The Business Unplanned Podcast Series

Speaker1 [00:00:00]: Thank you for listening to BMO Business Unplanned. If you like today's episode and would like more information, you can download the e-book for the show. Today's e-book is all about attracting more customers to your business. Get started and stay in the know today. Download your free e-book at BMO to attract more customers or check the link in the description of this episode.

Speaker1 [00:00:25]: Welcome to Business Unplanned, a business podcast brought to you by BMO. I’m Michael Hyatt and this is the final part, part four of a four part series entitled How to Work On Nodding in Your Business. This audio comes from our virtual event held on June 7th, 2022. In this episode, I'm joined by Sharad Sharma, a client solutions manager for Mita. And we're going to be talking about a really important topic, which is how businesses can acquire new customers for additional resources, you can visit bmo.com/smallbusinessresourcehub.

Speaker3 [00:00:49]: Let's shift over here to Sharad Sharma, client solutions manager at Mehta, working across so many great ad products and systems that we use every day. So Sharad, while consumer behavior is shifting and data is becoming increasingly important for businesses to market their companies. What are some of the most effective ways that a business can acquire new customers today?

Speaker2 [00:01:13]: Before answering this question, I want to highlight the role that I play at Mehta. It's basically to advise businesses to acquire new customers. My role is to advise on a day to day basis all the businesses on how to acquire new customer. And what we have seen in the last two years is a tectonic shift in how consumers behave or consumers are behaving in the marketplace right now due to the pandemic. What we have seen is it has brought a completely new set of shoppers into digital marketplace. Digital e-commerce marketplace, as we know, grew by close to 14%, over $5 trillion in 2021. With that crazy amount of growth in this marketplace, it's becoming even more important for any business to think from a customer lens. And this was important before pandemic, but this has become even more important now, given the importance digital marketplace has gotten in customer journey right now. And based on a research that we did at Mehta, what we found out was almost 81% of consumer in North America said that they have changed their shopping habits since the start of pandemic. And 92% say that they will continue with this new behavior because they are not used to this new behavior and they like the experience that they're getting in this new normal right now. And as customers have become accustomed to more online shopping and the personalization they receive, they're also more mindful of how businesses use their data.

Speaker2 [00:02:46]: In this new landscape, people want transparency, control and fair exchange when sharing their data and at the same time they expect tailored shopping experiences no matter their sharing choices. So we have to ensure that privacy and personalization should go hand in hand. And businesses, while they want to cater to their customer or potential customers, they need to respect their privacy choices as well. 69% of global online shoppers right now feel more personally connected to the brands that offer them their personalized content or deals. And 74% of us marketers that we are surveyed agree that relevant personalization and user privacy protection are not mutually exclusive, but they are very, very, very important. So these shifts right now are setting the stage for next generation of shoppers, and that's what the businesses need to be aware of. Already we are seeing Gen Z gravitate towards more entertaining, immersive and trusted shopping experience. Just before that talk started, we were having a conversation around how people are using Oculus and the different immersive experiences that are out there in the market. And that's where we are seeing more and more Gen Z gravitate towards. They want that immersive, entertaining experiences while they are doing their shopping as well. So while keeping up with these changes can feel challenging, we do have a once in a generational opportunity in front of us to innovate, and this will require brands to think differently about everything.

Speaker2 [00:04:22]: They need to think differently about their marketing strategies, their KPIs, the media channels that they use for marketing, their creative, their measurement, their privacy policy. Everything needs to be thought about differently and approached in a new way. But what sits at the heart of consumer expectation today is the ability to choose and control how they interact with their business, whether it's having a say in what data they share in exchange for personalization or being more selective in which creator they go for inspiration. I would say the ideal shopping experience put people at the centre and delights because consumer across all touchpoints marketing practices need to be evolved for these new consumer behavior and expectation and connecting products to people when they want them is not enough anymore. Businesses need to ensure that every interaction a consumer is having with their brand. They should get the feeling of personalization. They should get the feeling of trust. And they should ensure that the consumer feels that their data is protected and every opportunity should be treated as an opportunity to build a long term relationship with the consumer. I would also say performance marketing must also consider the whole customer experience. And it's not a new news when I say that customer journey is non-linear and more complex than ever. It can happen across devices and platform in a span of month or in just a few minutes or seconds as well. And it can happen in-store or it can happen online.

Speaker2 [00:05:56]: So the brands need to identify all the common elements across these different interaction points. And I'm coming from Meta, so I will talk about it a bit out here. But people are actually visiting our platform on average 21 times across an online purchase journey and this is based on our internal research. And compared to that, they go to a retailer site almost 18 times or they go to the store or search for something or on five times. So the brands need to understand where the interactions are happening with their consumers, and they need to be present in those interaction points and be immersive enough for consumers to have a long lasting relationship with the brand. They need to understand that a consumer's relationship with the brand will be rooted in trust, connection, convenience and value across every touchpoint. So if I have to summarize, I would say a business needs to think through five different characteristics in order to acquire new customer in this changing landscape right now. The first is the thought process around customer centricity. Ensure that every touchpoint that the business has is thinking from a customer lens and enabling customers to build a long term relationship with the business. They need to focus on trust. They need to deliver personalization without the cost of privacy. Trust and personalization should go together and should not come at a cost of one another.

Speaker2 [00:07:24]: They need to ensure that they are protecting the consumer data. They need to ensure that the consumers are getting the most personalised offering that they can get from the business. They need to build that connection with their consumer. They need to ensure their ads, their marketing resonates with the audience they want to reach. They cannot have one size fits all methodology anymore. If they are targeting me, they need to ensure or they need to find what my likings or what my habits are and ensure that their ad is targeting me in place of anyone else who might look like me. So they need to build that personal connection. They need to focus on convenience as well. They need to ensure that the purchase experience is as frictionless as possible, whether it's in-store or whether it's online. Convenience needs to be a key, and they need to ensure that they are measuring the right value of their marketing campaigns. A ton of times I have seen in my experience that brands spend a ton of dollar on various platforms or various marketing campaigns, but they don't have the right measurement behind those campaigns. And what ends up happening is they make business decisions which are incorrect, frankly, based on those incorrect measurement methodologies that they have. So they need to have the right measurement methodology in place to ensure that they are measuring the value of their marketing effort in the right way.

Speaker3 [00:08:46]: Hmm. So you mentioned there, I'll just recap customer centricity, trust, personalization and measurement. Those are some keys that took out of that. Our customer acquisition strategy is shifting in a big way, and if so, what factors are creating that shift?

Speaker2 [00:09:02]: Yeah, so I would say customer acquisition journey is shifting based on how the customer behavior is shifted. Right. The customer journey, as we knew pre pandemic is very different from a customer journey as it is right now. And what we are seeing is there are three key attributes that is defining the customer journey right now, and that's how the brands are thinking about their customer acquisition strategy as well. I touched upon this in my previous answer, but there is a big convenience gap which customers are focusing on right now. We all know because of pandemic and because of the macroeconomic situations that we are living in right now, people are feeling their life being more stressed on a day to day basis, and they want to prioritize what's more important to them on a personal level as compared to what they would prioritize, say, two years back as well. And as a priority, they want to focus on products and services that allow them to have some time and headspace to enjoy what they really enjoy in their life. Right. They want to spend quality time with their family, take vacations, take charge of their health, pursue new skills and all of that. So they are looking for more and more brands that can provide them that convenience factor. Right. So as a brand, you need to think from that lens of a customer journey. No, you cannot just focus on the benefit of your product. You need to tie that benefit back to how the convenience of your potential customer will be impacted.

Speaker2 [00:10:36]: Right. And think through that piece. The other is the participation paradigm, right? What we are seeing is people have a growing thirst for trying out new features when they are doing their day to day shopping. Right. We are seeing a huge demand of live shopping around the world on our platforms right now. And what that goes on to show is people are expecting a new type of relationship with brands and expect brands to adopt new technology as well. They want brands to be available where they are and not be just tied to one specific channel and stuff like that. So I think some of the other panelists touched upon this earlier as well. But brands need to be present where their consumers are. Right. And they cannot assume that their consumers will be present where the brands want them to present. A consumer can be right now on social media. They can be on TV, they can be on metaverse as well. So the brands need to start thinking through all of those different avenues that the consumers can be present and start engaging their consumers where they are. And the third piece that I would highlight out here is the brands need to start thinking about digital gathering. What we are seeing spatially increased during COVID and other challenging times as people are increasingly turning to communities to find support and offer support. We all have been through some really, really tough times in the last two or three years, and we all have started to look outside of our immediate family circle to find those groups where we can share, where we can get the support that we need.

Speaker2 [00:12:13]: And we need to ensure that brands are available or brands are portraying themselves as someone who care about all these issues and all these support systems that people are going through. So if as a brand earlier you were just focusing on your product, you were just hitting customers with their messaging about the benefit of their products and why customers should go for their product. That isn't the new normal anymore. Brands need to think through, as I mentioned before, a customer journey, right? They need to understand that a customer can have a very different set of priorities at this point in time. They can be present across different technologies or different avenues at this point in time. And the customers are leaning in more and more on these communities. So the brand needs to have a very clear, concise messages around how them as a brand is supporting these communities, how they are present across all these different technologies, and how they are able to solve that convenience gap that customers are looking for. Once you hit cross all these three different issues, then you have a much higher chance of getting new customer or retaining your existing customers as compared to a brand who would just go in with their product messaging from the get go.

Speaker3 [00:13:30]: So are there specific trends that businesses should be aware of and leverage when it comes to promoting their businesses online? Obviously, there are so many tools and you had to have so many options as well. What should businesses be thinking of and what trends should they be looking at more closely to actually get more customers?

Speaker2 [00:13:49]: Yeah, and I think one way to look at this is understanding what businesses need in these challenging times. It's one thing to say that they want to acquire new customer, but it's also important to understand for the customers that they have acquired. What's their bond rate at this point in time? Are they able to keep those customers on the books or are the customers one and done kind of customers? So I'm talking more about the customer retention piece. So when you ask me about the trends that I'm seeing, what we are seeing these days is there is a massive customer churn that we are seeing across businesses right now, and that's because the availability or the ease of purchasing that the customers have at this point in time and the loyalty factor that the business is used to have in the past is not that evident anymore. So I would say for any businesses that are thinking through their customer acquisition strategy, they should be thinking through the customer retention strategy along with the same lenses as we have done researches where we are seeing that over $1.6 trillion are lost by businesses because of their customer churn. And acquiring a new customer in this market can cost almost five X more than retaining an existing customers. Right? So what that shows on is they need to ensure that their focus is not just on new acquisition but also on customer retention.

Speaker2 [00:15:12]: Right. And for both these strategies, the idea remains the same. The value that a customer is putting in for personalization, be it for acquisition or be it for retention, is the same. The value that the customers are putting on digital enablement of the business is very important. We have seen that customers have gone away from businesses because they did not like the experience that the business gave to them when someone went to their website, we look at something internally, like when someone runs ads on Meta, we have a matrix that the advertiser can track, which is called Ad Recall. And what we have seen is ad recall or the remembrance of that specific brand experience is dependent on how the brand portrays itself when someone goes out of the platform and onto the brand's landing page, for example, right? So if your web page is not strong enough, if you're if the experience that you're providing to the user is not strong enough, or if it's confusing for the users, we have seen customers drop off from the page pretty fast and that will have an impact on how your acquisition strategy plays out or how your retention strategy plays out, right? So that is again, very critical and this is a trend that we have seen.

Speaker2 [00:16:31]: The other piece, what we are seeing right now is a channel burnout. We are seeing that too many brands are over relying on traditional media and not testing new channels, as I talked before in my earlier answers as well. There are so many new channels that are opening up and your consumers are on those new channels. So if you are still relying on the traditional brand channels that you had in the past, you would not be able to get your customers where they are. So brands need to come out of their channel burnout and they need to think through all these evolving technologies as they come around and start experimenting across these new technologies. And the other trend that I would say is the lack of customer centricity. I cannot tell you how many brands have seen whose only focus is to just do a product based messaging and not think through a customer lens. And I cannot stop emphasizing the fact that they are missing out on so many net new customers or retention of their customer because they don't keep customer first and their brand approach or in their marketing approach. So you need to have customer first as your priority before you think about the product.

Speaker2 [00:17:44]: And you also need to ensure that you are constantly innovating. And when I say innovating, it doesn't mean that, hey, we are going to spend this much money on a new channel that's coming out or a new marketing experience that's coming out. But you need to innovate along with a test and learn methodology. You need to ensure that every new technique that you use or every new channel that you use, you're learning something out of it so that even if that channel is not the best channel for you at that point in time, you can still come back at a later stage and experiment again on that channel. And I would say, be it social media, be it search based channels, be traditional channels. There's always something new to learn across all these channels. So have a test and learn mindset. And the successful brands that we see on our platform and across a lot of different platforms are the ones that are constantly testing and learning from anything new that they do on a specific channel, and they build their strategies based on that. So they are flexible. They are always in that test and learn mode and they are always trying to not just attract new customer but retain their existing customers as well.

Speaker1 [00:18:57]: Thank you for listening to Business Unplanned, a podcast brought to you by BMO. For more information on how you can prepare your business for the future, visit bmo.com/smallbusinessresourcehub.

Speaker4 [00:19:07]: BMO Smarter Investing is a podcast that will help you make smarter investing decisions. Join top BMO economists Douglas Porter, Sal Gualtieri and Jennifer Lee for monthly insights on markets, economy, growth, inflation and so much more. A deep dive into the trends and developments impacting our world today. Tune in to be smarter investing wherever you listen to podcasts.

Speaker1 [00:00:00]: Thank you for listening to BMO Business Unplanned. If you like today's episode and would like more information, you can download the e-book for the show. Today's e-book is all about how to properly manage your cash flow. Get started and stay in the know today. Download your free e-book at bmo.com/managingcashflow or check the link in the description of this episode.

Michael Hyatt [00:00:22]: Welcome to Business Unplanned, a business podcast brought to you by BMO. I'm Michael Hyatt and this is part three of a four part series entitled How to Work On Not In Your Business. This audio comes from our virtual event held on June 7th, 2022. In this episode, I'm joined by Dana Leeson, Director and Controller for Moneris. So we're going to be talking about how to balance business cash flow and managing inflation and supply distribution and what opportunities there are for businesses to get ahead. For additional resources, you can visit bmo.com/smallbusinessresourcehub.

Speaker3 [00:00:53]: Dana Leesen, I want to welcome you, director and controller at Moneris. So I guess to start off, new and growing businesses might experience cash shortfalls, especially during years when they have the most significant growth. How can a business balance growth in today's economic climate but still remain in a healthy financial position? 

Dana Leesen [00:01:15]: Demand is driving higher prices and energy costs are higher than ever. So supply chain issues and labor shortages are putting further pressure on prices. All these factors are contributing to inflation around the world. So businesses need to be agile to adapt. And with the challenging economic circumstances, businesses might find themselves with less of a cash buffer. So the first step to managing your cash flow successfully is ensuring that you understand your needs. So having a forecast of the business's cash flow for incoming receipts and outgoing cash disbursements is critical. Ideally a short term forecast should be up to 13 weeks out on a daily basis, whereas longer term cash forecasts can be done on a weekly or monthly basis ; 1 to 2 years in the future for planning of larger investments for acquisitions. So forecasting cash flow begins with having access to detailed and reliable reporting tools. So for Moneris merchants, as an example, we have a system merchant direct, gives business owners a monthly statement, covers settled debit and credit transactions that were processed, as well as a thorough breakdown of fees and as a result is a great starting point for business owners who want to monitor their cash flow. We also offer a pure reporting feature updated monthly which can be helpful to serve as a benchmark, so it allows owners to see how their net sales performance compares against their industry and then in order to manage cash flow gaps, having a line of credit to draw on is always a good idea, and I'm sure Robert can help with that. 

Dana Leesen [00:02:46]: As well as an overdraft as it can act as a Christian when needed. Alternatively, a commercial credit card can be used for purchasing items, so this can help delay payments to a later time to reserve your cash balances. A business should always prioritize their payments, like their payroll taxes and key suppliers first. But many companies are also working with their preferred suppliers to extend payment terms to 60 days. So pay your suppliers when their invoices are due and not before in order to preserve cash flows. Utilize a corporate credit card when you're able to assist. Not only delays payments, but business can receive cash back or credit card rewards on their purchases. So that's another way of generating some cash flow. Now, to ensure cash flows are healthy, business owners should clearly establish payment terms so that they are agreed upon by customers. Most customers will start the clock ticking from the date of the receipt of the invoice, not the date of the document. Therefore, completing billing promptly is important and not to procrastinate. Businesses should try to give customers as many payment options as possible, including credit card and EFT when paying invoices. If the payment options are convenient and easy, the client is much more likely to pay quickly. So if possible, you could also incentivize your clients to pay early by including interest rate charges in your contract if a client pays later than, say, 45 to 60 days and looking at ways to automate payment reminders if a bill remains unpaid.

