TiEQuest Toronto

This past Saturday, I had the good fortune of being a judge at the Toronto TiEQuest Finals. TiE is The Indus Entrepreneurs organization (www.toronto.tie.org), which provides mentoring, education, networking and a lot more to entrepreneurs with or without an Indian background. There are chapters literally all over the world where the Indian diaspora exists.

The judges reviewed 19 candidates, from which 3 moved on to the international TiEQuest Finals.

I was amazed at the quality of the opportunities that were presented. While many of the companies were lacking in some important factor for success (which is why they were presenting to TiEQuest), for the most part each contestant had some combination of product validation, experienced management and advisory boards and customers or beta customers. Some were pre-money start ups looking for financing to get them over the hump until their expected cash flow kicked in. Others needed someone with entrepreneurial management experience to compliment the technology background of the founder.

While I don't want to disclose the companies at this stage as they haven't heard whether they made it to the final round, stay tuned for the results as they become public.

The Problem with Toronto Mayor Rob Ford is a Lack of Leadership Skills

I voted for Rob Ford for mayor of Toronto. I supported his vision for fiscal responsibility and the building of subways. The Mayor's vision is getting sidetracked by squabbling in the council chamber. Much like the situation in the US congress, the business of government is getting shunted aside by partisan politics.

So what does this have to do with entrepreneurship? To my mind the issue at both Toronto City Hall and the US congress is a lack of leadership. Great leaders, whether in government or business can move mountains. Poor leaders can get bogged down and accomplish very little. That seems to be what's happening in Toronto and in Washington.

So what are the qualities of great leadership?

1. Integrity. I am not questioning Mayor Rob Ford's integrity. I have no doubt that his heart is in the right place. He has, to some extent, led by example by reducing the budget of his own office.

2. Teamwork. Here is an area when the Mayor breaks down. Teamwork requires, among other things, fairness and empathy. The Mayor has been unable to keep his right of centre coalition together because he has lost touch with the members of his team. A leader with empathy for his team members doesn't experience the type of mutiny from his own supporters.

3. Planning. The whole subway vs LRT debate was lost by the Mayor because he had no plan. While he may be right that his constituents want subways, there was no plan in place to pay for them. If he had anticipated the weakness of his position, he would have realized that a fiscally prudent plan was required and he would have beaten his critics to the punch. Instead, the debate defaulted to what was considered affordable (or at least more affordable).

4. Vision. Rob Ford has a vision. However, it was incomplete. His vision, as far as I can see, consisted simply of slogans such as "end the gravy train" and "the people want subways". He may be right, but he was unable to inspire other politicians at City Hall to follow his lead, due to the lack of specifics for his vision.

5. Adaptable. A great leader has to be openminded and adaptable. Rob Ford's strategy is to shout and bang his drum the loudest. An astute leader would have seen that things were moving against him and would have adapted to bring more of his colleagues on board with this vision. Instead, he loudly and arrogantly stuck to his guns and he alienated some of his supporters.

6. Passion. There is no question that Mayor Ford is passionate. He often looks like he is going to blow a vein. Passion is important. But,  it has to be a passion of the infectious kind. A great leader is able to get people to come along with him for the ride. If the Mayor wanted to play the populist game, as he has tried, he needed to motivate the people to come out in support for his vision for the subway. If there had been a rally at City Hall supporting subways, the "mushy middle" might have been too afraid to abandon the Mayor and risk crossing their constituents. Instead, the Mayor merely pounded on his desk (at least metaphorically).

7. Positive. Great leaders have a positive outlook. I haven't seen the Mayor smile in months. He always appears under siege. And angry. This is not very motivational for either his fellow councillors or the voters.

8. Persuasive. Successful leaders are charismatic and can get their followers to follow them anywhere. Any great leader is a great salesman first. The Mayor's selling style is more in the nature of bullying. If you are a bully, make sure you can deliver on your threats. The Mayor's opponents called his bluff and the emperor had no clothes (sorry for that unfortunate metaphor). Rob Ford neglected to line up the support that he would need to win the day on subways. Bluster just doesn't cut it.

9. Communication. Rob Ford got elected because he was seen as an "everyman", the people's mayor. In campaign mode, he was able to effectively stay on a simple message of "end the gravy train". However, once elected he had no plan. And if he did, he has not communicated it in an effective manner.

Mayor Rob Ford doesn't seem to understand how City Hall politics works. We have a "weak mayor" system here in Toronto. This means that Mayor on has only one vote. Therefore, he must garner the support of over half of the other councillors in order to move his agenda forward. It appears that he is in way over his head at least in terms of his leadership abilities and his ability to manage and lead a diverse council.

Crowdsourcing

Much has been written lately about "crowdsourcing", the latest trend in funding start up businesses and other projects. The JOBS (Jumpstart Our Business Startups) Act, which allows crowdsourcing in limited circumstances, recently passed the US House of Representatives. No such legislation exists yet in Canada, so crowdsourcing for business start ups still violates Canadian securities laws.


What is crowdsourcing? According to Wikipedia, crowdsourcing describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Websites such as Kickstarter allow people to raise funds for their projects. For example, a musician can launch a tour by raising money from their fans.


Until recently, crowdsource funding for businesses was caught by US securities regulations. With the introduction of the JOBS Act, businesses can raise up to $1,000,000 from up to 1,000 investors with no one investor owning more that 10% through crowdsourcing and would be exempt from the typical securities legislation.


From a start up business' perspective, this is a great new source of capital with substantially lower transaction costs. Businesses will be able to post their offering on Kickstarter or other crowdsourcing websites (I'm sure that new ones will be popping up). Investors will be able to invest up to $10,000.


However, investors must be wary. Without the protection of securities legislation, you can expect scammers to jump in to raise money from an unsuspecting public. Buyer beware!


