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BUSINESS DEVELOPMENT BANK OF CANADASPRING 2014 / VOL. 34 NO. 2 / BDC.CAESSENTIAL INFORMATIONFOR ENTREPRENEURSIN YOURCORNERBUILD A STRONGERBUSINESS WITH ANADVISORY BOARDPASSINGTHE TORCHTHE RIGHTSUCCESSION PLANLANDMARKACHIEVEMENTAN ENTREPRENEURKEEPS HIS PROMISERHONDA BARNETSTEELWORKS DESIGN
08COVER STORYADVICE YOU CAN COUNT ON—RHONDA BARNET, who runs SteelworksDesign with husband Donald, says anadvisory board has played a huge role inhelping to guide their company throughits toughest challenges. What benefits areyou missing out on by not having a board?12UP FRONT—HOW TO FIND BUSINESSINNOVATION RESOURCESMANAGEMENT TIP4 REASONS TO GO INTERNATIONALINVESTING IN TECHNOLOGY:6 LOW-COST OPPORTUNITIES19FEATURE STORYIN HIS OWN WORDSTURNING THE PAGE—The owners of Montreal advertising agencyLG2 have been working for years on a planto pass ownership to the next generation.Many Canadian entrepreneurs are facingsimilar decisions as a long-awaited waveof business transitions gains momentum.Is your business ready?SAVING A LANDMARK—When the landmark White Point Beach Resortin Nova Scotia suffered a devastating firein 2011, owner ROBERT RISLEY promisedto rebuild. That promise was kept andthe result is one of eastern Canada’smost spectacular vacation spots.16ENTREPRENEURSFIRSTMANUFACTURING A COMEBACK—SUPERIOR CABINETS, a Saskatoonmanufacturer of kitchen cabinets, has comeback strong after a near-death experience.There’s much other entrepreneurs can learnfrom its winning transformation.PROFIT 04
03PRESIDENT’SMESSAGEJEAN-RENÉ HALDEPRESIDENT AND CHIEF EXECUTIVE OFFICERA POWERFUL TOOLA RECENT BDC STUDY FOUNDTHAT ADVISORY BOARDS DELIVERIMPRESSIVE BENEFITS TO SMALLAND MEDIUM-SIZED COMPANIES.YET, FEW ENTREPRENEURS HAVESET UP A BOARD. WHY?PROFIT is published by the BusinessDevelopment Bank of Canada (BDC). Its purpose is toprovide entrepreneurs with information of interest andto inform them about BDC products and services.PublisherBDCEditorDon Macdonald / don.macdonald@bdc.caProfit articles may be reprinted when permission isobtained from the editor and credit is given to BDC.Publications CoordinatorLouise ForestISSN-0711-0316Art DirectionPierre Ménard and Marc-François St-Pierre(BDC Marketing and Public Affairs)Agence Code A registered mark of BDC.To unsubscribe or to receive an email notificationto read the latest issue of Profit online, please go towww.bdc.ca/profitsunsubscribe or call us at1 877 BDC BANX (232-2269).AddressBusiness Development Bank of CanadaPublic Affairs Department5 Place Ville Marie, Suite 400Montreal, QuebecCanada H3B 5E71 877 BDC BANX (232-2269)www.bdc.caPrinted on 100% recycled paper.t BDC, we are convinced thatCanada’s continued prosperitydepends largely on improvingthe competitiveness of our small andmedium-sized businesses.However, if you’re like manyentrepreneurs, you may find you don’thave the time or expertise to map outthe strategic moves necessary to make yourcompany more competitive. This is wherean advisory board can help.Through conversations with entrepreneursand my own experience as an advisory boardmember, I have long been convinced of theirvalue as a source of high-quality, affordableguidance for entrepreneurs.So, you can imagine my delight when thiswas powerfully confirmed by a recent BDCstudy. The study found that companies thatuse advisory boards reap major benefits,including large gains in sales and productivitycompared with similar companies thatdon’t have boards. (I encourage you toread the full report, available at bdc.ca/advisoryboardsstudy.)The problem is that only 6% ofCanadian small and medium-sized businesseshave an advisory board. What’s holdingentrepreneurs back?Often, it’s a perception that settingup an advisory board is difficult and timeconsuming. Like any initiative, it does takesome effort. But our study shows it’s aworthwhile investment. Indeed, almost86% of entrepreneurs who have an advisoryboard say it has had an important impacton their business success.An advisory board encourages youto see the bigger picture and take actionto reach your goals. It acts as a soundingboard on issues facing your company,bringing to bear varied and complementaryexpertise. At the same time, an advisoryboard doesn’t have formal decision-makingpowers or the liability issues of a formalboard of directors.I believe an advisory board can giveyour business the leg up it needs to competeand win in an increasingly tough marketplace.Isn’t it time you took a closer look at thispowerful tool?SPRING 2014
