Category Archives: Business

The rising cost of rising gas prices

Whether you own a jingle-spouting ice cream truck or a velour-draped women’s clothing boutique, nothing is more important for the success of a small business than location.
“The fundamental thing is,” says Joseph Paradi, a management and entrepreneurship professor at the University of Toronto, “can you get the customers who need your goods?”
He says smart entrepreneurs know their products and who wants to buy them.
“A store that caters to retired people isn’t going to be a good idea in the suburbs. If you’re a Halal meat store and open in Rosedale you’re not going to get much uptake.”

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Keeping your business safe

Whether stuffing videogames under hoodies or diapers in the bottom of baby carraiges, thieves will steal anything that isn’t bolted to the floor.
Theft is inevitable, but the best weapon against it costs less than little Jimmy No-Good’s first stolen lollipop—excellent customer service.
“Saying ‘hi, how are you,’ to every customer is a huge asset,” says Lucas. “Walmart does it not just because they want to say ‘hello’, they want to say ‘we know you’re in our store.’” That way, he adds, “The thief knows someone is there.”
Simple awareness, he says, is the first step. But the second is a bit more expensive—a camera system, which can run anywhere from $1000  for four cameras, a digital video recorder, and a public monitor, to $5000 for more complicated setups. Then, recommends Lucas, retailers need an alarm system (another $1000) to make sure after hour break-ins end quickly, and with police on the scene.
Beyond this, security needs to be specifically tailored to the business.

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Changing spaces

Whether a lease is up, a business has grown, or the lingering smell of the fish monger next door has started seeping into the dreams of employees, there are many reasons for a small business owner to change location.
The key to a fruitful move, says Orest Kelebay, president of Max’s Market, a Bloor-west prepared food store,  is forward thinking.
“Successful companies are looking at the horizon, not down at their feet,” he says. “You go when the opportunities present themselves.”
Kelebay, an entrepreneur who owned a handful of restaurants before opening Max’s in 1999, recently launched a second location on the Queensway near Islington. He bought land there three years ago in the lead up to major development projects in the area. As more stores went up and condos began to fill, he realised the market was ripe to expand his business. But for many entrepreneurs, moving doesn’t come at such opportune times.
Often businesses change location because their lease is running down and they’re unable to negotiate a reasonable deal with their landlord, or, says Katherine Roos, Enterprise Toronto’s small business manager, because “there’s no revenue coming in, there’s no evidence of growth, their correct customers aren’t coming in the door.”
She says moving is a difficult process—it means potentially losing customers and having to re-establish a presence in the community.
“You want to do your homework,” she says, adding that retailers must always keep an eye on the demographics surrounding their business. If the age, income level, ethnicity and family status of nearby residents doesn’t line up with what they’re selling, it may be time to hit the road.
But not every entrepreneur has to worry about customers. For commercial business owners, low rent, ease of access for employees and presenting a professional image to investors takes precedent.

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Energy costs a challenge tight budgets

Tom Henheffer Special to the Star

Jamie Musselwhite is Toronto’s priciest piano tuner.

It’s a title he’s proud of, but it’s been challenging to maintain lately.

“As soon as I raise my prices, the other tuners raise theirs,” he says. “It’s hard to keep up.”

Like all entrepreneurs, Musselwhite has to keep a close eye on his finances, but as someone who’s constantly crisscrossing the GTA to serve clients — regularly covering upwards of 200 km a day — his bottom line is especially vulnerable to the price of gasoline.

With costs jumping from $1 per litre to a peak of over $1.50 in parts of the province over the past year, his finances have been especially volatile. But the counter-intuitive approach to marketing gives him leeway to maintain pricing that reflects costs — he charges $120 for a tuning, up from $95 in 2006 — reliably keeping his business in the black.

“I pass the cost on to the consumer. Customers never complain. If they do, I very happily suggest they try someone else,” he says. “If I had to struggle to make a living, I’d lower my prices to compete. It’s all a matter of balance.”

But Musselwhite’s approach won’t work for everyone.

“I’ve been doing it all my life. I’m a third-generation technician, and I’ve got the skills a younger technician won’t have.”

As a result, his experience nets a premium that lets him keep prices high.

Managing costs is a perennial problem for all business owners.

So other tuners, and businesses with different cost-management needs, must find their own solutions.

“The kinds of costs that throw businesses for a loop, the ones that are the most difficult to manage, are the ones that continue to surprise throughout the year,” says Ted Mallett, chief economist at the Canadian Federation of Independent Business. “Energy prices are at the top of the list.”

As gas prices show, Mallett says, energy costs swing wildly.

This isn’t a problem for knowledge-based industries with high margins, such as accountants, lawyers or software firms, but a spike in oil prices can destroy businesses with more overhead and tighter budgets. The trick, he says, is keeping track of revenue and always planning as far ahead as possible.

“There are fairly regular expenditures — pay periods, rent, heat and hydro. Project these costs forward and try to track what a typical revenue stream is,” he says.

This gives businesses more stability and helps when dealing with banks and investors.

“Banks do not like business risks. Understanding your business, the industry, being active in discussing this with the bank, it’s very helpful.”