I have mixed feelings about crowdsourcing for financing start ups. On one hand, entrepreneurs will be able to harness the power of the internet and social media to raise capital for their business ideas. On the other hand, fraudsters will surely take advantage of the lax regulatory regime for crowdsourcing. Investors will have to be very careful and carry out their due diligence.


As Canada decides whether to jump on the crowdsourcing bandwagon, we should carefully monitor the US situation and determine what additional investor protections should be included in a Canadian crowdsourcing environment.

Partnership - A Necessary Evil

I have been asked to prepare a session for MaRS' Best Practices program on partnerships. So, I have been thinking a lot about what I might say. I found this column that was published in Profit Magazine in 2005. I thought I would share it with you:

It’s said that business partnerships are like marriage: easy to get into, messy to get out of. Surely you’ve heard horror stories about breakups that nearly ruin the business, if not the divorcees. When Jana Matthews and I polled entrepreneurs about their worst mistakes for our book, Lessons from the Edge, well over half the stories involved partnerships.

It’s also often said that partnerships are a necessary evil. Whoever came up with that one got it half right. Partnerships are often necessary, but they are not necessarily evil. Whether a partnership goes bad depends largely on what its participants invest in managing it. In fact, there are many simple ways to foster the productivity and longevity of even the most unlikely alliances.

For my entire entrepreneurial career I have been in partnerships. Why does anyone choose to have partners at all? Usually, an entrepreneur requires something only a partner can bring to the table (in exchange for equity, that is), such as money, contacts or a skill set. Sometimes an entrepreneur needs the confidence that can only be provided by working with someone else. Having someone to bounce ideas off can be very helpful—after all, running your own business can get lonely.

For example, one partner can provide industry expertise, while the other partner brings financing.

You can trace the roots of most failed partnerships to the beginnings of a business. The partners become so enamoured with the potential of their venture that they jump into bed before determining whether they share the same values and expectations. In some cases, entrepreneurs spend more time interviewing and checking the references of prospective employees than they do of their future partners.

Even if they’ve met their perfect match, many partners fail to discuss their respective responsibilities and contributions, such as what happens if more money or resources are needed, how decisions will be made and how they will get out the partnership. And they neglect to put it all in writing. (I’ll grant you that a shareholders’ agreement can be very expensive, but far less expensive than a litigated breakup.)

But some partnerships fail despite their solid foundations. Differences in ambition, work ethic or simply the stage of life can result in the relationship changing midstream.

As in marriage, don’t take your partnership for granted. Renew your partnership vows at least once a year. It is a good idea to go on periodic retreats to review your goals, roles and expectations. And when you don’t? Inevitably, problems and frictions arise that require patience and understanding to resolve. When this happens, you can employ a facilitator or coach to mediate a partners’ retreat to help resolve issues that have percolated to the surface.

Face it: partnerships take a lot of work. To make it a little easier, I’ve compiled a list of my favourite tips and tactics for making alliances fruitful and long-lasting.

1. Check out your prospective partner. Make sure that you share the same values, your skills are complementary and you have the same timelines. A 50-something partner will want to retire when the 30-something partner is just coming into his or her own. Don’t hesitate to conduct a background check: investigate references, do a credit search. Create some conflict during your “courtship” to see how your prospective partner reacts.

2. Put it in writing. Ideally, you should have a shareholders’ or partners’ agreement drafted by a lawyer. The pact should address all aspects of the partnership: what you are contributing, how decisions are made, how disputes are resolved, who is responsible for future capital injections and, most importantly, how you get out of the relationship. Even if you can’t afford a lawyer, at least write something down on the back of a napkin!

3. Have an annual retreat. Get away from the office once a year to review where you’ve been and where you’re going. Revisit your mission statement, business plan, etc. Address any issues or festering problems. Don’t be afraid to have it facilitated by a professional moderator or coach. It may help you resolve some issues or reach higher goals.

4. Get out more. Talk to businesspeople outside of the partnership. Organizations like EO, YPO and TEC provide a useful venue for exploring issues. After all, your fellow entrepreneurs may have already been there and done that. Better yet, they won’t be afraid to tell you when the problem isn’t your partners, but you.

Have You Checked Out Pinterest?

It would appear that Pinterest is the next big thing on the web. It is a virtual pinboard where you can organize and share images you find on the web. Once you register for the site,  you can create various themed "pinboards" and "pin" images to the pinboards. For example, if you are into photography, you can pin images which you find on the web or on your computer to your "Photography" pinboard. Like with Facebook, people like your pins. Like with Twitter, people can follow you and see what you pin to your pinboards from time to time.

Businesses have gotten into the act as people pin images of a business' product they like to their pinboards. Images sourced on the web will link people back to the business' website. The "Like" and "Following" features create an opportunity for viral marketing of a product or service.

As recently reported in Inc Magazine, when someone wore a Camiband, a new fashion accessory, recently on the Today Show, they got 3,500 hits on their website. However, when a raving fan pinned an image of a Camiband on their pinboard, it went viral and Camiband got over 40,000 hits. Clearly, Pinterest works for B2C businesses. It will be interesting to see how B2B businesses take advantage of it.

Pinterest has an interesting approach to registration. They have taken a page off gmail's marketing strategy. A user must apply to be invited to join. I have yet to hear of someone not being invited to join, but their approach has helped to create the buzz that's starting to fan out. Pinterest is growing fast. According to web measurement company CommScore, in January 2012, 13.76m people worldwide visited, and spent an average of 89 minutes there.

I have started a Pinterest page myself and I have begun experimenting with it. I plan on having an Entrepreneurship pinboard where I will pin images of interest to my following of fellow entrepreneurs. I will also create a Photography pinboard on which I will pin images relating to my hobby. Follow me on Pinterest to see how it evolves. Let me know if you have any suggestions.

Check out Pinterest yourself and I will follow you! 

Are Internships Exploitive?