Dana Leesen [00:04:18]: Another option, if the business margins allow, is to offer discounts for early payments. Many customers are happy to pay early if it means they can take a discount. But again, not all margins allow for this. Now, to manage supply chain disruptions, business shouldn't put all their eggs in one basket. So well, business needs to have the lowest cost possible. It's also important to minimize disruptions and ensure they're able to fulfill customer orders and diversify suppliers as much as possible and have longer term contracts or preferred suppliers in place so that they can give preference in the event of a supply chain disruption. You don't want to be in the position of not being able to fulfill an order. And as I mentioned earlier, cash forecasting is important for businesses to maintain healthy cash flows. And I think Michael referred to this earlier when he was saying companies need to get back to basics, but a business should also be regularly forecasting and planning their financials, reviewing actuals, revenues, expenses and net income against their budget in order to measure how the business is performing against its objectives. This will then enable the company to course correct as necessary review your product lines, your revenue streams that require additional focus and eliminate any unprofitable products, possibly, or address any pricing adjustments that may be required, especially during inflationary times such as now. Lastly, looking for efficiencies, whether it be through automation or opportunities to reduce costs, is another way businesses can look to improve their bottom line.

Speaker3 [00:05:49]: Michael, what's your take on all this? You ran a high growing company, a very fast growing company for a long time. You see this in the market right now, not only when times are bad, but when times are really good and you're growing quickly, you’ve ran out of cash and you've got to struggle to make payroll to pay your suppliers. How do you deal with that?

Michael Hyatt [00:06:07]: Yeah, I'm going to go back to the basics again. I will challenge you to take a look, and actually, how much do you really know about your numbers and your growth? I would say it's been very intoxicating the past three years, four years, five years. I know we had that little shock kind of in April, but the stock market turned around in like 90 days and then liquidity came back because they put in trillions of dollars to pump everything up. I think we've just frankly been asleep. I think companies for the past couple of years have raised money by just raising their hand. Money was essentially free. I mean, in Europe, it was like 0% interest rate, literally free, literally. I think in Germany was negative interest rates. You get paid to take debt or something crazy in a mortgage there. And essentially in America it was like under 1%. So money was free and money was being shoveled into the market. So VCs and private equity people just couldn't put enough in and that raised all boats. And it was easy and I think it was intoxicating. It's probably and Robert made a point earlier about mortgage rates. I don't know. You talk to the average someone in their twenties that just had a home that got a mortgage.

Michael Hyatt [00:07:10]: They think having a mortgage at one and a half or 2% is like not bad. I mean, that's like 200 year low in interest rates. 200 years, it's abnormally low. But you ought to think if you're in your twenties, getting your first house like, this is great, this is like, okay, did you get two or one and a half or something silly? I think we've been asleep at the switch. I think that everything reverts to the mean and I think if interest rates go up another two or 3%, that's going to be since World War II or the 40s, the 50s, it comes back to the average, which it should be at four or 5%, which should be a normal number. And I just think that we've been lulled into it for a while here, and I think we have to go back to basics. And you have to understand that the gravy train, the cash train is going to be turned off a little bit. It's not going to be so easy to raise money, so get profitable, look at your numbers and be super critical on what you're doing.

Speaker3 [00:08:02]: We should have called this session, get profitable, because.. I think that's the message you've hit a number of times here. It's a great message. So, Dana, the pandemic shifted consumer behavior in a big way. Are you expecting a lot of businesses to start giving up their brick and mortar storefronts in favor of just online stores?

Dana Leesen [00:08:21]: Well, you're right. The pandemic has definitely shifted consumer behavior quite a bit. We've definitely seen some stores have closed or downsized during the pandemic. But there's still… we're still seeing a strong demand for brick and mortar stores, as many consumers prefer to see and feel the goods before purchasing them. So I think what we'll see is that businesses will need to have a good balance of both a strong brick and mortar presence as well as online stores. So we'll see more restaurants offering both in-person dining, as well as delivery and takeout options as customer needs have definitely changed over the last two years. So while consumers are returning to dining in restaurants, they've also become accustomed to the convenience of delivery. And there's a strong balance for both. So I think we're going to see more of a shift to a good balance in the future.

Speaker3 [00:09:09]: And what are some of the best practices for setting up your successful eCommerce business.

Dana Leesen [00:09:16]: When setting up an e-commerce business firstly, a business has to determine their business model. Are they keeping and shipping their own inventory? Are they drop shipping goods whereby when a customer places an order, the business sources, the order to a vendor who then directly ship the client? Drop shipping requires lower investment and overhead costs, but you're also relying on a vendor to fulfill and ship the orders, so that can come with some potential drawbacks as well. It's also very important when setting up an online website presence to ensure you have proper fraud tools such as 3DS and that protects against chargebacks caused by fraud. It's important to make fraud protection a priority as fraudsters look for easy vulnerabilities to exploit. And sadly, we've seen how they've been taking advantage of businesses during COVID to use friendly fraud or chargeback fraud while businesses have been changing their process. So when accepting payments online using fraud prevention tools is key. There's things like 3DS 2.0, skip and count which will verify the cardholder's identity, using SMS confirmation biometrics, and it will detect and notify you of suspicious activity such as multiple transactions from a single card, unusual order sizes and transactions verified with 3DS 2.0 also shift the chargeback liability to the cardholder. So, it further protects the business from fraud losses. So if you're offering delivery, also ensure you have tracking or confirmation of delivery receipts because non-delivery of goods is one of the major causes for chargeback disputes. So ensuring that your return, refund and cancellation policies are clearly stated for the cardholder to see and acknowledge at the time of the sale whether online order confirmation or on the receipt. These are all great measures that business can do to protect themselves from chargebacks.

Speaker3 [00:11:05]: Now that we're returning to a pre-pandemic activities, we're getting back to life as we knew it more or less, what are some new and innovative ways businesses can re-engage their communities and their customer bases to actually get them back into the store?

Dana Leesen [00:11:20]: That's an interesting question. Consumers have been cooped up for two years and they're anxious to get back out there. So we're seeing that consumer spending is up significantly in restaurants, hotels and entertainment. So there's many ways a business can re-engage their customer base and communities, whether it be through loyalty programs to reward repeat customers, giveaways, focusing on customer experiences such as in-store fashion shows, musicians, entertainment, children and friendly play zones are just some of the examples of customer experiences that can attract business in store. But while we're doing more things in person, again, maintaining your online presence is still important for generating in-store traffic. So things like participating in your community online. So for every niche and neighborhood you can find relevant communities online, whether it's Facebook, LinkedIn, Instagram or online forums, you can get to know your neighbors online who run the storefront offices near you, follow them on their official social media. It makes it more likely for local consumers in the area to find you and find out if the business improvement area or the neighborhood association has a community forum and make sure the locals know who you are and that your business is nearby to support them. Sharing content online helps the consumer get to know you for your expertise. So offering quick tips or organizing a webinar or a live Instagram Q&A is a good way to build your brand, generate awareness for your business, and set up an official website and social media accounts up to date. That's important. Your website and social media accounts are the first places your consumer searches to check information regarding hours, services and safety protocols. So having these channels set up also gives you a chance to answer customer questions in advance with FAQs.

Michael Hyatt [00:13:10]: Thank you for listening to Business Unplanned, a podcast brought to you by BMO. For more information on how you can prepare your business for the future, visit bmo.com/smallbusinessresourcehub.

Speaker5 [00:13:20]: BMO Smarter Investing is a podcast that will help you make smarter investing decisions. Join top BMO economists Douglas Porter, Sal Gualtieri and Jennifer Lee for monthly insights on markets, economy, growth, inflation and so much more. A deep dive into the trends and developments impacting our world today. Tune in to BMO smarter investing wherever you listen to podcasts.

Speaker1: [00:00:01] Welcome to Business Unplanned, a business podcast brought to you by BMO. I'm Michael Hyatt and this is part two of a four part series entitled How to Work On Not in Your Business. This audio comes from our virtual event held on June 7th, 2022. In this episode, I'm joined by Iman Massoud, Executive Human Resources Relationship Manager for ADP Canada. We will be discussing the best practices for distributed workforces and remote workforces and how businesses can engage and retain top talent. For additional resources, you can visit bmo.com/smallbusinessresourcehub.

Speaker2: [00:00:32] Iman Massoud, Executive Human Resource Relationship Manager at ADP. So we're all aware of the term, the great resignation. It's a term that we all hear. If you travel anywhere, you'll find signs in shop windows looking for help. If you scroll through LinkedIn or your Twitter feed, you'll notice that many of these postings mention that your colleagues company is hiring. What are you seeing in terms of the great resignation right now? 

Speaker3: [00:00:58] Thank you for that. It's a great question. I like to think about it as the great realization more than the great resignation, because it's been more than two years since the onset of this virus. And we have so many certainties that absolutely sure about that have completely gone out the window with this. At the same time, we're hearing about the economic landscape that's changed fundamentally, and we're hearing about this from Michael, we're hearing about this from Robert. We know when we look at our day to day and running our businesses that there's a major shift in the economic landscape, in the political landscape. And these are extremely challenging amongst issues like rising inflation and our supply chain delays. But all of this really combines to create this mix of pressures, right? And it's going to affect our businesses for times to come. We're not going to have a drastic shift right away. This is going to be the new normal for some time at least. And to add to all of that, we're seeing that the sentiment and the needs of our global workforce are just changing or changing the way that we look at things, or the employer relationship is changing fundamentally and dramatically. And it's imperative that employers understand that they're the drivers really, as well as the potential impacts of the shifts a bit, because you want to make sure that you can attract and retain talent to create stronger and more resilient businesses. 

Speaker3: [00:02:24] Right. We've had our people at work 2022 study published recently by the ADP Research Institute. And we're seeing a few things. We're seeing that, one, workers want change. So in terms of job security and business ethics, we are not just seeing that lots of employees are looking to shift from one organization to the other. So there's actually seven in ten workers globally are contemplating a major career move. And there's a sense of them questioning about what job security really means, post-pandemic. And it's not just about a steady paycheck. This pandemic has put our well-being and our life outside of work into really clear perspective. And we're seeing that workers are really interested in what the company's ethics and values are. Three quarters of the employees that were studied and I think it was 38,000 participants globally in the study, said that they would consider looking for a new job if they just discovered that their company had unfair gender pay gaps or no diversity and inclusion policy. So this is pretty dramatic and the way that people are starting to realize what they want to prioritize and what's important for them. Job satisfaction and outlook is changing. Generally, employees are upbeat, but we're also seeing that salary is a priority. It's important, but it's not everything. So pay is still the most important factor in a job. But at the same time, we're seeing that seven in ten employees would really like more flexibility as to when they work. 

Speaker3: [00:04:05] One of the ways that we might be able to engage employees and to retain employees is to be creative with what we're offering. So we're thinking about four day workweeks. We're thinking about just improving work life balance or having more flexibility in the way that we're allowing them to structure their hours. It really reinforces the idea that we as employers need to make a tradeoff sometimes between pay and other factors to keep workers content and fulfill just because pay is important. But it's not everything. And then, of course, there's mental health. So we keep on hearing that there's the COVID 19 pandemic and then there is the shadow pandemic or the mental health pandemic. Stress is increasing, work is suffering. Stress at work is actually right now at critical levels. And 67% of workers are actually experiencing at least once a week. That's up from. 62% pre-pandemic. So our workers, our employees are being impacted professionally. They're being impacted personally. And the impact is profound. The impact is not just to the employees but to the businesses that they work in. It's just completely and totally unsustainable. As businesses, we can do our best to support our staff with being days or stress management breaks or counseling. But there's so much intense and sustained pressure that we really need to rethink what we can do as employers to minimize these triggers, to minimize stress, to ease the burden.

Speaker3: [00:05:38] And in this great realization, which is another word for the great resignation or the great rethink or the great reset or whatever you call it, people have really shifted not just how they're thinking, but how they function as well. So there's career shifts. There's people rethinking whether their career is the right one for them or whether they're in the right space. But they're also rethinking where they live and if that's the right space for them. So we've seen that so many employees, workers have been working from home, moving out of urban centers to different locations. Lots of people are still contemplating relocating. There's a substantial it's still a minority, but there's a substantial minority that have already relocated. And this means now that the old model of work no longer works for them. So actually forcing them to come back into work is not feasible, not desirable, and often it's just not possible. I have a client who, when I was there, returned to work that day. They realized that several of the people that were supposed to come back to work had actually moved out of the city and one had moved to the Dominican Republic. True story. There is no way that this employee is actually going to come back to work if they've moved so far away and they're so happy with where they are. So it is a great resignation, I suppose, but it's also so much more than that.

Speaker3: [00:07:08] We're just working life. They're not independent entities now. We're not fighting for like a 5050 balance between work and life because that's how we can demarcate or separate these two things. We just can't. We need to, as employers, understand and acknowledge, that work and life are intertwined with each other. They're affecting each other. They're only to be seen together. And my recommendation coming out of this is really for employers. I agree with Michael about over communicating, communicating to the point of over communicating not just with investors, but with everyone. That's a stakeholder, including employees here, because you want to encourage open communication between workers and employers to detect any issues and concerns before they become really massive. Have regular meetings, think outside the box when it comes to ideas about how you could retain, attract, retain and engage employees. And that might just be having different work schedules, having a hybrid work structure or creative ways like more programs around work life balance, or additional days off or even days with no cameras during meetings or. Lately, we're hearing a lot more about four day workweeks. So there's a lot that we can do as employers that's not just related to pay and increases in pay to attract, retain, motivate and have these long term employees as we move through our hopefully post-pandemic phase where everything's changed.

Speaker2: [00:08:42] Yeah. Michael, this is such a great debate. The idea of can you run a business remotely? What do you do if people leave? But they're great employees. Where do you come down in all this in your companies?

Speaker1: [00:08:53] I hate to say it depends, but it depends. And there's a monster battle going on right now. My friends that work at the big banks in Toronto are just put their hands in the air. They were adamant, I would say, six, eight months ago that they're going to come back. Everybody's going to come back three or four days a week. I just had a walk and talk a coffee with a good friend of mine who's a VP, and he's like, We're asking for one day and we're encouraging to, you know. And I think that's it. You know, I have another software company that we have maybe 250 employees and we can get 25 of 250 a day to come back. Their profits are up. Our gross margins are up, our growth is up. You know, so kind of we're okay now. We're wondering why we spend all this money on our beautiful office. So for certain companies, this really works. But it's almost like the pandemic pushed everybody for ten or 15 years of what that balance is going to be. Then at the other end, you have Elon Musk who came out and said and everybody's talking about it this week, says, Hey, if you want to come in to work, you're probably doing nothing. So you can go do nothing outside of Tesla and leave.

Speaker1: [00:09:56] And you can practice living, doing nothing outside of Tesla. And you know what? In a way, he has a point. And in some respects for some companies, I think every company is battling with how to bring people back and how to make that balance without losing great people. And I don't think there's any easy answer. No. What I've seen is like things like they're trying to bring you a ritual food, saying you come back to the office and we'll give you a ritual credits to get people to come back. You know, I think some lunches help and stuff like that. But if I were to boil it all down, I'll tell you, the work life balance is going to be two days a week, max, three days if you have a super engaged workforce. And that's it. I don't see it rolling back and maybe some of the other panelists can comment. I think it's just the way it's going to be. And I predict what's going to happen is companies are going to start hiring less people in a way and figure out if they can do more with less and this coming period of time. So it's going to be interesting to see what happens.

Speaker2: [00:10:52] Yeah, I'd love to put that to the panel. Later on. I'm sure we'll get different opinions on while we're seeing a large percentage of the Canadian workforce having already returned to the office. We've also seen many who have opted to work remotely as we've just talked about. How does this new distributed workforce allow for a fair and level playing field when it comes to succession planning and promotions? Is there such a thing as a zoom ceiling?

