s efficiency by reducing the vehicle’s weight. Clear out the trunk and improve aerodynamics by removing empty roof racks. Make sure your tire pressure is set to the recommended level as this will improve auto safety and reduce your fuel consumption.
Review your costs: Can your business do things to reduce costs? Check with customers and suppliers about adjusting delivery schedules, both for incoming and outgoing shipments, in order to reduce the number of road trips needed. Consider revising your product delivery schedule and sales trips to be more efficient. Do they cover geographic areas in the most effective way? Car-pooling is one method that consumers use to manage costs, so consider if you can cooperate with another local business to achieve the same synergies with deliveries.
Look for long-term alternatives: Although the 2011 fuel price increase will likely subside, over the longer term higher fuel costs are something you will likely have to accept. Many of the structural changes in global demand are not going away and may even get more extreme – particularly the rise in demand from emerging economies such as China and India. For the longer term, you may wish to consider the cost-benefit ratios of energy efficient vehicles. An electric or hybrid vehicle may cost more now, but if fuel prices stay high it could be an investment that saves you cash over time.
How is the cost of gasoline affecting your business? What are you doing to deal with high prices? Share your stories in the comment section.
More summer reading suggestions
In our last Get Growing for Business entry, we looked at some business books to help inspire you during the summer months. Here are some more books that could inspire.
The Social Animal: The Hidden Sources of Love, Character and Achievement, David Brooks
New York Times columnist and best-selling author David Brooks’ The Social Animal ventures into the world of behavioural economics and evolutionary psychology. It is an ambitious work bringing insight on human behaviour and motivation. Through an engrossing cradle-to-grave narrative of fictional couple Harold and Erica, Brooks introduces a wealth of neuroscience, psychology and social science research on what motivates, drives and attracts people.
Brooks’ narrative style provides an easy, enjoyable and occasionally laugh-out-loud read. He touches on all major aspects of life including a range of business-relevant matters: leadership, boardroom power struggles, decision-making, relationships in the workplace, change management, overconfidence and risk evaluation, marketing and advertising. Brooks provides a fascinating read that will help you better understand your customers and yourself.
Onward: How Starbucks Fought for its Life without Losing its Soul, Howard Shultz with Joanne Gordon (2011)
Howard Schultz changed the global coffee culture by growing Starbucks from a single Seattle coffee shop into one of the most recognizable multinational brands. His previous book, Pour Your Heart Into It, which maps the rise of Starbucks may have more insight for aspiring entrepreneurs. But Onward – the story of Shultz’s return to the helm and drive to save a floundering company by returning to its original principles and passion – provides insights on the importance of passion, vision and people.
By telling a story of the revitalization of a powerful brand, it also provides a cautionary tale about how a board of directors, if disconnected from a business on a personal level, may not always produce the best results. Shultz shares the importance of top-down leadership and provides useful advice on how to keep the spark of passion in a growing business.
What’s on your book shelf? Have you read any books that have inspired your business? Share your insights in the comments.
Gain insights through summer reading
Is summer a slow period for your small business? If so, it may be a great opportunity to relax with a good book and brush up on the latest business insights. Here are some fresh summer reads that may spark some ideas for growing your business:
Mom Inc., Amy Ballon and Danielle Botterell, with Rebecca Reuber (2011)
Canadian authors Ballon and Botterell offer a readable and useful guide for women who have recently started their own business or who are considering making the transition from full-time mom to “mompreneur.” The authors speak from their own experiences as mothers and as founders of Admiral Road Designs, a boutique specializing in children’s clothing. The authors’ work is supported by informative sidebars from Rotman School of Management professor Rebecca Reuber, as well as interviews with more than 200 mompreneurs. Through this, they deliver a guide for starting-up and growing your business while maintaining work-life balance.
Is mompreneurship right for you? How do you come up with a successful idea? How important is a business plan? Ballon and Botterell address these questions and provide useful tips on marketing, networking, fundraising, dealing with suppliers and more must-know information. Although targeted at a niche market, the advice is clearly communicated and therefore useful for anyone seeking to start a business.
The authors’ website also offers practical advice and interactive materials for moms seeking to make the leap into business.
Drive: The Surprising Truth About What Motivates Us, Daniel H. Pink (2009)
Daniel H. Pink’s 2009 bestseller, Drive: The Surprising Truth About What Motivates Us, was released in paperback in April 2011, making it a perfect companion for the beach, cottage or long-haul flight to a far-away vacation spot. Relying on recent research from behavioural psychology, economics and sociology, Pink makes the case that there is much more to the art of motivation than carrots and sticks.