I have very mixed feelings about internships for students and recent graduates. I have encouraged my own kids to seek them and they both have had excellent experiences, which in my son's case turned into a full time job. However, employers, who can otherwise afford it, are bringing young people into their businesses for little and often no pay. These young people have absolutely no bargaining power and are at the whim of the employer. They are also potentially taking work from others that the employer would have to pay.

I can see it from the employers' perspective - they are providing on the job training to young people who are otherwise relatively unemployable. To many companies, this is an opportunity to give back to the community by bringing young people into their business. Important skills are learned and the young person is better prepared for their first paying gig. In return, the company gets free or low cost labour.

However, from the young person's perspective, they are providing their time and energy and are receiving very little remuneration in return. Often they are doing low value tasks for which the employer would have to pay someone else. While it is true that they have the opportunity to learn important skills which will stand them in good stead for future employment, the young person has absolutely no bargaining power to ensure that they are treated fairly, particularly since unemployment rates are so high for their demographic.

Furthermore, students and young people looking for entry level opportunities don't have the financial ability to carry the cost of the internship. While they may not have mortgages and car loans to pay (mind you, many of them do), they do have to pay tuition and carry student loans.

To me it seems a bit exploitive. With governments cutting back education and student job funding, there will be more pressure on industry to provide internship opportunities and more and more young people will be joining the work force for little or no pay for an "internship experience". As far as I am aware, there is little in the way of regulation or governmental protection for these young people, other than minimum wage laws perhaps.

There is also a class issue that arises as young people from affluent families are better able to take a low or no pay internship than a student from more modest means. My kids had the luxury of having internship experiences for little or no pay as my wife and I are prepared to underwrite their education, including the costs of launching their careers through internship experiences. Not every student can afford to do so.

Now I am not advocating unionizing interns or anything as draconian as all that. However, I think there should be a debate around the issue of internships and some consensus as to what is fair in the circumstances. My own view is that unless there is a formal (perhaps accredited) educational benefit coming from the internship, the young person should be paid fairly for their work. What do you think?

What do you do with a Deadbeat like Mohit Gupta?

We all have collections problems with customers from time to time. However, I have an issue with a customer that's driving me crazy. Its  bad enough that he stiffed me for my bill, but what really irks me is that he lied to my face about paying it. Here's the story.

In the summer of 2008 I was retained by Mohit Gupta of Geo Drilling, an Indian company that was interested in finding a Canadian partner with expertise in the natural gas business. I asked Mohit for a retainer and the funds were wire transferred to my account. I then arranged a series of meetings in Calgary with potential partners and we went to Calgary together for a whirlwind couple of days.

On the morning of the last day, Mohit advised me that his grandmother was seriously ill back in India and that he had to go home right away. He asked me to represent him at the meetings on the last day of our trip and off he went back to Delhi. I finished up the meetings and sent him my report and my final invoice. I never heard from him again.

I sent emails, made telephone calls, all to no avail. My final invoice remains outstanding to this day.

That would have been the end of it, however, in the Fall of 2009, my wife and I were on vacation in India. It was Diwali and we were the guests of a friend and his wife who took us to a series of Diwali parties one evening. We were at the first of 3 events that we attended that evening and I couldn't believe my eyes - in a country of over 1 billion people, the first person I bump at this party was my old "friend" Mohit Gupta.

Rather that avoid me, he came right up to me, apologized and asked to meet with me to discuss the project and my invoice. My wife and I were leaving for Bhutan the next day, but Mohit and I agreed to have dinner in Delhi upon our return from Bhutan 10 days later.

So, off we go to Bhutan. I am busy telling my travelling companions about the Karma of running into Mohit and how he is going to pay my invoice. We meet for dinner my first night back in Delhi and he apologizes profusely, provides me with a long story about business challenges and promises to wire transfer my funds so that they will be waiting for me upon my return to Canada.

That was the last I heard from Mohit Gupta. I re-sent my invoice monthly. I sent emails, made phone calls, left voicemail messages, and yet I never heard from him again. My invoice is still outstanding almost 4 years later.

I did get some modest revenge as I was contacted by someone on Linkedin who was asking for a reference on good old Mohit. Suffice it to say that I gave the guy a strong warning.

So, what's the lesson? I got 50% of my fee prepaid as a retainer, so while I didn't lose money on the project as I was able to cover my out of pocket expenses, I got stiffed for the balance of my invoice. I suppose I could have gotten 100% of the fee up front, but that seemed a bit excessive at the time.

I guess the bottom line is to be careful who you are dealing with. Get references. Get as much of your invoice paid up front as possible if you are dealing with foreigners. And finally - don't do business with Mohit Gupta of Geo Drilling and MG Industries of Delhi, India.

Creditor Protect Yourself

Here's another one of my Profit Magazine columns. I wrote it 5 years ago. It is still good advice today.

Recently I had lunch with the poster boy for entrepreneurs who crash and burn but live - quite comfortably - to tell the tale. He thanked me for saving his financial life. A few years ago Bill (not his real name) came to see me for some business advice. Bill was anxious to expand his business. I listened intently to Bill’s story and his plans. I reviewed his business plan and financial statements. I then proceeded to provide him with comprehensive advice as to what I thought he should and should not do.

Unfortunately, Bill ignored virtually all of my advice and ended up in corporate and personal bankruptcy a few years later. Fortunately, he did listen to one important bit of advice that I imparted to him on that fateful day. The piece of advice that Bill did follow was to creditor protect himself. As a result, when he went through the bankruptcy process and lost his business, he managed to keep his house and all of his personal financial investments.

I want to share this advice with you too, so that if you ever end up in the same position as Bill, you too will have a nest egg with which to start over.

The nature of entrepreneurship is that we tend to be risk takers. Furthermore, to be successful we must be fully engaged in growing our business. Often this leads to the unfortunate result that we don’t look after our own personal financial needs in the most responsible and/or timely manner. On top of everything, we tend to be risk takers in our personal investments. Many of us fail to put basic financial planning tools in place in order to safeguard ourselves and our families. Simple things such as wills, powers of attorney, life insurance, etc., are often left to be addressed at a later date.