Speaker3: [00:11:18] And that's where it's at, right? So we think about what pros and cons are of being working remotely versus coming back into the office. And I love Michael that you brought up this comment by Elon Musk. I've read about it. I've been thinking about it. I've really been trying to wrap my head around what happens next. And we have some data about what happens when people are working more outside of the office, because what's challenging is that it's not that everyone often is working in the office or everyone is working out of the office. I don't know if you've been part of one of these meetings, hybrid meetings I have where I'm remote, but everybody else is in office or I'm in office. And then there's somebody that's remote. There's a huge difference in experience in what you feel like when you're sitting with people talking with them. And then if you're sort of like a little person on a screen that's remote, you are kind of not really part of all of that informal conversation. So that's really all to say that there is a difference. We've also found that there's this thing that we're calling the proximity bias. So we had a study, ADP did a study in December 2021 to really measure the impact of proximity bias, specifically in trying to see whether there was preferential treatment or advantages for those that are working in office over those that are working remotely part time or full time. And we did find that while employers and leaders generally agree that, like you said, Michael, hybrid and flexible work options will remain in place, there is a difference between the perception. So in-office employees are still perceived to have inherent advantages for their career, including better relationships and better opportunities, more face time, so better relationships, more career advancement, more social encounters.

Speaker3: [00:13:12] And it's really unconscious. So it's obviously not something that we are intentionally wanting to do. But in this post-pandemic world, it means that we really are perhaps favoring those that are getting more face time. So as employers in navigating this hybrid workforce, I think it's just really important to be intentional about knowing and accepting that this bias can exist, but then also coming up with strategies. And tactics to try to ensure that we are offering similar opportunity to those that are not in as close proximity. And the survey also found that 63% of Canadian workers that were surveyed did feel that being physically present provides a better opportunity for career advancement. Would perhaps speculate. But it's inherent. It's unconscious as employers, again acknowledge that it can occur. There may be some difference that can be made through investing in good technology for those virtual meetings, so that if you have a virtual meeting, you have a camera that's actually focused in on the person that's speaking regardless of who it is. If there's people that are all in person and there's a few people that are virtual invest in technology around engagement that encourages feedback, have remote learning opportunities and training programs, and just encourage equal presence and participation in these meetings. There is going to be a difference between face to face and between people that are remote. I think that as employers we just need to be cognizant of that and address that before it becomes a major issue.

Speaker2: [00:14:55] So what's the first thing that an HR professional or a business owner who's hiring should be doing to action their recruitment or engagement strategy? How do you find these employees in the current workforce?

Speaker3: [00:15:08] So I'll focus more around what you do first, because what you do first really addresses the second question is that how do you then find those employees? I'd say that now more than ever, with so much increased connectivity and so much potential in how you can get the word out through social media, through platforms, through there's so much more avenues now for recruiting than we used to have. Traditionally, I'd say, just become known as a great employer. You want to have your people, the people that have the values and the skills that your organization requires, you want to be where they are. So you want to be on the social media platforms that they are. You want to be at the events and at the conferences and the different gatherings that those people your people are at and just become known for who you are, for what you stand for, and focus in on what your brand is as an employer. So I like to think about it in terms of we do a lot of work on the customer experience and on marketing and on the different touchpoints that we have as companies with our target market that we're actually selling things to. But here, I like to think about it more as thinking about the employee experience or the candidate experience or the future candidate experience, the potential candidate experience in all of those different touchpoints that they have with the organization.

Speaker3: [00:16:36] They're always evaluating what the organization stands for and what it would be like to possibly work at that organization. So I'd say first and foremost, build your employer brand. Think about what your current employees are saying. Think about what the word of mouth is. Make your employees your biggest ambassadors. Ask them to share their stories on social media. Ask them to let their networks know what it feels like to work at that organization. There's huge amounts of great hires that can come in from referrals from inside your organization, from people that know what it's like to work there. And every organization, every large brand has an image that comes to mind when you think about their products. If you know about that brand, I'd say think about that in terms of what comes to mind as an employer. And I'm sure that when we talk about different brands, some of the ones that Michael talked about earlier are Apple and Microsoft and Meta and Google, I think. And and then we spoke about Tesla as well. So each one of those really brings to mind a feel of what it possibly is like to purchase those products, but then also what it's like to work for one of those companies. So focus in on that and hone in on what you're communicating out to potential possible candidates that may be employees in the future.

Speaker2: [00:17:56] Yeah. Michael, anything that you're thinking of doing in your companies to brand yourselves as a good employer and find those great employees?

Speaker1: [00:18:04] You know what? I would be all over it if there was, like, one thing you could do. The truth is, is that a culture takes I don't know, it takes a village kind of thing. It takes a lot of first off, in the question I'd have for many people watching this, have you done an anonymous survey that people really believe is anonymous about your company and how many people, as they would say through the Net Promoter Score, would actually recommend you to one of their friends? And if that's not above 70% of your company, you have to think about what's going on. Culture isn't important in a company. It's literally everything. And you can learn that the hard way or the easy way. But there's probably a ton of small things you can do to make sure that you're really digging into the human experience and making sure that your employees really feel safe with you and they feel like it's a purposeful place and they understand why they're in the company and where the company is going and what the mission is.

Speaker2: [00:18:54] Yeah. So just to wrap up this section I'm on when we're all listening to the same ads for recruiting companies on the radio, going to the same platforms for the same candidates, there's always going to be an employer who secures the candidate and the one that loses them. What's different and what can businesses do to actually secure that right candidate?

Speaker3: [00:19:14] So I want to circle back to something Michael said in the start, and he spoke about really keeping things simple. So I would focus in on this as well, again, as employers that are looking for the right candidates for your open positions or positions in the future. You want to be where your talent pool is, for sure, but you really want to simplify what it might mean to be successful in a particular role in an organization, and then break that down and job postings say what really it takes in terms of knowledge and skills and abilities to perform that role. So a lot of times we see that there is credential. Shows that we often have listed in job postings that may or may not really be required for that position, but they knock a lot of candidates out. So try to widen your reach in terms of candidates and also look in places that you might not necessarily think about as your traditional spaces where you'd find talent. So look beyond titles on the resume. Look beyond conventional backgrounds. So think about what might be a hidden workforce for you, such as caregivers or veterans, immigrants, people with physical and mental challenges, or the previously incarcerated. They're especially prone to being hidden from prospective employers by platforms and cycling back to this human experience. And I'll just wrap up with this. We've gone towards applicant tracking system recruiting systems and recruiting technology, which is great because it allows us to really weed out some of the candidates that may be a better fit for the organization or for the role. However, we need to bring that human experience back in now and simplify things and think about what that role really needs to do. What it means to work for this organization. What the culture speaks for, and widen that net to see that we're finding the right people for the organization.

Speaker1: [00:21:16] Thank you for listening to business on Planned a podcast brought to you by BMO. For more information on how you can prepare your business in the future, visit the McCombs Small Business Resource Hub.

Speaker4: [00:21:26] Bmo Smarter Investing is a podcast that will help you make smarter investing decisions. Join top BMO economists Douglas Porter, Sal Gualtieri and Jennifer Lee for monthly insights on markets, economy, growth, inflation and so much more. A deep dive into the trends and developments impacting our world today. Tune in to be smarter investing wherever you listen to podcasts.

Jon (00:00): Hello and welcome everyone to this very special livestream event. How to Work on Your Business Not in Your Business presented by BMO. My name is Jon Davids. I'll be your moderator for this session. We have an engaging discussion and Q&A planned over the next 90 minutes. We received a lot of questions leading up to the event, will be answering as many of them as we can during the session. If you have questions, please feel free to put them into the live chat area on your screen. We'll get to them if we can. Before I introduce our speakers, I want to let you know that if you enjoy great business content like this, please check out the BMO Resource Hub by going to be MOE dot com slash Small Business Resource Hub. Here you'll find insightful articles, videos and other resources that can help you grow your business, help through crisis planning, establishing your marketing strategy and more. We have an accomplished panel of speakers joining us a little later, and I'll tell you about them right now. We have Robert Kavcic, director and senior economist at BMO Capital Markets. Imaan Masood, an executive human resources relationship manager at ADP. Dan Allison, Director and Controller at Munarriz. And Sharad Sharma, a client solutions manager at Meta. Working across Facebook, Instagram, WhatsApp, Oculus, and he's going to be sharing a lot with us. Sherratt is actually filling in for Marina, who wasn't able to make it today. But first, before our panelists, I will introduce you to our keynote speaker, Michael Hyatt. Many of you will know, Michael, he's a very accomplished entrepreneur, an active investor advisor, a board member philanthropist and a real catalyst in Canadian business community. Michael is the host of the podcast business Unplanned, which you can find wherever you listen to podcasts. And with that, let's kick off how to work on your business, not in your business. Presented by BMO. Ladies and gentlemen, Michael Hyatt.

Michael (01:50): Well, thanks, Jon. It's great to be here and great to see everybody coming together to talk about the world of business right now. It is such an interesting time. So many extraordinary things are happening right now. And I hope in this time together we can talk about some really practical things we could be thinking about to make our businesses better. I want to start with a bit of an historical look. I was just thinking back to being a CEO for a very long time and I've been through a number of very difficult moments. I'm going to call you back to the year 2000, March 2000, 2001 crash. It was very interesting when the dot com bubble burst and when it broke down, it was kind of like the Internet was over. And back then there was only 80 million broadband subscribers on the planet. So there wasn't really that much commerce. There was a lot of hype. There was a lot of froth. There were tons of companies starting websites, but no money, no profits, nothing. It was a lot of euphoria and that actually went away. But what didn't go away with the good companies that had real businesses like Amazon, like Cisco, a lot of the big companies that actually made it, that had real businesses and moved on and that crash itself was very, very painful for tech. It took many, many years for the Nasdaq to hit that peak again, over ten years to come back. The next crash and I was a CEO then, was 2008. That crash was completely different. It was a general liquidity crash with the banks and it kind of brought everybody down. All assets came down and goals and stocks and bonds and everything came down in unison. And that liquidity crisis was held up by the US Fed, much like in 2001, stepping in and helping to reflate the economy. And there's a lot of maybe people saying they put too much in or what have you, but they did about $700 billion, a kind of a relative amount of money to stimulate the economy. And oh eight or nine, by 2011, the economy came back. But in that time, great companies are born. Great companies are born in recessions like Shopify was born in 2009. So the greatest companies come out of these times of trouble in these times of change. And then liquidity came back into the market. And actually we had a very, very, very long bull run, too. No one really saw what coming in 2020, which was the next kind of crash was, of course, the problem with the pandemic, which shut down everything. And this time it's a very different moment for us right now that we're sitting in, because we had a time when we actually put many, many trillions, much, much more than 2000 into the economy to re-inflate it, to bring business back to market. We had a tremendous amount of challenging weather with shutdowns and the economy and what have you. And jobs and teeter totter is in very, very negative GDPs and all that kind of stuff. But eventually we came through it. But three things kind of happened and is happening right now. We had our first pandemic in 100 years. There was never really a global pandemic since the Spanish flu in the early 1900s, we had our first scale war in Europe. We haven't had a war in Europe of any kind like this in 75 years. And like it or not, we lived in a world before the issues in the Ukraine where there was a peace dividend around the world, there was really not that many supply chain issues and that peace dividend was actually doing really well globally. And I think there was a tremendous amount of trade, a tremendous amount of globalization. We kind of stepped back from that. And the last thing that we haven't seen for 40 years is real inflation stepping in because of all the supply chain issues, because of all the stimulus that came into the market. And it kind of leaves us where we are today. And I've been thinking a lot about where we are today. And if I was starting a business or I was running a small business or a medium size business or really any business right now, how would I be thinking about things right now where we just kind of got through this kind of pandemic? A war has broken out and inflation is really changing what's going on. And I think that I wanted to give a little bit of advice here before I pass it on to our other speakers. I think that money is going to continue to get a little more expensive, and that means interest rates will go up this year. Capital is going to get harder to raise because as money gets more expensive, a rising tide rises all boats, but also can lower all boats when it comes down. So as money gets more expensive, it's harder to get. And that's what an interest rate is. The Bank of Canada and the US Fed and banks around the world are making money more expensive. It's harder to get this money or funding. What we are seeing out there in the world of getting funded is the best companies. The top ten 15% are getting funded. Many other people are left in a kind of a bit of a refrigerator. Right now. They're on pause because VCs and private equity people and investors right now and businesses are just going to be taking less risk for the foreseeable future to see how things are going. There's a lot of people sitting on their hands. So I think there's going to be two types of companies that everybody looks at right now, those companies that were kind of running on growth with no profit, and then they always had to have cash to keep growing. I think if you're one of those companies, you're going to have to rethink your business model a little bit because if you're just going to be losing money for the next 12, 24, 36 months, you might have some really big challenges because you might not be able to consistently raise that money. The companies that are probably going to do better right now and the ones you want to think about are the ones that are profitable or are going to be profitable with the cash that you have. So if you look at the cash you have, you can in that runway in that time period, can you get profitable? And I think that's going to be really, really critical for your business today, because it's going to be uncertain for 2022 and 2023 could be challenging as well. So you're really going to have to look at these numbers. So I'm going to give three pieces of advice right now, and I want to come back to it later with our speakers. And to summarize this entire talk, what I call this the back to basics plan. And I think right now you need to look at three things. The first thing you need to look at is what I call know your numbers. I will tell you the amount of times that I meet founders or I meet early stage companies that don't really understand their math. Their business is far, far too often they don't understand the revenue and then the gross margin and how to make a profit. They don't really understand those numbers deeply. They just believe they can raise money and keep going. Know your numbers. You really need to stop and know your numbers. You'd be surprised at how much you don't know about your numbers. Number two, profit matters. And if you're not profitable, you've got to find a path very quickly to profitability. And in an inflationary environment that we're in now, the companies that are going to do the best are simply the companies that can raise their prices. So if you can't raise your prices, you're going to have some trouble in this year, next year, because we're in an inflationary environment. And lastly, my third advice to think about if you're running a business today is that you need to get together with your board, get together with your investors, get together with your advisors and overcommunicate, you know, one of the best chess players in the world, Garry Kasparov, says, you know, it's better to have a bad plan than no plan. And I implore you to really overcommunicate with your investors and advisors, even on a weekly basis, if you have to, to really figure out how you're going to get to profitability and how you're going to expand in your market. The good news is, is we are going to get through this, and I do believe there'll be a time when inflation comes down and the markets come back. But for right now, we're going to go through some choppy times. And it's really important that you think about this idea of coming back to basics.

Jon (08:38): Yeah, so I'd love to just follow up on that. Michael, you brought us some good points. You know, focus on your pricing, your numbers over communication. We're heading into a downturn now. We're probably in a bit of a downturn. And you experienced something maybe somewhat like this back in 2008, and I'm sure as a result you came out stronger. Can you talk a bit about that and maybe what you did to to ensure that you could actually survive and thrive?

Michael (09:01): Yeah, we quickly became profitable. I remember our revenue was going up and our valuation was going down. 28 was particularly awful and I don't think we're actually in that situation today because that was a general liquidity crisis. It got so bad in 2008 where it was uncertain where the money was coming. It was going to come out of bank machines until the Fed stepped in. So I don't think we're in anything like that today, but I do think we're in a challenging environment. And what I did learn is that it's always better to be able to quickly move to profitability if you can sacrifice some growth for that. And also, don't be afraid to get real with your staff, get your company together. Meet me. You're watching this and you have five, ten, 15, 20 people. Honesty's the best policy. Sometimes you just have to get them in the room, tell them the truth, and have a kind of a radical openness and get them involved in solution. You'd be surprised at how people can react to help rowing in the boat and just kind of be kept in the dark. So get people involved, really think about profitability. And the winners were always the companies that had a. City to act if you have a propensity to act and move and make the biggest changes quickly. They were the winners.

Jon (10:07): You talked about, again, profit numbers. Obviously, we all want to increase profit all the time. What kind of numbers or costs or just areas in general would you be looking at if you are a business facing tough times today, where are there levers that you can pull?

Michael (10:21): Well, I mean, typically people try to bring in a lot more automation into their business. But you should think very quickly, very clearly about a very simple number in business, which is very, very simple number. People don't spend enough time on, which is gross margin. You look at what you sell something for and you take away the cost to make that good. And you look at the number you have left with. Now the world works like this. A hotdog vendor has a gross margin of 40%. The best software companies in the world have about 80, 85% on the public markets. So you kind of somewhere hopefully between a hot dog vendor and that best software company. But whatever you can do to increase that gross margin, maybe it's delivering your product in a different way. Maybe it's changing licensing agreements, maybe it's renegotiating with IWC on Amazon, whatever you can get to make more money drop to the bottom line to decrease your burn to get to profitability is critical. I would spend the most time on your gross and your gross margin and get really into knowing your numbers.