Pink delves into research and business case studies indicating that the reward and punishment mechanisms most businesses use for motivation only work up to a point. The true motivators, Pink argues, are autonomy, mastery and purpose. When a job goes beyond mundane technical work, people want more than just financial reward: they want to be “players” and not “pawns;” they want to advance and gain expertise; and, most of all, they want to feel that their work is be part of larger, more important project.
The book’s second half is a toolkit in which Pink offers ideas that small business people can put in place in their own organizations, such as “Thirteen ways to Improve Your Company, Office or Group,” or their own lives, such as tips to motivate yourself to exercise.
For more information visit Pink’s website or watch the below animated lecture from the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA):
In our next entry in our Get Growing for Business blog, we’ll look at two more books that may provide inspiration for your business. Have you read any books that have inspired your business? What’s at the top of your reading list this summer? Share your insights in the comments.
Using the Canada Small Business Financing Program
Securing financing can be a challenge for small businesses, but help is available. The Canada Small Business Financing Program (CSBFP) seeks to increase loan availability, streamline administration and extend financing that would otherwise be unavailable to small-and medium-size enterprises.
Under the CSBFP, financial institutions and the government share risk in order to help small businesses each secure up to $500,000 in financing for capital spending. The loans are available to non-farm businesses with annual gross or projected revenues of less than $5 million. Eligible businesses can be corporations, sole proprietorships or partnerships.
The program can help you grow your business, and loans can be used to cover up to 90% of these costs:
• Purchasing or improving land or property
• Purchasing leasehold improvements or improving leased property
• Purchasing new equipment or improving used equipment
While the loans are government backed, small businesses have to apply for a CSBFP loan directly through their own financial institution – not through the government.
Banks use the same due diligence and procedure in making a CSBFP loan as they do for a non-CSBFP loan. This means that your application and supporting documents must be in order (e.g. your business plan, cash-flow projections and recent tax returns.) Your Small Business advisor can help you prepare for your application.
For answers to frequently asked questions about the CSFBP you can visit the Industry Canada website.
Getting Value from Difficult Customers
Disgruntled or angry customers are seen as a challenge by many businesses. They cause frustration, use up time and may be disruptive. However, the ‘difficult’ customer can help you identify real problems that may be holding your business back. Viewed constructively, disgruntled customers may provide important information to improve your operation and customer satisfaction, thereby positively impacting your sales.
As a general rule, the majority of dissatisfied customers often do not complain about poor service to sales staff or management. They find the process of complaining uncomfortable, aggravating and a waste of time. Most dissatisfied customers will simply take their business elsewhere without ever making a complaint. Worse still, while they may not take the time to complain to you or your staff, they may relate negative complaints to their friends and colleagues. This can create negative view of your business that can potentially damage your reputation.
Here are some steps to keep in mind for getting the most out of customer complaints.
Step 1: Listen
Not every difficult customer is reasonable or valuable. There are some who may indeed be a drain on your time and a source of aggravation. The only surefire method to judge whether a customer complaint is valid – and perhaps even valuable – is to listen and try to understand the reason for their dissatisfaction.
Step 2: Identify
As you engage with your customers remember that your goal is to identify possible problems, not to offer excuses. Empathize with the customer and try to calm their mood, especially if they are angry. It will be easier to identify the problem through a calm conversation. Be composed and concerned. Clearly indicate that you are interested in helping.
Step 3: Resolve
Once you have identified the problem, work to fix it. If it is a legitimate complaint – even one based on misunderstanding or unclear communication – try to resolve it. If it is a problem that has no immediate resolution, communicate that you understand the validity of the complaint and will look for ways to improve. If you demonstrate that you are willing to go the extra mile to help, you may turn the disgruntled customer into a loyal one.
Make complaint resolution and identification an established procedure. Ensure your frontline sales staff understand the value of customer satisfaction and actually listen to what the customer is saying. Moreover, establish a mechanism so that salespersons can report customer complaints up the management chain where they can be effectively resolved in a permanent manner. This is a benefit to all your customers and your business in the long-term.
What are your methods for dealing with challenging customers? Has a customer ever provided you with feedback that helped you improve your business? Leave a comment to share your experience.
Where should you park your money?
Whether a company is small or large, a sound cash management strategy can make or break a business. Elements of cash management that we’ve previously discussed include managing cash flow, accounts and inventory . Now, its time to look at managing your cash on hand.
Many businesses only think of cash management in lean periods – when cash flow or credit is tight – but it is also important to consider it in prosperous times. If you find yourself with extra cash on hand that you are not quite ready to reinvest back into your business, or if you are building reserves for a capital investment or another business goal, you should consider whether or not you are getting the best return. This is especially true if you are parking your cash in low or zero-interest chequing accounts.