My advice to you is to make getting your personal house in order a priority.

The bottom line is that as an entrepreneur you are taking on tremendous risks. You are the officer and director of your company and, therefore, take on all of the statutory liabilities of your business such as tax and other source deductions, health tax, employment standards, workers compensation, HST and so on. You may have personally guaranteed all or part of your company’s debt. You may have even mortgaged your home to finance your business. If the s—t hits the fan, you could lose everything.

In most investments higher risks translate into the potential for higher returns. Obviously, you embarked on your business adventure with this goal in mind. However, typically (particularly in the early stages of your business) you either pay yourself very little or, in many cases, nothing at all. By reinvesting your profits in your business, the ironic result is that you are taking higher risks and receiving lower (current) returns.

Manage the Risk

What should you be doing to manage this risk? You can do some basic things like diversifying. Rather than leaving your profits in your business as retained earnings, take money out of your business from time to time and build a nest egg by investing conservatively. Resist the impulse to invest in other businesses in your sector or industry. Even  though this may be within you comfort zone, if there is a downturn, you could easily lose it all.

Other suggestions involve making sure that you have planned your estate. Do you have adequate life insurance? Disability insurance? Critical illness insurance? Is your will up to date? What about a living will? Do you have a power of attorney?

Separate Assets in Your Spouse’s Name

The first, simplest and least expensive credit protection strategy for your nest egg is to put assets in your spouse’s name (provided that he or she isn’t also an officer and director of a company, has signed personally at the bank or has other potential liabilities). When Bill went through personal bankruptcy, he and his family managed to keep their home because the title was in Bill’s wife’s name. Making your RRSP contributions into a spousal plan, rather than into an RRSP in your own name will safeguard your retirement savings from your creditors.

Segregated Funds

Bill was also able to retain his personal financial holdings because they were invested in segregated funds. Segregated funds are investments in mutual funds through an insurance company. Because these investments are insurance contracts purchased from an insurance company, they are governed by the insurance legislation in each province and are exempt from being seized by creditors. The same is true of a traditional insurance policy. Most major insurance companies offer a wide range of mutual funds so that you can select a portfolio that is consistent with your personal investment objectives. While the management expense ratios (MERs) for segregated funds are slightly higher than the management fees payable for the same mutual fund purchased outside of the insurance contract, consider the higher cost a small price to pay for “creditor protection insurance”. Segregated funds can be purchased in registered (i.e. RRSPs and RESPs) and unregistered investment accounts.

Individual Pension Plan (IPP)

Another relatively inexpensive way to creditor protect your retirement savings is to set up an Individual Pension Plan (IPP). An IPP is a defined benefits pension plan that you can set up for yourself. As a pension plan regulated under provincial and federal pension legislation, IPPs are administered as trusts and are creditor protected. A further benefit of an IPP is that the contributions are not fixed as they are with the maximum RRSP contribution. As you get older the tax deductible contribution increases every year. There is a lot more to IPPs than this simple introduction. Talk to a financial advisor who has an expertise with IPPs. Many financial advisors purport to know about them, few really know what they are talking about. You can always call me and I will refer you to someone!

Family Trust

A more expensive way to creditor protect yourself is to set up a family trust. In this instance, you would pay a lawyer to set up a trust naming you and the other members of your family as contingent beneficiaries. In other words, the trustee has complete discretion to decide whether to pay anything from the trust to you. You could be the trustee or you can name someone else as the trustee. As a contingent beneficiary you have no absolute right to the assets in the family trust. As a result, in theory your creditors cannot force the trustee to turn over the assets of the trust. There have been instances where a court has ordered the trustee to turn assets over, particularly where the trust was established on the eve of an insolvency.

Offshore Creditor Protection Trust

You can add a belt and suspenders and safeguard against an overly zealous Canadian court by going offshore and utilizing a foreign third party trustee for your trust. An advantage of this approach is that a Canadian court will not have any jurisdiction over the foreign trustee. In addition, depending on the foreign jurisdiction you choose, the foreign country will have a statute of limitations that provides that the claim must be commenced in the foreign country within a specific period of time. Usually, by the time your creditors complete their claim against you here in Canada and figure out that they will have to pursue your assets in another jurisdiction, the statute of limitations will have expired.

One caveat - If you transfer your assets into any of these vehicles when you are technically insolvent, your creditors may have the right to trace the assets and unwind the creditor protection steps that you have taken. Therefore, it is important to set up these protections well in advance so that they are part of your ongoing estate planning considerations and not merely a way to defeat your creditors.

Bill was able to buy me lunch because he took my creditor protection advice. He put his house in his wife’s name and moved his financial assets into segregated funds. Bill may have lost his business, but he still has his nest egg so he can start over again. Will you?

Partnerships - A Necessary Evil

I have reviewed some of my earlier writing from my book, Lessons from the Edge, and from my Profit Magazine columns and have decided to share some of what I consider to be the "best of". Here's one on partners:

It’s said that business partnerships are like marriage: easy to get into, messy to get out of. Surely you’ve heard horror stories about breakups that nearly ruin the business, if not the divorcees. When Jana Matthews and I polled entrepreneurs about their worst mistakes for our book, Lessons from the Edge, well over half the stories involved partnerships.

It’s also often said that partnerships are a necessary evil. Whoever came up with that one got it half right. Partnerships are often necessary, but they are not necessarily evil. Whether a partnership goes bad depends largely on what its participants invest in managing it. In fact, there are many simple ways to foster the productivity and longevity of even the most unlikely alliances.

Why does anyone choose to have partners at all? Usually, an entrepreneur requires something only a partner can bring to the table (in exchange for equity, that is), such as money, contacts or a skill set. Sometimes an entrepreneur needs the confidence that can only be provided by working with someone else. Having someone to bounce ideas off can be very helpful—after all, running your own business can get lonely.

