Social change, demographic trends, economic shifts and rapidly evolving technologies are creating countless new challenges and opportunities for Canadian entrepreneurs. Here’s how you should respond.
Turn a shade of green
Going green accelerates business success by avoiding risks and adding to the bottom line.
Some attribute it to Al Gore’s film, An Inconvenient Truth. Others point to the disastrous affects of Hurricane Katrina. And just about everyone knows that something’s wrong with eating Thanksgiving dinner on your back deck in 30- degree heat. For whatever reason, North Americans are finally convinced of the growing urgency of addressing global climate change.
Unfortunately, when it comes to investing in sustainability strategies, most business owners are too time-crunched and cash-poor ? if they even know where to start. Busy is definitely part of the problem, says Whitby, Ont.-based Bob Willard, one of North America’s most respected analysts of the value of environmental sustainability in business.
But here’s a reason to find some time. In the past few years, organizations in Canada and around the world, from KPMG to the Canadian Council of Chief Executives, have been extolling the benefits of going green. Willard’s own extensive research indicates that by integrating sustainability practices into their operations, small and medium-sized companies can increase their profits by at least 66% over five years. Being socially responsible doesn’t impede business success, says Willard. It accelerates it by avoiding risks and adding to the bottom line.
The low-hanging fruit comes in the form of eco-efficiencies, which is just a fancy term for saving money in certain areas, says Willard. Among them: energy, water, materials and waste handling. For example, reducing waste volumes can reduce the need for the labour and machines that handle waste.
In the longer term, green firms can also expect reduced recruiting and attrition costs, and increased productivity. Employees want to contribute to a company that they think is doing the right thing, says Willard. For example, three-fifths of the graduates and potential employees surveyed by global management consultancy Accenture in 2004 rated ethical management as an important factor in choosing an employer. Similarly, 68% of the students in a 2003 global survey by Toronto- based GlobeScan disagreed that salary is more important than a company’s social and environmental reputation when deciding which company to work for.
Going green can boost revenue as customers increasingly factor the corporate citizenship of potential suppliers into their purchasing decisions. For instance, two-thirds of consumers are likely to switch their spending to companies that have demonstrated a commitment to green policies, according to a survey released earlier this year by Bullfrog Power, a Toronto-based producer of electricity from environmentally friendly sources.
Finally, more savings can be achieved by green businesses, which financial institutions view as better risks, in the form of reduced insurance and interest rates. When all benefits are quantified in a holistic business case, the rationale for acting becomes readily apparent, says Willard. The market is so ready for this stuff. The timing is perfect.
Vancouver-based Small Potatoes Urban Delivery has enjoyed significant benefits from implementing green initiatives. The grocery-delivery service has, for example, cut 60% from its lighting costs by removing lights from areas that didn’t need to be lit, and by replacing others with energy-efficient bulbs and ballasts. It prints its customer newsletter on the back of invoices, saving 200,000 sheets of paper per year, as well as the employee time it takes to stuff an extra sheet into every order. It also buys many of its computers second-hand or rebuilt, saving the company thousands of dollars while preventing e-waste. (Globally, discarded electronic devices contribute one billion pounds of plastic to landfills.)
The company even has an easier time finding staff because of its policies. A number of [job applicants] say they chose us because of our social and environmental mission, says president and CEO David Van Seters, adding that his recruitment costs have been significantly reduced.
Start your colour shift simply by asking employees and customers how they’d feel about your business going green, and get them engaged. Keep it loose and open, as a fun thing to take a look at, says Willard. Don’t go into this like it’s a crusade.
Adopt CRM software
CRM software helps deepen customer relationships, leading to sustainable longterm growth.
Forget about your product. Well, not quite. But, still, today’s most successful enterprises obsess less over the stuff they make or the services they provide, and more over the customers who buy them.
Most entrepreneurs now recognize that building deep customer relationships will lead to sustainable longterm growth, says a report released by Forrester Research this past summer. But to do so effectively, you could use help from technology that allows for deeper customer understanding - namely, customer relationship management software. CRM software can help you centralize client data, automate customer service processes such as status reports or e-mail campaigns, and alert you to when you’re behind schedule - all of which improve relationships and ultimately boost sales.
In a recent report by Boston, Mass.-based Bain & Company on management tools and trends, 84% of the senior executives of global firms polled said their companies used CRM technology. More important, they’re highly satisfied with it.
But whereas CRM technology used to be the exclusive domain of mid-sized and large corporations due to its former complexity and expense, today, it’s cheaper and easier to use than ever before, making it an attractive investment for entrepreneurial businesses. In fact, two-thirds (66%) of Canada’s Fastest-Growing Companies use CRM software.