First, look at your cash flow and regular cash needs. Determine the minimum balance that you need to maintain in your chequing account for business purposes, including a buffer. After you have that, consider moving the excess to an interest-bearing account. Your bank can assist you with electronic-banking transfers from savings to your business-related chequing account so you can maintain your minimum balance. You can also set up a pre-authorized contribution (PAC) system for savings.
Banks will also offer special accounts for small businesses. For instance, with the Scotia Power Savings business account you can earn a higher rate of interest without the need to lock in funds or pay a monthly account maintenance fee. Plus, you are eligible for unlimited free self-service transfers to and from your other Scotiabank accounts.
Check with your bank for other small-business options. For example, the Scotiabank Business Interest Account is a day-to-day operating account that pays a competitive interest rate on your Canadian and U.S. dollar balance. This tiered-rate account is ideal for small to mid-sized businesses with account balances of $5,000 to $500,000.
Other relatively secure options that are available include money-market funds and guaranteed investment certificates (GICs) These instruments vary in terms of return and possible lock-in periods. You can check with your Small Business advisor about which options may be best suited for you.
If your surplus cash is growing, you may want to consider other potentially higher-return options depending on your business needs.
To learn more about where to park your cash, Graeme Auchincloss, Senior Manager Small Business with Scotiabank, will discuss additional investment options for Small Business in our June Get Growing for Business Newsletter. Sign up here.
Building an eco-friendly practice
When Richmond Hill, Ontario dentist Dr. Anna Fong envisioned building her Richmond Green Dental Care clinic, she made a commitment to go eco-friendly. While initially expensive, her clinic has been paying off in lower costs, a growing client list and higher customer satisfaction.
As an eco-conscious dentist, Dr. Fong was able to implement her vision from the construction of the practice to running the office in an environmentally friendly manner.
“We did the research when setting up our office and decided to go completely digital. We decided to use digital charting and digital X-rays. These are more eco-friendly. There is less paper use and there are no harmful films or chemicals for development,” Dr. Fong says. “And, there is less exposure to radiation, about 75-90% less for an individual patient.”
The costs of going digital, she says, will pay for themselves within three to four years. However, the practice’s smaller ecological footprint has provided peace of mind for patients and increased demand for her services.
“We have a lot of patients that seek us out after having heard about us through word of mouth or by searching through MSN and Google,” she says. “It’s for both environmental and health reasons; there are a number people who are concerned about X-ray radiation.”
The top-10 eco-friendly practices this clinic uses are:
1. Use of digital imaging instead of traditional x-rays, which means less radiation for patients and the elimination of toxic x-ray development chemicals
2. Digital patient charting to reduce paper waste
3. Steam-based instrument sterilization that eliminates use of harmful chemicals
4. A special filtration system to allow environmentally sound disposal of old mercury fillings, preventing pollution of our water system
5. A high-efficiency vacuum system that results in reduced water usage throughout the practice
6. Energy-efficient lighting throughout the practice
7. Energy-conserving appliances
8. Walls that are painted with low volatility paint for better breathing comfort
9. Use of gentle, environmentally friendly cleaning products
10. Recycling of bottles, cans, paper and shipping boxes
While some of the steps, such as energy-efficient appliances, can be adopted by almost every business, Dr. Fong says the biggest eco benefits have come from the adoption of trade-specific eco practices.
Entrepreneurs in other fields can possibly find similar best ecological practices in their own areas. In order to research eco-dentistry, Dr. Fong consulted professional journals and internet articles. Dr. Fong also recommends speaking to vendors and suppliers, noting that hers were able to offer a range of options for an eco-friendly practice.
Dr. Fong believes that an eco-friendly practice is a smart practice, and adds that the clinic continuously looks for ways to improve dentistry while protecting the environment.
Tips for networking success
Networking skills are essential to being successful in sales, lead-generation, establishing partnerships, recruitment and many other aspects of a flourishing business. Whether you are a natural communicator or a wallflower, you could benefit from creating a plan of action to expand your professional circle.
First, identify the consumer or professional groups with whom you want to build business relationships with and research where they congregate. If you are selling to new parents, for instance, you could seek out local community groups or events. Are there on-line or virtual communities that you could join? Remember, if these are social or “social networking” forums, hard selling would not likely be appreciated. However, such gatherings can be great places to introduce your business to potential customers and gauge their interest in your products or services.
Selling opportunities are more acceptable at trade shows and exhibitions. These are great places for you to meet with targeted professional and specialist groups. However, remember that these are very competitive events so considerable advance preparation is strongly recommended, including: business cards, brochures, a sales presentation and possibly a display booth. As well as a detailed presentation, make sure you have an “elevator pitch,” a brief soundbite about what you do and what you can offer.