04HOW TO FIND BUSINESSINNOVATION RESOURCESARE YOU WONDERING WHERE TO GET HELPWITH YOUR COMPANY’S INNOVATION EFFORTS?You can find the answers you need by using the Government of Canada’s new ConciergeService. It provides small and medium-sized companies with information and guidancein finding innovation programs and resources. As part of the service, concierge advisors,located across Canada, use their industry experience and knowledge to help guideyou to the most appropriate services available for your business.The Concierge Service is delivered by the National Research Councilof Canada’s Industrial Research Assistance Program (NRC-IRAP), in collaborationwith over 40 federal and provincial partners. It can help Canadian businessesin all industry sectors, including companies that are: undertaking research and developmentgoing through any stage of product and service development (prototyping,manufacturing, testing, etc.)seeking productivity gains through the adoption or adaptation of technologylooking for help accessing funding and advice to support their innovationPROTECTINGYOUR CASH FLOWYannick Achim keeps a close eye on cash flow at his chain of six Quebec cheese stores,Fromagerie Yannick.One of the lessons he learned during the last recession was to useterm loans instead of his everyday cash to pay for computer systems, cash registers and otherequipment.“We had a lot of cash, but it wasn’t really a good strategy to use it to buy assets,”Achim says. “When the markets slowed in 2008, we didn’t have that cash available to usanymore.”He adds, “The risk is that when there’s an economic slowdown, you mighthave a hard time paying your suppliers because your money is tied up in assets. You couldalso miss out on business opportunities.”Your working capital is appropriate forshort-term, recurring expenses, such as payroll, office supplies and inventory. Whenpurchasing long-term assets, it’s often better to protect your cash flow by getting a termloan whose repayment terms match the asset’s expected lifespan.For more cash flowmanagement tips, download your free copy of BDC’s eBook Master Your Cash Flow:A Guide for Entrepreneurs at BDC.ca/cashflow.PROFIT PHOTO: FROMAGERIE YANNICKMANAGEMENT TIPILLUSTR ATION: MATHIEU BÉL ANGERVisit the Concierge Service website (www.concierge.portal.gc.ca) to searchfor and access programs and resources. For more customized assistance,call the Concierge Service Client Contact Centre at 1-855-53-GUIDE.YANNICK ACHIMOWNER / FROMAGERIE YANNICK
054 REASONS TO GOINTERNATIONALReady or not, globalcompetition is coming.Canada is a relativelysmall market.Emerging middle classwill number 1 billion indeveloping countries.Made in Canada brandhas strong internationalappeal.RECIPE FORINTERNATIONALSUCCESSADOPT A GLOBAL VISIONAND GET STARTED RIGHTAWAY. DON’T WAIT UNTILYOUR PRODUCT IS CANADABEAMBITIOUSPERFECT. MAKE SUREEMPLOYEES AND STAKEHOLDERSARE ON BOARD.PLANIDENTIF Y SUITABLE REGIONSAND REVIEW OPPORTUNITIES. ADAPT YOUR PRODUCT/SERVICE FOR FOREIGNMARKETS. SEEK ADVICEAND CONTACTS FROMINNOVATEGOVERNMENT AGENCIESAND CONSULTANTS.PUT INNOVATION AT THECENTRE OF YOUR BUSINESSSTR ATEGY. INVEST IN CONTINUOUSIMPROVEMENTS. FOCUS ON A NICHEMARKET TO COMMAND PREMIUM PRICES. PROVIDE A FULLY INTEGR ATED SERVICE,NOT JUST A PRODUCT.SPRING 2014
06ENTREPRENEURSCAN SOLVE COMMONBUSINESS HEADACHESWITHOUT SPENDINGA FORTUNE01Investing in today’s business technologycan help you solve common challengesand change the way you run yourbusiness. Here are six opportunitiesto improve your business usingaffordable software.0203L M M J VTOTALPROFIT GROW AND MAINTAINPROFITABLE CUSTOMERRELATIONSHIPS. Are youstruggling to keep track of information,such as customer contacts, follow-ups,correspondence, and sales andmarketing activities? Customerrelationship management (CRM)software can help you capture andorganize information about yourcustomers and make it accessibleacross your company.AUTOMATE INVOICING FORBETTER CASH FLOW. Fallingbehind on invoicing can have a disastrouseffect on your cash flow, so automatingyour billing is one of the wisest decisionsyou can make. There’s a wide range ofaccounting and billing options availableto small businesses. Many can speed uptheir billing even more by using mobiledevices and point-of-sale (POS) productsto issue invoices and collect paymentsfrom customers right on the spot.REDUCE INVENTORYCARRYING COSTS. Inventorymanagement software allows you totrack inventory location and movement.It also lets you automatically generatepurchase orders when neededand maintain optimal stock levelsby purchasing inventory closerto the time it’s needed.04BOOST SALES WITHOUTADDING STAFF. Using salesautomation software is an effective wayto get the most out of your existing salesforce. It provides your sales team withtools and data to track leads, respondto customer inquiries, monitor salesperformance and collaborate easily.05GET YOUR PROJECTSRUNNING ON TIME AND ONBUDGET. If overtime and unforeseencosts are leaving you wondering whetheryour projects are