Jon (11:15): Now, you talked also about communicating with your board. If you have one or any investors or advisors, how do you recommend going about finding a great advisor or someone who's maybe been through this has something to share? What should you be looking for in an advisor and how would you recommend that people go about finding them?

Michael (11:33): It's a really good question. I'm going to tell you what not to do. When I see a lot. I get to companies and they ask me to advise them and I ask who's on the board and who's their advisors? And I'll show me 23 advisors and they've given everybody a little bit of equity. And there's so many advisors, so many cooks in the kitchen. I don't know how you get anything done. I think you should depend on one or two people that have been there, done that. So let's say you have a company and you have one person who is an expert in the film business or whatever business you're in, and maybe one other advisor who has built and sold and managed companies who's an operator. Right. This is can also play a very, very strong role on helping you figure out what you ought to be doing. And there are two types of VCs, ones that have just run money and ones that have run money and being operators. I would have a propensity to stick to the people that are operators who actually have had to make payroll sometime in their life. But at the end of the day, you want people that have been there, done that. And the way I tell say it to founders is, you know, you're trying to get from A to B, you can either take the back roads or the 407. Right. The highway, and you can take the highway if you get the right one or two advisors. But up above that, you don't want them.

Jon (12:39): Well said. Okay. Let's bring in Robert Kavcic, director and senior economist at BMO Capital Markets. And Robert has so much knowledge and expertize to bring here. So I guess the question I'd love to start off with, Robert. Businesses across the globe are experiencing an inventory supply shock right now due to the rising costs of materials, global supply shortages. Is this going to last for a while or do you see this disruption as passing relatively quickly?

Robert (13:08): Well, it's it's the it's the big question right now. And I think what we what we've learned and our our position on this all along has been that there is a fundamental inflation issue in the economy. You know, if you remember a year ago, six months ago, central banks were out there peddling this notion that inflation was transitory. We were just going to kind of sit back with easy monetary policy and everything was just going to go away and right itself. We started our desk looking at the data, looking at what was happening out there from a supply demand perspective, from a psychological perspective in the economy, and said, no way. So what what what really has happened here is it's kind of a combination of both some supply side issues that are just going to take time to resolve, but also demand side pressure that is going to have to be done away with by tighter policy. Right. So on the supply side, I mean, there's nothing we can do about Russia invading Ukraine and what's that done? What that has done to oil prices, grain prices, food prices at the grocery store, presumably that's eventually going to normalize and go away at some point when nobody really knows. There are still some, you know, supply chain issues in parts of Asia because of COVID, specifically, where we actually do have not have had physical lockdowns still in parts of China, big manufacturing centers, that stuff will eventually go away as well. But the fundamental issue here is that we've seen an explosion in demand in the economy, partly because we we saw unprecedented fiscal stimulus transfer down from, you know, from the federal government to the household level. And as we always say, this is the only recession in in history going back to the postwar era where household disposable income actually went up. And it went up a lot, like probably about $300 billion or so above what the baseline savings rate in Canada would have put on household balance sheets through this pandemic. That's you know, that's a massive amount of saving. It's. Probably ten or 12% of GDP. So what have people been doing with all this? They've been buying a lot of stuff. Great physical goods demand because we've kind of been locked down and forced to do stuff around our house and locally rather than travel and go to restaurants. Physical real goods. Demand in the US economy, for example, is probably like 30 or 40% above that pre-COVID baseline. And everybody calls this a supply chain problem. But in reality, it's just a massive amount of demand that's been put on a supply chain that just simply can't respond fast enough. So if we're going to actually see inflation go away, it's going to probably come in two parts. One is the part we don't know, which is what happens in Ukraine, what happens with resource prices. One is what we do know, and that is higher interest rates are going to cripple demand and we're going to back off some of this spending on goods. Some of the asset price inflation we've seen in areas like housing and that is well underway. And, you know, when we look at, say, the interest rate outlook for the rest of this year, we've really only just got started in terms of higher rates are probably see a good 150 basis points more of of tightening from the Bank of Canada this year. So those are the things we're looking at and that's kind of how we think it's going to gradually evolve over time.

Jon (16:10): Yeah, and now inflation is also at an all time high. How are businesses dealing with the current situation and are there strategies maybe that they can use to help stay afloat during hard times?

Robert (16:22): Well, so this is like this is something we get we get asked a lot about. So our role in this from a macroeconomic perspective is more trying to understand what's driving inflation and when it might go away and what what the consequence of that might be. Right. Rather than giving advice to businesses specifically. And on that point, I would think, you know, I would say you just have to continue to be very agile as businesses have been through the pandemic. Right. And businesses that, for the most part, a great job of navigating the pandemic right now. What they're going to have to navigate is, is inflation that's more persistent than they would have thought and a very quick and aggressive tightening cycle by the central banks. So unlike the last tightening cycle where we had this inflationary credit event back in 28, 29, they took ten years to come out of this is a demand side inflation shock where interest rates are rising fast and they're going to rise above levels that we saw at the end of the past cycle. So from that perspective, I think businesses need to understand that this is different. And from a financing and a cost of money perspective, it's going to look a lot different than the past cycle. I guess the other side, as Michael touched on, on a focus on gross margins and that's a real challenge because you do have input costs rising on the one side of the equation. But at the same time, there is a lot of demand and a lot of quality out there where firms are showing that they do have power to actually push price increases through to households because the job market and finances are actually in pretty strong condition. Yeah.

Jon (17:49): So, Michael, let's bring you back into the conversation there. So I just want to get your thoughts on kind of how companies are dealing with the supply chain issues as well as kind of inflation. Anything you're seeing there and any advice you're giving to the companies that you're advising?

Michael (18:03): Yeah, look, expect long lead times. I mean, you know, I can give you some anecdotal because I've just finished building a house after in it to two years. And I can tell you that if you're ordering some certain refrigerators, you're going to be backed up 15 months. Right now, it is very severe. There's not just a demand issue. There is just issues with getting enough microchips. It's sinking in cars and it's just broadly a problem. I think you have to overprepare. You have to over order. Look, eventually what's going to happen in as an investing, everything reverts to mean meaning that everything will eventually come back down. Everything will eventually come back to a place where it's normalized. I just think we're going to be in this for 12 to 18 months at least, and just simply because we're just trying to restart the engine. One of the things you have to think about very carefully is that capitalism was never meant to be stopped. We literally in April of 2020 stopped capitalism. There was no book, there was no paper. There was no theory for any any Ph.D. ever. That said, we're just going to pause capitalism for a year and we're going to tell everybody to stay at home and shut every business. And trying to restart that engine is what's happening now. And it's a very painful process. I think you'll be very mindful of your supply chains. And again, the winners right now, the ones that can increase their prices, the ones that can be more nimble, the ones that can think about alternatives. But honestly, I really, really think that, you know, you have to do everything you can to go all the way to the source to get your materials. You have to go further, longer and harder to get what you really, really need for your business. And even then it can be really challenging. Yeah.

Jon (19:34): So Robert, we're also seeing a challenging interest rate environment. Interest rates are climbing, impacting the cost and access of borrowing. What should owners do to prepare their business and the financial security of their businesses at this point in time?

Robert (19:48): Well, I think, you know, for the better part of the last year, we were pretty loudly banging the table to lock in your financing, lock in borrowing costs, like in mortgage costs, all that kind of stuff, unfortunately. I'd ship is now kind of see off a little bit because longer term interest rates have backed up in the market now it's starting to now does reflect the reality that central banks are well behind the curve and they're going to have to tighten policy pretty aggressively here. So I would just keep in mind that if you're on a variable rate product or if you have a lot of borrowing tied to Prime, that the moves we've seen so far are really just the first couple of steps. And I mean, our official forecast right now for the Bank of Canada is three more 50 basis point rate hikes through the rest of this year. So through the fall. So another 150 basis points, total of rate hikes coming down the pipeline. You know, put that in the context of a mortgage market, for example, where we were boring at one and a half percent in Canada during the pandemic. By the end of this year, the whole mortgage market's going to be up in the 4 to 5% range, if not, if not slightly higher. So that's a major adjustment in financing costs. And I guess to go along with that, just, you know, liquidity in this environment as as financing gets more expensive and there's a lot of uncertainty on there out there in terms of input costs and whether or not we can pass on selling prices and stuff like that. So from from a cost of capital perspective, I think those are the things to keep in mind. And maybe one other thing here is that central banks, not only through the pricing of money, but through the just the amount of actual liquidity out there in the economy, through quantitative tightening, there's there's going to be quite a bit of a pullback coming down the pipeline on that front as well, both in Canada and the U.S.. Probably a good one and a half trillion dollars or so of tightening at the Federal Reserve level in the US economy as they unwind those balance sheets. So that's the that's that's that's more or less the world that we're seeing right now.

Michael (21:33): It's a really interesting point. But just so everybody watching this knows what Robert is speaking about. When you increase interest rates would probably decrease asset prices like houses, like things that you have, including probably the value of your business. Because as money gets more expensive, it can the debt can only cover so much. Right. And and what he was saying about extracting liquidity from the market is very, very, very significant. What the US Fed does, which is the world's reserve currency, it's the most important currency in the world. When they get their bonds back, if they don't roll them over and they just literally cut them, they're extracting liquidity out of the market and raising interest rates. So in 2000 108 and even in 2020, the government steps in and pushes money into the market and gets everybody excited, lowers rates, gets everybody going. Boom, boom, boom, boom, boom. That's why interest rates are going down and then housing prices going up. The exact opposite is happening now, but we have not been on this climb for 40 years. This is the key distinction, what's happening right now. And it's not going to suddenly turn around in a couple of months. So you really need to prepare.

Jon (22:37): So do you have any advice I ask I'll ask both of you this Michael and and Robert, what advice would you give to a new or even an established business right now to actually practically manage through these times? Michael, why don't you start?

Michael (22:50): Yeah, I think it's mainly the stuff I've been saying. Know your numbers, right? Get to profitability and if you're not profitable, I'm straight up with you. You have an issue. And if you if you are going to run out of money in 2022, I'm going to say it's going to be challenging for you to raise. You're going to have to raise on terms you're not going to like if you're a software company in the tech world, which is, you know, for the past how many years you just literally put up your hand and somebody gives you another couple of million bucks that's gone. That stopped. Right. So now we're working in a different world when the greatest tech companies in the world, like Microsoft, Google, Metta, are down. You're down further than that. And that's the thing that people don't understand. And so you really, really have to get to the core numbers and profitability of your business. And I will say that I heard people screaming about profitability after oh one, after eight and even in 2020 and early 2020. Wall Street also has a very, very, very short memory. And in a couple of years from now, when interest rates come back down, they'll be like, don't worry about profit, lets us grow at all costs again. But for now, for the next 12, 24 months, it's going to be about losses.

Jon (23:55): Yeah. And Robert and anything else you wanted to close up with there and then.

Robert (24:00): No, that's good. I mean, maybe I'll just summarize, I guess, three takeaways from this back and forth from from my perspective, at a macro level, I know obviously everybody's business is going to it's going to differ what they take away from these three things. But one is that inflation is persistent. We know that now. We've known it for a while. I think everybody knows it now and it's going to take some time to go away. Cost of capital is rising. We've seen the early stages of that. But again, I would say we're just getting started with respect to rate hikes. And when you combine all of that, what we have is is now a kind of a deflationary pressure on asset prices because their cost of capital is right. So we are seeing things like like housing, equities, especially longer duration equities that are tied more to future growth. And you know, and as Michael touched on, maybe the value of various individual businesses as well as a kind of compressed by this higher cost of capital and a higher discount rate. So those are those are things we see through the end of the cycle when the cycle ends. At some point, I think, like, you know, the most likely situation is that the. Federal Reserve and the Bank of Canada have to take us into a slowdown at some point to break the back of inflation. Whether that's next year, 2024 kind of remains to be seen. But the risk a few years out is that we rinse and repeat this whole thing again. The economy turns down, central banks cut rates and we start over, hopefully in a more normal world rather than the one we just came out of.

Speaker1 (00:00:06): Welcome to Business Unplanned, a business podcast from BMO. Today we're joined by Michael Hyatt to talk about where we are right now and where we're headed. Michael, here we are in April 20, 22. How do you see things right now?

Speaker2 (00:00:19): You know, it's so interesting. We've been through so much in the past two years. And just when you think we're out of a wave, we're back into another wave. Although I think we're not talking about this wave we're in right now. It's the wave that we're kind of not in. But what's really, really interesting is the good news is actually the economy in Canada and the economy in the US is actually on fire in a good way. And the bad news is that the economy is on fire in a good way, meaning that, you know, we didn't expect to have this level of unemployment which is so low. We've had tremendous amounts of stimulus come in. I think we predicted it on our last show. We just had two really big things that hit the market. Lots and lots of vaccines and lots and lots of money stimulating the economy. And now the economy is coming back. And and the federal banks around the world are withdrawing, putting some stimulus in. And there's turning around and they're saying, you know, inflation is catching us by surprise and we're going to have to raise interest rates. And there's a lot coming down.

Speaker2 (00:01:09): And I would say the thing that most people are seeing and I was just out of the country for four months, I spent time down in Florida in the winter. I came back and I was shocked at the price of food here. In my mind, Loblaws experience turned into a Whole Foods experience very quickly, and there is definitely retail price change. You know, if you fill up your tank of gas, if you're buying food and if you're ordering just about anything and I'm under I'm a real life, real time example of what's happening actually building a family home for the past two years in this pandemic. So I've been ordering something of everything from fridges to stoves to steel to wood. So I've seen the prices of everything and nothing can surprise me today. So we can talk about that today as well. So I would say it's going to be a very interesting and challenging year, but I do believe on the back side of the year we're going to pull out of this quite well and I'm quite optimistic of where we're going. I would say that we're going to have some challenges, though.

Speaker1 (00:02:00): So let's dig into that for a second. In the next 3 to 6 months, what are some challenges that you think business owners should be looking at?

Speaker2 (00:02:08): Yeah, it's a really good question. The number one is your supply chain. I think that everybody was hoping and I think in earnest that they they told their customers something was going to be delayed and normally they would get some item in 30 days and then they had to push it at 60 to 90. You know, I'll give you an example. I ordered a very nice bunch of appliances from a well known higher end appliance company. And basically I did that eight months ahead or so, and they came back and they said they couldn't even fill my order in 12 to 15 months. You know, another one was we looked at a company that made custom couches and they would lead time with 66 weeks. I'm like, Wow, isn't that 52 weeks in a year? And then, you know, just today, for example, I got pushed back another three months after being guaranteed my European appliances would come. But they're not. And you can't do much about it. I have a friend who runs a very large food company, does a lot of the foods, the the candy, the sweets, the nice desserts, the healthy desserts. If there's such a thing for Whole Foods and he has shipments, he hasn't gone in for raw materials since October. So what's been really pushed back is incredible supply chain and no one can do a lot about it.

Speaker2 (00:03:17): But what you're going to have to do is set really long expectations right now for clients because, you know, I can tell you that the way some of these appliance kitchen appliance companies have treated me after kind of guaranteeing me, guaranteeing me, I just lost faith in the companies and they look incompetent and I feel kind of bad for them because they're not incompetent. They're obviously great companies, but they have no control on these supply chains right now. And they're really, really bad. And I would say that this isn't going to get immediately better. So, you know, we're going to see we have a chip shortage problem still. Right. We're seeing like right now, if you have a used car, the strangest thing has happened this year as they've gone up in price. Right. That is like everybody's car is appreciated. And I don't if you talk to anybody whose lease is coming up this year, but everybody is thinking of buying their car from their lease, which has never happened because it's worth more than the lease. Right. So it's really an interesting time. Everything is kind of upside down, but everything will eventually revert to the mean meaning. It'll come down and eventually used cars will depreciate like they should and everything else is just a scarcity and supply chain is really messed up, everything. So if you.

Speaker1 (00:04:20): Are running a business today and you're looking ahead and saying, okay, these are the challenges, supply chain and what have you, is there anything that you would do today to take advantage of the situation or maybe position yourself in a way that you say, well, my competitors are having the same problem. Here are one or two things that I can do to get ahead.

Speaker2 (00:04:37): Well, I think you set expectations and you don't overpromise. That's one thing. But I'm going to say something that I want everybody to think about out there. If you have a business, all the great businesses in 2022, you know what defines a great business in 2022? One that could increase their prices because if you don't have a business that you can increase prices. Then where? Where how are you going to suck up all the price changes to you? Right. Just imagine being in the food business right now, trying to raise the price of whatever. A Loblaws because you're selling your food to Loblaws and they can't really pass it on to the consumer. So someone in this chain is going to get squeezed. We saw the I think, the potato chip problem at Loblaws, the latest problem lately and all that if someone is going to get squeezed. Right. And can you pass it on? So if you're a great company, you should be able to raise your prices right now because inflation is real. It's running hot at six, seven, 8% right now, which means that basically, if you have describe it to you this way, if you have money in your bank account, it's losing value at about six, seven, 8% a year just by sitting there. So cash is trash right now. So if it's not being moved and doing something, it's actually declining in value because we have way too much money chasing too few goods. We're just not getting the supplies in.