You can trace the roots of most failed partnerships to the beginnings of a business. The partners become so enamoured with the potential of their venture that they jump into bed before determining whether they share the same values and expectations. In some cases, entrepreneurs spend more time interviewing and checking the references of prospective employees than they do of their future partners.

Even if they’ve met their perfect match, many partners fail to discuss their respective responsibilities and contributions, such as what happens if more money or resources are needed, how decisions will be made and how they will get out the partnership. And they neglect to put it all in writing. (I’ll grant you that a shareholders’ agreement can be very expensive, but far less expensive than a litigated breakup.)

But some partnerships fail despite their solid foundations. Differences in ambition, work ethic or simply the stage of life can result in the relationship changing midstream.

As in marriage, don’t take your partnership for granted. Renew your partnership vows at least once a year. Go on periodic retreats to review your goals, roles and expectations. And if you don’t? Inevitably, problems and frictions arise that require patience and understanding to resolve. Employing a facilitator or coach to mediate a partners’ retreat can help resolve issues that have percolated to the surface.

Face it: partnerships take a lot of work. To make it a little easier, I’ve compiled a list of my favourite tips and tactics for making alliances fruitful and long-lasting:

1. Check out your prospective partner. Make sure that you share the same values, your skills are complementary and you have the same timelines. A 50-something partner will want to retire when the 30-something partner is just coming into his or her own. Don’t hesitate to conduct a background check: investigate references, do a credit search. Create some conflict during your “courtship” to see how your prospective partner reacts.

2. Put it in writing. Ideally, you should have a shareholders’ or partners’ agreement drafted by a lawyer. The pact should address all aspects of the partnership: what you are contributing, how decisions are made, how disputes are resolved, who is responsible for future capital injections and, most importantly, how you get out of the relationship. Even if you can’t afford a lawyer, at least write something down on the back of a napkin!

3. Have an annual retreat. Get away from the office once a year to review where you’ve been and where you’re going. Revisit your mission statement, business plan, etc. Address any issues or festering problems. Don’t be afraid to have it facilitated by a professional moderator or coach. It may help you resolve some issues or reach higher goals.

4. Get out more. Talk to businesspeople outside of the partnership. An EO or YPO forum or discussion group can provide a useful venue for exploring issues before you are ready to raise them with your partners. After all, your fellow entrepreneurs may have already been there and done that. Better yet, they won’t be afraid to tell you when the problem isn’t your partners, but you. 

Union Leadership is Missing the Point

I was listening to a debate on 640AM Toronto radio the other day between financial guy and Mr. Happy Capitalism, Lou Schizas, and Ken Lewenza, the head of the Canadian Auto Workers union. They carried on the usual boring debate - Lou said Canadian unionized wages are low because that's all the market will bear and Ken said that it was unfair that CEO salaries are so high relative to the rank and file worker. Back and forth they went, without addressing what in my mind is the real issue.

As I see it, the 1% vs 99% debate comes down to simple economics. The high paying middle income jobs have been exported to lower wage countries (the 99%), while the scarcer and more skilled jobs remain in North America and earn substantial salaries (the 1%). It occurred to me that the North American labour movement is misdirecting their attention. Rather than focusing on the 1% while more and more of their jobs are leaving the country, the unions, and environmentalists and human rights advocates for that matter, should be working towards higher wages, improved labour conditions and basic human rights in the countries where the middle income North American jobs are going.

The unions, environmentalists and human rights advocates are busy attacking what's left of the North American economy, while China, India and the other BRIC countries grow at close to 10%. China and India are not part of the Kyoto process. In China workers have little in the way of human rights. So while the disgruntled workers and their leadership occupied most major North American cities in 2011,  jobs continued to go to lower cost markets.

So, what's to be done, if fighting over the remaining scraps of the North American economy is not the answer?

I think that its time for the North American union movement to move on and grow up. Unionized workers in North America have the best working conditions in the world. What they don't have is demand for their labour skills because they can't compete globally at current wage demands.

The North American labour unions should take the fight to the real enemy - low paying labour in the developing world. Its time for the unions to organize and speak out on behalf of the workers who are taking their North American brethren's jobs. Rather than fighting over whether the CEO gets paid to much, why not fight for improved wages, labour conditions and human rights in the developing world. Imagine if Chinese factories had to meet the labour red tape that exists in North America. Imagine if Chinese factories had to meet the same environmental protection legislation that exists in North America. Imagine if workers in developing countries had basic human rights - such as freedom of speech and the right to vote. Their labour costs would rise and their competitive advantage would evaporate.

It is high time that the labour movement realize that they are fighting the wrong enemy. Their North American employers have nothing more to give if they are now fighting over whether their boss is being paid too much. They are rearranging the deck chairs on the Titanic, while their jobs continue to flow out of the country. Its time that the union leadership earn its pay and lead a global fight for fair wages, working conditions and human rights. The ultimate beneficiaries will be the North American worker, who will no longer have to compete with one hand tied behind their backs.

Jazz Thomas Cook and the Lost Art of Corporate Communications

My family and I travelled to Nuevo Vallarta, Mexico for a one week all-inclusive vacation the week of Christmas for a much needed rest. The resort - the Occidental Grand Nuevo Vallarta - was fantastic. However, the flight to get there was a nightmare. Our carrier was Jazz Thomas Cook, which I believe is operated by Air Canada.

While delays can be expected at this time of year due to weather and traffic, however, poor communication regarding the reason and length of the delay cannot be excused, particularly in this era of instant communication - the internet, email, bbm, sms, Twitter, Facebook, etc.

Our flight was scheduled to depart at 9 am EST on December 23, 2011. We dutifully showed up at the airport 2 hours ahead of the departure time to check in. We were advised that the flight was on time and we were excited to start our vacation.