Collecting leads is your key goal, so make sure to get details for everyone you meet – and keep a log of their particular interests or questions. Use incentives to collect business cards and contact details, such as free samples or a contest offering your services as a prize.
Whether you are networking at a social or professional engagement, you want to be at the top of people’s minds when it comes to your business value proposition. Give them something to remember you by, a business card or a branded item. Then, after you’ve established relationships, keep them going. For major individual customers, send personal e-mails – letting them know you remember details of their needs – and arrange targeted one-on-one meetings. For groups, consider setting up a regular channel of communication: a direct-mail list, e-mail newsletter, a Twitter or Facebook feed. Keep your customers aware of what your business is doing, and collect their feedback on products or services that they may be interested in.
Finally, while we have been discussing how to cultivate new contacts, do not forget to build on those you already have. Have you kept in touch with former colleagues or classmates who may be interested in your business? How about family members? Your neighbors? Your doctor or dentist? Keep people you know on a casual, friendly or familial basis up-to-date about your enterprise. This shouldn’t be approached as a selling activity, but it is a means of getting the word out and could lead to business with people you may be connected to.
Do you have any networking or marketing tips for fellow entrepreneurs? Share them in the comments.
May 19, 2011 | 7:26 pm
Huge response to BIG Impact Challenge
After an incredible response from across the country, the final round of judging has started for the Small Business BIG Impact Challenge. This contest, brought to you by Scotiabank in partnership with the Canadian Federation of Independent Business (CFIB), recognizes and celebrates the numerous ways that small businesses make a BIG impact in their communities across Canada.
The Challenge has attracted entries and nominations from more than 1200 enterprises stretching from coast-to-coast including: a builder in Fortune, Labrador, who offers employment and home renovation services to surrounding communities impacted by plant closures; a Bow Island, Alberta, enterprise that provides homecare to the elderly in underserviced areas; a Kelowna, BC, honey winery that seeks to preserve ecologically important bee populations; plus hundreds of other outstanding enterprises nationwide. We thank all the entrants for their contributions, to the contest and their communities.
The contest’s five-person panel of small-business experts now takes on the challenge of selecting one winner in each of three categories for $10,000
• Employment: An award recognizing one of the thousand of small businesses that contributes to their local communities by creating and sustaining employment.
• Products/Services: An award recognizing a small business that offers innovative or unique products and services that benefits, and might not otherwise be available, to their community.
• Leadership: An award that recognizes a business that contributes to its community by taking a leadership role in initiatives to make its community a better place to live and work.
Scotiabank and the CFIB will announce the winners on June 1. Check back with Get Growing for Business for the results and visit the Small Business BIG Impact website to view the entrants.
Is growing with Eco-friendly energy profitable?
Earlier in Get Growing for Business, we explored how adopting alternative energy- and resource-saving practices can [link: pending] shore up your bottom line. But while all businesses can benefit from cutting down on their utility bills, a bigger question is going extra step by procuring Eco-friendly energy sources would help or hurt your individual business?
Broadly speaking, the cost benefits of adopting Eco-energy sources – such as biofuels, wind or solar power – may not be immediately evident for most small and medium enterprises. However, given the proper circumstances, it could be worth considering for yours.
Whether a business can achieve cash benefits from installing solar panels, for instance, depends on a number of factors. These include: being located in an area with good sunlight, the amount of roof space available for installation and whether any government grants are available to offset costs.
Within Ontario, small businesses may benefit from the Ontario Power Authority’s Feed-in Tariff (FIT) program. Under the microFIT program, homeowners and small businesses that develop Eco-energy projects can sell that energy back to the power grid. There are various other programs across the country that will offer rebates, subsidies or other incentives for small-business energy projects.
While a dedication to energy saving could monetarily benefit every business, enterprises will have to take a very close look at their own circumstances to judge whether they can gain from generating or using Eco-energy.
For instance, livestock farms could consider biomass energy projects. The Institute for Renewable Energy on Farms (IREF), an initiative launched by Natural Resources Canada and Agriculture Canada, notes that animal waste can be converted to biogas, while simultaneously generating valuable products such as fertilizer. The gas can then be captured and used to generate heat and electricity.
The financial benefits of biogas depend on the circumstances of the business. The IREF notes the economic viability of biogas generation is currently uncertain and that small and medium sized farms should only consider the process if potential synergies can be found.
Although many Eco-energy projects remain uncertain, the future of Eco-energy looks more positive. With increasing market demand for low-polluting energy, technological innovation and increasing prices for carbon-based energy sources, the costs of Eco-energy may decline and become more attainable for independent enterprises.
Has your business had any experience with Eco-energy? Leave a comment to start a discussion.