Speaker1 (00:05:47): So when we when we talked on business, on plan back in 2020 and 2021, we always looked ahead and we said, you know, things are going to get better after COVID. Covid has sort of consumed us over the last two years. And now here we are sort of more or less coming out of COVID. And we're in a period of high inflation. There's a war happening in Ukraine, and I sort of feel like we went from one crisis to the other. Is there anything that makes you optimistic and when do you think that that optimism or that real lift will come?

Speaker2 (00:06:17): So a lot of things make me feel optimistic and that if we just step back for a second from the graph and look at everything, you know, technology is still actually deflationary against inflation because it's getting much, much, much, much more powerful. The cloud is consuming everything. The technology thesis of the power of computing is still moving. Medicine is getting better and cheaper, even though it looks like it's getting more expensive. There's a lot of things. Artificial intelligence is rolling in. There's a lot of efficiencies in fintech, insurance, tech. Everything is kind of rolling in technology the same way. So in a macro sense, I'm very bullish on the way tech is driving all their economies. And I've said it before, I don't think in the future there's going to be fintech or insurance sector agritech. There's just going to be companies that have technologies and everybody's going to adopt artificial intelligence and it's going to consume us and it's going to make everything cheaper, faster and better and pervasive. And that thesis is still moving. That what keeps me broadly happy about things. What I would say is that we're in a situation right now if you want to kind of drill into this year the Fed, the US Fed, which is kind of the dog and where the tail and tails don't wag dogs. But the way it works is that they've kind of just admitted and we talked about this last time that they've got to they're being caught behind the curve. And what that means is that, hey, if you go back and roll the tape back six months, they're saying inflation.

Speaker2 (00:07:30): I know it's a little bit high, but it's probably transitory. Probably transitory. It's probably COVID, probably COVID. And now they're like, we're behind the curve, which means that they're going to have to raise interest rates more aggressively and faster than anybody thinks. So we're going to have a short term pain of raising interest rates multiple times in Canada. The EU and EU might be much harder because there's a war in Europe, but the Fed is, the US Fed is, the Bank of Canada is going to raise rates. And so that means the price of money goes up and asset prices fall. You've seen constrictions that are probably going to come out today in the budget where in Canada they're going to try to stop some foreign buying of real estate because they're trying to cool that off, which is being a little too red hot. Supply chains are very, very limited in Canada right now. I would say we have a lot of problems because the war going on in Ukraine, Ukraine accounts for 10% of the world's wheat supply, with Russia about 25%. And since that's so mucked up over there, the world is not going to get supply of wheat and barley and everything that goes into just about everything we eat. So prices are going to go up. We're going to have problems. Getting a container from China used to cost 2500 bucks.

Speaker2 (00:08:32): You could pay 25,000 now and not get that container it. And I know people that will pay more in that to get that container and can't get that container. I believe we're in a what I call a short term pain year. I think it gets a little tougher this year with rising interest rates and constriction on supply lines till it gets better. I would say the greatest thing about our planet is that we've lived for many decades in peace and we've gotten a peace dividend. There has been a global economy, global trade, monetary has been the rule of law spread around the planet for the most part, although you don't appear like a unified world, we've been more unified as a world for a very, very long time. We can trade, we can fly anywhere. You can get anywhere, you can call anybody. You can transfer money that got broken recently and that got questioned that world order with what's happened in the Ukraine. So that peace dividend that did things like lower stocks to keep in because the risk was risked off and everybody was inflating stock prices because there was no war and there was no crisis. We never, ever said the word nuclear, ever. I mean, in my life, I've never said that word. And the fact that we're saying that word takes away that peace dividend. So 2022 is going to be a short term tougher year. But I believe that we'll roll our way out of this because we always do.

Speaker2 (00:09:45): But, you know, there's nothing simple about COVID. I mean, the interesting thing now is by the sixth wave that we're under right now, I believe I heard a stat something like Ontario is 100,000 cases a day when they're testing wastewater right now and you talk to the government, they're like, oh, that small thing. Well, okay, I know there's an election coming up and everything else, but I think people. Over it. If you go down to the path downtown, it's just like it's like they're taking off. I think I read an article taking off their t shirt at the beach, you know, just like everybody gets come in in two days later, they're back at the office. You know, I laugh because I just don't think people can handle it anymore and we're going to live with it. And maybe the way we get out of it is everybody gets it to the point the naturalized vaccination is the way around this. But I think the society is going to learn to live with this somehow. And it's not a good thing, but it's something we're just going to live with and we're going to move on. Tough year, but I think cash flow is king this year. Being able to produce profit is more important this year. If you need to raise capital, it's tougher this year than last year, and that's going to stay around for a bit. Everything's a little tougher this year, but I think everything reverts back to the mean eventually.

Speaker1 (00:10:55): So hindsight being 2020 people went through COVID, they went through the last couple of years and they had to change so dramatically. Everybody got online, everybody up. Their technology, their delivery, their logistics. Do you think looking back, businesses in general are better off for having gone through it, or do you think it actually put a lot of folks out of business who otherwise would have done fine?

Speaker2 (00:11:16): That's a great question. I think the short answer is we went decades and years. In two years we went 20 years. But I would say that we've changed actually in an odd and strange way for the better. I think we've decided that people start valuing their their off time a little bit more and try to get a better work life balance. I would say people are happier and have just been unhappy because they can't go out with their friends and can't travel. And now you're seeing people bust out on travel right now.

Speaker1 (00:11:42): Thank you so much, Michael. Join us June 7th where we will gather industry leaders to help you make real financial progress. We'll speak to you on how you can improve cash flow, hire and retain employees, prepare for market trends as well as how to acquire new customers. We're featuring special guests from onerous ADP Global Markets at BMO and Meta Check back on BMO Business Unplanned to learn more and to RSVP next month. Talk to you soon on Business Unplanned.

Michael (00:01): Welcome to Business Unplanned, a business podcast from BMO. I'm Michael Hyatt, and this is the final episode of the virtual event: Prepairing Your Business For The Future. In this episode, I'm joined by Krista LaRiviere, chief marketing officer at Mintent. I'll be answering questions from Canadians, from all across our country and talking about how you can properly plan your business from what's coming in the future. And remember for additional resources you can visit bmo.com/smallbusinessresourcehub.

Jon (00:29): My name is Jon Davids, and I'll be your moderator for this session. Krista LaRiviere has spent 25 years in digital marketing strategy and leadership. She's now the chief marketing officer at Mintent, who I've known for a long time, actually, an entrepreneur and a marketing genius; really, really good at what she does. I want to ask kind of a question just to kick off here. What would you say is the single most important preparation step founders can take to support exponential growth in this great reopening that we're about to see?

Krista (01:05): That's a really great question, Jon. Yeah, as the economy reopens and I gave this some thought and it's really exciting times in my opinion. COVID was scary and even our business, Mintent, which is now a digital marketing agency, we really pivoted actually away from our proprietary software to full services. And that decision was really just sped up because of COVID; it probably would've happened anyways, but it really made us make decisions a whole lot faster. And so, these exciting times, you know, probably a once in a lifetime experience, or maybe not, if the economy gets closed down again, we hope not, but it could happen, anything can happen, I think that's what we've learned over the past 18 months. When I think about what the most important preparation step that founders can take to support that exponential growth that we all want to experience and I've experienced it in the past, I've experienced exponential growth and exponential ungrowth throughout my business career.

But it really comes down to one really, really important input in business that you can control as an entrepreneur and as a business leader and that's the people. So the single most important preparation step founders can take is to figure out how to attract really, really great people. And one of the things that COVID has changed for business leaders and HR departments, for example, is the fact that the labour pool is now...for certain businesses that can work remotely, the labour pool has really widened and so you have access to more great people than maybe you did pre-pandemic. So finding great people, in my opinion, it's become much easier for us, quite frankly, to find the really great people to put on the bus - that's a Jim Collins quote.

But the other thing that's changed, that affects this is people really don't just want to go to work anymore. They want to spend their time doing something purposeful and they want to work at places that really matter and really care about their people, really care about how they're giving back to the world. And I think our time out over the past year has people really thinking like where I work, am I providing any kind of purpose and does the company have any purpose? So this then leads founders and business owners, business leaders, to really reprioritize, rethink, and maybe even reposition their business product or services to be able to really convince and communicate what their purpose is. And so Simon Sinek, I like this quote, he really nailed it when he said great leaders give someone something to believe in and not just something to do.

So we need to stop and just really figure out, the business that I've started, what is the purpose? Yeah, I sell widgets or, you know, the products or services, but what does it really about? So metrics all still matter; the gross margins, the targets, all those numbers still matter, but what's becoming more important and again, if you want to really attract those great people that are going to get you to that exponential growth is really understanding why we go to work, why we want our great people to come to work. What does the company really care about? Do we care about our people and what do we believe in and get those great people on that bus and get to that exponential growth. So it's about people.

Jon (04:45): Yeah, people, and I think you were also talking about vision there, which actually takes us to our next question. What's a good strategic plan that I can take to ensure the longevity of my business stays on track?

Krista (04:58): Yeah. Another great question. Strategically, to make sure your business stays on track. I think we have all learned that you need to pandemic proof your business. If you're not pandemic proof you're not going to make it. The entrepreneurs who were able to pivot and, you know, we're talking about anything from restaurants to tech companies, and everything in between. And so if you're thinking about starting a business and hoping to have a long-term business, you do need to consider, you know, is this business idea pandemic proof? And think about your customers and the way they would behave in the next pandemic and knock on wood that doesn't happen. But, you know, it's really about the customer's behavior and reacting to that in a positive way.

And as soon as I start to think about behaviors, then my mind instantly goes to the marketing side of the world because that's my background. I think businesses, strategically, and we've touched on marketing and digital marketing already, but they really need to put marketing first and really prioritize marketing strategy and efforts for different situations that you may encounter over the life of the business. And I love this saying marketing is about understanding people. It's really that simple, but it's really that difficult. And so just really put marketing front and center. And as the economy reopens even still like, how will behaviors change and how are they going to continue to change? And how much of your products and services and promotion evolve to meet those changing behaviors? And we were talking about digital marketing.

The BC government has a really great grant program running right now. They actually just close the application process because I think they're nearing the end of the grant dollars. It's called BC Launch Online and it allows businesses in BC to apply to obtain a grant for $7,500 to put towards the improvement of their online digital presence in the form of implementing e-commerce or just other things that will help their business interact with their customers and really pandemic proof that business.

Jon (07:26): Yeah. That's great. I do want to push or explore one point that you made there. We can bring Michael in as well for this part of the conversation. We talked about sort of pivoting and what would you say about a company, you know, for example, in the event space, or you're a store that really relies on the experience of touching and feeling, or perhaps you sell a high-end good and people, you know, are sort of cutting back on their expenses; to what extent or how can you tactically kind of pivot if the core DNA of your business is just not really amenable to a pandemic, what do you do?

Michael (08:00): Yeah. So that's a really, really good question. I think that no matter...my advice...oh, let me give you the exact...I'll give you one that I was in. So I work exclusively with Speaker's Spotlight in Toronto. When they take me in, they put me on stage all over North America and it's a great job. I fly somewhere, I have a nice steak, I meet a bunch of great people. Talk, talk, talk, I get onstage, 45 an hour. I ramble off in some incessant way that I do, and then I come home and I love giving these speeches and meeting Canadians and Americans and getting points of view. But imagine that business; COVID hit, 100% of the business stops and their entire pitch is, you know, a speech is 45 minutes, but it can last a lifetime, and the whole thing is about a human connection.

The reason I was a speaker is I actually liked going to the cocktail party the night before and just meeting everybody, you know, on the insurance industry and the finance industry and it was a lot of fun for me. So overnight, 100% of bookings gone; 100%. And what did they do? They immediately changed their cost centers. They immediately made hard decisions. They had to let some staff go, but okay, fine, they pivoted to all online on speeches. Now, I've done a number of online speeches and I don't like it because you can't hear and see the audience. You tell a joke and it's deadpan, kind of bizarre so I don't like it but you know, sitting at your own home, it's okay. But I got to tell you that business now is coming out of COVID.

So I'll tell you what 2022 looks like for Martin Farrah, the husband and wife who run this, which are amazing people, by the way, they now have this massive online. Okay. And their clients use to set up these $100,000 stages. You get on these stages, I did this one with HP when I was on the Starship Enterprise, that was the stage. Like they pay me money, but they pay so much money for this stage and the lighting and the food and the hotel. But now they're like, well, wait a second, I can just hire Michael Hyatt from the nicety of his home and we don't have to spend $250,000 on the stage. Yeah, this is looking good. So now what do speakers have? Speakers has this amazing online business. And by the way, if they want to actually have this old school, want to see you business, they'll send you there too.

The moral of the story here is that the great companies built rapidly, the online version of whatever it is, even events, and then when the world comes back, they have both. The real answer to this is they should have always had both. The truth is that Speakers’ Spotlight should have always had both, but to be fair to them is no one wanted it one over video till they were forced to take it over video. And then here, let me just throw something else out, I don't know, I used to get on a plane and go into New York for two days and have five meetings and go up and down on the subway and see everybody and sweat and all the rest of it. I don't know, am I going to go to New York for five meetings or am I just going to do Zoom? I want to go to New York, but really, you know, getting in and out of LaGuardia and that drive in, it's pretty hectic. I don't know if I'm going to, I don't know. So what I'm saying is that I'm now trained to say, I can just do this by Zoom and it's been pretty good. We've been forced to accept this new world, which I think would have happened in 10 years, but it's happened in three.

Jon (11:28): Yeah. That's great. Anything you want to add to that Krista? And I'll just kind of broaden it a little more. I saw a question come in just now about real estate and you know, all these other industries that really are going to be changing post pandemic. You know, how do you look at again, going back to the question of longevity, how do you look at a business and do you think certain businesses need to really pull a whole 180 and kind of change the way they work?

Krista (11:53): Well, yeah, I think this situation has provided us an opportunity to really think through the different unavoidable and uncontrollable risks situations that face businesses every day and really make it more real; not so much the what if, but the when. And to just really sharpen your thoughts around how do you get through some really, really tough situations but not just think about it, actually come up with a plan for it. So I'm not sure if that answers the question.

Jon (12:32): Absolutely. Absolutely.

Jon (13:18): What do you look for to invest in an early stage business?

Michael (13:23): Look, I'm gonna be straight up about it. I have to like you first and foremost. I've said this before, I have to be able to be stuck with you at an airport for four hours. Would I invite you to my family barbecue? Do I like you? Here's the deal; by the time I work with you and exit, I might have to know you and have a lot of coffees, like 10,000 of them for 10 years. And I have to be able to give you feedback and you have to accept it, and then we can argue a little bit and be okay about it. And listen, I just wanted to say something to you. Let me give an example. This startup, two guys come to me a couple of weeks ago. I said, “okay, you know what? I am going to lead you around to financing. I'm going to put up this much money, but I'm not going to introduce you to anybody”. They're like, “why not?” I'm like, “because I want to see if you can go raise the rest of the money.” Like, I actually want to see if people can hustle and pull it together and then you can watch and see how they work with you through the fundraising process; it's very, very interesting. So I give people tasks. Another thing I look for, if it's to do with dentistry, I call a dentist friend and I actually bring the product to them. I love bringing whatever you have and giving it to people that I know. That's why my LinkedIn is so big because when I'm interested in a business, I literally bring them clients and say, here, would you buy this? Like, literally I'll sign them with the clients. And I guess the worst thing is if I don't invest, I brought them some clients or not. And it's an amazing thing what I learned.

There was a funny thing at the creative destruction lab. There will always be somebody coming with a medical device claiming that it does something. And we're all, I'm a scientist by training but my shelf life's been a long time, so I can't remember a lot. And we'd always find this device incredible. Oh, look, it's a portable blood analyzer. This is so great. Well, let's invest. Then I would take it and I bring it to a microbiologist and they'd go, yeah, this is crap. You know? So I mean like, you know, you have to test some of these product out in real life. I would tell you, we talked about gross margins; people know this, but you have to have some kind of what's your defensibility. I'll give you an example.