This can lead to growth opportunities, which come with their own challenges — and opportunities.

Aditya Shah, co-founder of beauty subscription company Loose Button, knows about growth. The Toronto startup, which sends monthly packages of high-end cosmetics samples to subscribers, is looking to double its 10-person staff in the next six months, and has seen business jump 100 per cent month-to-month since its inception last year.

It’s still a small operation, but one that has to thrive or die. In 2010 there were only a small handful of beauty-subscription companies around the world; now, Shah says, there are over 30.

“For us to maintain leadership in the market, we need to grow fast,” he says. But, as a startup without much capital to burn, this growth has to be carefully controlled. So Shah plans meticulously and cuts spending wherever he can.

Probably his business’s greatest cost-saving success has resulted from eschewing traditional (and expensive) marketing. Instead, like an increasing number of young entrepreneurs, he focuses on word of mouth fuelled by social media.

“When we ship out our boxes, within 24 to 48 hours, you see all these blogs and YouTube reviews online that get anywhere from 10,000 to 50,000 views,” he says, adding that the key to generating positive word of mouth is simply “building a really great product.”

Shah doesn’t just trust his company to the hordes of Joe-YouTubers and Sally-Blogospheres. He fosters partnerships to expand word of mouth. To this end, he’s teamed with several newspapers and magazines to offer long-term customers free subscriptions to his service.

“They become exposed to us and we get new subscribers. It’s win-win. That goes a long way in keeping our costs down while we grow.”

That creativity never hurts and translates to huge savings over the long term. And, in the end, it stems from Shah’s careful business plan. This analysis and planning, says Mallett, is the key to successful cost management across industries.

“You can’t manage anything if you aren’t measuring it. Whether it’s keeping track of banking fees or tracking fuel use, make every attempt to try to quantify and measure the costs you have.

“Otherwise, you’re just guessing.”

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A cure for the energy crisis

Shale gas could one day replace coal in power plants and gasoline and diesel for cars and trucks

Getty Images/ MetroWest Newspapers

Mike Markham used to hold a match under his faucet and light the tap water on fire. He’d get a small blue flame or an explosive orange fireball, depending on the day. “I had to check to see if I still had a moustache,” he says. Markham lives on an 80-acre farm in Fort Lupton, Colo. There are about eight natural gas wells within a few miles of his property, which he says are causing methane gas to migrate into his water.

The problem, which also affected about 100 of Markham’s neighbours who get water from the same aquifer, ended this year when the drilling companies changed pipe infrastructure and introduced filters and holding tanks to remove the gas before it entered household sinks. The aquifer is still contaminated, but local concerns about water quality aren’t going to stop the nearby drilling. That’s life on the front lines of what might be the biggest energy revolution in generations.

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Eddy group arrives

Display at the Eddy Group showroom

Display at the Eddy Group showroom

The Eddy Group has come to Fredericton.

“People just don’t know about Eddy Group. (We’re) the new kid on the block. It’s all about service. Whether you come in with $1000 or $100,000 you’re treated the same. … It’s a family atmosphere,” said Debrah Brideau, one of Eddy Group’s showroom consultants.

The company’s new showroom is at 71 Avonlea Court. It carries sinks, bathtubs and mirrors for the bathrooms and kitchens of everyday consumers. It also has a full warehouse of supplies for contractors.

Dale Eddy is the Co-President of Eddy Group. He says the new showroom helps consumers.

Display at the Eddy Group showroom

Display at the Eddy Group showroom

“This gives us an opportunity to show (our products to) people that are working on a project. They can come in and see what it looks like in a nice setting.”

Eddy also spoke about his company’s slogan, “building on service.”

“You’re never really there (with service). We’re always striving to improve.”

Eddy said his company provides consumers with expert consultants, an elegantly designed showroom and products up to date with current trends and styles.

Betty Atkinson is an interior designer with Atkinson-Clark Design. She says Eddy group has made a good impression.

“It’s really excellent for someone in my position to bring in a client and let them see and touch. It’s a step above a department store,” she said.

“It’s definitely designed and set up for discriminating clientele, someone who wants good products.”

Eddy Group is a maritime company. It is family owned and run by the fourth generation of Eddy’s. The fifth generation is working their way up to management. Ken Eddy, the chairman of the company, says Eddy Group’s history and concentration in the Maritimes gives it some unique advantages over other retailers.

“It gives us a lot of flexibility,” he said.

“We’re able to customize (the company) for the Maritimes. We can style and

Display at the Eddy Group showroom

Display at the Eddy Group showroom

personalize it for the community.”

Even the people who sell Eddy Group its products are impressed.

Marcel Hardy sells Blanco sinks to Eddy Group.

“I’ve always had a very good relationship with them,” he said.

“ They way they deal with the public, I think is a big deal. From A to Z, from low end to the very chic high end product. They can give you a full package deal.”

Brideau says there are challenges when it comes to opening a new location. She says people sometimes think the showroom is only for contractors because of the warehouse out back. However, she wants the public to know that Eddys is for everyone and customers are always welcome.

This article originally appeared in The Daily Gleaner

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