At 8:30 am or so, we were advised by the gate attendant that the flight was to be delayed due to unidentified equipment issues. By 10:30 am, it was announced that the flight was delayed until 9 pm and that we should go home until 7 pm. We were offered taxi/limo vouchers, on which the telephone numbers of a limo company and Jazz Thomas Cook were handwritten for our convenience. We were told to check the Jazz Thomas Cook website or call the number that had been provided to us. We weren't happy about the delay, but could understand that safety must come first. So, off we went home.

As the time for departure from home to go back to the airport approached, I attempted to find out whether the flight was still departing at 9 pm. I went to the Jazz Thomas Cook website, but could not find any information about our flight. (Either it wasn't there or the site was impossible to navigate.) I then called the number that I was given. After navigating through the usual menu of options and sub options, I finally got to the recording for "Today's Departures", which said that there were no departures today and promptly hung up. Finally, I checked the Greater Toronto Airport Authority website, which said that the flight was still departing at 9 pm. So, off we went back to the airport.

Upon arriving at the airport and finding the gate, the posting at the gate said that the flight was still leaving at 9 pm. However, as time went by it became apparent that 9 pm was no longer realistic as no plane had arrived. Finally, at 9 pm the flight number and departure time disappeared from the board at the gate, with no update. The passengers at this point got very agitated as there had been no public announcement about our flight since we were sent home at 10:30 am that morning. The GTAA employee at the gate either didn't know anything or was stonewalling for some reason. The natives continued to get more and more restless.

Rumours starting circulating that there was going to be an unscheduled stop in Windsor, Ontario (of all places). The GTAA employee (whose name was Brenda, with no last name) continued to stonewall. Eventually the plane arrived and was boarded without any explanation for the delay. When asked whether it was true that we were stopping in Windsor, Brenda refused to answer and simply said that the captain would provide us with the flight plan update.

Once on board, we finally took off at 11 pm, some 13 hours after the scheduled departure time. We did stop in Windsor for fuel (apparently, this plane with its load couldn't make it to Puerto Vallarta from Toronto).

The bottom line is that Jazz Thomas Cook treated us like mushrooms in the dark for over 12 hours. There was absolutely no meaningful communication with the passengers for a ridiculously long time and I can't for the life of me figure out why. Passengers, particularly Canadian passengers, are inherently reasonable. Had Jazz Thomas Cook opted to provide us with periodic updates as to the status of the flight, a lot of angst and anger that was directed at the carrier and GTAA staff could have been avoided. I am told that this is typical communication protocol for most airlines. We have all heard horror stories about passengers stuck on a plane for 7 or 8 hours without food, water, restrooms, access to the gate or an explanation. I just don't get it.

The prevailing wisdom elsewhere in business regarding corporate communication is to get out in front of the issue (think about the way Michael McCain handled the listeria crisis a couple of years ago). Why do airlines treat the passengers with such disrespect? Jazz Thomas Cook has a lot to learn about corporate communication best practices.

Where Have I Been?

It has been over a year since my last blog. Where have I been, you might ask?

As you may know, in November 2010, I sold an early stage solar development company to Oneworld Energy Inc., which was on the verge of completing a going public transaction. The plan was for Oneworld to provide funding for our many projects. Well, the going public transaction never happened due to very weak capital markets and other reasons. The upshot being that the much needed capital never came in.

I have spent the past 13 months working as a consultant to assist Oneworld in a restructuring process. It has been a difficult task to say the least. When the smoke finally clears, it is probably worth a lengthy blog on the restructuring process. In the meantime, my commitment to Oneworld only has a few months left and its time for me to move on and find my next gig.

As many of you know, I have spent my professional life either as a serial entrepreneur or as a trusted advisor to entrepreneurs. I am a lawyer by training, but have a unique perspective having been both a practicing lawyer as well as an entrepreneur living on the edge.

I have worked with a variety of entrepreneurs over the past number of years, the most notable of which is Razor Suleman, founder of Achievers (formerly I Love Rewards). I met Razor at one of my speeches promoting my book, Lessons from the Edge. Razor was at a critical point in his business. From that time, I helped Razor create his first advisory board (with me as chairman), I coached him through his first strategic planning process and, ultimately, I helped him raise his first round of outside financing, a combination of venture capital, angel and "friends and family" money. Since that time, Achievers has been a tremendous success, with the latest benchmarks being a major investment by Sequioa Capital, one of Silicon Valley's premier venture capital firms (think Apple, Google, Yahoo, Linkedin and YouTube, to name a few) and Razor being named Ontario Ernst & Young Business to Business Entrepreneur Of The Year.

So, what's next? As my responsibilities at Oneworld wind down, I have started the process of reviewing new opportunities. To broaden my search, I am doing a number of things to "get back out there". I am volunteering as an advisor at MaRs, I am ramping up my speaking engagements, I am networking with various friends and colleagues and I am starting to write again (beginning with this blog post).

I am looking to meet a future E & Y Entrepreneur of the Year, who I can mentor to take his or her business to the next level.

Stay tuned. There will be more blogs to come. Let me know what you are interested in reading about.

Jeff

jmdennis@calefinancial.com

Make Money on Your Roof

There's big money on the roofs of industrial and commercial buildings in Ontario as a result of the Feed in Tariff Program under the Ontario Green Energy Act. If you avoid the pitfalls, you can take advantage of this huge opportunity by putting a solar PV power plant on your roof.

As you are no doubt aware, the Ontario government enacted the Green Energy Act a little under a year ago. The Green Energy Act implements one of the most generous feed in tariff (FIT) programs in the world. As a result, many international players in the renewable energy space are beating a path to Ontario. Our company, Oneworld Energy, being a Toronto based diversified renewable energy company with a global footprint, is well positioned to take advantage of the opportunity presented by the Green Energy Act.