We’ve had CRM from Day 1, says Paul Kerr, CEO of Scalar Decisions, a fast-growing IT consultancy based in Toronto. It’s one of the key tenets of how we run our business. It gives you instant access to key information, and it’s great for tracking key performance indicators of your business opportunities, and making sure you’re following customers closely.
Kerr can’t imagine running his $20-million business without it. I have salespeople across Ontario, and they all carry $4-million-a-year quotas, says Kerr. If I wanted a report on how they’re doing, I’d have to call each one, or request an email, and there’d be no consistency to those reports. Whereas CRM forces everyone into the same pattern, the same path.
Another benefit Kerr points out: You can go into the system at any time and see which deals in progress are the biggest. Then you’ll know which client you need to go and visit to [close the deal], he says.
For those already using CRM, Kerr recommends taking it to the next level and using an integrated business platform (IBP) called NetSuite. It’s a broad application covering business functions including CRM but also ERP, e-commerce, customer support, accounting, inventory management and more. With thousands of clients worldwide, San Mateo, Calif.-based NetSuite is the leading IBP provider to SMEs, its sole market. Says Kerr: I think of NetSuite as CRM 2.0.
Harness your corporate brain
A knowledge management system helps you find the knowledge in your company and eliminate knowledge gaps due to employee turnover.
Remember when your firm was really small? You knew all your employees as well as you know your close friends, and could probably do all their jobs better than they could. But how about now, with employees scattered around different floors, offices or even cities. Now, you don’t know people intimately anymore and, worse, you don’t know what people know, says Nick Bontis, director of the Institute of Intellectual Capital Research and a professor of knowledge management at McMaster University in Hamilton, Ont.
That’s a very bad thing. Without effective, systematic ways of filtering, capturing and distributing the knowledge within your walls, you risk unnecessary duplication costs and can’t tap into the full intellectual horsepower of your company. More important, a proper knowledge management (KM) system helps you find the knowledge in your company and eliminate knowledge gaps due to employee turnover.
A 2003 study by KPMG revealed that 83% of organizations with a KM program in place said they had realized synergies among business units; 63% said they had accelerated innovation; and 67% said they had reduced costs. Among the non-financial benefits, companies experienced increased teamwork (68%), increased speed and responsiveness (64%) and better decision-making by front-line workers (55%). The same study revealed that 6% of companies’ annual revenue isn’t being realized because they fail to exploit knowledge effectively. The cost of KM is relatively low in comparison to the business opportunities it can exploit, say the authors of the KPMG report.
Effective KM processes at your company mean no more unnecessary duplication of work. A KM system, says Bontis, would allow you to know that Mike in Toronto shouldn’t start that sales presentation from scratch because Paula in Vancouver created the same presentation six months ago.
Start your KM initiative with an intranet-based document filing cabinet - a program that helps all employees add, navigate, search and retrieve information from disparate sources. Many such programs are now being offered online through the software-as-a-service model.
Bontis also strongly advocates comprehensive exit interviews for departing employees. He recommends hiring a human-resources consultancy to conduct exit interviews that capture the employee’s most useful knowledge - the stuff he knows that nobody else knows. At Mississauga, Ont.-based Pivotal Managed HR Solutions, for example, a 40-minute exit interview costs about $75 - although Bontis recommends even longer, more extensive interviews. The idea is to learn everything, from a client’s quirks to where the departing staffer keeps the keys to his filing cabinets. All the information gleaned would then be stored in the corporate intranet.
But KM isn’t just about capturing knowledge and technology; it’s also about communication and collaboration among employees. My research shows that for really good collaboration, you must have rapport, says Bontis. That’s only done face to face. So, as a leader, you must find institutional slack - which he defines as the time and space you set apart for the purposes of socialization. Whether it’s Thursday night at the bar, Friday afternoon in the lunchroom or Monday morning at the weekly sales meeting, companies must come up with a time and place where the only things that happen is people come together to informally socialize. We need to know who people really are in order to truly collaborate.
Do business in the buff
Open up your business and use collective intelligence to improve processes and products.
It’s natural to feel secretive about the inner workings of your company. Traditional corporate values shun transparency, and given today’s competitive business landscape, a CEO’s intuition tells him to keep his firm’s secrets under wraps.
But there’s growing evidence that opening up your business for the world to see - then using as many people as you can to contribute ideas about improving the processes and products you’ve put on full display - is a growth strategy for now and future. Call it collective intelligence. Could it work for your company?