I had somebody approach me two weeks ago and I used their service. It's this great Ontario company that delivers alcohol. And he wants me to invest and all this stuff, I go. So I used it. I've been sending my friends and people to thank them. I just closed a big sale of a company. So I said, don't play in the odds of the investors. I'm a client, but I said, there's no moat here, you're just sending alcohol around. Like, I mean, I can do that too. So I said, no, but I'll become a client, but I can't invest in your business. There's nothing here. There's just, you know, alcohol delivery.

So there's a lot of things we look for. There's something that's got to be defensible. There's got to be stickiness. There's got to be, you know, want in the market. And I think that sometimes we like niche-y business; here's a great saying that everybody should write down: where there's mystery, there's margin. So what's the mystery in your business and how can I find margin? So think about it that way. So I have to like you, there's got to be a moat. I have to like the market. And then what I also do typically, if the round is a good size, like if we're writing a check for one to 5 million or something, I usually bring in a VC as well. So I get another brain to think alongside me to help. And then it kind of works out. So we test market it with a couple of other brains and we see it. But listen, whatever you do, you must be willing to pivot your company. I said that earlier. I'm going to say it again. If you're not willing to pivot, we ain't going nowhere here. You're all going to pivot, I don't know where, but you're all going to pivot.

Jon (16:46): There's another question about content marketing and the idea of how you reach people you know, sort of in this virtual world; what are your thoughts on content marketing and any kind of quick tips or strategies you'd give people to kind of get that off the ground?

Krista (17:01): Yeah, for sure. Well, content is, has, it was important before, it's more important now. I mean, it's the foundation of marketing. You can't do marketing without content. And so what we tell people about content strategies is it's really about...if you have content now you want to be optimizing your existing inventory of content. Don't go and trash it, Google has probably indexed it but it needs to be optimized. It comes back to your audience, understanding your audience and the content that they need to make a decision to buy from you. And to take a step back, it's about the key words that they use to describe the problem that they have, that you can solve for them. And so, some solid persona development and keyword research to then drive the content marketing strategy is always where we start and always where we recommend to start.

Jon (17:56): Let's do some closing remarks and then we'll wrap up the session.

Krista (18:00): Yeah, just short and sweet. I've started many, many businesses and have had some exits and it's hard and I think everybody can agree with that. And so, further to what Victoria was saying, ask for help. There are so many people in the Canadian community who are willing to help businesses get off the ground and offer advice to entrepreneurs because we've been in your shoes. So yeah, ask for help are my closing remarks.

Michael (18:35): Thanks for listening to Business Unplanned a business podcast from BMO. For more information on how you can prepare your business for the future, visit bmo.com/smallbusinessresourcehub

Michael (00:01): Welcome to Business Unplanned, a business podcast from BMO. I'm Michael Hyatt and this is part three of a four-part series. In this episode, I'm joined by the awesome Ryan Holtz, owner of Ryan Holtz Marketing and host of the great Ryan Holtz Show. What you're about to hear is audio from our virtual event called Preparing Your Business For The Future, held on July 14th, 2021. I'll be answering questions from Canadians, from all across our country and talking about how you can properly plan your business from what's coming in the future. And remember for digital resources, you can visit bmo.com/smallbusinessresourcehub.

Jon (00:37): Hello, and welcome everyone to this very special livestream event, Preparing Your Business For The Future, presented by BMO. My name is Jon Davids, and I'll be your moderator for this session. I want to welcome Ryan Holtz now. I want to start off with a question for you about marketing, which is your forte. How can I drive more business for a local store or a local retailer? And what do you recommend for small businesses in general for marketing affiliation and networking?

Ryan (01:08): I love this. First off, hello Canada, and what a great panel to be on. You know what we always say in business BAU- Business As Usual - business is as unusual right now, and I broke COVID and the pandemic down into four words; it's 'stay humble, keep hungry' because I think that entrepreneurs do their best work when their backs are against the wall. And we are notorious for being weird kind of people in common. You know, we talk a lot with inner family and friends and we talk about what we do on a daily basis and a lot of the time it's crickets or you get one of these, like, I don't get what you're doing. And I think marketing and branding, people get it confused. You know, they always say, Hey, Ryan, what's the difference between branding and marketing. Branding wants the relationship, marketing is leading to the transaction.

And I think to answer your question, Jon, it's a great question. I think that business owners have to really understand they are in a great position now to be remarkable. BRAND stands for: Be Remarkable And Not Disappointing. Meaning, when you're doing business, you need to always lead all of your marketing and branding initiatives with one sentence. And I trust you, all the clients, every single person I work with, I always say, listen, you need to answer this one question. The question is this: what's in it for them? Business owners have to understand just as much as they're in love with their business or offering, they also have to be just as in love with the result that provides to the end consumer. And a lot of business owners, they talk about their service. And I like to say to people, nobody cares about your service, they only care about the result of your service.

So to answer your question, John, it's very, very simple; emotional intelligence is going to win for the next three to five years in a big, big way. People have been sitting at home, they're getting more educated, they're more knowledgeable. The consumer starting to understand maybe I want to do business with that company, maybe I don't want to do. And they're also sitting back and seeing that, you know, as we've been talking about what companies are acting, what companies are promoting diversity, what companies are keeping an ear into social issues that are happening? And I always tell the consumers, I say, listen, when you're doing business with a company, ask them simple questions; let me see your C-suite executives, let me see your decision-makers and decide the character and the fabric of that company.

Ryan (03:17): But I think on the flip side, when companies are trying to gain new consumers, they need to wrap the emotional intelligence of their consumers. Meaning if I solve Michael's problem today with my service, which is the result, how can I do that and why does Michael have the problem in the first place? And when we dial into our emotional intelligence, here's the one trick and yeah, it can be time-consuming, but content is the unlock. If we're not physically shaking hands anymore, networking, people are consistently on their mobile device, which is the billboard and remote control of your life. So we need to put out content, that's not just talking about our service, that's literally using our emotional intelligence and wrapping it around the content and the result. Meaning, let's start speaking our customer's languages, let's start understanding their true problems, and let's start delivering content in a way that we are always answering the one question that only matters: What's in it for them?

And every business owner out there right now, they're solving a problem. And that is the surefire way to get a jumpstart. In terms of marketing affiliations, I think that really getting into your local communities, looking at who other business leaders are, other charities, organizations, other causes, startups, things like that, just becoming more than an entrepreneur, but a community activist, so to speak. And I think that entrepreneurs now in 2021, they have to start thinking like a media company, because they've got to understand why is somebody going to click on my ad? Why is somebody going to see that piece of content and take that action to fill out the form and come into my funnel or whatever you're trying to get them to do? So again, be remarkable and not disappointing.

Jon (04:58): That was very inspiring and great points there. You know, you talked about content marketing, which was already big before the pandemic, obviously. And you're right, it's sort of in this world where we're not shaking hands as much, we're not seeing each other, content is really the touchpoint to other people. But let's bring Michael back on this question, Michael, before we go on to the next one. Anything else? I mean, you're exposed to so many businesses, how are small and local businesses reaching customers and building today?

Michael (05:25): Yeah. So I think that if you didn't have a very aggressive digital strategy before, I think you had to build one and that could be a very expensive way to do it. I think that you really, really need to rethink everything on the idea of CAC - which is Customer Acquisition Cost - and what does it really cost you to reach someone, retain someone, and keep them. And I think that, you know, it's interesting how expensive probably Facebook, Facebook is Instagram and Google and all of them have gotten today. I think that early-stage companies could actually partner with an outsource marketing firm to actually gain speed acclimate to where they want to go. There's a couple of very good, small ones that they can use to actually do this if you're not an expert at it. So we're seeing so many people start a business, bring a product in from say China or overseas, and putting it directly to the consumer now.

And I think that there's no better time now to scale this type of marketing effect. And also, what I would also tell you that I think what's also harder, I think the level, and I'd love to see what Ryan and the team think about this, but I think the level of customer service now is at another level higher. I think you have to step up. When I work with brands and I buy things that I've bought things in this pandemic, I buy a lot of jogging pants because we are living in them now, that's all we do. And I put on jeans this year, it was just bizarre, what are these things? But I like every flavour of jogging pants now. Every time I get an Instagram with jogging pants, I just buy it and just see if I like it.

But it's amazing how many of those, like some of them, it's very, very hard to reach customer service, right? And you think, well, that's not a marketing thing, but it is because I'm not gonna tell anybody about it, I'm not going to buy another pair, and they've lost me. Many brands have lost me, a few of them have kept me. So I think you really have to step it up now and really communicate with your clients more than you ever have to build a marketing front. I think people expect so much more and by the way, people want their stuff tomorrow. That one small thing that tells me when it's coming, because I can buy something cheaper or something from another site, I think it's coming in 10 days, but I don't know.

Jon (07:41): It's funny. And just to add onto that, you know, I think what both of you are saying in a way is you look at other companies and what they're doing successful companies and a lot of it is you can just borrow and steal those tactics because if they work and someone else has invested to learn something, why not just take it for yourself?

Michael (07:58): That's right.

Jon (08:40): Let's move on to the next question. And Ryan or Michael, either of you can take this to start off with: how does one build or rebuild a business post-pandemic, especially if you've already had a business, maybe was impacted, a retail or a physical place, a restaurant? How do you get that momentum back post-pandemic?

Ryan (08:59): I think again, it goes back to the 'stay humble, keep hungry'. I think, great business owners from what I've seen and we've had clients that their revenues have dropped half and then we've also had clients that increased in sales and we've seen that too. And that's just a token to the entrepreneur, the business owner understanding that, Hey, just because we got put out of the game, doesn't mean we're not still in the game. And I think that business owners have been using this time to do an audit, to go into their digital stuff, to figure out what am I paying for? What am I getting? How is this answering the question of what's in it for the customer? And I think things like little touch points that Michael's referring to about, you know, I like to see when those joggers are coming in, I like to know, oh my gosh, it's out for delivery and it was just picked up.

It's the same, we call it mental ownership, but it's digital mental ownership. You know, I put the emoji up here because in your mind right away, it's remarkable, it's something different. It's an attachment in your subconscious that's coming in. And I think that with text programs now, that you can text your customers, you know, I have a client, for instance, you know, they've spent the whole pandemic texting out birthday lattes, meaning they shipped out a little gift card via texts that, Hey, coffee's on us today. Just maintaining that relationship, but then understanding how you can deploy those same digital tactics to try to keep it going but then also build back up. And again, back to Michael's point and I do agree with it, customers now, kind of the level of customer service they're expecting, it's went through the roof now and I think we have to meet them there.

Jon (10:31): Anything to add Michael on kind of keeping that momentum going? You've already given some good examples already.

Michael (10:38): Yeah, Ryan's right. And I think, you know, I remember meeting John Chambers, the CEO of Cisco, here's a great one there for a long time. And he says to us, he says, you know, companies don't fail on their own. They start to fail and then what happens is that competitors jump onto the failure, right? So it's accelerated by your competitors. So when you see a company, you know, I would tell you, it's something that people don't want to talk about. There's a bunch of companies that didn't make this pandemic. I'm going to say something controversial, maybe they weren't gonna make it anyways. Maybe they weren't. Do you know what's amazing about Kitchen Nightmares? Do you ever get into a show like on this pandemic, I think, you know, Gordon Ramsey comes and he goes, oh my God, this thing isn't cooked. He comes in and screams - anybody up here has seen Kitchen Nightmares?

Okay. This is so instructive. He goes, the best chef in the world, turns up to this kind of crappy restaurant, same thing, playbook every time, the food sucks, the decor is terrible. He comes in, screams at everybody, swears a lot, changes the menu, brings out great food, changes the decor, changes the tables, and it's actually a good restaurant. But here's the dirty secret to that show, that doesn't come on that show. I went back and I decided to look at all the restaurants in the season's where are they now? And almost all of them died within like six months or so of the show leaving. And why is that? It's because the same crappy entrepreneurs are running it and they just take it back down the tube.

Here's another example. Do you know Blockbuster started to move their entire business to send you online video before Netflix? They then hire a new CEO and said, what is this crap? People love going to the store and picking a video, cut that off, and took them backward to the videos. That's why Netflix is around because the gorilla decides people love eating the salty popcorn coming to this place, right? Some companies shouldn't have to make it. And you got to understand something, the way my analogy I use and Ryan's got some good ones, I think you've gone through this kind of Star Trek wormhole. Like you're on the other side of the galaxy. We actually moved. When we see we've moved 10 years, 10 years in retail, that is actually the number between what was offline to online. I've actually looked at the stats of the math on these decks that were sent out. And they're actually statistics that show, we move 10 years into the future in three months. And every month this goes on, every lockdown that stays another month, and every time we're trained to do this, the more normal it becomes and we ain't going back.

So, you know, I think that first off, the greatest entrepreneurs I know will get out of this. Can I just give you one last example? Can I just give you one more? Can I imagine I'm an investor in a great Canadian company, and I'm going to say right here right now that this company has got to make it and do well, but you must be thinking, but I thought there's a company in Toronto, a great tech company called Ritual. Well, Ritual woke up in March for the pandemic and literally 90% of its sales has stopped because there's nobody ritually picking up anything in the path, in Hong Kong, in London, in New York. I mean, literally, this company in three weeks went to 90% off because there's no one at the office.

This is where leaders are born, this is where greatness is born when Ray, the CEO, there has the ability, and by the way, he's turning around the company really, really well. It's so easy to get all this applause, you know, as the company's getting big and all this stuff, now is this time where the greatest entrepreneurs pivot their business and find a way out and they are. But just imagine waking up and losing 90% of your revenue on a Tuesday, you know, it's an amazing thing. So I think the bad entrepreneurs wouldn't have come out anyways, and probably the creative destruction capitalism cleans them out, which should happen and the great ones will pivot through this, like Ritual.

Ryan (14:35): Jon to add onto Michael's point, the pandemic, it just did something simple. It was a mandatory, forced, personal and professional audit and everything got exposed. The end.

Jon (14:46): A question I'm going to ask you, this came up a couple of different ways. Where would you invest your time right now in terms of marketing on social media? You know, there's TikTok, Instagram, YouTube, Twitter, et cetera, et cetera. If you have to pick one and sort of think about it, tactically, where would you put your time right now?

Ryan (15:06): Sure. Yeah. I tell everybody when it comes to social media and what platform to really choose, think about when you're cooking something; you got a colander and you got the broccoli, you're trying to shake all the water out, right? We call it a sieve. Well, if you take TikTok, Instagram, Twitter, Facebook, all these different platforms, they're all, essentially, tools. And you as a business owner, have to understand, well, depending on my service or my offering and the result that it gives, who's that for? Where's the audience at? And oftentimes business owners, they launch all of them up at the same time, which can be very, very daunting. But once they understand who they're talking to, then we can look at Instagram, we can look at TikTok, we look at Facebook. But as Jon said before, you know, the cost of advertising on the platform says increased, but there are still platforms out there right now that the organic reach is like almost everything and we call that underpriced attention.

When we're putting out advertising dollars, we're buying attention is what we're doing. So ones that I like right now for business owners, especially if you're a business owner, love LinkedIn, the organic reach is absolutely incredible. I, myself, will admit, Michael, I'm sure you can attest to this. About three to five years ago, for me, LinkedIn, it seemed like a boring resume for many people and I was just not into it. But in the last few years, LinkedIn has personality. You're seeing people's families sometimes, you're seeing a lot more texture there. So LinkedIn is very good on the B2B side. But then you've got something like TikTok, where everybody says, Ryan, I don't know, my kids are on there, you're dancing in front of it. No TikTok is great. The organic reach is awesome and there's tons of educational, financial literacy, tons of information rolling on there.

Instagram, listen, that's the shot, right? You're in front of the Rolls Royce. You know, you're trying to, we call it the flex, right? Even like Warren Buffet says, you know, we figured out who's swimming without a life jacket when the tide comes in, but we still want the flex. We got the Instagram, right, do it for the gram. Twitter; Twitter is a lot of conversation happening. So again, to answer the question, I think that you've got to sit back and look at social media, not as, oh my goodness, this is cool and I want to be on it, but look at it as a tool and think about it as a sieve. When I'm putting stuff in, content, what's coming out from it, and does it serve my end audience or customer?

Jon (17:21): I do want to just to wrap up here on this portion. There's another question about content marketing and the idea of how you reach people you know, sort of in this virtual world: what are your thoughts on content marketing and any kind of quick tips or strategies you'd give people to kind of get that off the ground?