One of the most profitable opportunities under the Green Energy Act involves the development of photovoltaic (PV) solar power plants on the roof of industrial and commercial buildings. The FIT Program provides a 20 year contract with the Ontario Power Authority (OPA), whereby the OPA buys 100% of the power produced on your roofs at a fixed price. The feed in tariff varies by the size of the power plant, however the sweet spot is systems between 10 kW and 250 kW, which will pay CDN $0.713 per kWh for the life of the 20 year contract. Someone who owns the system on their own roof can earn returns in excess of 15%, depending upon a few variables.

Some people are even renting their roofs to passive investors who are aggregating multiple rooftop systems into portfolios. The market for rent seems to be around CDN $0.40 to $0.50 per square foot of useable space.

When considering whether to rent your roof or own your a system on your building, there are a number of important considerations that you should take into account:

1. Do I need a new roof?

Yes and no. The system will be on your roof for 20 years. Most flat roofs have a life span of 20 years as well. The bottom line is that if you are due for a new roof in the next few years, since you will have to replace the roof anyway, you might as well as do it now so that you can take advantage of the FIT Program.

2. Will my roof leak or cave in?

No and no. Virtually all roof mounted systems designed for flat roofs are non penetrating. Instead, we use a ballast system which sits on top of the roof membrane and is weighed down by gravel or paving stones which evenly spreads out the weight of the system. The Ontario Building Code dictates requirements for weight and snow load, among other things. Provided the system meets Building Code requirements and is properly installed, the roof will have no problem supporting the system.

3. Does the installer have experience?

As the Feed in Tariff Program is less than a year old, most of the people who have jumped into the market have absolutely no experience in designing, installing or operating the systems. Before, someone puts a power plant on your roof, be sure that you check out their credentials. Oneworld Solar and its team have been installing roof and ground mounted systems in Europe (Germany and Italy) for the last number of years. We have experience in dealing with virtually any situation that can arise and we have key relationships with global players (suppliers, financiers, etc).

4. What's this I hear about "domestic content"?

Ontario has one of the most generous FIT programs in the world. However, in order to be entitled to the high rates for solar, generators are required to use a certain percentage of "domestic content" or made in Ontario components. Its 50% this year and 60% in 2011.

The first phase of the FIT Program is supposed to involve 2,500 MWs of solar projects. Over 750 MWs have already been approved. Currently, there is substantially less than that in supply of modules and inverters, the key components of a solar PV power plant. The upshot is that there are a number of installers running around making promises about timing and pricing that they cannot possibly meet. Be sure to ask a potential installer about their source of domestic content.

Oneworld Solar, due to our deep relationships with global component manufacturers, has over 100 MW of "domestic content" for 2011. We are a 65% "domestic content" provider.

5. What returns can I expect?

Its much better to own the system, rather than simply be a landlord. A 50,000 sq ft roof at CDN $0.40 per sq ft will generate CDN $20,000 in annual rent. Not bad considering your roof has historically been a cost centre.

By owning the system, you can earn between 10% and 20%, depending upon the leverage in the deal. In a market where real estate returns are under 10% and tenants' creditworthiness can be in question, where else can you get these returns from a government agency guaranteed for 20 years. If you bought a 20 year Ontario bond, you would get a return between 4.5% and 5%. WIth a solar power plant you are getting returns that are between 3 and 4 times the returns you would earn from the same credit risk. Not bad!!

I would be pleased to talk to anyone interested in learning more about how you can take advantage of the Ontario FIT Program. Get in touch with me at jdennis@oneworldenergy.com.

Still Green - Part II

I can't believe that its been over a year since my last installment. So, what's new?

Much has transpired since March of 2009. COU Solar Inc., the company John Gamble and I founded, has grown to be a >$50 million company. We sold ourselves for shares to Oneworld Energy Inc. Oneworld is a diversified renewable energy company with operations in North America and Europe. Its 3 operating divisions are:

• Wind development and power production
• Solar development and power production
• Operations and maintenance for both solar and wind

The company has over 1.5 GW of solar and wind projects in both North America and Europe slared to be developed over the next couple of years.

Oneworld's revenues have increased steadily from $2.5 million in 2007 to $25 million in 2009. Revenue for 2010 is projected to exceed $100 million.

I now run the solar business for Oneworld along with my co-founder John Gamble. John looks agter the European business and I am focused on the Ontario market with the advent of the Green Energy Act.

Oneworld is in the process of going public by way of a CPC. We should be publicly traded by the end of June. Stay tuned for further updates.

I'm Still Green - Lang AG

You may be wondering what my next project is. I have been retained by Lang AG to assist it in getting to the next level in its business development. We are financing this project by taking Lang public on the Toronto Venture Exchange by way of a reverse take over.

Lang AG is in the property improvement and solar integration business in Germany. Their property improvement business services some of Germany's largest property owners, providing a turn key solution to their renovation needs. When Germany was unified, the government privatized large portfolios of government housing. The private equity investors are obliged to bring the properties up to current “green” standards. Government subsidies are in place to assist with this. Many of the property owners outsource this to companies like Lang.

In addition to the property improvement side of the business, Lang is also developing ground and roof mounted (for their property owning clients) PV solar power installations. We have partnered with a Canadian fund to provide the equity for these projects.

At this stage, we are looking for public distribution of a pre-RTO round in order to comply with the distribution requirements of the Toronto Venture Exchange. The minimum investment is CDN $5,100. The maximum is CDN $25,500. We will be looking for a more substantial round of financing in the fall once we are publically trading.

Our plan is to fund Lang's growth of both the property improvement division throughout Europe as well as the solar division on a global basis. The solar division's initial focus will be roof and ground mounted projects in Germany, but we also intend to expand into other markets in Europe and North America, particularly with our team based in Ontario given the new initiative announced last week by the provincial government.

Green business is one of the few industries that will experience growth during this economic downturn. I suggest that you join me in going green. Otherwise, you might be green with envy!

Jeff Dennis' Lessons from the Entrepreneurial Edge: I'm Back!!

Jeff Dennis' Lessons from the Entrepreneurial Edge: I'm Back!!

http://www.jeffreydennis.ca/

I'm Back!!