In We Are Smarter Than Me: How to Unleash the Power of Crowds in Your Business, authors Barry Libert and Jon Spector argue that revealing the inner workings of your business and encouraging mass collaboration just makes sense in the Internet age. I don’t think it’s possible to hold on to the old idea of secrecy as a competitive advantage, says Libert. It’s not possible anymore for employees to be kept in the dark or to keep customers away from product innovation, because if you do, they have the voice of the Internet through blogs, wikis and discussion forums to say things about [you] and, ultimately, they’ll get the upper hand. Rather than allowing the marketplace to come to detrimental conclusions about your business based on misinformation or no information at all, turn everyone into an enlightened partner in your business process.
That getting customer and employee feedback is important isn’t news. But creating nakedness or being exposed or, as we say, ‘letting the zoo be run by the animals’ is what’s really creative here, says Libert. The more people that can get involved, whether it be employees or customers, the more innovative and vibrant a company can become. And, say Libert and Spector in We Are Smarter Than Me, in the case of customers, it gives them a vested interest in the results and all but guarantees they will like - and buy - what they’ve created.
You might already gather your constituents for annual focus groups or conferences in which you share information and collect feedback. The problem with that is it’s a single transaction, says Libert. It has no recurring nature to it, so it doesn’t engage the hearts and minds of the customers and employees year round.
You may not want to go as far as Microsoft, which posts uncensored internal videos on public websites and encourages its engineers to blog freely about their projects in order to get the public’s feedback and give the mammoth company a more human face. Still, try to think about ways to collect more feedback and create more discussion.
Consider adopting open-book management, whereby you give employees detailed financial and operational information, thus equipping them with the knowledge they need to make smart business decisions. Libert, for one, recommends starting with technology (perhaps Facebook or a wiki) that allows your employees to post profiles and share ideas in a more meaningful way than a suggestion box. Then, you can think about how to turn that externally focused, says Libert. Begin asking the same thing of your customers - what types of products and services would they like to see - and using discussion forums, blogs and wikis to engage in a real-time dialogue, a 360-degree process year-round.
Sell more with search engines
Search-engine marketing is one of today’s essential sales boosters.
From a company looking for a new technology supplier to an individual hunting for a new pair of shoes, the vast majority of buyers now begin their purchasing research online. A 2007 study by Kelowna, B.C.-based Enquiro Search Solutions, which provides search-engine optimization (SEO) services, shows that 85% of buyers go online when making a business purchasing decision. That’s why search-engine marketing, including optimization and the placement of paid ads beside organic search results, is one of today’s essential sales boosters. If you don’t help search engines find your website or use an ad services like Google Adwords, most of the planet’s billion Web users will never find your site - or your product.
Organic search-engine optimization is the process of designing your website content in such a way that users will find it through their search-engine queries. Optimized websites have descriptive and accurate title tags (i.e., the name on the top of each page), a site map and rich content that users don’t have to register to read. They use the same language that customers might use to search for it and, ideally, are linked to by lots of other websites.
But avoid using nefarious SEO tactics such as cloaking, hidden text or doorway pages. Google, for instance, has removed companies that use these tricks from its index. Get the boot, and it can take months to get traffic back, says Gord Hotchkiss, president and CEO of Enquiro.
Paid placement or pay per click (PPC) marketing can be as effective as it is economical. With PPC, your ad appears alongside the organic search-engine results when someone searches for keywords pre-selected by you (on Google, for instance, the PPC ads appear down the right side of the page), but you pay only if the user clicks on your ad. (Prices range from a few cents to more than $1 per click, depending on a keyword’s popularity.) Because keywords are purchased on a pay-for-performance basis, marketers can easily control their search-marketing spending.
It’s not impossible to do yourself, but Forrester recommends outsourcing all search-engine marketing, as it takes too much time and money for most firms to dedicate internal resources to manage volatile and complex search-marketing tools, technologies and ad formats.
Speakers’ Spotlight, a Toronto-based speaker’s agency, took the plunge two years ago, enlisting Enquiro to optimize its site. Since then, Speakers’ Spotlight’s total organic search engine-referrals have increased by 976%. Unique visitors to the firm’s website jumped by almost 300%, and hits by repeat visitors jumped by 106%. CEO Farah Perelmuter says her company’s newly optimized site has boosted her global business opportunities. We have found that the massive growth we’ve experienced online has impacted our sales tremendously, she says. We now book our speakers for events in numerous countries around the world, and for all different types of organizations. We have even generated media attention overseas and are approached with opportunities we would never have expected.
Create employee shareholders
An employee share-ownership plan is a highly effective way of making employees feel like they’re a part of the organization.