profitable, it’s time toconsider project management software.By using it to track schedules, budgets,expenses and time reports, you can takecontrol of your current projects andobtain the information you need beforebidding on that next big project.06START SELLING ONLINEWITH EASE. Online e-commercesoftware can provide you witheverything you need to set up and runa successful online store at an affordableprice. Common features includeonline storefronts, product catalogues,shopping carts, payment gatewaysand live inventory tracking.MAKE THE RIGHT CHOICEBefore investing in technology, it’simportant to clarify your businessobjectives and define your technologyrequirements, in order to ensurethe best return on your technologyinvestment. To learn more, visitBDC’s Smart Tech section(bdc.ca/smarttech) and, whileyou’re there, download our freeeBook Profiting From Technology:A Guide for Entrepreneurs.ILLUSTR ATION: MATHIEU BÉL ANGERINVESTING IN TECHNOLOGY:6 LOW-COST OPPORTUNITIES
TECHNOLOGY INVESTMENT PLANFor small and growing businessesTechnology purchasing made easy Find the best technology solutions based on your business needs Get a technology investment plan with recommendations and areas to prioritize Obtain a short-list of technology vendors with two references each Receive unbiased advice from BDC’s technology consulting specialistsApply for a Technology loan* to finance the cost of consulting fees.Call us at 1 888 463- 6232or visit bdc.ca/techinvestment*Certain conditions apply.
08COVER STORYADVICEEYOU CANCOUNT ONAN ADVISORY BOARD MAY BE THE BEST-KEPTSECRET FOR IMPROVING YOUR BUSINESS❯ BY DON MACDONALDRHONDA AND DONALD BARNET SAY AN ADVISORYBOARD HAS PLAYED A BIG ROLE IN THE SUCCESS OFTHEIR BUSINESS, STEELWORKS DESIGN. A BDC STUDYHAS FOUND THEIR EXPERIENCE IS NO ISOLATED CASE.IS IT TIME YOU TOOK ADVANTAGE OF ONE?DONALD BARNETPRESIDENT / STEELWORKS DESIGNPROFIT RHONDA BARNETVICE PRESIDENT, FINANCE / STEELWORKS DESIGN
09The Barnets ended up laying off halfthe 18 people then working at the company.Steelworks survived and is now on animpressive growth trajectory, almostdoubling sales in the last two years to 2.2 million. The staff now numbers 22,including 10 engineers.PHOTOS: Y VES L ACOMBEt was a meeting Rhonda Barnet willnever forget.The financial crisis had sent NorthAmerica’s auto industry spiralling towarddisaster and automakers were the maincustomers for Steelworks Design, anindustrial machinery company run byBarnet and her husband, Donald.By October 2008, the crisis had costSteelworks half its sales for the custommachinery it designs and makes inPeterborough, Ontario. The Barnets foundthemselves in a desperate fight to save theirbusiness. Yet, they resisted what would bethe first staff layoffs in the company’s history.“We’re a small family business withfriendships and relationships inside thecompany,” Rhonda Barnet says. “It wasso difficult.”CRISIS FORCES A DECISIONThe crisis came to a head that October whenthe Barnets sat down with their advisory boardto look at the situation. All three members ofthe board had experience as senior executivesat other Peterborough companies. Two wereretired and the third was still active.They challenged the Barnets to takedecisive action. As Vice President of Finance,Rhonda is also responsible for managingsales, human resources and strategicplanning. Donald is President andresponsible for the company’s operations.“I was very, very emotional,” Rhondasays. “But if we didn’t make those decisions,everybody’s job was in jeopardy. Theadvisory board gave us the courageand the strength to go ahead.”A VALUABLE RESOURCEThe advisory board proved to be aninvaluable source of advice for the Barnetsthrough the recession and beyond. Theboard counselled them, for example, ontheir efforts to diversify their business awayfrom the auto industry. It also helped themimprove their financial management andeven shop for a new bank.“I think it’s one of the most valuabletools an entrepreneur could use,”Rhonda says.A new BDC study on advisory boardsagrees. The study, entitled Advisory Boards:An Untapped Resource for Businesses, foundthat advisory boards produce huge benefits forsmall and medium-sized businesses, includingsubstantial gains in sales and productivity.An advisory board is a group of trustedadvisors that meets regularly to help you makebetter business decisions and develop along-term vision for your business. Unlike
LG2 have been working for years on a plan to pass ownership to the next generation. Many Canadian entrepreneurs are facing similar decisions as a long-awaited wave of business transitions gains momentum. Is your business ready? 16 ENTREPRENEURS FIRST MANUFACTURING A COMEBACK — SUPERIOR CABINETS, a Saskatoon manufacturer of kitchen cabinets, has come back strong after