Its been over 6 months since the last entry on my blog. The reason for the hiatus was a combination of being very busy in my role as interim President & CEO of SonnenEnergy Corp. and the risk of writing about the goings on at the company given the disclosure rules of the Toronto Venture Exchange. Frankly, I wasn't too sure about what I could and couldn't write about. So, I chose not to write at all.

I left SonnenEnergy a little over a month ago. I have been asked by many people why I left. The bottom line was that the board of directors and I were in a dispute with Hans Hager, the founder and major shareholder of the company. It got to the point that Herr Hager commenced litigation against the company and me personally. He was able to get injunctive relief that made it virtually impossible to deal with the many problems of the company without a court order or his consent.

Despite many attempts to settle the litigation or obtain Herr Hager's consent to some of the changes that the board and I had brought forward, we simply couldn't move the company forward. In addition, we were needlessly spending a huge sum of money on litigation. We came to the conclusion that it was not in the best interest of the company to spend money that we didn't have to fight the litigation. As a result, we resigned and turned the company over the Herr Hager and his new board.

The ball is now in the new board's and Herr Hager's court to act in the best interest of the company. I remind them that they must take into account the interest of the company as a whole when making decisions about the future of the company. I wish them well, particularly since I am still a significant shareholder of the company.

President & CEO of SonnenEnergy Corp.

The last week and a half have been crazy for me. Since November, 2007, I have been chairman of the board of directors of SonnenEnergy Corp. (www.sonnenenergy.com), a public company that trades on the Toronto Venture Exchange (TSXV:PWR). The company is a solar energy integrator and independent power producer with most of its operations in Germany.

Last Monday, the day before our annual general meeting of the shareholders, the board of directors decided that we needed a change in the leadership of the company. On short notice, I agreed to step in as President & CEO until we can conduct a search and identify an appropriate candidate for the job. The next day I addressed the shareholders and two days later I did the earnings conference call for shareholders and analysts.

You can hear the webcast of my conference call at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2394480.

In between these meetings and over the past weekend I have been busy getting my head around the issues, communicating with key stakeholders and planning a trip to Germany to review our operations.

As I see it, my goals are as follows:

1. Conducting a thorough and comprehensive search to find a new CEO to lead this company, ensure that we execute on our business plan and create value for our shareholders;

2. Working diligently to ensure that we deliver on the projections laid out by management and that revenue from future projects comes in as projected; and

3. Making it a priority to secure the funding we require in order to fund our future growth and meet our installation and power production targets in this year and the years to come.

With the whirlwind that I have jumped on to, I may not be blogging on as regular a basis. Stay tuned.

All Your Eggs in One Basket

Much has been heard and written about businesses that have too much of their revenue tied to one customer. If the customer goes elsewhere, you lose your business.

In fact, a friend of mine who shall remain nameless for confidentiality purposes was just about to submit a letter of intent to buy a business that had 90% of its revenue coming from one customer. During his due diligence, my friend heard a rumour that the customer representing 90% of the business had recently decided move to single sourcing for this product and the target company apparently was not going to be the single source. Yikes.

Another example of having all one's egg is one basket involved my client Auctionwire Inc. This is a supply side situation. Auctionwire is the leading auction agency for top brand companies and non-profit organizations. Historically, they ran all of their high end auctions exclusively on the ebay platform. Ebay was effectively their sole supplier of the back end of their auctions. A number of months ago, Auctionwire had a dispute with one of their customers when the customer failed to deliver the auction item and Auctionwire refused to forward the purchase price opting to protect the buyer. A complaint was lodged with ebay, who rather that ajudicating whether the complaint was valid, began to arbitrarily suspending some of Auctionwire's other auctions even though they had nothing to do with the dispute.

Auctionwire began to realize that it had all of its eggs in ebay's basket and that their entire business was at risk. Ebay could arbitrarily and unilaterally put Auctionwire out of business because of the onerous terms of their standard form user agreement. Because of the near monopolistic position that ebay has in the market, Auctionwire has no ability to negotiate the terms of the user agreement. They have to take it or leave it.

Auctionwire decided to leave it. They took immediate action to diversify their suppliers of the online auction back end. Auctionwire successful found another platform and was able to secure the exclusive licence to use this online auction software. Now Auctionwire controls their own destiny because they have complete control over their online auction back end systems and no longer are dependent on ebay.

Be very careful if you have all of your eggs in one basket, whether it is on the supplier or the customer side. Being so dependent on someone puts your business in a very vulnerable position. Whether they have greater bargaining power, end up going out of business or being bought by one of your competitors, having all of your eggs in one basket could result in the death of your business.

Indian Drilling Company

I just returned from a week in Calgary with my new client Mohit Gupta of Geo Drilling Ltd., a coal bed methane (CBM) start up in India.

I met Mohit when I was in Delhi in 2004 as part of the speaking tour that I did in connection with the launch of my book, Lessons from the Edge. Mohit was the president of the Entrepreneurs' Organization chapter in Delhi and was my host during my stay.

Mohit is now working with some partners with coal industry experience to build an Indian CBM drilling company. Apparently, while there are any number of traditional deep well drilling companies in India, there are virtually no competitors in this specialized space. Shallow well drilling for CBM requires unique skills.

My mandate is to find a Canadian joint venture partner for Geo Drilling. While Geo Drilling has capital, labour and local expertise and contacts, they require a Canadian JV partner with the specialized skills to drill for CBM. We had a very successful trip. We identified a couple potential partners and we are now getting to know them better in order to identify the ideal partner. We will then negotiate the terms of the JV.

Its all gloom and doom here in Ontario these days. Real estate prices are drifting in the wrong direction and the lay offs in the manufacturing sector are piling up. Calgary on the other hand is in full fledged boom town mode. It was reinvigorating to be in an environment where there is a sense of confidence about the economy. I look forward to spending more time in Calgary and India as we put together this exciting Indo Canadian joint venture.