If you think all the talk of a labour shortage is nothing but hype, then consider the following facts. First, the CEOs of Canada’s Emerging Growth Companies recently said that a shortage of qualified workers is their single biggest external obstacle to further growth of their businesses. Second, research by the Canadian Federation of Independent Business shows that talent shortfalls are affecting entrepreneurs in all areas and industries - not just coffee shops in Alberta boomtowns. And finally, Generation Y - those workers born in the 1980s and 1990s who are notorious for their lack of loyalty to employers - now accounts for at least 19% of the workforce.
Clearly, any company that wants to thrive needs to place more emphasis on retaining good people. But many firms need help. One of the things that entrepreneurs have to do a bit better is making employees feel a part of the organization, says Mike Salveta, managing partner of Pivotal Managed HR Solutions. That is why people stay with a company.
Employee share-ownership plans (ESOPs), which formalize the process by which staff members purchase or are granted shares in their firms, are a highly effective management tool, for one obvious reason: staff are less likely to leave a company if they own a piece of it.
But there are other benefits to employee ownership. The largest study of ESOPs, conducted in 2000 by researchers at Rutgers University, found that ESOPs increase sales by 2.4% per year over non-ESOP companies. And according to the Oakland, Calif.-based National Center for Employee Ownership, employee-owned firms enjoy 4% to 5% annual productivity gains in the first few years after they employ an ESOP, double that of companies that aren’t employee-owned. Not surprisingly, almost half (47%) of Canada’s Fastest-Growing Companies run ESOPs.
But ESOPs have added value in an era in which more than 300,000 Canadian entrepreneurs have indicated their desire to sell their companies over the next 10 years. That’s because ESOPs create employee shareholders who will be in a better position to acquire majority ownership when their entrepreneur employer wants to exit the business.
ESOPs attract and retain people, and they can be used in transition planning, says Perry Philips, president of Thornhill, Ont.-based consultancy ESOP Builders. Combine the labour shortage with the coming succession crunch, and you have a perfect storm for the use of ESOPs.
Put social media in your mix
From blogs to Facebook, social media is the biggest up-and-comer in the world of marketing.
From blogs to Facebook, the communications applications of Web 2.0 keep increasing in availability and popularity. Forrester Research calls social media the biggest up-and-comer in the world of marketing - and says now is the time to get into it. Last year, we said holding off on social media was OK, says a recent Forrester report, but rapid consumer adoption of these channels indicates that the time is now to enter this space. Market-intelligence firm IDC predicts that the social-networking application market will grow by 815% by 2009, as its uses evolve out of basic networking into marketing, branding, customer service and lead generation.
Using social media has been everything for Mitch Joel, president of Montreal-based Twist Image, a digital marketing agency with 50 employees. Joel regularly blogs and has several bustling Facebook pages, and credits his use of social media with the success of his company. The only way we’ve done any promotion has been the blog, and this has led to us being perceived as thought leaders; it has led to speaking opportunities and created business growth, says Joel, who adds that RSS - Really Simple Syndication, which pushes new content to Joel’s subscribers as soon as it’s published - is an essential ingredient of any firm’s social media mix.
If you’re brand new to this stuff, blogging may be your best bet, says Maggie Fox, cofounder of Social Media Group, a Dundas, Ont.-based firm that helps companies connect with audiences by leveraging the power of emerging social media channels. With the right content, you can position yourself as an industry leader and really build relationships with customers, she says. Formerly, there were no opportunities for companies to do that in an affordable way.
Blogging is an amazing type of advertising, says Joel. It shows our creativity, it’s incredible for public relations and it enables us to engage clients in a conversation. Still, if you’re going to blog, you’d better have something valuable to say. Sharing your expertise and passion for your industry is the best way to secure a loyal - and possibly lucrative - following. You also need discipline, says Joel, who updates his blog daily; many blogs start in earnest but fade away after only a few weeks when the business owner gets too busy. Decent storytelling skills are another valuable asset. As a former journalist, Joel has experience expressing his thoughts in words. If writing isn’t your strong suit, get help.
Then, of course, there’s Facebook. Largely thought of as a place to reunite with your best friend from Grade 2, the social networking site is emerging as a powerful way for businesses to spread news and promote brand presence. Keep your eye out for business-specific applications on Facebook; you can now use the site for recruiting, selling and even financing through the new Lending Club application. Some large corporations, including PlayStation Canada and Molson, have created sponsored Facebook groups, paying a fee to create a branded page that boasts their firm’s look and feel.
No matter what your industry, don’t bury your head in the sand when it comes to social media. Businesses really can’t ignore this stuff, says Fox. Besides its effectiveness, she says, It’s extremely cost effective to participate in this space.
2007 Rogers Publishing Limited All rights reserved.
By Kim Shiffman