Ryan (17:40): With content, the number one question we always get asked is this: Ryan, should I only post content about my business and services and not me about my family or personally? And it's such a big question because people say, do I need to keep the line? And people overthink their content strategies a lot. I always tell people if you're having a stump on what should I put out today, think about every problem you've had, how you solved it, start there, and then if there's somebody attached to the solution, talk about how they solved your problem. But Michael brought up something very, very crucial earlier. He said, if I want to invest in a company, I need to like the person who's doing the company. Now, how can Michael like the person who is doing the company if all we know about the person is the company or the service they're offering?

And I get that the context might be a little different, but here's where we see a lot of success. So yes, talk about your company, but figure out who Ryan is, figure out who Jon is, figure out who Michael is. Showcase who you are as a person because it's one of the best branding plays you can ever do. People come for dinner and the giraffes, but sometimes they stay for this or the service. And you have to think about, it's a people-first mentality. People don't just want to read an ad all the time, they want to connect with people. So I always say, if we're in business, I know it's B2C B2B, we're in the H stage, which is human to human.

Jon (19:03): I love that, that's a great point to end on, Ryan, gave me chills there. Let's do some closing remarks and then we'll wrap up the session. Any closing comments or thoughts you want to share?

Ryan (19:13): I like to be known as the hope dealer. And I think that with the pandemic, you know, and I like to address, I mean, people are really frustrated. People got into a really bad place in business. But I think there's something so noble about starting a business and I always feel that the losses mean more than the wins in a lot of cases. And I think that people who have lost “on paper”, I think this is the best time for your comeback. And your setback always sets up the comeback because entrepreneurs and business owners in general, it's something deep inside you. And you know, I've talked to many entrepreneurs and it's amazing how many aren't motivated by, I just want to make more money. They're motivated by what the result is doing for their end consumer. So everybody's talking about help and I think help is important. I do these little things. They're called eight-minute brand jams. They're free. I do them on Zoom. I do like a hundred a month. If anybody's listened and they want to just have them pick my brain for free for eight minutes, do it, I'm here to help you and I'm wishing you nothing but the best. And it's going to be great.

Michael (20:15): Thanks for listening to Business Unplanned, a business podcast from BMO. For more information on how you can prepare your business for the future, visit bmo.com/smallbusinessresourcehub.

Intro (00:01): Welcome to Business Unplanned, a business podcast from BMO. I'm Michael Hyatt and this is part two of a four-part series. What you're about to hear is audio from our virtual event called 'Preparing Your Business For The Future', held on July 14th, 2021. I'll be answering questions from Canadians from all across our country and talking about how you can properly plan your business from what's coming in the future. In this episode, I'm joined by Victoria Lennox, co-founder and president of Startup Canada. And remember for digital resources, you can visit bmo.com/smallbusinessresourcehub.

Jon (00:37): My name is Jon Davids, and I'll be your moderator for this session. Let's welcome Victoria Lennox to the conversation. And we'll pose this question to you, Victoria, to start off. There's been a lot of change during the pandemic, obviously. Why do you think entrepreneurship and starting up businesses have been a silver lining of the pandemic lockdowns?

Victoria (00:59): I'm really excited to be joining today from the unceded Algonquin territory here in Ottawa. So silver lining, absolutely. I mean, the pandemic forced a lot of us home. Working from home we had a lot more time on our hands, well, parents, that's questionable. But we did have a lot more time. We had a chance to pause, get caught up on the latest technology, where the economy was going for a lot of us who are working nine to five. We had a chance to start to look at Bitcoin, look at investments, kind of just to look at our options in front of us and maybe pick a different future. We also had a chance to upskill. We had a chance to go back to school to learn online for free. It was an amazing time and the silver lining was a chance to catch up and to pause and to reassess what we're doing in our lives is kind of what we want to do because we only live once.

It was also an opportunity as industries opened up that didn't exist before or we double down on online conferencing, we had breweries, micro-breweries turning into hand sanitation manufacturing centres. We saw this with Manjit Minhas. It was a real opportunity for entrepreneurs to demonstrate their resilience by pivoting. And so that was what we also saw. But we also saw the exodus of employees who were being laid off. And that also showed us that our jobs aren't safe and our jobs might be at risk. And it created finally entrepreneurship by necessity as well. You know, in Canada, we're so lucky, we're so well off. We're one of the highest educated countries in the entire world. And oftentimes we think of startups as being young guys hacking away in an accelerator incubator. But entrepreneurship by necessity, where you had that fire under you to support yourself, your family, to leave your legacy, leave your mark, there's nothing that compares with that fire that COVID has brought.

Victoria (03:00): And so we're seeing all these new startups and all these new companies that are not just being started up by kind of that very homogenous group. Now you're seeing a diversity of startups. You're seeing indigenous entrepreneurs that are thriving with all different types of companies. You're seeing, you know, a big initiative around black business owners across the country, a realization that our strength is our diversity. So certainly the silver lining that every entrepreneur knows is we turn lemons into lemonade constantly. There have been so many silver linings and so far as giving us the time to really set our journey and choose where we want to go in life in terms of, you know, really upscaling and pivoting and seeing new markets that unfolds before us, that we didn't see before. And in terms of giving fire under us to show that, you know, status quo was not okay. And whether you're starting a business or not, entrepreneurial resilience is a key way of life moving forward.

Jon (04:02): So Victoria, from your experience, working with thousands of entrepreneurs over the years, what's the best way to prepare for financial success, whether it's looking at debt or equity financing or otherwise?

Victoria (04:16): I think for all the new entrepreneurs out there, you can't get away from understanding your numbers. And oftentimes when we are starting up, we're starting up with a passion or problem we want to solve. We're not thinking about the financials behind the company that we're creating. But get real about it really, really fast because the implications of starting a company without financial literacy, it's the recipe for disaster. So really get your financial literacy up, understand what a cashflow forecast is, plan your expenses, really understand all the expenses and your time that goes into making that one product or that one app or whatever you're doing, just really understand how much it takes and all of that. The other side of it too is that there's a lot of support in Canada. We have an incredible ecosystem that can really offset a lot of your early startup costs.

We have a shred tax credits. This helps to offset 75% of your R and D upfront. It just means you can keep more money in your pockets. And so really trying to build really lean, really thinking that your minimal viable product, getting to market quickly, iterating constantly, and being okay to kind of, yes, no, stop, start. Say 'stop' if it's not making financial sense. And yeah, there's a lot of options. You have friends and family and tools, you have crowdfunding, there's a lot you can do before. Even having to think about taking out a loan or looking at Angel investors or venture capitalists, even if that's for you, at all; getting to know your numbers first and letting your business models kind of form itself and prove that out.

Jon (06:01): So, Michael I'd love to bring that question to you. And you talked about it earlier, gross margins, which of course you know, are so important. Do you want to unpack that a little bit and talk about what you would look for maybe basic unit economics, or how should people think about how much money they might need upfront? And what's kind of a good target in what timeframe?

Michael (06:20): Yeah. It's hard to talk about it just globally, but I'll kind of set some standards for you. A hot dog vendor in New York City has a gross margin of maybe 40%. That's what it is. Meaning that; I got my hot dog cart, I've got my hot dogs. If I'm going to sell you a hot dog for 10 bucks - I don't think it's that much - for five bucks, 60% of it is expenditures and then 40% is the gross margin. So where are you compared to a hot dog vendor, I like to kind of say? And so typically if you can...the best companies can increase their revenue and increase their gross margin. Go back to the buffet and Charlie Munger's ideas of business and it's really, really simple. Let's go back to what they say, which is the value of a company is strictly based on the future cash flow potential.

So if I line you up today to infinity of all the cash you'll ever make, that's the value of the company. Why was Facebook worth some crazy number early? Even though all the fighting and problems about Facebook's this and that, why does the stock keep going up? The average profit margin on the bottom of an S&P company is about 10%. Facebook's is 47. They literally print cash. And that's the same with Google and these tech companies. And why do they literally print cash? Because if their net is that high, their gross is way higher. So that's the thing. And not only do they increase their revenue, that they tick up that gross margin. If I go in and look at a company, Jon, and I see them skyrocketing on revenue and the gross margin falling, you're buying those sales, you're buying that revenue.

So a dollar of revenue is not always a dollar of revenue. There's a quality of those earnings. As a software company if you come to me, if you don't have a gross margin above 70%, no green checkmark from me. I like to see above 80. Best-of-breed tech companies, once you put in customer service and installation and AWS fees and all that, it should be about 80. I know everybody thinks they're above 90, but when you really calculate them probably above 80, 82, 83, and you kind of run your business from that. Now those of you watching that are kind of in retail and other things that are non-tech, you know, you really have to see, okay, I'm an old school storage company used to have a gross margin of actually 20%. That's old-school storage. You know, we store your stuff, we have to pay for the building and the heating and lighting.

I'm actually a big investor in a Canadian company called Second Closet - they'll be changing their name in the week, by the way, get excited. But their gross margins are double or even higher and ticking up from that. But what's interesting and how are they doing that? The reason that they're an investible company is they're bringing in all of this technology to scale the gross margin and why are they doing that? So they can eventually produce a lot of net margin on the bottom. Does that make sense? So the idea is technology comes in, robots come in, pick and packing, doing stuff and eventually, we start to create more bottom line because we're getting more efficient at what we can do with computing.

So gross margin is the most key metric and watch where that's going with your revenue. But remember, eventually you have to actually produce a bottom line, a profit. I mean, eventually, you do, because if you don't keep raising money, then the lights are going to go out. So you can't just keep going on, raising money. Now you can, in this world that we're in today, because the 10 year, the cost of capital is so low at 1.4%...by the way, it's a 200 year low. The cost of capital is at a 200 year low. And there's so much capital burning everywhere that you can raise capital as long as you're growing fast enough and growth is about three times more important than profit if your growth is exciting.

Jon (10:50): Let's jump back to Victoria and just kind of change the topic for a moment. I'd love to talk about inclusion, diversity, and environmental sustainability. They become front and centre worldwide. People want to buy from and support companies that walk the talk. So how can entrepreneurs ensure they are building companies that create a healthier and more inclusive world and companies that are tools of reconciliation?

Victoria (11:15): Oh, well, I'm glad we're talking about that. That's so important, especially today. And, you know, we've seen in the news constantly, even yesterday, more unmarked graves being realized and found and we're confronted head-on with our truth with our indigenous communities. At the same time, we see all the fires out West and we're very concerned for our planet. As corporate citizens, we're building companies that are stewarding the future, and we're also seeing companies like Google and Facebook, I mean, they're more powerful than a lot of nation-states. And so as we're building companies thinking about creating good and a better future for humanity is so important. And it's really easy to do that, especially from the start. It's a lot harder to do it once you kind of create those, you know, systems that are just perpetuating more of the same of, same of.

So a few key ways you can do that right now is take a quick Google of B Corp. You can set up your company as a B Corp, and that will help you to really reassess your values, you know, understand, okay, who are the advisors I'm bringing in? How am I treating my employees? And it really is a holistic approach to thinking about your company with an annual audit function, to make sure that, you know, you're staying true to that. So that's so powerful. Every company in Canada should be a B Corp, hard yes, please, thank you. The next thing is to align with the UN sustainable development goals. There are 19 of them, and it could be anything from supporting equality of women to feeding hungry people worldwide to investing in clean technologies. Every single company should know which sustainable development goal they're feeding.

And if they're not fueling one of the sustainable development goals, they miss the mark on how we're working on advancing humanity altogether. So those are two concrete things that every company can do. Super simple. It's free to do just a quick Google of the B Corp, a quick Google of UN sustainable development goals. Now, when it comes to kind of reconciliation with our indigenous communities, this is going to take time and it starts with education. There are free courses on Coursera and other platforms to educate us about our indigenous history. Most of us that went high school, we didn't learn about our true history as a country. The colonialism, you know, we knew it was there, but we didn't know the extent of it, which was really genocide of an entire part of Canada. And it's now the fastest-growing population. It's projected to be a hundred billion dollar economy by 2030 by Indigenomics, the indigenous economy.

You know, indigenous businesses mean big business for Canada. And it's super exciting but it starts with education, learning, and listening, and then starting to embed what you're learning into your company. It's about indigenous land acknowledgments. It's about reaching out to indigenous nations where you're based and just, you know, letting the community know about your company. You're on their land and see how you can work with that community. You know, the medicine wheel really is all about all the backgrounds, all the nations coming together, you know, white people and indigenous people and Asian people and all different colors coming together and supporting one another. So it isn't just about reconciliation from an indigenous perspective, is that how we create, you know, an inclusive company where everyone's welcome, but also where you can also, you know, serve the indigenous community. Again, fastest-growing in Canada, very exciting economically, creating incredible companies. So hopefully, you know, those are a few key practical ways that we can move forward together, but it is about walking the talk and not just talking the talk. And what I love about B Corp companies is kind of, it gets reinforced to the institutions and governance of the organization. Hopefully, that helps.

Jon (15:25): A Question I want to ask here, this came up a couple of different ways. Where would you invest your time right now in terms of marketing on social media? You know, there's TikTok, Instagram, YouTube, Twitter, et cetera, et cetera. If you had to pick one and sort of think about it tactically, where would you put your time right now?

Victoria (15:43): Now, some of the social platforms have e-commerce functionalities and I'm seeing businesses start up without even having their own website. They're just selling online on Instagram and selling out in seconds because they've created a campaign and everyone knows when it's going to drop and it drops. So it's producing all these new marketplaces for us to be able to grow. The other side is how we activate all those social channels as it relates to our employees and our social causes. You know, I love these social channels that really showcase their employees and the values of the company and the impact that they're making. So really looking at it, not just to push product, but also to kind of create that intimate experience and finding the right platform for the various audiences.

Jon (16:29): I want to ask a question here. An interesting one came in from Kevin. Is there room for art in the workplace murals, or is it a luxury in our COVID times? And I'll just expand the question. The whole idea of, I mean, this case, you have a luxury good, which is, you know, a beautiful mural and you're going to be targeting the office community. I'd love to hear your thoughts on, that sort of a business challenge. And again, we can broaden the question. Are there businesses that should rethink their entire purpose of being, if they were targeting the workplace or targeting something that maybe has fallen out of fashion, or do you think that they should double down and focus on what they're good at and maybe they'll find that niche audience?

Victoria (17:08): I really think it's about being really innovative with the model. And you know, you might be selling art, but where are you selling it? How are you reaching your customers? How are you creating demand around it? So I think it's about the model. There are art companies where you rent art. Imagine equipping your employees with beautiful art at tours their homes. Imagine providing your executives with that level of beauty to inspire them. So I think it really is about thinking about your model, thinking about your niche, and kind of having to pivot. I don't think it means you stop making art. I think it means that you start really thinking about who are your customers, and who's going to pay for your services to the level you want them to.

Michael (17:54): A friend of mine, a guy I know did murals for a tech company in early 2000s. They couldn't pay him. They gave him stock, they gave him a lot of stock. His name is David Choe, you can look him up and he's in LA. And he did it for this small company called Facebook. Anyways, he never has to work again. And also as a side note, they also gave the massage therapist stock in Facebook because they couldn't pay her either and she never has to work again. But you know what I'd love if that person finds me on LinkedIn and comes to my house and does some lovely animal murals for my kids, like a giraffe coming over. So I think actually your idea is fabulous. Just come to the home and do the murals.

Jon (18:38): Let's do some closing remarks and then we'll wrap up the session, Victoria, any closing comments or thoughts you want to share?

Victoria (18:47): Oh, just thank you so much for having me. I think, you know, a parting piece of advice for every entrepreneur, no matter what stage of business you are, is to reach out to your community. There's a fantastic startup and entrepreneurship community across Canada, through Startup Canada, as well as locally Startup Vancouver, Startup Toronto, Startup Halifax. No matter where you are, there's a community; there are mentors, advisors who just want to see each other succeed and will always be your rallying source, you know, to test out those ideas, to make sure that you don't fall into Michael's bad category of a bad entrepreneur. You want to be a good entrepreneur. Good entrepreneurs learn from one another and pivot and challenge each other. So, you know, don't go at it alone, you don't need to and in fact, doing so at your peril. So definitely join your startup community, and good luck everybody.

Outro (19:41): Thanks for listening to Business Unplanned, a business podcast from BMO. For more information on how you compare your business for the future, visit bmo.com/smallbusinessresourcehub.

Intro (00:01): Welcome to Business Unplanned, a business podcast from BMOB M O. I'm Michael Hyatt, and this is part one of a four-part series. What you're about to hear is audio from our virtual event called 'Preparing Your Business in the Future', held on July 14th, 2021. In this episode, I'll be answering questions from Canadians all across the country and talking about how you can properly plan your business for what's coming in the future. And remember, for additional resources you can visit bmo.com/smallbusinessresourcehub.

Michael (00:32): Listen, I was thinking about the title of this show and I was thinking, but you can't really prepare for the future. And if COVID has taught us anything, it's just not going to happen that way. But I think what we can do today and what the people on this show can help you with is I think we can help you make fewer mistakes. And I think if you think about it that you're going to make a ton of mistakes building a company and we're going to help you make fewer mistakes, that's a real victory. We learned some things in the past year in COVID and we learned so much about ourselves and the business. I think we probably all learned that we want to hug another human and actually see people now. I think we're all getting a little, you know, I think Friday's the day in Ontario kind of thing, but like we learned some key lessons and going forward.

Before COVID came on, the world is rapidly adopting the cloud and still moving forward in a very high-tech way. Computer power was still doubling, it was still moving at a very aggressive pace. But when we were slammed in that period in March with COVID, there were kind of two types of leaders; leaders that reacted and ones that didn't. The ones that won and did really, really well, they actually, really did something that others didn't. And what they did, they had the ability to immediately reapply resources and they also had this propensity to act. So they had the ability to look at the situation, move quickly with a propensity to act. And really the world got split between people that got frozen and the people that actually could do something and acted.

So for example, many retailers started just move really quickly to curbside pickup. Stores moved to digital offerings right away. I'll give you an example. I'll call out one, I'm not invested in this company. There was this restaurant chain and two, three families that owns it, a husband and wife, called Starving Artists in Toronto, and immediately all the restaurants are closed. What are they going to do? Well, they turned around, went to their customer list, and said, Hey, we're called Kitsch Kitchens. And we're going to deliver you a menu once a week for family-sized portions. And now for the past year, we've been ordering family-sized portions from them. And that business is now bigger than they ever had with those restaurants. Their ability to move and their propensity to act, save them and turned them around. You know, fitness came online and I would tell you that if you talked to a lot of trainers now that are training people online, they're like, “Hey, this is even better.” Again, the propensity to act is a big thing.

I also think the second thing is that cost centers in all companies were transformed almost forever. And I think that see this aggressive push to the cloud and automation is not going to slow down at all. Even older school law firms and legal firms have been pushed into this automation and cost centers have been broken everywhere. The way you want to think about it is what Uber really do when they came into the market? They destroyed the cost center of a dispatcher. The same kind of thing went on with Airbnb, those were broken.

The third thing that I noticed that stepped in over the past year was creative destruction. Creative destruction stepped in and is always in a capitalist economy, readjust the economy. So for example, remember when you started seeing all these big-box retailers, all the big ones like Sears going under and all these retailers, that's actually kind of interesting. We take Sears, they started in the 1800s, survived World War 1, World War II, The Great Depression, The Great Recession, and it was kind of the internet that killed them. And then everybody says, well, what's going to happen with these big empty stores? They're everywhere, what's going to happen? Creative destruction steps in. Those are juicy, juicy places to do pick and pack Amazon-type centers. They could be vertical farming centers and they can be data centers. And if you notice right now, you cannot anywhere in major metropolises or even one degree outside a major city in North America find industrial real estate. It is the most pricey real estate in the world because creative destruction steps in and says, Hey, what was there, doesn't work but what we're putting in is worth a lot more.

I think we also saw in effect, and I think this effect can't be doubled down enough that really, science saved us. Just think about it for a second that once we figured out the actual DNA of the structure of this COVID disease, we were able to actually replicate the response within 72 hours to know how to take it down. It was the six and nine months of testing that's why the vaccine was delayed and then how to get it out and all this kind of stuff. But, you know, there's no time in human history where we ever could have come out with something this fast. It took 10 years usually to make a vaccine. So why is it happening so quickly? Computing power is doubling every 18 months halving in size, and it's the power of mathematics, which is becoming cheaper and better and faster, and the cloud is taking this over.

And lastly, the last lesson I think you're going to learn and think you're going to see, and I think we're sitting in this now, and this is a broad conversation happening everywhere is I think the best leaders and the smartest leaders are going to figure out how to balance coming back to the office and not coming back to the office.

I think the short answer is why are you seeing such a real estate boom outside Toronto? Well, it's simple. Because you have a much bigger house for much cheaper and some land, and you'd go for a walk with your kids. It's lovely and it's beautiful to be in Ajax and those kinds of places or Hamilton. And by the way, maybe you're going to come in downtown two days a week, and you're going to suffer the three hours of traffic, but you don't want to do it five days a week. And I think the best companies will figure out how to adjust. I think there's a lot of push right now in Toronto, too. I think I saw an article saying, 'get a backbone, bring your staff back to the path, bring them back to the bank.' I don't see that happening.

I see the best companies, the most emotionally, intelligently aware companies are going to figure out how to work with their customers. Listen, I'm investing in a company that I'm closing next week, I forgot to ask them a question and the question was, where's your office? And they just realized they don't have one and I never even thought to ask them that question. Where's your office? Let me come to your office. When we've invested in tech companies in the past, we used to turn up and look at the fridge, see if there are uneaten sandwiches or people working like, you know, what's going on? Now, it's 'you have an office?' That's kind of weird. Why would you do that?' So you don't need it, you know?

And let me just summarize; the world is still getting dramatically better. I know it seems like this was a really strange hiccup and everything's happening and sometimes it feels like things are really bad all the time. It's because you're getting hit with a billion times more media because we can just get to you really fast with everything now. I mean, there are many times in human history where we just couldn't reach you so you just didn't know what was going on. The world is getting dramatically better and things are getting cheaper, faster, and better. Every graph on everything from even vaccination to reading to child mortality, it's still moving up to the right. Things are getting better. So sometimes I think we can get stuck in this kind of rut where things seem bad, but it's not. And I'll tell you, and I've said this before on this show, that the only mistake all of us have - and I say a mistake in quotations - is that we're not born 20 years into the future because the future is dramatically better.

Healthcare and just think about it. Would anybody watching this show right now, go to the hospital and want healthcare from today or from 20 years from now? And there's not a single person that won't even take it five years from now because you know that things are getting better. So remember the big picture, things are getting better and I'm very optimistic about our future and especially as Canadians.

Speaker (07:49): Very inspiring. Wow. A lot to unpack there. Michael, thank you so much. So, let's get into some tactical questions here. What's a good checklist to have in order to ensure a successful startup on a tactical level, what would you tell an entrepreneur?

Michael (08:04): Yeah, I've been thinking about this a lot and I think the short answer again is there's no such thing, there's nothing that will ensure your success, but there are things that you can do and you can be to be better. First off, I'm a 20-year overnight success. I wasn't the smartest, I wasn't the fastest, I just literally outwork everybody else. That was it. You know what? Go to a gym on January 1st or 2nd, it's full; by January 5th, it's not. And why is that? Because Woody Allen said it; 80% is showing up. That's what he said in one of his movies. That's it. You got to keep showing up. Showing up is hard to do, hard to do consistently. Are you okay with a tremendous amount of emotional commitment and arduous commitment? Are you okay putting your relationship online and everything else?

It's like going down a tunnel and you think there's going to be light at the end of the tunnel, but you just don't know when that light is going to be. It's like going for the Olympics, but you have no clue when the Olympics is. It's very difficult emotionally. I think you've got to be ready. I will tell you my opinion. Most people should not start a business, most people should not be entrepreneurs because it's too hard. But I will tell you if you happen to not be in a relationship and not have kids and not have a mortgage, probably the best time for you to go and do this because you have less to risk and it's time for you to go out there and fail, go out there and make mistakes. It gets harder when you have a mortgage and a minivan and kids, things just get harder.

So earlier, go in there and destroy it. It's okay, take risks and fail, that's fine. I just want to give you a couple of practical pieces of advice around your business. But let me just ask you all one simple question about your business. Why are you starting this business? Because most people start a business because they got something going cool and they hunt around the room, and you see this on the Dragon's den all the time. They hunt around the room, trying to figure out where their amazing product is going to fit. That's not a good start to a company. It should be because you couldn't get a taxi in France, just like Travis did in Uber and he couldn't get it going so he decided to give one limousine driver one Blackberry and tested this early thing out called Uber. He did it because he needed to do it. He needed it.

So why are you starting this business, and do you need to do this for you because you couldn't find a solution? That's number one. Number two, do you have something called a gross margin? That's what you sell it for. You take off what it costs you to make this pen and what's left is your gross margin. If you don't have a fat, juicy, gross profit before your expenses - heating, lighting, employees, and all that - this is a very difficult business to start. Gross margin is a very important concept when you're starting a business. That's why software companies are worth so much because the gross margins are 70 to 90%, and that's why they multiply the top line of the revenue.

And lastly, get your product out, iterate, iterate, iterate, and pivot. And this is what I'm going to guarantee you: whatever you started with - Facebook, Harvard, Hot or Not - that's not what it's going to turn out to be. By the way, does anybody know what YouTube was when it started? It was a dating site, a video dating site. You didn't know that. So, where you start and where you pivot, you're going to pivot 3 degrees or 33 degrees or 180 degrees, I don't know, but you're going to pivot. So, a little something: when I invest in companies, I really look closely at early stage, whether I think you have the ability to take feedback and pivot. So, think about all these concepts I'm giving you because it is a tough arduous path. It can really be worth it but think carefully about how to iterate very quickly on your business.

Speaker (12:33): Okay, let's go on to the next question. How do I find a great advisor or mentor to help me on my journey?

Michael (12:40): Yeah, so I get asked to advise companies a lot. And the first thing I do is I ask them a simple question. Who's your current advisors? And honestly, I get on there and there's like a kind of smorgasbord of 27 faces. I don't know, what's really happening. So first off, you have too many cooks in the kitchen. You're not getting advice, you're just getting names and I don't know what, and probably half the time, they're right and wrong. So first off, who do you really want to advise you, and would they be willing to even write a cheque into your business? I really think it's a little bit hard to be an advisor unless they also write a cheque into the business. Typically, I write a cheque and then do some advising, shares, and whatever. I would love to just write a cheque and never speak to an entrepreneur, just make money, but then, they want to speak to me, which is actually the expensive part.

I also think you should pick an advisor who's been there and done that. If they haven't built a company and sold it or done this or been through the process, it's very hard to choose them because you have to understand that it's very hard to throw things at me, for example, that I haven't seen. I can't say, 'Oh yeah. Okay. So this is what I would do. Yeah, I've seen that. I've seen it worse actually, and things happen.' You have to have somebody that's actually going to help you make fewer mistakes and fewer mistakes could actually be, this could be the title of this podcast, make fewer mistakes. You'll be successful, probably right. And that's what I try to do.

And the other thing is when you get someone to give you money and come to your company and work with you, you're in a foxhole, you know what that is? In World War II, they used to dig a hole, and two guys used to be in a foxhole and they used to sit around there and you pretty much know that guy pretty good because you could be in there for two days with one guy. So, you're in a foxhole sometimes for five years, sometimes for 10 years. A lot of the time there's a lot of ups and downs in a business and you can do a whole podcast on the amazing pivots that companies have made and where you think you're counted out and coming back. But you have to be very, very willing to work with this person.

And lastly, this is a tricky one, but some adviser that joins you should have the ability to do one thing and that is: vote against their own interest. There are many times where I say, okay, I'm going to take off my investor hat and then tell you what I think you should do. You have to have the ability to take off a hat and really vote against your own interest of what's best for their shareholders or best for those founders. And that's something that's a very gray area and hard to do because people think, well, I'm an investor, I just want to kind of give them advice based on I want to be in the next round. Sometimes my advice is don't take my money. No, don't take the debt. Or why do you need to do this? Or like sometimes the best advice is you don't need my money. And you have to be very honest. So I also would be choosing advisors where the outcome of your company won't change their day. So think about that carefully who you want to be in that foxhole with and how you're going to communicate with them and do you like them? And let me just tell you and your gut check, if you don't want to be stuck in an airport with your advisor for four hours, don't work with them.

Speaker (15:41): Michael, what would you say here? I know you're actually an investor in a company that is all about storage and delivery. Are you comfortable today investing or being involved in a business that is heavily reliant on physical or would you want to see a virtual presence first?

Michael (15:55): Yeah, no, look, I mean, second closet is very physical. It's pick and pack and delivery of your goods. I mean, there's a lot of room for those types of businesses. But listen, that doesn't mean there's a lot of your functions that can't be remote and can't come in and can't work remotely. I mean, there are some very beautiful places in Canada to live that are not in a city and I would be very jealous of...I mean, there are places in Nova Scotia that are literally God's country. I mean, it's incredible and I would love to live there and not have to commute the hours that we are in a bit of a slave. I think the one benefit to COVID, if there's actually a benefit to that it actually taught us that maybe we can be out of the core city, maybe we can have more space and be more open.

I mean, there's something really nice to that. Maybe we have more time for our families. So like in this COVID time, I've had two more children now twins and when I look at the time I get to spend even the time with my daughter the first 21 months. And I think she must think that dad is just always at home, dad doesn't work and dad is meant to have stickers in his hair. And I think that there's a really nice side to that. And I think that's one of the other problems that people not wanting to go back to the office as much. I mean, I think people are used to getting that work-life balance and being just as productive, quite frankly.

Speaker (17:19): Fantastic. And Michael, take us home.

Michael (17:21): I just want people to step back and get some perspective on their lives. We just went through something very, very hard. I mean, just to be clear, Capitalism in the world we live in, in business was never meant to be stopped. It was never meant to be just frozen. And there was never a situation in 2018 or 19 where people said, okay, we're at this board meeting, I would like a plan if we have to stop all commerce. People would say, you're crazy. Literally, throw you out of the room. There was no way you could see this coming. We didn't understand it. We do now. We also got to find out a number of things about the world. We found out what it meant to have a country that may disagree with this politician, but believed in the politicians, look at the vaccination rates in Canada.

We don't always agree with our politicians, but we believe them when we believe the science, those are important things. And countries that tended to believe in their countries have done very, very well, even as hard as it has been. And we're going to go through successive hard times. I mean, I was around in the recession, in the nineties when we started, I was in the 9/11, 2001 dot com crisis. I was in the great financial recession - 08, 09 - and this COVID one and they all are very hard to deal with and all had their own flavour and history doesn't repeat, but it rhymes. And I'm going to be straight up with you. Yes, there's going to be another crash. Why? Because every year, 10 years or so there just is and I don't know what it's going to be, and it's just going to happen that way. And that's how capitalism works. There'll be a different reason and you couldn't have seen it coming and that's the way these things work.

But what I can tell you is if you're resilient, you build a great business. You're not building something to flip or sell tomorrow. You have good, great advisors. You figure out your gross margins, you figure out profit, you make good relationships, you have great customer service. You don't worry about your customers, and you take care of your employees first. Those kinds of things matter. People matter. And I think the one thing, the big thing I think we all agree with sitting on it together is that people matter and getting together. I mean, what do you say to your friends right now? I'm desperate for you to come over and have a beer in my backyard. I'm desperate, please, you know, and I'm not quite sure cause I've had newborns if I can hug my friends, but I want to, and that's because we're human and that's what we want to do. I want to get back together. We want to go to dinners. We want to be people again. And then this is a new world we're in right now, and it's still a little difficult. And I want to tell you, I'm incredibly optimistic. Everything that I'm seeing is in the right direction. You will have to give the world a bit of perspective that this will be an aberration of a few years in our lifetime, a very certain cycle. But years from now, you're going to look back on this and most of the graphs that you look up will be up to the right. The S and P will be up to the right. Your business will be up to the right. The world will have more literacy, more vaccinations, more this, more that more, less child mortality. And it's an incredible time to be alive and there's no better time to be alive than the future. I'm incredibly optimistic.

And lastly, I just want to just tell you this, and if you haven't thought about this, if you happen to live in Canada, you happen to be born in Canada, you happen to have a Canadian passport, congrats, you're in the 1%; that's the truth, that's it. You know, we hit the lottery just by being in this country; for all our ups and downs and all our failures and all our great things, we are an incredibly fortunate nation. And if you don't know that, travel the world and you're going to love to come home, Canada's a wonderful place. And we did everything wrong and everything right in this and a lot of bickering through COVID, but honestly, we're going to come out ahead and this is going to be much better. And I think we're going to see things like the production of our own vaccines going forward, something we probably should have had before. And I think we're going to be much more ready going forward. I'm actually very optimistic about business and I think people are learning a lot and I think people are communicating a lot. And I just want to say that the future's better and I want to thank everybody for coming today.

Outro (21:27): Thanks for listening to Business Unplanned, a business podcast from BMO. For more information on how you can prepare your business for the future visit bmo.com/smallbusinessresourcehub.